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Union Budget 2023- A Professional Perspective

The budget is an estimate of the wishes and ambitions of a Government, it often has an element of imagination in it, to build the confidence of the general public. The Budget Estimates are the estimated expenditure that the Government is willing to incur and the same shall be revised further based on the possibility of spending. If we analyse the Budget Estimates (BE) and Revised Estimates (RE) and the reason for the variation between the two, thereby can possibly identify the areas wherein the expenditure was escalated beyond the estimated figures.

The Union Budget -2023, presented by Mrs Nirmala Sitaraman, is destined to improve the morale and confidence of the public in the governmental systems, especially when the rest of the world is staring at a sure-shot recession, which was invited by the war crisis in Ukraine. The eye-popping budgetary figures can be shot-in-the-arm of the economy, which can suddenly revamp the sluggish mindset of the people who are worried about the escalating unemployment levels, spiralling cost of living and free-falling rupees.

Budget Estimates 2023-24.

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 and the fiscal deficit is estimated to be 5.9 per cent of GDP. To finance the fiscal deficit in 2023-24, the net market borrowings from dated securities are estimated at Rs 11.8 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.

Reasons for variation of Budget Estimates and Revised Estimates of 2022-23.

The Revised Estimates of expenditure for 2022-23 show an increase of Rs 2,42,323 Crores over the Budget Estimates of 2022-23. The increase in the expenditure was mainly due to higher requirements under fertilizer subsidy, food subsidy under the Food Security Act, and implementation of ‘One Rank-One Pension’ to retirees of the armed forces, provision for the expenditure of medical treatment to CHGS pensioners, provision of a one-time grant to Oil Marketing Central PSU’s, higher requirements for revenue expenditure for Army, Navy and Air Force, higher provision made towards railway development, the higher allocation for nutrient based subsidy on sales of indigenous/imported fertilizers, a higher requirement for allocation towards MGNRES, allocation towards viability gap funding to BSNL for unviable rural wire-line operations, a higher requirement for meeting resource gap of Union territories, higher allocation towards credit linked subsidy scheme for economically weaker section/lower income group under PM Awas Yojana etc. The major reasons for the increased estimated expenditure in 2022-23 were mainly on account of subsidies and other schemes for empowering the weaker sections of society.

Reasons for variation of expenditure between RE 2022-23 and BE 2023-24

The BE of expenditure for 2023-24 is shown an increase of Rs 3,15,865 Crore over the RE 2022-23, which was mainly due to higher allocation for payment of interest on market loans, discount on treasury bills, state provident funds and National Small Saving Scheme of CG. There is an incremented allocation for transfer to GST compensation fund and special assistance as loans for capital expenditure, higher provision for the construction of new lines, doubling, rolling stock and investment in Railways PSU, investment in Oil Marketing Companies, higher revenue expenditure of Army, Navy and capital expenditure of Army and Air Force, higher allocation towards Jal Jeevan Mission/National Rural Drinking water mission, the higher requirement for Border Security Force, Central Industrial Security Force and cap-ex of police and central armed forces, the higher allocation for Guarantee Emergency Credit Line facility to eligible MSME borrowers, the establishment of National Research Foundation, higher provision for Eklavya model residential schools and provision for Ken-Betwa River Project. The RE for 2023-24 also had escalated mainly due to higher than projected allocation towards social welfare measures, which is mainly for the downtrodden populace.

The Budget priorities

The Budget presented a vision of Amrit Kaal for India@100 which includes a technology-driven and knowledge-based economy with strong public finances, and a robust financial sector. During Amrit Kaal, the focus will be more on the Economic Empowerment of Women, PM Vishwakarma KAushal Samman, intended to empower artistic skills for achieving Atma Nirbhar Bharat, developing Tourism and Green Growth by promoting green fuel, green energy, green farming, green mobility, green buildings, and green equipment, and policies for efficient use of energy across various economic sectors. The Budget the prepared with a specific focus on Inclusive Development, Reaching the Last Mile, Infrastructure and Investment, Unleashing the Potential, Green Growth, Youth Power and Financial Sector

Inclusive growth through empowering the Agrarian Sector

Inclusive development is envisioned to be achieved through accelerating the digital public infrastructure for agriculture by providing accelerator funds, enhancing the productivity of cotton crops, and developing a plan for horticulture with an outlay of Rs 2200 Crore. The budget, to boost the agrarian sector as a whole had increased the agriculture credit target to Rs 20 lakh crore with a focus on animal husbandry, dairy and fisheries. In order to revamp the Fisheries, a new sub-scheme of PM Matsya Sampada Yojana with a targeted investment of Rs 6,000 crores to further enable activities of fishermen, fish vendors, and micro & small enterprises is also envisaged in the budget. Inclusive development is being achieved through health education and skilling, teacher’s training, national digital library for children and adolescents and there are specific budgetary allocations for all the said segments.

Reaching the last mile for the development of focused areas

The Budget have a specific focus on the development of the North Eastern Region, which was a neglected area of the Country for a long time. The budget also gave specific attention to Health, Fisheries, Animal Husbandry and dairying, skill development, Jal Sakthi and Cooperation. The Budget proposes to recruit 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools, serving 3.5 lakh tribal students and the outlay for PM Awas Yojana is being enhanced by 66 per cent to over Rs 79,000 crores.

Huge infrastructural push

The budget had given a great, never before, focus on Investments in Infrastructure and productive capacity, which can give a large multiplier impact on growth and employment. To give a big push to the said goal, Capital investment outlay is being increased steeply for the third year in a row by 33 per cent to Rs 10 lakh Crore, which would be 33 per cent of GDP. This will be almost three times the outlay in 2019-20 and the ‘Effective Capital Expenditure’ of the Centre is budgeted at Rs 13.7 lakh Crore, which will be 4.5 per cent of GDP. Also to give a decentralised capital infrastructure growth, the 50-year interest-free loan to state governments shall continue for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of Rs 1.3 lakh crore. With an intention to boost investment opportunities in the infrastructural sector, assistance shall be provided to private players through the newly established Infrastructure Finance Secretariat. Apart from the above, a capital outlay of Rs 2.40 lakh crore has been provided for the Railways, the highest ever outlay is about 9 times the outlay made in 2013-14. The budget also proposes fifty additional airports, heliports, water aerodromes and advanced landing grounds will be revived to improve regional air connectivity.

Empowering the Business segment

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

Income Tax

Currently, those with income up to Rs 5 lakh do not pay any income tax in both old or new tax regimes. It is proposed in the budget to increase the rebate limit to Rs 7 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs 7 lakh will not have to pay any tax. The new personal income tax regime with six income slabs starting from Rs 2.5 lakh. It 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 Rs 3 lakh.

The Budget proposed to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime. This would result in the reduction of the maximum tax rate to 39 per cent. There are no changes in the other tax rates and hence the Government shall lose revenue of about Rs 37,000 crore in direct taxes and Rs 1,000 crore in indirect taxes.

To sum up, the budget had done justice to the seven priorities envisioned in the preamble of it, and, as citizens of India can be proud of the India@100 envisioned during Amirt Kaal.

Bijoy P Pulipra , LL.M, FCS,IP, RV

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