Union Budget 2023-24

Union Budget 2023-24

• The Annual Financial Statement is another name for the Union Budget.
• According to Article 112 of the Indian Constitution, a budget is a statement of the expected expenditures and revenues of the government for a specific year.
• The Budget maintains the government's financial records for the fiscal year (from 1st April to 31st March).
• The Union Finance Minister emphasized that the Indian economy is on the right track and going towards a bright future while delivering the Union Budget 2023–24 in the Lok Sabha.
• Three categories—the Consolidated Fund of India, the Public Account of India (Article 266), and the Contingency Fund of India—are used to group the income and expenditures (Article 267).
• It is created by the Ministry of Finance's Department of Economic Affairs.
• Until 2017, the railway budget was combined with the Union Budget and presented jointly (was a 92-year-old tradition).
• Before going into effect, the Lok Sabha must approve the budget.
• Revenue and Capital Budgets each make up a portion of the Union Budget.

The Budget passes through six stages in Parliament:

• Presentation of Budget
• General discussion
• Scrutiny by Departmental Committees
• Voting on Demands for Grants
• Passing an Appropriation Bill
• Passing of Finance Bill

The highlight of the budget 2023-2024:

• Building on the groundwork established in the previous budget, the Union Budget 2023–24 creates a strategy for India@100.

• The government intended to create a solid basis to guide the Indian economy towards Amrit Kaal in the Budget 2022–2023 document.
• The name "Amrit Kaal" was created by the government to signify the 25-year era leading up to India's 100th anniversary of independence in 2047.

• Amrit Kaal's vision: An empowered and inclusive economy
• The phrase "Amrit Kaal" refers to a kind of golden age and is derived from Vedic astrology.
• It denotes that India will have its greatest prosperity—economic growth and social justice—in the upcoming years.
• Before attaining India@100, the Budget recognizes four revolutionary opportunities that must be taken advantage of:
  • Economic Empowerment of Women through SHGs
  • Tourism Promotion in Mission Mode
  • PM VIshwakarma KAushal Samman (PM VIKAS)
  • The Green Growth

Saptarishi:

The Union Finance Minister has outlined seven major goals that will support one another and serve as the government's "Saptarishi" as it navigates the Amrit Kaal. They consist of:

• Inclusive Development
• Reaching the Last Mile
• Infrastructure and Investment
• Unleashing the Potential
• Green Growth
• Youth Power
• Financial Sector

Inclusive Development:

• Open source, open standard, and interoperable functionality Agriculture's Digital Public Infrastructure.
• Establishment of an Agriculture Accelerator Fund
• Increasing cotton crop productivity through the use of a cluster-based and value-chain approach via the PPP model.
• The Atma Nirbhar Horticulture Clean Plant Program has been launched.
• The agricultural credit target will be raised to 20 lakh crores, with an emphasis on the animal husbandry, dairy, and fisheries sectors.
• Agri-startup funding: An Agriculture Accelerator Fund will be established to encourage agri-startups by young entrepreneurs in rural areas.
• Millets: To help India become a global hub for 'Shree Anna' (Millets), the Indian Institute of Millet Research in Hyderabad will be supported as a Centre of Excellence for sharing best practises, research, and technologies on an international scale.
• Agri-Cooperatives: In order to realise the vision of "Sahakar Se Samriddhi," the government intends to establish decentralised storage capacity and establish multiple cooperative societies in underserved villages over the next five years.

Fisheries:

• A new sub-scheme of the PM Matsya Sampada Yojana with a target investment of 6,000 crores is being introduced.

Health:

• 157 new nursing colleges will be established in tandem with the existing 157 medical colleges established since 2014.
• The mission of the Sickle Cell Anaemia Elimination Mission will be launched to eradicate Sickle Cell Anaemia by 2047.
• Medical encouragement Development & Research
• A new initiative to promote pharmaceutical research and innovation
• Medical device-specific multidisciplinary courses will be encouraged.

Education:

• The adoption of innovative pedagogy and ICT technologies will revolutionize the mode of teacher education.
• Creating a National Digital Library for Children and Adolescents.

