In the 75th year of India’s Independence, the World has recognized the Indian Economy as a ‘bright star’ as the Economic Growth is estimated at 7 per cent, which is the highest among all major economies, in spite of the massive global slowdown caused by COVID-19 and Russia-Ukraine War. This was stated by Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman, while presenting the Union Budget 2023-24 in Parliament today. She emphasized that Indian economy is on the right track, and despite time tested challenges, it is heading towards a bright future.
Smt. Nirmala Sitharaman said that this Budget hopes to build on the foundation laid in the previous Budget, and the blueprint drawn for India@100, which envisions a prosperous and inclusive India, where the fruits of development reach all regions and citizens, especially our youth, women, farmers, OBCs, Scheduled Castes and Scheduled Tribes.
“Today as Indians stands with their head held high, and the world appreciates India’s achievements and successes, we are sure that elders who had fought for India’s independence, will with joy, bless us our endeavors going forward.” Smt. Sitharam added.
1.Resilience amidst multiple crises
The Finance Minister said that India’s rising global profile is due to several accomplishments like unique World Class Digital Public Infrastructure namely, Aadhaar, Co-Win and UPI; COVID-19 vaccination drive in unparalleled scale and speed; proactive role in frontier areas such as achieving the climate related goals, mission LiFE, and National Hydrogen Mission.
She said that during the Covid-19 pandemic, Government ensured that no one goes to bed hungry, with a scheme to supply free food grains to over 80 Crore persons for 28 months. The Minister added that continuing with Centre’s commitment to ensure food and nutritional security, Government is implementing, from 1st January 2023, a scheme to supply free food grain to all Antyodaya and priority households for the next one year, under PM Garib Kalyan Anna Yojana (PMGKAY). The entire expenditure of about Rs 2 lakh crore will be borne by the Central Government.
2.G20 Presidency: Steering the global agenda through challenges
The Finance Minister pointed out that in these times of global challenges; the G20 Presidency gives India a unique opportunity to strengthen its role in the world economic order. With the theme of ‘Vasudhaiva Kutumbakam’, India is steering an ambitious, people-centric agenda to address global challenges, and to facilitate sustainable economic development, she added.
3.Achievements since 2014: Leaving no one behind
Smt. Sitharaman said that the government’s efforts since 2014 have ensured for all citizens a better quality of living and a life of dignity and the per capita income has more than doubled to Rs 1.97 lakh. She said that in these nine 9 years, the Indian economy has increased in size from being 10th to 5th largest in the world. Moreover, the economy has become a lot more formalized as reflected in the EPFO membership, more than doubling to 27 crore, and 7,400 crore digital payments of Rs 126 lakh crore through UPI in 2022.
The Finance Minister pointed out that the efficient implementation of many schemes, with universalisation of targeted benefits, has resulted in inclusive development and listed some of the schemes such as 11.7 crore household toilets under Swachh Bharat Mission, 9.6 crore LPG connections under Ujjawala, 220 crore Covid vaccinations of 102 crore persons, 47.8 crore PM Jan Dhan Bank Accounts, Insurance cover for 44.6 crore persons under PM Suraksha Bima and PM Jeevan Jyoti Yojana, and Cash transfer of Rs 2.2 lakh crore to over 11.4 crore farmers under PM Kisan Samman Nidhi.
The efficient implementation of many schemes, with universalisation of targeted benefits, has resulted in inclusive development. Some of the schemes are:
- 11.7 crore household toilets under Swachh Bharat Mission,
- 9.6 crore LPG connections under Ujjawala,
- 220 crore Covid vaccination of 102 crore persons,
- 47.8 crore PM Jan Dhan bank accounts,
- Insurance cover for 44.6 crore persons under PM Suraksha Bima and PM Jeevan Jyoti Yojana, and
- Cash transfer of ` 2.2 lakh crore to over 11.4 crore farmers under PM Kisan Samman Nidhi.
Vision for Amrit Kaal – an empowered and inclusive economy
The Finance Minister said that our vision for the Amrit Kaal includes technology-driven and knowledge-based economy with strong public finances, and a robust financial sector and to achieve this, Jan Bhagidari through Sabka Saath Sabka Prayas is essential. She added that the economic agenda for achieving this vision focuses on three things and those are facilitating ample opportunities for citizens, especially the youth, to fulfill their aspirations, secondly, providing strong impetus to growth and job creation and finally to strengthen macro-economic stability. She added that to service these focus areas in our journey to India@100, the following four opportunities can be transformative during Amrit Kaal-
(4.)1.Economic Empowerment of Women: Deendayal Antyodaya Yojana National Rural Livelihood Mission has achieved remarkable success by mobilizing rural women into 81 lakh Self Help Groups and we will enable these groups to reach the next stage of economic empowerment through formation of large producer enterprises or collectives with each having several thousand members and managed professionally.
(4)2.PM VIshwakarma KAushal Samman (PM VIKAS): For centuries, traditional artisans and craftspeople, who work with their hands using tools, have brought renown for India and they are generally referred to as Vishwakarma. The art and handicraft created by them represents the true spirit of Atmanirbhar Bharat.
