After the “Halwa” ceremony to mark the final stage of budget preparations, many pre-budget expectations were fulfilled by Finance Minister Nirmala Sitharaman in the budget 2023-24. “The Budget will focus on growth & balancing fiscal pressures”, said NR Bhanumurthy an economist. There will be some temptation to go for populist measures said another financial analyst.
There was a mixed reaction by the people from all walks of life on the paperless budget of Modi 2.0. In case of middle class relief, Finance Minister said that “I too belong to the middle class so I can understand the pressures on them”.
In view of that tax has been slashed down as Individuals having total annual income of Rs.7 lac will have to pay no tax. The standard deduction of Rs.50000/- is also available to salaried individuals in case of loans & advances.
Moreover, for Personal Income Tax, the new tax rates are 0 to 3 lac will attract NIL percent. Similarly, from Rs.3 to 6 lac will attract 5%; Rs.6 to 9 lac 10%, Rs. 9 to 12 lac 15%, Rs.12 to 15 lac 20% and Rs.15 lac & above 30%.
The stakeholders of insurance sector expected that the government would lower the prevailing GST rate on health insurance, and anticipate that the current budget would take into account higher exemption on tax under Section 80D from Rs.25000/- limit to Rs.1 lac.
It is to clarify here and in place to mention that an individual having upto Rs.7 lacs annual income will not to pay any tax, however, a person having Rs.8 lacs annual income will have to pay tax as of 0 to 3 lacs NIL, Rs.3 to 6 lacs 5% as per above tax rates.
For the senior citizens the limit for deposit scheme has been enhanced to Rs.30 lac against Rs.15 lacs in Senior Citizens Savings Scheme. Similarly, Mahila Samman Savings Certificate has been introduced on ‘Azadi Ka Amrit Mahotsav’ for women or girls for a tenor of two years at a fixed rate with tax benefits under section 80C of Income Tax Act.
The fiscal deficit is estimated at 6.4% of GDP for further reduction to below 4.5% by 2025-26. The capital expenditure stepped up to Rs.7.50 lac crores 2.9% of GDP against Rs,5.54 lac crores in 2021-22 and total market borrowings of government estimated to stand Rs.11,58,719 crores.
The Indian economy has increased in size from the last nine years being 10th to 5th largest in the world. That is why the per capita income has almost doubled to Rs.1.97 lacs in these nine years and 7400 crore digital payments of Rs.126 lac crores took place only through UPI in 2022.
The Finance Minister declared that the vision for Amrit Kaal that includes a technology driven and knowledge based economy with strong public finances and a robust financial sector.
The digitalization dream can be achieved further by the expansion of connectivity infrastructure across the country, particularly improving access in rural areas.
Digitization has contributed in three main ways to business, & economy; more number of transactions, easy way of business & more people in tax net. The digitalization reduces the rush in banks and the customer can make transactions even on holidays & Sundays i.e., 24X7X360.
The digital technology will drive the recovery of small businesses, the backbone of the economy. The adoption of mobile services has made it easier for the people to experience the benefits of digitalization. The digital shift will accelerate in coming years as the number of mobile service users, like in e-commerce, in the world is expected to reach 7.52 billion in 2026.
G20 Digital Economy Development & Cooperation acknowledged digitalization as a driver of global inclusive economic growth. In view of above, the government’s priority will be macroeconomic stability, MSMEs for sustainable economy.
One of the key highlights of Finance Minister’s announcement in budget 2022-23 was allocation for MSMEs to the tune of Rs.21422 Crores, hence up by 26.71%. To have a strong foundation of startup ecosystem government has allocated Rs.283.5 Crores for the startup India Seed Fund Scheme.
Few measures also announced in the budget for startups such as extending the period of incorporation till March 31, 2024 for eligible budding entrepreneurs for providing tax incentives.
The budget also focused on promoting startups in the agriculture sector and making agri-preneurs and giving them a boost to come with better ideas for cold storage, food processing and value addition. Focusing transportation system union budget allocated Rs. 2.7 lac crore to the Ministry of Road Transport & Highways.
The Gati Shakti a National Master Plan mission to boost the logistic infrastructure of the country, a 100 lac crore project, has received Rs.20,000/- crore in the current budget. The Gati Shakti infrastructure projects approved by Network Planning Group NPG emphasises on the connectivity, transportation of roads, railways, ports, airports & waterways.
The NPG has a representation from various connectivity infrastructure ministries & departments involving their heads for unified planning & integration of proposals. Further government is taking measures to develop the metro rail network and build smart cities to promote ease of living.
There is an urgent need to modernize education. In education section we have to encourage the system for skill development and empower them to use educational services provided by the EdTech business. The budget has a transformational effect on higher education and EdTech.
Out of Rs.1,12,898.97 crores, Rs. 44,094.62 allotted to Higher Education and Rs.68,804.35 to School Education is a huge step of making India education leader, and will help in overall development.
The announcement for this sector was also important; during the pandemic, education went completely online and EdTech sector got benefitted greatly.
Later when the students returned to classrooms the startups of education sector faced fall in their subscriptions. Earlier the allocation to education sector saw 11% increase and emphasis was given to e-learning, digital education, expansion in one class one TV channel and establishment of digital university.
As far as tax rates are concerned, government is keen to impart education to one and all with an objective that education is not for profit. Experts feel that cut in MGNREGA is because of less interest of the people living in the rural areas, as per the data, while as boost to handloom & handicraft sector for innovative things in the market. Overall we hope that the unemployment problem will be addressed substantially.
Disclaimer: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.