Union Budget 2023: All the details you need to know

Finance Minister Nirmala Sitharaman announced the Union Budget for FY 22-23 recently as the same was fairly eventful. This was the final full-year budget for the Modi government as we are all set to enter elections in 2024.

In her 60+ minute presentation yesterday, she set forth several proposals, reforms and estimates for the upcoming fiscal year year with 3 main economic objectives outlined: 1] facilitating ample opportunities for citizens, especially the youth to fulfil their aspirations;2] providing strong impetus for growth and job creation;3] strengthening macro economic stability. Some of the most important points from her announcement today are: -

• The PM Garib Kalyan Yojana, in accordance with which priority households were being given free food grains, will be extended by another year & the same will cost the Central government Rs 2 lakh crores.
• A package was announced to assist local artisans whereby they will be provided training, knowledge of digital techniques and social security in order to help the artisans improve the quality of their goods, improve the scale and reach of their products & integrate them with the MSME value chain.
• To boost the tourism sector, the government has announced the active participation of states and public-private partnerships. Moreover, 50 destinations will be selected to be included on an app which will enhance tourist experience.

However, there were 7 main components of the Union Budget 2023: -

1. Inclusive Development:
   1. Digital infrastructure for agriculture will be built as an open source interoperable public good. 
   2. Agriculture accelerator fund will be set up to encourage agri startups. 
   3. Launch of an Atma Nirbhar Clean Plant Program for high value crops at an outlay of Rs 2,200 crores. 
   4. To make India a global hub for millets, the Indian Institute of Millet Research will be supported for best practices internationally. 
   5. Plan to set up massive decentralized storage capacity to help farmers store their produce and realize best prices. 
   6. A new pharma program which promotes research and innovation in pharmaceuticals will be taken up through centres of excellence while encouraging companies to invest in R&D.
2. Reaching the Last Mile:
   1. Launch of a PM Primitive Vulnerable Tribal Groups (PVTG) Development Mission to improve socioeconomic conditions of PVTGs by providing sanitation, safe housing, clean drinking water, improved access to education, road, telecom connectivity, health, nutrition and sustainable livelihood opportunities. An amount of Rs 15,000 crores will be made available for the plan over 3 years. 
   2. Assistance of Rs 5,300 crores to drought hit mid-Karnataka. 
   3. Enhancement of the outlay of the PM Awas Yojana by 66% to over 79k crores. 
3. Infrastructure and Investment:
   1. Increase in the capital investment outlay, for 3rd year in a row, by 33% to Rs 10 lakh crores or 3.3% of GDP. 
   2. Effective capex of Centre is budgeted at Rs 13.7 lakh crores. 
   3. Railways will get capital outlay of Rs 2.4 lakh crores, its highest ever.
   4. Investment of Rs 75,000 crores in 100 projects for ‘Last and First’ mile connectivity for ports, coal, steel, fertiliser and food grains sector. 
4. Unleashing the Potential:
   1. Artificial Intelligence (AI) will get 3 centres for intelligence in top educational institutions and will see collaboration from top organisations. 
   2. The KYC process will be simplified. For businesses, PAN will be used as common identifier for all digital systems of specified govt agencies to improve Ease of Doing Business and will be facilitated via legal mandate. 
   3. Phase-3 of the e-court projects to be launched with outlay of Rs 7,000 crores. 
   4. To enable more fintech innovative services, scope of documents available in digi-locker will be expanded and an entity locker will be set up for use by MSMEs, large businesses and charitable trusts. 
   5. 100 labs to be set up for 5G services apps development. 
   6. To promote lab grown diamonds, R&D grant will be provided to an IIT for 5 years & reduction in the basic customs duty on import of it's seeds.
5. Green Growth:
   1. Moving towarda the aim of Net Zero carbon emissions by 2070, Rs 35,000 crores investment will be made towards energy transition and net zero objectives.
   2. Viability gap funding to be provided for battery energy storage systems with capacity of 4,000 Mwh. 
   3. Renewable energy evacuation and grid integration inter-state transmission system for 13 Gw from Ladakh will be constructed with an outlay of Rs 20,700 crores. 
   4. Green credit program to be notified. 
   5. 500 new waste-to-wealth plans under ‘Gobardhan’ scheme will be established at an investment of Rs 10,000 crores. 
   6. Over the next 3 years, the government will facilitate 1 crore farmers to adopt natural farming through the setup of 10,000 bio input resource centres. 
   7. Coastal shipping will be promoted for passengers and freight through viability gap funding. 
   8. Replacement of old polluting vehicles of governments, on both State and Central, in pursuit of vehicle scrapping policy. 
6. Youth Power:
   1. Pradhan Mantri Kaushal Vikas Yojana 4.0 will be launched to upskill lakhs of youths within next 3 years through methods such as on job training, new age courses and industry partnership. 
   2. For international opportunities, 30 Skill India International centres will be set up across different states. 
   3. To provide stipend support to 47 lakh youth in 3 years, direct benefit transfer under Pan-India National Apprenticeship scheme will be rolled out.
7. Financial Sector:
   1.  Revamped credit guarantee scheme for MSMEs will take effect from 01/04/2023 with a corpus of Rs 9,000 crores, resulting in reduction of cost of debt by 1%. 
   2. National Financial Information Registry will be set up to serve as the central repository for financial and ancillary information. 
   3. To enhance business activities in Gift IFSC, power will be delegated to the IFSCA to avoid dual regulation. Moreover, a single window IT system for registration and approval of IFSCA, SEZ authorities, RBI, SEBI, IRDAI and GSTN will be set up.
   4. Permitting acquisition financing by IFSC banking units of Foreign Banks
   5. Establishing subsidiary of Exim bank for trade refinancing. 
   6. Amending IFSC act & recognizing off shore derivatives as valid contracts. 
   7. Countries looking for Digital Continuity solutions will be facilitated by India in setup of their data facilities in gift IFSC.