Reaching the Last Mile:

• Building on the success of the Aspirational Districts Programme, the Aspirational Blocks Programme, covering 500 blocks, was recently launched.
• It aims to improve performance in a variety of areas, including health, nutrition, education, agriculture, water resources, financial inclusion, skill development, and basic infrastructure.
• The Pradhan Mantri PVTG Development Mission will be launched, and approximately 15,000 crores will be made available to implement the mission over the next three years.
• The goal is to provide basic services to PVTG communities.
• In the next three years, the government will hire 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools, which serve 3.5 lakh tribal students across the country.
• Assistance of Rs. 5,300 crore to the Upper Bhadra Project to address the challenges of Karnataka's drought-prone central region.
• The PM Awas Yojana budget has been increased by 66% to over 79,000 crores.

Infrastructure and Capital Investment:

• Capital investment in infrastructure increased for the third year in a row, by 33% to Rs 10 lakh crore, or 3.3% of GDP.
• The budgeted 'Effective Capital Expenditure' is Rs 13.7 lakh crore, or 4.5% of GDP.
• Support for State Government Cap-Investment: The government has decided to extend the 50-year interest-free loan to state governments for another year in order to spur infrastructure investment and incentivize them to take complementary policy actions.
• The increased budget for this is Rs 1.3 lakh crore.
• Railways: A capital outlay of Rs 2.40 lakh crore has been provided for the Railways, the highest ever outlay and nearly nine times that of 2013-14.
• Aviation: To improve regional air connectivity, 50 additional airports, heliports, water aerodromes, and advanced landing grounds will be reopened.

Other Transportation Initiatives:

• 100 critical transport infrastructure projects for last and first mile connectivity in the ports, coal, steel, fertiliser, and food grains sectors have been identified and will be prioritised with a Rs 75,000 crore investment, including Rs 15,000 crore from private sources.
• The shortfall in priority sector lending will be used to establish an Urban Infrastructure Development Fund (UIDF).
• The National Housing Bank will manage the UIDF, which will be used by public agencies to build urban infrastructure in Tier 2 and Tier 3 cities.
• Every year, Rs 10,000 crore will be set aside for this purpose.

Unleashing the Potential:

• Unleashing the Mission's Potential Karmayogi has aided in the implementation of capacity-building plans for civil servants.
• Government employees now have access to learning opportunities thanks to the launch of the "iGOT Karmayogi" integrated online training platform.
• The Jan Vishwas Bill, which amends 42 Acts to improve the ease of doing business and creation of Centres of Excellence for Artificial Intelligence.
• Plans to develop a National Data Governance Policy to support start-ups and academia in their innovation and research.
• Using the DigiLocker service, a one-stop solution for identity and address reconciliation and updating will be established.
• To unlock new opportunities and potential, 100 labs for developing applications using 5G services will be established in engineering institutions.
• Five-year R&D grants to one of the IITs to promote indigenous production of Lab Grown Diamonds (LGD) seeds and machines.

Dispute Resolution:

• Vivad se Vishwas: Contract execution requirements for MSMEs are less stringent (being provided as a relief to the MSMEs affected during the Covid period).
• Easier and standardised dispute resolution scheme allowing for faster resolution of contractual disputes involving the government and government undertakings.
• e-Courts: For effective justice administration, Phase III of e-courts will be launched.

Green Growth:

• The National Green Hydrogen Mission was launched, with a budget of Rs. 19,700 crores.
• The Ministry of Petroleum and Natural Gas has allocated 35,000 crores for priority investments towards energy transition and net zero goals.
• Viability Gap Funding for Battery Energy Storage Systems with a capacity of 4,000 MWH.
• An inter-state transmission system for the evacuation and grid integration of 13 GW of renewable energy from Ladakh will be built with a 20,700 crore investment (central support of 8,300 crores).
• Under the Environment (Protection) Act, a Green Credit Program will be established to incentivize environmentally sustainable actions by individuals, local governments, and businesses.
• To encourage States and UTs to promote alternative fertilisers and balanced usage of chemical fertilisers, the PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth (PM-PRANAM) would be introduced.
• In accordance with the Galvanizing Organic Bio-Agro Resources Dhan (GOBARdhan) scheme, 500 new Waste-to-Wealth plants will be built.
• 10,000 Bhartiya Prakritik Kheti Bio-Input Resource Centers will be built in order to create a countrywide dispersed micro-fertilizer and pesticide manufacturing network in order to support organic farming.
• Mangrove plantations will be made possible via the Mangrove Initiative for Shoreline Habitats & Tangible Incomes (MISHTI).
• Over the following three years, the Amrit Dharohar project will be implemented in order to promote the best possible use of wetlands and enhance biodiversity.
• Allocating enough money to phase out obsolete cars.

