Union Finance Minister Nirmala Sitharaman addresses a press conference on Union Budget 2023-24, in Jaipur on February 20, 2023.
| Photo Credit: PTI

The measures like increased capex, boosting the green economy and initiatives for strengthening financial markets announced in the Budget 2023-24 are expected to promote job creation and spur economic growth, the Finance Ministry said on Thursday.

In its Monthly Economic Review, the Ministry said during the December 2022 quarter, various High-Frequency Indicators (HFIs) pointed towards a slowdown in general, as monetary tightening appeared to have started weakening global demand.

“This may continue in 2023 as various agencies have forecasted a decline in global growth. Apart from the lagged impact of monetary tightening, the uncertainties emanating from the lingering pandemic and relentless conflict in Europe may further dampen global growth,” it noted.

Even as global output is expected to slow, the IMF and World Bank project India to be the fastest-growing major economy in 2023.

“As in 2022-23, India faces the coming financial year with confidence imparted by underlying and overall macroeconomic stability while being on the alert against geo-political and geo-economic risks,” the monthly review said.

The Economic Survey 2022-23, tabled in Parliament ahead of the Budget, had pencilled in a growth rate of 6.5% for FY24 but with more downside than upside risks, it added.

“Inflation risks are likely to be lower for India in FY24. Still, they will not have vanished as global conditions, such as geopolitical conflicts and consequent supply disruptions that contributed to higher inflation in 2022 are still present,” it said.

Predictions of a return of El Nino conditions in the Pacific could presage a weaker monsoon in India, resulting in lower output and higher prices. Similarly, as with prices, external deficits may be a lesser challenge in FY24 than in FY23, but close attention to trends in international trade and capital flows will be warranted.

The 2023-24 Budget has yet again provided a capex stimulus to growth by increasing the Centre’s capex budget to ₹10 lakh crore — 33% higher than the previous year.

“By doing this, the Government is continuing its push towards investment-driven growth amid global headwinds…The measures announced in the Union Budget FY24, such as a rise in capital expenditure, increased focus on infrastructure development, boost to the green economy, and initiatives for strengthening financial markets etc., are expected to promote job creation and spur economic growth,” it said.

The Budget FY24 has also announced measures to increase spending and consumer demand. These include the rationalisation of tax slabs and an increase in the basic exemption limit from ₹2.5 lakh to ₹3 lakh under the New Personal Income Tax Regime (NPITR).

“The Union Budget has further introduced important process measures, such as the setting up of the National Financial Information Registry, the implementation of a single window system, and reforms in property-tax governance, among others.

“These will improve processes in the financial market and, in turn, enable regulators to create a more effective feedback mechanism to review regulations,” the Ministry’s monthly review report said.

The steps announced in the Union Budget FY24 will sustain the growth momentum that has characterised the Indian economy in the current year while aiding in addressing inflationary pressures. Even though the Consumer Price Index (CPI) inflation rose to 6.5% in January 2023, headline inflation in India has been showing a downward trend in the second half of FY22, it added.

Measures announced for the MSME sector will likely reduce the cost of funds and aid small enterprises. Revision in tax slabs under the New Personal Income Tax Regime is expected to boost consumption, thus providing more impetus to economic growth. Easier KYC norms, expansion of DigiLocker services, and overall impetus on digitisation and last-mile connectivity are predicted to strengthen financial markets, the report said.

“Thanks to the emphasis on macroeconomic stability in the last several years, the Indian economy faces the year ahead with confidence while being mindful of the risks,” it added.

A salesman watches TV screens during the live telecast of Union Budget 2023 by Finance Minister Nirmala Sitharaman in Ahmedabad on Wednesday.
| Photo Credit: VIJAY SONEJI

The Union Budget 2023-24 has proposed certain changes to the Income Tax search and seizure provisions in view of the increased use of technology and digitisation in the management and maintenance of accounts, digitisation of data, cloud storage and other associated aspects.

Section 132 of the Income-Tax Act pertains to the procedure for the search and seizure to be followed by the agency.