(4)3.Tourism: The country offers immense attraction for domestic as well as foreign tourists. There is a large potential to be tapped in tourism. The sector holds huge opportunities for jobs and entrepreneurship for youth in particular. Promotion of tourism will be taken up on mission mode, with active participation of states, convergence of government programmes and public-private partnerships.
(4)4.Green Growth: Government is implementing many programmes for green fuel, green energy, green farming, green mobility, green buildings, and green equipment, and policies for efficient use of energy across various economic sectors. These green growth efforts help in reducing carbon intensity of the economy and provides for large-scale green job opportunities.
5.Priorities of this Budget
The Budget adopts the following seven priorities. They complement each other and act as the ‘Saptarishi’ guiding us through the Amrit Kaal.
(5)1 – Priority 1: Inclusive Development
The Government’s philosophy of Sabka Saath Sabka Vikas has facilitated inclusive development covering in specific, farmers, women, youth, OBCs, Scheduled Castes, Scheduled Tribes, divyangjan and economically weaker sections, and overall priority for the underprivileged (vanchiton ko variyata). There has also been a sustained focus on Jammu & Kashmir, Ladakh and the North-East. This Budget builds on those efforts.
Agriculture and Cooperation
Digital Public Infrastructure for Agriculture
The Finance Minister said that the Digital Public infrastructure for agriculture will be built as an open source, open standard and inter operable public good. She said, this will enable inclusive, farmer-centric solutions through relevant information services for crop planning and health, improved access to farm inputs, credit, and insurance, help for crop estimation, market intelligence, and support for growth of agri-tech industry and start-ups.
Agriculture Accelerator Fund
The FM announces that an Agriculture Accelerator Fund will be set-up to encourage agri-startups by young entrepreneurs in rural areas, which will aim at bringing innovative and affordable solutions for challenges faced by farmers. It will also bring in modern technologies to transform agricultural practices, increase productivity and profitability.
Enhancing productivity of cotton crop
To enhance the productivity of extra-long staple cotton, Government will adopt a cluster-based and value chain approach through Public Private Partnerships (PPP). This will mean collaboration between farmers, state and industry for input supplies, extension services, and market linkages.
Atmanirbhar Horticulture Clean Plant Programme
Smt. Nirmala Sitharaman announced that the Government will launch an Atmanirbhar Clean Plant Programme to boost availability of disease-free, quality planting material for high value horticultural crops at an outlay of Rs 2,200 crore.
Global Hub for Millets: ‘Shree Anna’
“India is at the forefront of popularizing Millets, whose consumption furthers nutrition, food security and welfare of farmers,” said Hon’ble Prime Minister.
India is the largest producer and second largest exporter of ‘Shree Anna’ in the world. We grow several types of ‘Shree Anna’ such as jowar, ragi, bajra, kuttu, ramdana, kangni, kutki, kodo, cheena, and sama. These have a number of health benefits, and have been an integral part of our food for centuries. The Finance Minister acknowledged with pride the huge service done by small farmers in contributing to the health of fellow citizens by growing these ‘Shree Anna’.
Now to make India a global hub for ‘Shree Anna’, the Indian Institute of Millet Research, Hyderabad will be supported as the Centre of Excellence for sharing best practices, research and technologies at the international level.
The agriculture credit target will be increased
to ` 20 lakh crore with focus on animal husbandry, dairy and fisheries.
Ministry will launch a new sub-scheme of PM Matsya Sampada Yojana with targeted investment of ` 6,000 crore to further enable activities of fishermen, fish vendors, and micro & small enterprises, improve value chain efficiencies, and expand the market.
For farmers, especially small and marginal farmers, and other marginalised sections, the government is promoting cooperative-based economic development model. A new Ministry of Cooperation was formed with a mandate to realise the vision of ‘Sahakar Se Samriddhi’. To realise this vision, the government has already initiated computerisation of 63,000 Primary Agricultural Credit Societies (PACS) with an investment of ` 2,516 crore. In consultation with all stakeholders and states, model bye-laws for PACS were formulated enabling them to become multipurpose PACS. A national cooperative database is being prepared for country-wide mapping of cooperative societies.
With this backdrop, we will implement a plan to set up massive decentralised storage capacity. This will help farmers store their produce and realize remunerative prices through sale at appropriate times. The government will also facilitate setting up of a large number of multipurpose cooperative societies, primary fishery societies and dairy cooperative societies in uncovered panchayats and villages in the next 5 years.
Medical & Nursing Colleges
One hundred and fifty-seven new nursing colleges will be established in co-location with the existing 157 medical colleges established since 2014.
Sickle Cell Anaemia Elimination Mission
A Mission to eliminate Sickle Cell Anaemia by 2047 will be launched. It will entail awareness creation, universal screening of 7 crore people in the age group of 0-40 years in affected tribal areas, and counselling through collaborative efforts of central ministries and state governments.