Youth Power:

• Pradhan Mantri Kaushal Vikas Yojana: In order to up-skill the kids within three years, 4.0 will be launched.
• Expansion of the Digital Skill India Platform.
• 47 lakh young people will receive stipend support through the National Apprenticeship Promotion Scheme in 3 years using the DBT mechanism.
• The states will be encouraged to open Unity Malls in their capitals or other important tourist destinations to promote GI products and boost ODOPs (one district, one product) to promote tourism.

Financial Sector:

• Credit Guarantee for MSMEs: In 2022, a new credit guarantee scheme for MSMEs was introduced. This scheme will go into effect on April 1st, 2023, and will cost Rs 9,000 crore.
• This will provide for an additional Rs 2 lakh crore of collateral-free guaranteed loans.
• There will be a 1% reduction in the credit's cost.

Registry of Financial Information:

• To act as the main repository for financial and related data, a National Financial Information Registry will be established.
• This will encourage financial inclusion, efficient credit flow, and financial stability.
• The RBI was consulted throughout the building of a new legislative framework that will control this credit public infrastructure.
• Small Savings Programs: The Mahila Samman Savings Certificate, a one-time new small savings program, will be made accessible for a two-year period up to March 2025 to honor Azadi Ka Amrit Mahotsav.
• With the option for partial withdrawal, this will provide deposit facilities up to Rs 2 lakh in the name of women or girls at a fixed interest rate of 7.5%.
• The Senior Citizen Savings Scheme would increase its maximum deposit amount from Rs. 15 lakh to Rs. 30 lakh.
• The Monthly Income Account Scheme would increase its maximum deposit limits from Rs. 4.5 lakh to Rs. 9 lakh (for single accounts) and from Rs. 9 lakh to Rs. 15 lakh (for joint account).

SECTORAL BUDGET:

Ministry of Defence:

• Defense funding totals 5.94 lakh crores in the Union Budget 2023.
• This is a 13% year-over-year increase from prior Budget Estimates.
• The Ministry will be able to advance military systems, ships, and planes, as well as make emergency purchases of vital ammunition and replacement parts, thanks to the higher funding.

Ministry of Science & Technology:

• An allocation of 16,361.42 crores has been given to the Ministry, which represents a nominal increase of 15% from the last Budget forecast.
• Out of this, 7,931.05 crores (a 32.1% increase from the prior year) have been given to the Department of Science and Technology (DST).

Ministry of Health:

• The Ministry has been given 89,155 crores in the Union Budget for 2023–24, an increase of 3.43% over its prior allocation of 86,200.65 crores.
• The Department of Health and Family Welfare has been given 86,175 crores of the overall budget.
• However, the Department of Health Research will receive 2,980 crores.

Ministry of Railways:

• Compared to the FY 2022–2023, the Ministry of Railways received an outlay of 2.4 lakh crores instead of 1.4 lakh crores.
• With four sites—in Chennai, Sonipat, Rae Bareli, and Latur—now producing Vande Bharat trains, the greater expenditure would be utilized to improve output.
• A train powered entirely by hydrogen will also be ready by December 2023 and will make its debut on the Kalka-Shimla heritage route.

Ministry of Road Transport and Highways:

• It has received a budget allocation of 2.7 lakh crores for 2023 as opposed to 1.99 lakh crores for 2022–2023
• The PM Gati Shakti master plan will receive a big boost from this funding.

Ministry wise allocation Data:

Ministry of Consumer Affairs, Food and Public Distribution: was allocated 2,05,764 crores.

Ministry of Home Affairs: The Ministry was allocated 1,96,034 crores.