The document said: “In the recent past, due to the increased use of technology and digitisation in every aspect including management and maintenance of accounts, digitisation of data, cloud storage etc., the procedure for search and seizure has become complex, requiring the use of data forensics, advanced technologies for decoding data etc., for complete and proper analysis of accounts.”

Similarly, “there is an increasing trend of undisclosed income being held in a vast variety of forms of assets or investments in addition to immovable property. Valuation of such assets and decryption of information often require specific domain experts like digital forensic professionals, valuers, archive experts etc. In addition to this, services of other professionals like locksmiths, carpenters etc., are also required in most of the cases, due to typical nature of the operations”.

Accordingly, the government has proposed to amend the relevant provisions of the section to ensure that during the course of I-T searches, the authorised officer may be able to requisition the services of any other person or entity, as approved by the Principal Chief Commissioner or the Chief Commissioner, the Principal Director General or the Director-General, in accordance with the procedure prescribed by the Board in this regard, for assistance during the search.

It has also been proposed that during or post search, the officer may make a reference to any person, entity or authorised valuer to estimate the fair market value of the property in the manner prescribed and submit a report within 60 days from the receipt of reference.

If approved, the amendment will take effect from April 1.

“Consequent to the changes in 2021, the assessment or reassessment in consequence to search is now performed under Section 147 of the Act and provisions of Sections 153A and 153B are no longer applicable. The timelines for completing assessment or reassessment in search cases are linked to the execution of the last of the authorisations during such procedure, in order to establish the day of conclusion of search proceedings, and what constitutes as last authorisation is provided in Section 153B,” it said.

As the provisions of Section 153B are no longer applicable, the government has proposed to provide the meaning of execution of last authorisation under Section 132 itself. “This amendment will take effect retrospectively from the April 1, 2022,” it said.

Union Finance Minister Nirmala Sitharaman speaks during a post-budget press conference, in New Delhi, Wednesday, Feb. 1, 2023.
| Photo Credit: PTI

The government will focus on economic growth and job creation and cut down the fiscal deficit, Union Finance Minister Nirmala Sitharaman said on Wednesday, presenting its last full budget in Parliament before the 2024 election.

Here are the charts that show major aspects of Union Budget 2023:

Budget at a glance

The Narendra Modi government focused on a slew of measures that expanded Capital Expenditure spending and tied in various priorities including Green Growth, Youth Power, and Inclusive Development.

Fiscal deficit would be brought down to below 4.5% by 2025-26, Finance Minister Nirmala Sitharaman said. She also said that tax receipts for the next fiscal are budgeted at ₹23.3 lakh crore and States would be allowed 3.5% of GDP as fiscal deficit.

What funds the deficit

The government plans to borrow a record ₹15.4 lakh crore from dated securities in FY24 to meet its expenditure requirement to prop up the economy. This is higher than the total borrowing of ₹14.21 lakh crore for the current financial year ending March 31, 2023.

Rupee come from

Borrowings and other liabilities account for the largest avenue from where the Budget money comes.

Rupee goes to

With 20% of its budget going into interest payments, the State’s share of taxes and duties and the Central sector scheme assume two major areas of spending for the government.

State-wise allocation of central taxes and duties

Here is the state-wise distribution of net proceeds of Union Taxes and Duties for Budget Estimates 2023-24. The distribution was conducted according to the recommendation of the 15th Finance Commission which fixed the share of states at 41% of the net proceeds of sharable Central Taxes and Income Tax.

Transfer to states/UTs

Allocation to Ministries

The Union Budget allocated a massive ₹5.94 lakh crore for the Defence Ministry, a 13% increase year-on-year from last year’s budget estimates.

Outlay for Major Schemes

The Union Budget 2023-24 document listed the new allocations for core welfare schemes that drive socio-economic development.

Finance Minister Nirmala Sitharaman announced a number of measures for the agriculture sector, including an increase in the credit target to ₹20 lakh crore, with focus on animal husbandry, dairy and fisheries.