Facilities in select ICMR Labs will be made available for research by public and private medical college faculty and private sector R&D teams for encouraging collaborative research and innovation.
A new programme to promote research and innovation in pharmaceuticals will be taken up through centers of excellence. We shall also encourage industry to invest in research and development in specific priority areas.
Multidisciplinary courses for medical devices
Dedicated multidisciplinary courses for medical devices will be supported in existing institutions to ensure availability of skilled manpower for futuristic medical technologies, high-end manufacturing and research.
Teachers’ training will be re-envisioned through innovative pedagogy, curriculum transaction, continuous professional development, dipstick surveys, and ICT implementation. The District Institutes of Education and Training will be developed as vibrant institutes of excellence for this purpose.
National Digital Library for Children and Adolescents
A National Digital Library for children and adolescents will be set-up for facilitating availability of quality books across geographies, languages, genres and levels, and device agnostic accessibility. States will be encouraged to set up physical libraries for them at panchayat and ward levels and provide infrastructure for accessing the National Digital Library resources.
Additionally, to build a culture of reading, and to make up for pandemic-time learning loss, the National Book Trust, Children’s Book Trust and other sources will be encouraged to provide and replenish non-curricular titles in regional languages and English to these physical libraries. Collaboration with NGOs that work in literacy will also be a part of this initiative. To inculcate financial literacy, financial sector regulators and organizations will be encouraged to provide age-appropriate reading material to these libraries.
(5)2 – Priority 2: Reaching the Last Mile
Prime Minister Vajpayee’s government had formed the Ministry of Tribal Affairs and the Department of Development of North-Eastern Region. To provide a sharper focus to the objective of ‘reaching the last mile’, our government has formed the ministries of AYUSH, Fisheries, Animal Husbandry and Dairying, Skill Development, Jal Shakti and Cooperation.
Aspirational Districts and Blocks Programme
Building on the success of the Aspirational Districts Programme, the Government has recently launched the Aspirational Blocks Programme covering 500 blocks for saturation of essential government services across multiple domains such as health, nutrition, education, agriculture, water resources, financial inclusion, skill development, and basic infrastructure.
Pradhan Mantri PVTG Development Mission
To improve socio-economic conditions of the particularly vulnerable tribal groups (PVTGs), Pradhan Mantri PVTG Development Mission will be launched. This will saturate PVTG families and habitations with basic facilities such as safe housing, clean drinking water and sanitation, improved access to education, health and nutrition, road and telecom connectivity, and sustainable livelihood opportunities. An amount
of ` 15,000 crore will be made available to implement the Mission in the next three years under the Development Action Plan for the Scheduled Tribes.
Eklavya Model Residential Schools
In the next three years, centre will recruit 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools, serving 3.5 lakh tribal students.
Water for Drought Prone Region
In the drought prone central region of Karnataka, central assistance of ` 5,300 crore will be given to Upper Bhadra Project to provide sustainable micro irrigation and filling up of surface tanks for drinking water.
PM Awas Yojana
The outlay for PM Awas Yojana is being enhanced by 66 per cent to over ` 79,000 crore.
Bharat Shared Repository of Inscriptions (Bharat SHRI)
‘Bharat Shared Repository of Inscriptions’ will be set up in a digital epigraphy museum, with digitization of one lakh ancient inscriptions in the first stage.
Support for poor prisoners
For poor persons who are in prisons and unable to afford the penalty or the bail amount, required financial support will be provided.
(5) 3 – Priority 3: Infrastructure & Investment
Investments in Infrastructure and productive capacity have a large multiplier impact on growth and employment. After the subdued period of the pandemic, private investments are growing again. The Budget takes the lead once again to ramp up the virtuous cycle of investment and job creation.
Capital Investment as driver of growth and jobs
Capital investment outlay is being increased steeply for the third year in a row by 33 per cent to ` 10 lakh crore, which would be 3.3 per cent of GDP. This will be almost three times the outlay in 2019-20.
This substantial increase in recent years is central to the government’s efforts to enhance growth potential and job creation, crowd-in private investments, and provide a cushion against global headwinds.
Effective Capital Expenditure
The direct capital investment by the Centre is complemented by the provision made for creation of capital assets through Grants-in-Aid to States. The ‘Effective Capital Expenditure’ of the Centre is budgeted at ` 13.7 lakh crore, which will be 4.5 per cent of GDP.
Support to State Governments for Capital Investment
The Finance Minister informed that she decided to continue the 50-year interest free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of ` 1.3 lakh crore.
Enhancing opportunities for private investment in Infrastructure.
The newly established Infrastructure Finance Secretariat will assist all stakeholders for more private investment in infrastructure, including railways, roads, urban infrastructure and power, which are predominantly dependent on public resources.
Harmonized Master List of Infrastructure
The Harmonized Master List of Infrastructure will be reviewed by an expert committee for recommending the classification and financing framework suitable for Amrit Kaal.