FM Sitharaman also laid out certain proposals in her address to the Parliament: -

• To reduce the number of basic customs duty rates on goods, other than textile and agriculture, from 21 to 13.
• To exempt excise duty on GST paid compressed biogas contained units. 
• Customs duty exemption to be extended to import of capital goods and machinery required for manufacture of lithium-ion cells. 
• To provide relief on customs duty on import of certain parts and inputs like camera lens and continue the concessional duty on lithium ion cells for one more year of Mobile phones.
• To reduce customs duty on TV parts to 2.5%.
• Proposal to exempt basic customs duty on Denatured ethyl alcohol, a key component used in the chemical industry. 
• Upwards revision of 16% of ‘natural calamity contingent duty’ on certain cigarettes.
• Higher limit of 3 crore for TDS on cash withdrawal for co-operative societies.

Finally, the Budget also announced certain tax reforms which were aimed to curry favour with the public before the 2024 elections: -

• Rebate under 87A limit improved to Rs 7 lakhs under the new tax regime while the basic exception limit has increased to Rs 3 lakhs.

• Salaried individuals will get a standard deduction of Rs 52,500.
• Reduction of the highest surcharge rate from 37% to 25%, bringing the highest tax rate from over 47% to 39%. 
• Maximum limit for senior citizens savings account deposit will be improved from Rs 15 lakhs to Rs 30 lakhs. 
• Allow carry forward of loss on change of shareholding of startups from 7 to 10 years from incorporation. 

The Budget announcement also mentioned estimates pertaining to FY22-23: -

• Indian economic growth was expected to be 7% for the current year despite global economic challenges, the highest among all notable economies.
• Total receipts other than borrowings were estimated to reach Rs 27.2 lakh crores while Net tax receipts are estimated to reach Rs 23.3 lakh crores.
• Total expenditure during the year is estimated to surge to Rs 45 lakh crores.
• The fiscal deficit is expected to be 5.9% of the GDP, in line with the government’s target of 4.5% by 2025.
• Revenue of Rs 37,000 crores in Direct Tax and Rs 1,000 crores will be forgone on account of aforesaid tax cuts. Total revenue foregone will be Rs 35,000 crores annually.

Feel free to read the Honourable Finance Minister’s entire Budget announcement  here:https://www.indiabudget.gov.in/doc/budget_speech.pdf

Article by Aman Agarwal.