% change for major schemes

Here’s a roundup of how the budgetary allocations for some of the key schemes have changed. While the MGNREGS budget saw a 32% decrease from the revised estimates of 2022-23, the outlay for PM-Kisan remained the same.

Railway Budget in a Glance

With an outlay of ₹2.40 lakh crore for the financial year 2023-24 compared to ₹1.40 lakh crore in the FY22-23, Finance Minister Nirmala Sitharaman said that the outlay for the railways is nine times the amount provided in 2013-2014.

Cheaper vs Dearer

With an eye on promoting exports, boosting domestic manufacturing and enhancing value addition, Union Budget 2023-24 has proposed number of changes to Customs Duty regime that is likely to make mobile phones and televisions cheaper and certain class of automobiles, including EVs, as well as toys and bicycles dearer.

Finance Minister Nirmala Sitharaman holding the Budget Papers at the North Block in New Delhi on February 01, 2023.
| Photo Credit: R.V. Moorthy

Finance Minister Nirmala Sitharaman on February 1 raised the personal income tax rebate limit, doled out sops on small savings, and announced one of the biggest hikes in capital spending in the past decade as she did a tightrope walk in the Budget between staying fiscally prudent and meeting public expectations in the year before general elections.

Ms. Sitharaman’s fifth straight Budget comes at a time when the economy is slowing and there is a need for increased spending on social sectors as well as ramping up incentives for local manufacturing. The Modi government will seek third term next year and the BJP will face nine Assembly elections this year.

Announcing its last full budget before the 2024 elections, the NDA government focused on a slew of measures that expanded Capital Expenditure spending and tied in various priorities including Green Growth, Youth Power, and Inclusive Development. This was also accompanied by major tax announcements for the salaried class, with changes in tax slabs and a clear intention to shift to the new tax regime.

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V. Nagappan, president of the Hindustan Chamber of Commerce, said the proposal to extend the revamped credit guarantee scheme for the micro, small and medium enterprises and relief to the pandemic-affected units in the Union Budget 2023-24 is in the right direction. “Reduction of 1% interest for the MSMEs will further boost their growth and also allowing the payment to the MSMEs as “allowable expenses” only when actual payment made by the corporates is a welcome step as it will enable the big companies to honour their commitments,” Mr. Nagappan added.

T.R. Kesavan, president of the Madras Chamber of Commerce and Industry, said, “On the whole, we feel that the budget is growth- oriented without compromising on fiscal responsibility or sustainability.” The Chamber always bats for ease of doing business. Decriminalization of more than 3,400 legal provisions, adopting PAN as common identifier for all digital systems and unified filing process are the right measures, he pointed out.

Chozha Naachiar Rajasekar, president of The Tamil Chamber of Commerce, pointed out that there are no announcements on specific projects for Tamil Nadu. C.K. Ranganathan, past chairman, CII Southern Region, said, “I don’t see anything specific to Tamil Nadu, but the announcements pertaining to start-ups, MSMEs, Unity Mall and Skill Development will benefit us like other States.”

Sasikumar Gendham, Managing Director, Salcomp India, “This budget provides a clear vision towards increasing investments into infrastructure, youth skill development / employment, green growth. While the status quo has been maintained for electronics sector, a small relief being provided for certain parts of mobile phones and television, is a welcome step.” V. N. Shiva Shankar, vice president, SICCI, said, “Being the first in the Amrit Kaal, it has signalled positive for several new-age industries. “It is really welcome to note that the government continues to place a lot of importance to Green Growth – which is critical to achieve self reliance,” Mr. Shankar said.

V.L.Indira Dutt, President of Andhra Chamber of Commerce, said that thrust given for artificial intelligence, spectrum 5G labs would create more opportunity globally for techno professionals. C A Amrith Lal, Convenor, FICCI Tamil Nadu Finance and Taxation Panel, said the budget has taken care of the hardworking and middle class in the form of tax reliefs to them both under the old and new tax regimes.

S. Vaidhyasubramaniam, Vice-Chancellor, SASTRA Deemed University, said that as an academic, this year’s report card deserves a distinction for its digital focus on both next-gen technologies at the top and skilling at the bottom. There is a clear sign of inclusivity in human capacity building, he said.