A capital outlay of ` 2.40 lakh crore has been provided for the Railways. This highest ever outlay is about 9 times the outlay made in 2013-14.
One hundred critical transport infrastructure projects, for last and first mile connectivity for ports, coal, steel, fertilizer, and food grains sectors have been identified. They will be taken up on priority with investment of` 75,000 crore, including ` 15,000 crore from private sources.
Fifty additional airports, heliports, water aerodromes and advance landing grounds will be revived for improving regional air connectivity.
Sustainable Cities of Tomorrow
States and cities will be encouraged to undertake urban planning reforms and actions to transform our cities into ‘sustainable cities of tomorrow’. This means efficient use of land resources, adequate resources for urban infrastructure, transit-oriented development, enhanced availability and affordability of urban land, and opportunities for all.
Making Cities ready for Municipal Bonds
Through property tax governance reforms and ring-fencing user charges on urban infrastructure, cities will be incentivized to improve their credit worthiness for municipal bonds.
Urban Infrastructure Development Fund
Like the RIDF, an Urban Infrastructure Development Fund (UIDF) will be established through use of priority sector lending shortfall. This will be managed by the National Housing Bank, and will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities. States will be encouraged to leverage resources from the grants of the 15th Finance Commission, as well as existing schemes, to adopt appropriate user charges while accessing the UIDF. The Finance Ministry expect to make available ` 10,000 crore per annum for this purpose.
All cities and towns will be enabled for 100 per cent mechanical desludging of septic tanks and sewers to transition from manhole to machine-hole mode. Enhanced focus will be provided for scientific management of dry and wet waste.
(5) 4 – Priority 4: Unleashing the Potential
“Good Governance is the key to a nation’s progress. Our government is committed to providing a transparent and accountable administration which works for the betterment and welfare of the common citizen,” said Hon’ble Prime Minister.
Under Mission Karmayogi, Centre, States and Union Territories are making and implementing capacity-building plans for civil servants. The government has also launched an integrated online training platform, iGOT Karmayogi, to provide continuous learning opportunities for lakhs of government employees to upgrade their skills and facilitate people-centric approach.
For enhancing ease of doing business, more than
39,000 compliances have been reduced and more than 3,400 legal provisions have been decriminalized. For furthering the trust-based governance, we have introduced the Jan Vishwas Bill to amend 42 Central Acts. This Budget proposes a series of measures to unleash the potential of our economy.
Centres of Excellence for Artificial Intelligence
For realizing the vision of “Make AI in India and Make AI work for India”, three centres of excellence for Artificial Intelligence will be set-up in top educational institutions. Leading industry players will partner in conducting interdisciplinary research, develop cutting-edge applications and scalable problem solutions in the areas of agriculture, health, and sustainable cities. This will galvanize an effective AI ecosystem and nurture quality human resources in the field.
National Data Governance Policy
To unleash innovation and research by start-ups and academia, a National Data Governance Policy will be brought out. This will enable access to anonymized data.
Simplification of Know Your Customer (KYC) process
The KYC process will be simplified adopting a ‘risk-based’ instead of ‘one size fits all’ approach. The financial sector regulators will also be encouraged to have a KYC system fully amenable to meet the needs of Digital India.
One stop solution for identity and address updating
A one stop solution for reconciliation and updating of identity and address of individuals maintained by various government agencies, regulators and regulated entities will be established using DigiLocker service and Aadhaar as foundational identity.
Common Business Identifier
For the business establishments required to have a Permanent Account Number (PAN), the PAN will be used as the common identifier for all digital systems of specified government agencies. This will bring ease of doing business; and it will be facilitated through a legal mandate.
Unified Filing Process
For obviating the need for separate submission of same information to different government agencies, a system of ‘Unified Filing Process’ will be set-up. Such filing of information or return in simplified forms on a common portal, will be shared with other agencies as per filer’s choice.
Vivad se Vishwas I – Relief for MSMEs
In cases of failure by MSMEs to execute contracts during the Covid period, 95 per cent of the forfeited amount relating to bid or performance security, will be returned to them by government and government undertakings. This will provide relief to MSMEs.
Vivad se Vishwas II – Settling Contractual Disputes
To settle contractual disputes of government and government undertakings, wherein arbitral award is under challenge in a court, a voluntary settlement scheme with standardized terms will be introduced. This will be done by offering graded settlement terms depending on pendency level of the dispute.
State Support Mission
The State Support Mission of NITI Aayog will be continued for three years for our collective efforts towards national priorities.
Result Based Financing
To better allocate scarce resources for competing development needs, the financing of select schemes will be changed, on a pilot basis, from ‘input-based’ to ‘result-based’.
For efficient administration of justice, Phase-3 of the E-Courts project will be launched with an outlay of ` 7,000 crore.
Fintech services in India have been facilitated by our digital public infrastructure including Aadhaar, PM Jan Dhan Yojana, Video KYC, India Stack and UPI. To enable more Fintech innovative services, the scope of documents available in DigiLocker for individuals will be expanded.
