Decoding Budget 2023: Gains in Brief

On Wednesday Indians were glued to their TV set listening to Finance Minister Nirmala Sitharaman presenting the budget for the fiscal year 2023-24. The budget as claimed by PM Modi and his ministers is one that would fulfill the aspirations of the country as well as give the NDA Government momentum for the LokSabha Polls due next year. From the announcement of new schemes, to tax redemption, and increased allocation, to leveraging Artificial Intelligence and aiming to achieve net-zero emission by 2070, the budget has a scoop for every Indian. Despite the government’s strong pitch for the “middle & poor class” budget, it has attracted criticism from opponents who accused the Centre of reducing the budget to a mere ritual misleading the nation.

Team TLJ takes brief a look at the Budget of “Amrit Kaal” as reiterated by the Finance Minister in her long Budget speech.

The Gains

• The Government announced the rollout of a Mahila Samman Savings Certificate a scheme for Women in which depositors can save an amount of up to Rs. 2 Lakhs on which an interest rate of 7.5% will be provided till March 2025. With such a high-interest rate this scheme is believed to be able to attract a large number of subscribers from the target group. However, it’s not clear whether this will be tax-free or not.

•For the elderly, the latter can now save up to Rs. 30  Lakh in under Senior Citizens Saving Scheme, this is indeed a welcome move in a country where the population of senior citizens is on an uptick.

• Individual Account holders can now save up to 9 Lakh and Joint Account Holders up to 15 Lakh. These are currently 4.5 Lakh and 8 Lakh respectively.

Nilanjan Dey, Director of Wish List Capital Advisors feels that these steps are in the right direction to, “match the needs of the hardworking middle class”, in the words of FM

• A cut on customs duty on phone and TV components has also been announced by the FM. Customs duty will be brought down to 2.5% on camera lenses, Open cells of LED TV panels and the concession on lithium-ion cells will continue for the next one year.
The FM proposed the aforementioned to boost domestic manufacture Of mobile which she stated is 31 crore units valued at 2,75,000 crore in the latest financial year.

• The budget also slashed the duty on seeds used in the manufacturing of rough lab-grown diamonds from 5% to 0.

• Sitharaman also announced the recruitment of 38,800 teachers in 740 Eklavya Tribal Schools for 3.5 Lakh students as a part of the Tribal upliftment measure.

• A record Rs. 2.40 lakh crore has been allotted for the Indian Railways to speed up line doubling, electrification, and manufacture of Semi-high speed Vande Bharat Expresses as well as to pace up redevelopment of major railway stations, an extension of existing lines, scaling up infrastructure and passenger amenities.

• Revival of fifty additional airports, heliports, waterdromes, and advanced landing grounds for improving regional air connectivity. For this, The Ministry of Civil Aviation has received a total ₹3,113 crore for the financial year 2023-2024 as compared to ₹10,667 in the budgetary allocation last fiscal. The slash of 70% comes as a result of the privatization of Air India which has reduced liabilities.

• Permanent Account Number (PAN) cards to be considered a standard identity for all digital systems at government organizations. The modification is expected to simplify the KYC process and make it simpler for the Income Tax Department and other governmental agencies to handle the documentation of PAN cards.

• In order to create state-of-the-art AI solutions in the nation, the FM proposed establishment of three centers of excellence (COE).

• The allocation for the Ministry of Road Transport and Highways has seen a 36% jump with around 2.7 lakh crore for 2023-24. The National Highways Authority of India (NHAI) has been allocated around 1.62 lakh crore as part of MoRTH’s capital expenditure plan for 2023-24, a 21 percent increase compared to 2022-2023 when it was allocated 1.34 lakh crore. The Budget envisaged an expansion of 25,000 km in the highways network in the current fiscal.

• To encourage more startups that create employment, the government has proposed to extend the date of incorporation for income tax benefits to startups by a year from March 31, 2023, to March 31, 2024.

• For enhanced connectivity the government will set up 100 labs to develop apps based on 5G Technology. These apps will cover use cases such as smart classrooms, precision farming, healthcare, and intelligent transportation systems. TSPs like Jio and Airtel have already rolled out their 5G services.

• To promote innovation in the fintech sector, the government is also expanding the capabilities of DigiLocker, a citizen’s digital document wallet. MSMEs, major companies, and charitable trusts will soon be able to store and share documents with authorities and regulators, banks, and other business organizations thanks to the Entity DigiLocker.

• In order to meet net-zero Carbon emissions by 2070, the FM outlay and announced a string of “Green Steps”- ₹19,700 crore for the recently launched National Green Hydrogen Mission, which she said will facilitate the 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”. Outlay– ₹19,700 crore. Target– Annual production of 500 MMT (million metric tonnes) of green hydrogen by 2030. The budget provides ₹35,000 crores for priority capital investment toward energy transition, net zero objectives, and energy security by the Union Ministry of Petroleum and Natural Gas.

• As thousands of vehicles are set to be scrapped in the coming days in a bid to clean up the environment and decongest, the government will provide support to facilitate the scrapping of vehicles over 15 years of age.

• Individuals under the new tax regime will benefit as the number of slabs has come down to 5. The income threshold for taxation under the new tax regime has been increased to Rs 3 lakh from Rs 2.5 lakh earlier. A resident individual with a total income of up to Rs 7 lakh will no longer have to pay tax after the proposed increase in rebate. High-income individuals with income above Rs 2 crore pay a surcharge of 37 percent. This has now been reduced to 25 percent. It would lower the maximum tax rate from 42.7 percent to about 39 percent

• Leave encashment of up to 10 months of average salary at the time of retirement for private sector employees is exempt up to Rs 3 lakh. This will be extended to Rs 25 lakh.

The budget 2023 received a bag of mixed reactions from the opposition leaders. While some praised Nirmala Sitharaman others slammed the Government for avoiding addressing unemployment, inflation, and price hikes.

Former Finance Minister P Chidambaram said, “Who has benefited from this budget? Certainly, not the poor, not the unemployed youth, not the bulk of the taxpayers, not the homemaker. The wealth being accumulated in the hands of the 1% of the population. Certainly, not YOU!”.