EOM

Illustration: Satheesh Vellinezhi

With the global economy adrift, Finance Minister Nirmala Sitharaman sought to carve out an ark for India in her fifth Union Budget by trying to nudge domestic consumption and reluctant private investments upwards, while also seeking to create a feel-good factor among specific segments of voters as the government gears up for the 2024 Lok Sabha polls.

The FM summed up the BJP-led government’s achievements since 2014 as “leaving no one behind”, taking just 200-odd words to outline the doubling of per capita income to ₹1.97 lakh, the increasing formalisation of the economy and the expansion of targeted benefits. She then used the rest of her Budget speech to soothe sections of society that may have felt a tad left behind over its nine-year-tenure.

To assuage the salaried middle class, deflated by a sustained streak of high inflation, the tax-free limit under the new exemption-less income tax regime was raised to ₹7 lakh from ₹5 lakh. The cap on non-government employees’ leave encashment at the time of retirement was raised to ₹25 lakh from ₹3 lakh.

Help for those left behind

The first Budget of the Amrit Kaal — the 25-year period leading to the centenary of Indian independence in 2047 — aimed to build on existing “inclusive development” efforts that assign overall priority for the underprivileged, the Minister said. She launched new socio-economic development schemes: the PM Particularly Vulnerable Tribal Groups Development Mission, and the PM Vishwakarma Kaushal Samman to support artisans from weaker sections and Scheduled Castes, Scheduled Tribes and Other Backward Classes.

Some measures were also announced to alleviate the lot of micro, small and medium enterprises that have faced successive shocks over the last few years, from demonetisation to the pandemic.

Poll-pleasing focus on jobs

While the Finance Minister addressed various sections’ aspirations through her less-than-90-minutes speech, the broader underlying message was aimed at India’s restive youth and their hopes of securing a job.

References to “job” creation in a Budget speech hit a six-year high, with the Minister flagging it seven times in different contexts, compared to just two mentions in the 2022-23 Budget speech and three references in the year before that.

Giving an impetus to growth and job creation, and creating opportunities, especially for the youth, she said, was a key focus of the government’s economic agenda to achieve its vision for the Amrit Kaal, which will culminate in 2047.

It is perhaps no coincidence that the last time job creation figured high (with six mentions) was when the late Arun Jaitley presented the Budget for 2018-19 — another Budget presented in the year before a general election.

Capex plans depend on States

Polls apart, the Budget’s grand plan to ramp up infrastructure capex to ₹10 lakh crore in the hope that it gives greater traction to a revival in private investments will hinge on the States — which have been offered ₹1.3 lakh crore in the form of 50-year interest-free loans — doing their bit, and Indian industry being bold enough to take risks during a tumultuous, unpredictable period also marked by rising interest rates.

The deposit limit on savings schemes for senior citizens was doubled to ₹30 lakh and a new one-time small savings scheme was also announced for women to invest upto ₹2 lakh with 7.5% returns assured for two years.

An uptick in small savings collections will also help the government fund its fiscal deficit target of 5.9% of GDP in the coming year (from the 6.4% estimated in 2022-23), with net market borrowings pegged at ₹11.8 lakh crore, Ms. Sitharaman said.

While the Economic Survey projected a 6.5% growth for the year ahead, the Budget estimates a nominal GDP growth of 10.5% for its revenue calculations. Finance Secretary T.V. Somanathan explained that this could be derived from any combination of real growth and inflation, and was not a yardstick for hopes about either.

Finance Minister Nirmala Sitharaman proposed to double the deposit limit for Senior Citizen Savings Scheme to ₹30 lakh
| Photo Credit: PTI

Finance Minister Nirmala Sitharaman on Wednesday proposed to double the deposit limit for Senior Citizen Savings Scheme to ₹30 lakh and Monthly Income Account Scheme to ₹9 lakh.

In her Budget Speech, the minister also announced a new small savings scheme for women.