An Entity DigiLocker will be set up for use by MSMEs, large business and charitable trusts. This will be towards storing and sharing documents online securely, whenever needed, with various authorities, regulators, banks and other business entities.
One hundred labs for developing applications using 5G services will be set up in engineering institutions to realise a new range of opportunities, business models, and employment potential. The labs will cover, among others, applications such as smart classrooms, precision farming, intelligent transport systems, and health care applications.
Lab Grown Diamonds
Lab Grown Diamonds (LGD) is a technology-and innovation-driven emerging sector with high employment potential. These environment-friendly diamonds which have optically and chemically the same properties as natural diamonds. To encourage indigenous production of LGD seeds and machines and to reduce import dependency, a research and development grant will be provided to one of the IITs for five years.
To reduce the cost of production, a proposal to review the custom duty rate on LGD seeds will be indicated in Part B of the speech.
(5) 5- Priority 5: Green Growth
Hon’ble Prime Minister has given a vision for “LiFE”, or Lifestyle for Environment, to spur a movement of environmentally conscious lifestyle. India is moving forward firmly for the ‘panchamrit’ and net-zero carbon emission by 2070 to usher in green industrial and economic transition. This Budget builds on our focus on green growth.
Green Hydrogen Mission
The recently launched National Green Hydrogen Mission, with an outlay of ` 19,700 crores, will facilitate transition of the economy to low carbon intensity, reduce dependence on fossil fuel imports, and make the country assume technology and market leadership in this sunrise sector. Our target is to reach an annual production of 5 MMT by 2030.
This Budget provides ` 35,000 crore for priority capital investments towards energy transition and net zero objectives, and energy security by Ministry of Petroleum & Natural Gas.
Energy Storage Projects
To steer the economy on the sustainable development path, Battery Energy Storage Systems with capacity of 4,000 MWH will be supported with Viability Gap Funding. A detailed framework for Pumped Storage Projects will also be formulated.
Renewable Energy Evacuation
The Inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh will be constructed with investment of ` 20,700 crore including central support of ` 8,300 crore.
Green Credit Programme
For encouraging behavioural change, a Green Credit Programme will be notified under the Environment (Protection) Act. This will incentivize environmentally sustainable and responsive actions by companies, individuals and local bodies, and help mobilize additional resources for such activities.
“PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth” will be launched to incentivize States and Union Territories to promote alternative fertilizers and balanced use of chemical fertilizers.
500 new ‘waste to wealth’ plants under GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme will be established for promoting circular economy. These will include 200 compressed biogas (CBG) plants, including 75 plants in urban areas, and 300 community or cluster-based plants at total investment of ` 10,000 crore. In due course, a 5 per cent CBG mandate will be introduced for all organizations marketing natural and bio gas. For collection of bio-mass and distribution of bio-manure, appropriate fiscal support will be provided.
Bhartiya Prakritik Kheti Bio-Input Resource Centres
The Finance Minister announced that over the next 3 years, the Centre will facilitate one crore farmers to adopt natural farming. For this, 10,000 Bio-Input Resource Centres will be set-up, creating a national-level distributed micro-fertilizer and pesticide manufacturing network.
Building on India’s success in afforestation, ‘Mangrove Initiative for Shoreline Habitats & Tangible Incomes’, MISHTI, will be taken up for mangrove plantation along the coastline and on salt pan lands, wherever feasible, through convergence between MGNREGS, CAMPA Fund and other sources.
Wetlands are vital ecosystems which sustain biological diversity. In his latest Mann Ki Baat, the Prime Minister said, “Now the total number of Ramsar sites in our country has increased to 75. Whereas, before 2014, there were only 26…” Local communities have always been at the forefront of conservation efforts. The government will promote their unique conservation values through Amrit Dharohar, a scheme that will be implemented over the next three years to encourage optimal use of wetlands, and enhance bio-diversity, carbon stock, eco-tourism opportunities and income generation for local communities.
Coastal shipping will be promoted as the energy efficient and lower cost mode of transport, both for passengers and freight, through PPP mode with viability gap funding.
Replacing old polluting vehicles is an important part of greening our economy. The Finance Minister said that in furtherance of the vehicle scrapping policy mentioned in Budget 2021-22, she has allocated adequate funds to scrap old vehicles of the Central Government and States will also be supported in replacing old vehicles and ambulances.
(5) 6 – Priority 6: Youth Power
Smt. Sitharaman further added that to empower our youth and help the ‘Amrit Peedhi’ realize their dreams, government have formulated the National Education Policy, focused on skilling, adopted economic policies that facilitate job creation at scale, and have supported business opportunities.
Pradhan Mantri Kaushal Vikas Yojana 4.0
Pradhan Mantri Kaushal Vikas Yojana 4.0 will be launched to skill lakhs of youth within the next three years. On-job training, industry partnership, and alignment of courses with needs of industry will be emphasized. The scheme will also cover new age courses for Industry 4.0 like coding, AI, robotics, mechatronics, IOT, 3D printing, drones, and soft skills. To skill youth for international opportunities, 30 Skill India International Centres will be set up across different States.
