Key Budget Highlights 2023
01 February, 2023
Union finance minister Nirmala Sitharaman presented the first budget in the Amrit Kaal today, the fifth budget in the Modi 2.0 era. This budget strives to further build upon the previous budget, as the Indian economy transitioned from being the 10th largest to the 5th largest in the world. Here are some key updates for you.
Economic health:
The overall macroeconomic health of the country seems to be in good shape as monthly GST collection continues to hover around ₹1.5 lakh crore and the asset quality of banks continues to improve. The country also has enough forex reserves to cover 9 months’ worth of imports. Our projected growth for the current fiscal year is 7%, the highest of all major economies.
The Finance Minister maintained a target fiscal deficit of 6.4% of the GDP for FY23 and reiterated her target of bringing it down to 4.5% by 2025-26.Large Capex Plans:
The centre has planned a total capital outlay of ₹10 lakh crore, which is a 33.4% jump over the previous budget. The budget announced massive fund infusion in the railway sector in the upcoming fiscal year. A record ₹2.4 lakh crore has been set aside for capital outlay in the railways segment. The announced capex will also fund the construction of 50 new airports, ports, helipads, etc., to boost regional connectivity.
The agricultural sector has also gotten some attention. The outstanding bank loans to agricultural and ancillary businesses stood at ₹16.3 lakh crore on 30th December 2022, which is ₹1.69 crore higher than the previous year. ₹20 lakh crore in agricultural credit has thus been set as the target for 2023-24. Collateral-free agri-loan limit has also been elevated from ₹1 lakh to ₹1.6 lakh.
Under the PM Matsya Sampada Yojana, schemes with an outlay of ₹6,000 crore will also be laid out to support the fisheries segment.Green Energy in focus:
The transition to green energy is also in the budget’s crosshairs. ₹35,000 crore as ‘priority capital’ will facilitate the transition to green energy. The government will push this initiative further through viability gap funding and help set up 4,000 MwH of energy storage. A 13 GW renewable energy project worth ₹27,000 crore has also been announced for Ladakh, of which ₹8,300 will be funded by the centre.Big Push for MSMEs:
Further, the budget has earmarked ₹9,000 crore for infusion in the MSME segment, which will unlock ₹2 lakh crore to facilitate collateral-free credit. This comes as the world prepares to combat an impending recession. This will also result in a 1% drop in cost of credit.
Manufacturing Boost:
Mobile phone manufacturing in India witnessed a jump from 5.8 crore units in 2014-15 to 31 crore units in the last fiscal year. Duty cuts on import of mobile camera lenses and batteries was announced for another year as a value-adding move for the economy.Duty revisions:
Moreover, specific cigarettes are getting a 16% hike in calamity contingent duty, which will eventually make them more expensive. The import duty on silver bars has been raised to level it with platinum and gold as well.Tax Slab Revisions:
The most awaited part of the budget was taxation policy. The new tax regime is set to become the default tax regime in the country. The tax slabs have been revised with no tax on an annual income of ₹7 Lakh per annum. The slabs for the new regime are as follows:
₹3-6 lakh – 5%
₹6-9 lakh – 10%
₹9-12 lakh – 15%
₹12-15 lakh – 20%
>₹15 lakh – 30%
The government is also deliberating on pushing the limit on tax rebates from ₹5 lakh to ₹7 lakh. How everything unfolds from here will be closely watched by many as the outlook remains optimistic.
Want to know more about the glossary of terms used in the Union Budget? Read more here.
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