“The maximum deposit limit for Senior Citizen Savings Scheme will be enhanced from ₹15 lakh to ₹30 lakh,” the minister said in her 87-minute long speech.

She also proposed that the maximum deposit limit for Monthly Income Account Scheme will be enhanced from ₹4.5 lakh to ₹9 lakh for a single account and from ₹9 lakh to ₹15 lakh for a joint account.

Announcing a new ‘Azadi Ka Amrit Mahotsav Mahila Samman Bachat Patra’, Ms. Sitharaman said 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 up to ₹2 lakh in the name of women or girls for a tenor of 2 years at fixed interest rate of 7.5% with partial withdrawal option,” she said. The minister also announced to that an integrated IT portal will be established for investors to reclaim unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority with ease.

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Mobile phones will become cheaper as Finance Minister Nirmala Sitharaman announced a reduction in the import duty.
| Photo Credit: PTI

With an eye on promoting exports, boosting domestic manufacturing and enhancing value addition, Union Budget 2023-24 has proposed number of changes to Customs Duty regime that is likely to make mobile phones and televisions cheaper and certain class of automobiles, including EVs, as well as toys and bicycles dearer.

Presenting her Indirect Tax proposals, which also are aimed at encouraging green energy and mobility, Finance Minister Nirmala Sitharaman said “a simplified tax structure with fewer tax rates helps in reducing compliance burden and improving tax administration. I propose to reduce the number of Basic Customs Duty (BCD) rates on goods, other than textiles and agriculture, from 21 to 13.”

Consequently, there would be “minor changes in BCD, cesses and surcharges on some items, including toys, bicycles, automobiles and naphtha,” she said.

A reduction in mobile phone prices is likely on account of BCD on camera lens and its inputs/parts, used in manufacture of camera module of mobile phone, made nil from existing 2.5%. It has been decided to continue concessional duty on lithium-ion cells for batteries for another year. “The proposals are aimed at deepening domestic value addition in manufacture of mobile phones,” Ms. Sitharaman said, adding how government initiatives had led to mobile phone production in India, increasing 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.

“Similarly, to promote value addition in manufacture of televisions, I propose to reduce BCD on parts of open cells of TV panels to 2.5% [from the existing 5%],” she said.

In another Indirect Tax proposal, she said towards rectifying inversion of duty structure and encouraging manufacturing of electric kitchen chimneys, BCD on electric kitchen chimney was being increased to 15% from 7.5%, while the levy on heat coils for the appliance is getting reduced from 20% to 15%.

Set to be costlier

Toys, bicycles and some automobiles, including electric vehicles, as well as naphtha figure in a list of items that are likely to turn dearer with the Budget increasing the tariff rate. For bicycles, the new rate is 35% as against existing 30%; for toys and parts of toys, other than parts of electronic toys, it will be 70% (60%). BCD on naphtha has been increased from 1% to 2.5%. The duty on Styrene and Vinyl Chloride is being increased from 2 to 2.5%.

As an impetus to green mobility, the 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, she said. The Budget also proposed exemption from the levy on vehicles, specified automobile parts/components, sub-systems and tyres imported by notified testing agencies for purpose of testing/certification.

Denatured ethyl alcohol, which finds applications in the chemical industry, is being exempted from BCD. “This will also support ethanol blending programme,” the Finance Minister said. The Budget has also reduced duty on key inputs for domestic manufacture of shrimp feed.

Pointing out that Customs Duties on dore and bars of gold and platinum were increased earlier this fiscal, Ms. Sitharaman said the duties on articles made from them were being raised to enhance the duty differential. “I also propose to increase the import duty on silver dore, bars and articles to align them with that on gold and platinum.”

Out of 196 exemptions, 146 exemptions are being extended for one year, up to March 2024, while a few are being extended for five and two years and some discontinued with effect from March 31, 2023.

On the excise duty front, the Finance Minister said to avoid cascading of taxes on blended compressed natural gas, it is proposed to provide exemption from the levy on GST-paid compressed bio gas contained in it.