Skill India Digital Platform
The digital ecosystem for skilling will be further expanded with the launch of a unified Skill India Digital platform for:
- Enabling demand-based formal skilling,
- Linking with employers including MSMEs, and
- Facilitating access to entrepreneurship schemes.
National Apprenticeship Promotion Scheme
To provide stipend support to 47 lakh youth in three years, Direct Benefit Transfer under a pan-India National Apprenticeship Promotion Scheme will be rolled out.
Smt Nirmala Sitharaman provides major relief in the personal income tax. The indirect tax proposals contained in the budget aim to promote exports enhance domestic value addition, encourage green energy and mobility.
The FM said that States will be encouraged to set up a Unity Mall in their state capital or most prominent tourism centre or the financial capital for promotion and sale of their own ODOPs (one district, one product), GI products and other handicraft products, and for providing space for such products of all other States.
(5) 7 – Priority 7: Financial Sector
Credit Guarantee for MSMEs
The Finance Minster said that last year, she proposed revamping of the credit guarantee scheme for MSMEs and announced happily that the revamped scheme will take effect from 1st April 2023 through infusion of Rs 9,000 crore in the corpus. This will enable additional collateral-free guaranteed credit of Rs 2 lakh crore. Further, the cost of the credit will be reduced by about 1 per cent.
Smt. Sitharaman said that a National Financial Information Registry will be set up to serve as the central repository of financial and ancillary information. This will facilitate efficient flow of credit, promote financial inclusion, and foster financial stability. A new legislative framework will govern this credit public infrastructure, and it will be designed in consultation with the RBI.
She also announced that a Central Processing Centre will be setup for faster response to companies through centralized handling of various forms filed with field offices under the Companies Act.
For commemorating Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman Savings Certificate, will be made available for a two-year period up to March 2025. This will offer deposit facility upto Rs 2 lakh in the name of women or girls for a tenor of 2 years at fixed interest rate of 7.5 per cent with partial withdrawal option.
The Finance Minister announced that the maximum deposit limit for Senior Citizen Savings Scheme will be enhanced from Rs 15 lakh to Rs 30 lakh.
Also, the maximum deposit limit for Monthly Income Account Scheme will be enhanced from Rs 4.5 lakh to Rs 9 lakh for single account and from Rs 9 lakh to Rs 15 lakh for joint account.
Fifty-year interest free loan to States
Smt. Nirmala Sitharaman said that the entire fifty-year loan to states has to be spent on capital expenditure within 2023-24. Most of this will be at the discretion of states, but a part will be conditional on states increasing their actual capital expenditure. She said, parts of the outlay will also be linked to, or allocated for, the following purposes: like Scrapping old government vehicles, Urban planning reforms and actions, Financing reforms in urban local bodies to make them, creditworthy for municipal bonds, Housing for police personnel above or as part of police stations, Constructing Unity Malls, Children and adolescents’ libraries and digital infrastructure and State share of capital expenditure of central schemes.
The Revised Estimate of the total receipts other than borrowings is Rs 24.3 lakh crore, of which the net tax receipts are Rs 20.9 lakh crore. The Revised Estimate of the total expenditure is Rs 41.9 lakh crore, of which the capital expenditure is about Rs 7.3 lakh crore. Similarly, the Revised Estimate of the fiscal deficit is 6.4 per cent of GDP, adhering to the Budget Estimate.
Budget Estimates 2023-24
To enhance business activities in GIFT IFSC, the following measures will be taken:
- Delegating powers under the SEZ Act to IFSCA to avoid dual regulation,
- Setting up a single window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI,
- Permitting acquisition financing by IFSC Banking Units of foreign banks,
- Establishing a subsidiary of EXIM Bank for trade re-financing,
- Amending IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act, and
- Recognizing offshore derivative instruments as valid contracts.
For countries looking for digital continuity solutions, we will facilitate setting up of their Data Embassies in GIFT IFSC.
Improving Governance and Investor Protection in Banking Sector
To improve bank governance and enhance investors’ protection, certain amendments to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act are proposed.
She said that in her Budget Speech for 2021-22, she had announced that Government plans to continue the path of fiscal consolidation, reaching a fiscal deficit below 4.5 per cent by 2025-26 with a fairly steady decline over the period. She said that the Government has adhered to this path, and reiterated to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26.
Smt. Sitharaman said, to finance the fiscal deficit in 2023-24, the net market borrowings from dated securities are estimated at Rs11.8 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at Rs 15.4 lakh crore.
Concluding the Part-One of the General Budget, Ms Nirmala Sitharaman said that the total receipts other than borrowings and the total expenditure are estimated at Rs 27.2 lakh crore and Rs 45 lakh crore respectively. The net tax receipts are estimated at Rs 23.3 lakh crore.
The fiscal deficit is estimated to be 5.9 per cent of GDP.