Ministry of Chemical & Fertilisers: Allocation of 1,78,481 crores.

Ministry of Rural Development: Allocation of 1,59,964 crores.

Ministry of Agriculture & Farmer’s Welfare: Allocation of 1,25,035 crores.

Ministry of Communications: Allocation of 1,23,393 crores.

Direct Taxation Reforms:

Personal Income Tax:

• The new tax system's rebate cap has been raised to 7 lakh .i.e., under the new tax system, anyone making up to 7 lakhs per year is exempt from paying income tax.
• In addition, there are now only five tax slabs in the new personal tax system, and the 3 lakh. tax exemption threshold has been raised.
• Surcharges The Finance Minister also announced a decrease in the maximum surcharge rate for people with incomes over 2 crores, from 37% to 25%.

Co-operatives:

• New cooperatives will benefit from a 15% tax rate reduction if they start manufacturing operations before the 31st of March 2024.

Going Green:

• Excise duty exemptions for GST-paid items In order to prevent cascading taxes on blended compressed natural gas, compressed biogas has been announced.

Electronic equipment:

• Camera lenses and the parts needed to make them for mobile phones now have zero percent customs charge.
• The additional reduced duty on lithium-ion batteries cells has been extended for an additional year.

Additional Tax Reforms:

• Standard Deduction: The new tax system has recommended raising the standard deduction to 50,000 rupees for salaried individuals and to 15,000 rupees for family pensions.
• MSMEs: As long as the amount received in cash does not exceed 5% of the total gross receipts/turnover, the presumptive taxation thresholds have been raised for micro firms and some professionals.
• Only when a payment is made to facilitate the timely receipt of payments by MSMEs will a deduction for such payments be permitted.

Start-ups:

• The date of incorporation for start-ups to receive income tax benefits has been extended by the budget.
• In addition, the Budget offers start-ups the benefit of carrying losses from shareholding changes forward from seven to ten years after incorporation.

Changes to the CGST Act:

• The Budget includes a provision to change the CGST Act, raising the minimum tax threshold for starting a GST prosecution from 1 crore to 2 crores.

Consequences of tax changes:

• The Budget's amendments to direct and indirect taxes will result in the loss of up to 38,000 crores in revenue while also mobilising close to 3,000 crores.
• Online gambling: TDS and taxability on net winnings at the time of withdrawal or at the end of the fiscal year will be clarified for online gaming.
• Gold: The conversion of physical gold into electronic gold receipts, and the other way around, will not be considered capital gains.

Economic Indicators:

Growth projections:

• India's economic growth is anticipated to reach 7% in the fiscal years 2022–2023.
• Despite the global slowdown brought on by the Covid-19 Pandemic and the Russia-Ukraine War, this anticipated growth rate is the greatest of all the major economies.
• According to the Economic Survey 2022–23, the real GDP is expected to expand by a minimum of 6.5% in FY24.

Revised Estimates 2022-23:

• Spending totals: 41.9 lakh crores
• Total Receipts: 24.3 lakh crores (excluding borrowings).
• Net Tax Receipts:: 20.9 lakh crore

Budgetary Estimates 2023–24:

• Total Expenditure: 45 lakh crores
• Total Receipts: 27.2 lakh crores (excluding borrowings).
• Net Tax Receipts: ?23.3 lakh crores
• Deficit
• According to the budget forecast, the fiscal deficit is expected to be 6.4% of GDP in FY 2022–2023.
• 5.9% of GDP is projected to be the Fiscal Deficit in the Budget Estimates (BE) for FY 2023–24.
• By 2025–2026, the government aims to bring the fiscal deficit down to 4.5% or less.
• Capital expenditure (CapEx) Outlays for capital projects have dramatically grown, rising by nearly 33% to $10 lakh crores in FY 2023–24 from $7.3 lakh crores in FY 2022–23.
• The GDP share of capital expenditures for the fiscal years 2023–24 is roughly 3.3%.
• Inflows of US $84.8 billion in FDI, the greatest amount ever, were made into India in FY22.
• However, the total amount of FDI inflows decreased to US $39 billion during the first half of FY23, which has been linked to global monetary tightening.