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Union Law Minister Kiren Rijiju said Phase III of eCourts Project will build on the gains made by the earlier two phases that proved crucial in the delivery of justice during the COVID-19 pandemic when courts were under lockdown protocol. File
| Photo Credit: PTI

Finance Minister Nirmala Sitharaman on Wednesday allocated ₹7,000 crore for the launch of Phase III of the eCourts Project that seeks efficient administration of justice.

Union Law Minister Kiren Rijiju, in a series of tweets, thanked Prime Minister Narendra Modi, the Finance Minister as well as Chief Justice of India D.Y. Chandrachud, who headed the eCommittee of the Supreme Court.

Track Budget 2023 latest updates here

“This will ensure “Ease of Justice” and further improves the justice delivery system that the Hon’ble PM @narendramodi ji has always envisioned,” Mr. Rijiju tweeted.

“I also compliment the Hon’ble Chief Justice of India, Dr D.Y. Chandrachud ji who as the Chairperson of the eCommittee of the Supreme Court of India has been instrumental in the success of the earlier phases of the eCourts Project and who personally supervised and mentored the formulation of the DPR [Detailed Project Report] of the Phase-III of the Project,” he added.

The Minister said Phase III of eCourts Project will build on the gains made by the earlier two phases that proved crucial in the delivery of justice during the COVID-19 pandemic when courts were under lockdown protocol.

“The project envisages various path breaking initiatives like: Digital & Paperless Courts that aim to bring court proceedings under a digital format in a court, thereby, limiting the use of paper and speeding up the disposal of cases, Online Court that focus on eliminating the presence of litigants or lawyers in the court, Expansion of scope of Virtual Courts beyond adjudication of Traffic Violations,” Mr. Rijiju said in the tweets.

The Minister noted that the use of Artificial Intelligence and Machine Learning would allow for data analysis to work towards reduction in pendency and understanding litigation patterns and forecasting future needs.

While 4,400 fully functional eSewa Kendras will provide assistance to all lawyers and litigants, live streaming of court hearings would allow for further transparency in judicial proceedings, he said.

Digitisation of all court records will further pave the way for a completely paperless environment in future. “An Online Dispute Resolution platform will encourage alternate dispute resolution and a robust video conferencing system will create seamless connectivity between the jails & courts, allowing for all bail appearances over VC,” Mr. Rijiju said.

A worker in one of the oldest and largest diamond polishing units of Surat checking its dazzle. File image for representation
| Photo Credit: Vijay Soneji

To harness the potential of Lab Grown Diamond (LGD) or synthetic diamond segment, the Union Budget 2023-24 presented by the Finance Minister Nirmala Sitharaman has laid emphasis on research & development as well as to make it competitive in the international markets.

“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,” the FM said in the Parliament.

Also Read: Key Highlights from Union Budget 2023-24

To reduce the cost of production, the FM has proposed to reduce basic customs duty on seeds used in their manufacturing. Also she has proposed to increase customs duties on silver dore, bars and articles to align them with that on gold and platinum.

Vipul Shah, Chairman, Gem & Jewellery Export Promotion Council (GJEPC) said the FM” decision to accept their recommendation pertaining to the LGD industry would ensure India’s end-to-end world leadership in rough to finished lab-grown diamond and jewellery manufacturing.

“Another positive pro-growth move is that the conversion of physical gold into digital gold will not attract capital gains tax,” he said.

Saiyam Mehra, Chairman, Gem & Jewellery Council (GJC), the domestic council of the industry said, “The Gems & Jewellery Industry’s critical concerns are not addressed in the Union Budget 2023-24. While the Research and Development grant will be provided to one of the IITs for the development of Lab Grown Diamond seeds and machines, the other sectors of the industry have been ignored.”

“The reduction in Gold Custom Duty in this Budget was our big expectation, which has severely hampered the industry and encouraged smuggling and grey market. GJC has been actively representing the reduction in customs duty of Gold over past many years. However, the Silver Dore Bars Custom Duty has been brought at par with Gold and platinum in this budget. This move will adversely affect the masses,” he said.

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