(6) 1. Personal Income Tax
There are five major announcements relating to the personal income tax. The rebate limit in the new tax regime has been increased to ₹ 7 lakh, meaning that peons in the new tax regime with income upto ₹ 7 lakh will not have to pay any tax. The tax structure in the new personal tax regime has been changed by reducing number of slabs to five and increasing the tax exemption limit to ₹ 3 lakh. This will provide major relief to all tax payers in the new regime.
To avoid cascading of taxes on blended compressed natural gas, The Finance Minister proposed to exempt excise duty on GST-paid compressed bio gas contained in it. To further provide impetus to green mobility, customs duty exemption is being extended to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles.
As a result of various initiatives of the Government, including the Phased Manufacturing programme, mobile phone production in India has increased from 5.8 crore units valued at about ` 18,900 crore in 2014-15 to 31 crore units valued at over ` 2,75,000 crore in the last financial year. To further deepen domestic value addition in manufacture of mobile phones, The Finance Minister proposed to provide relief in customs duty on import of certain parts and inputs like camera lens and continue the concessional duty on lithium-ion cells for batteries for another year.
Similarly, to promote value addition in manufacture of televisions, I propose to reduce the basic customs duty on parts of open cells of TV panels to 2.5 per cent.
To rectify inversion of duty structure and encourage manufacturing of electric kitchen chimneys, the basic customs duty on electric kitchen chimney is being increased from 7.5 per cent to 15 per cent and that on heat coils for these is proposed to be reduced from 20 per cent to 15 per cent.
Chemicals and Petrochemicals
Denatured ethyl alcohol is used in chemical industry.
Finance Minister further propose to exempt basic customs duty on it, which will also support the Ethanol Blending Programme and facilitate our endeavour for energy transition. Basic customs duty is also being reduced on acid grade fluorspar from 5 per cent to 2.5 per cent to make the domestic fluorochemicals industry competitive. Further, the basic customs duty on crude glycerin for use in manufacture of epicholorhydrin is proposed to be reduced from 7.5 per cent to 2.5 per cent.
In the last financial year, marine products recorded the highest export growth benefitting farmers in the coastal states of the country. To further enhance the export competitiveness of marine products, particularly shrimps, duty is being reduced on key inputs for domestic manufacture of shrimp feed.
Lab Grown Diamonds
India is a global leader in cutting and polishing of natural diamonds, contributing about three-fourths of the global turnover by value. With the depletion in deposits of natural diamonds, the industry is moving towards Lab Grown Diamonds (LGDs) and it holds huge promise. To seize this opportunity, Smt. Sitharaman proposed to reduce basic customs duty on seeds used in their manufacture.
Customs Duties on dore and bars of gold and platinum were increased earlier this fiscal. I now propose to increase the duties on articles made therefrom to enhance the duty differential. Finance Minister proposed to increase the import duty on silver dore, bars and articles to align them with that on gold and platinum.
To facilitate availability of raw materials for the steel sector, exemption from Basic Customs Duty on raw materials for manufacture of CRGO Steel, ferrous scrap and nickel cathode is being continued.
Similarly, the concessional BCD of 2.5 per cent on copper scrap is also being continued to ensure the availability of raw materials for secondary copper producers who are mainly in the MSME sector.
The basic customs duty rate on compounded rubber is being increased from 10 per cent to ‘25 per cent or ` 30/kg whichever is lower’, at par with that on natural rubber other than latex, to curb circumvention of duty.
National Calamity Contingent Duty (NCCD) on specified cigarettes was last revised three years ago. This is proposed to be revised upwards by about 16 per cent.
(6) 2. Indirect Tax Proposals
The indirect tax proposals announced in the budget by the Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman emphasized on simplification of tax structure with fewer tax rates so as to help in reducing compliance burden and improving tax administration. The number of basic customs duty rates on goods, other than textiles and agriculture, has been reduced from 21 to 13. There are minor changes in the basic customs duties, cesses and surcharges on items including toys, bicycles, automobiles and naphtha.
To avoid cascading of taxes on blended compressed natural gas, excise duty on GST-paid compressed bio-gas contained in it has been exempted from excise duty. Customs duty exemption has been extended to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles.
To further deepen domestic value addition in manufacture of mobile phones, the Finance Minister announced relief in customs duty on import of certain parts and inputs like camera lens. The concessional duty on lithium-ion cells for batteries will continue for another year. Basic customs duty on parts of open cells of TV panels has been reduced to 2.5%. The Budget also proposes changes in the basic customs duty to rectify inversion of duty structure and encourage manufacturing of electrical kitchen chimneys.
Denatured ethyl alcohol has been exempted from basic customs duty. Basic customs duty has also been reduced on acid grade fluorspar and crude glycerin. Duty is being reduced on key inputs for domestic manufacture of shrimp feed. Basic customs duty on seeds used in the manufacture of Lab Grown Diamonds has also been reduced. The import duty on silver dore, bars and articles has been increased to align them with that on gold and platinum. The basic customs duty rate on compounded rubber has been increased. National Calamity Contingent Duty on specified cigarettes has been revised upwards by about 16%. The basic customs duty on crude glycerin for use in manufacture of epicholorhydrin is proposed to be reduced from 7.5% to 2.5%.
Common IT Return Form
The Union Budget also proposes to roll out a next-generation common IT return form for tax payer convenience. It also stipulates a plan to strengthen the grievance redressal mechanism for direct taxes. The Finance Minister also announced deployment of about 100 Joint Commissioners for disposals of small appeals in direct tax matters. She also said that the department will be more selective in taking up cases for scrutiny of returns already received this year.
Better targeting of tax concessions
For better targeting of tax concessions and exemptions, deduction from capital gains on investment in residential house has been capped at ₹ 10 crore. Income tax exemption from proceeds of insurance policies with very high value will also have limit. There are a number of proposals relating to rationalization and simplification of direct taxes in the Union Budget.
Other major proposals in the Budget relate to Extension of period of tax benefits to funds relocating to IFSC, GIFT City till 31.03.2025; Decriminalisation under section 276A of the Income Tax Act; Allowing carry forward of losses on strategic disinvestment including that of IDBI Bank; and Providing EEE status to Agniveer Fund.
Proposals relating to MSMEs
Describing MSMEs as growth engines of our economy, the Budget proposes enhanced limits for micro enterprises and certain professionals for availing the benefit of presumptive taxation. To support MSMEs in timely receipt of payments, the Budget allows deduction for expenditure incurred on payments made to them only when payment is actually made.
The Budget has a slew of proposals for the cooperative sector. New cooperatives that commence manufacturing activities till 31st March next year shall get the benefit of a lower tax rate of 15%. The Budget provides an opportunity to sugar cooperatives to claim payments made to sugarcane farmers for the period prior to assessment year 2016-17 as expenditure. A higher limit of ₹ 2 lakh per member has been provided for cash deposits to and loans in cash by Primary Agricultural Cooperative Societies and Primary Cooperative Agriculture and Rural Development Banks. The Budget proposes a higher limit of ₹ 3 crore for TDS on cash withdrawal for cooperative societies.
The Budget proposes to extend the date of incorporation for income tax benefits to start-ups from 31.03.2023 to 31.03.2024. It also provides the benefit of carry forward of losses on change of shareholding of start-ups from 7 years of incorporation to 10 years.
Amendments in CGST Act
The Budget provides for amending the CGST Act so as to raise the minimum threshold of tax amount for launching prosecution under GST from ₹ 1 crore to ₹ 2 crore, except for the offence of issuance of invoices without supply of goods and services or both. The compounding amount will be reduced from the present range of 50 to 150% of tax amount to the range of 25 to 100%. It will also decriminalize certain clauses of the Act like obstruction and preventing of any officer from discharge of his duties, deliberate tempering of evidence or failure to supply the information.
Personal Income Tax
The Funance Minister made five majir announcements regarding Personal Income Tax. Primarily for the benefit hard-working middle class.
The first one concerns rebate.
Currently, those with income up to ` 5 lakh do not pay any income tax in both old and new tax regimes. The proposal is to increase the rebate limit to ` 7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to ` 7 lakh will not have to pay any tax.
The second proposal relates to middle-class individuals.
The new personal income tax regime with six income slabs starting from ` 2.5 lakh, Introduced by Smt. Sitharaman in the year 2020 is proposed to change the tax structure in this regime by reducing the number of slabs to five and increasing the tax exemption limit to ` 3 lakh. The new tax rates are:
|5 per cent
|10 per cent
|15 per cent
|20 per cent
|Above 15 lakh
|30 per cent
This will provide major relief to all tax payers in the new regime. An individual with an annual income of ` 9 lakh will be required to pay only
` 45,000/-. This is only 5 per cent of his or her income. It is a reduction of 25 per cent on what he or she is required to pay now, ie, ` 60,000/-. Similarly, an individual with an income of ` 15 lakh would be required to pay only
` 1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent from the existing liability of ` 1,87,500/.
Third proposal is for the salaried class and the pensioners including family pensioners
For salaried class and pensioners The FM proposed to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of ` 15.5 lakh or more will thus stand to benefit by ` 52,500.
The fourth announcement in personal income tax is regarding the highest tax rate which in our country is 42.74 per cent.
This is among the highest in the world. Smt. Sitharaman proposed to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime. This would result in reduction of the maximum tax rate to 39 per cent.
Lastly, the limit of ` 3 lakh for tax exemption on leave encashment
On retirement of non-government salaried employees was last fixed in the year 2002, when the highest basic pay in the government was ` 30,000/- pm. In line with the increase in government salaries, Smt. Sitharaman proposed to increase this limit to ` 25 lakh.
Implications of tax changes
Announcing the changes in the direct and indirect taxes, the Finance Minister said that revenue of about ₹ 38,000 crore will be foregone as a result of these proposals, while revenue of about ₹3,000 crore will be additionally mobilised. She said thus the total revenue foregone is about ₹35,000 crore annually on account of these proposals.