Union Budget 2023 is the first budget of ‘Amrit Kaal’. The budget for 2023 takes a more people-centric agenda to take on global challenges.
The 7 Priorities for the Budget 2023
- Inclusive Development
- Reaching the Last Mile
- Infra and Investment
- Unleashing the Potential
- Green Growth
- Youth Power
- Financial Sector
The 2023-24 Union Budget aims to spur growth despite worries about the global slowdown’s effects. The finance minister stated that despite the Covid-19 pandemic and the Russia-Ukraine conflict causing a significant slowdown globally, India’s economy is on a positive path towards a better future. India managed a 7% growth rate despite the global slump.
The fiscal deficit is estimated to be 5.9% of GDP.
Union Budget Highlights 2023
1 – Inclusive Development
The government’s philosophy of “Sabka Saath Sabka Vikas” has promoted inclusive development for specific groups such as farmers, women, youth, OBCs, Scheduled Castes, Scheduled Tribes, the differently-abled, and economically weaker sections, with a focus on Jammu & Kashmir, Ladakh, and the North-East. This budget expands on these efforts.
Agriculture and Cooperation
- Digital Public Infrastructure for Agriculture: To provide farmer-centred solutions for crop planning and health, access to farm inputs, credit, and insurance, crop estimation, market intelligence, and support for the agri-tech industry and startups.
- Agriculture Accelerator Fund: To support agri-startups by young entrepreneurs in rural areas.
- Improving Cotton Crop Productivity: A partnership between state, farmers, and industry for input supplies, extension services, and market linkages through public-private partnerships.
- Atmanirbhar Horticulture Clean Plant Program: To increase the availability of quality planting material for high-value horticultural crops with an investment of 2,200 crores.
- Global Millets Hub “Shree Anna”: Indian Institute of Millet Research in Hyderabad will be a centre of excellence for sharing research, best practices, and technology.
- Agriculture Credit: The credit target will be increased to INR 20 lakh crore, focusing on dairy, animal husbandry, and fisheries.
- Fisheries: Launching a new sub-scheme of PM Matsya Sampada Yojana with a target investment of 6,000 crores to improve the activities of fishermen, micro & small enterprises, and fish vendors, and improve value chain efficiency, and expand the market.
- Cooperation: The government plans to set up decentralized storage capacity with the help of Primary Agricultural Credit Societies to help farmers store their produce and get better prices. The government also plans to set up cooperative societies – fishery and dairy in the next 5 years.
Health, Education, and Skilling
- Nursing Colleges: To establish 157 new nursing colleges in conjunction with the existing 157 medical colleges.
- Sickle Cell Anaemia Elimination Mission: Launching a mission to eliminate Sickle Cell Anaemia by 2047.
- Medical Research: Select ICMR Labs will be available for research by private sector R&D teams and public and private medical college faculty to encourage collaboration and innovation.
- Pharma Innovation: A new program will be taken up to promote research and innovation in pharmaceuticals through centres of excellence.
- Medical Devices Courses: Dedicated medical device courses will be supported in existing institutions to ensure a skilled workforce for futuristic medical technologies, high-end manufacturing, and research.
- Teacher Training: District Institutes of Education and Training will be developed as institutes to enhance teacher training.
- National Digital Library for Children and Adolescents: A digital library for adolescents and children will be set up to provide quality books across geographies, languages, genres, and levels with device-agnostic accessibility.
2 – Reaching the Last Mile
- Building on the success of Aspirational Districts and Blocks Programme
- Pradhan Mantri PVTG Development Mission: Improve socio-economic conditions of the particularly vulnerable tribal groups (PVTGs).
- Eklavya Model Residential Schools: Recruitment of 38,800 teachers and support staff for Eklavya Model Residential Schools.
- Upper Bhadra Project: Water for Drought Prone Region with central assistance of INR 5,300 crore.
- PM Awas Yojana: To be enhanced by 66%.
- Bharat Shared Repository of Inscriptions (Bharat SHRI): Set up a digital epigraphy museum to digitize one lakh ancient inscriptions in phase 1.
- Required financial support for poor prisoners for penalty amount or bail fees.
3 – Infrastructure & Investment
- Capital Investment as a driver of growth and jobs: The government is increasing its capital investment by 33% to 10 lakh crore, which is 3.3% of GDP.
- Effective Capital Expenditure: It is budgeted at 13.7 lakh crore or 4.5% of GDP.
- Support to State Governments for Capital Investment: To spur investment in infrastructure and incentivize state governments, a 50-year interest-free loan will be continued for another year.
- Enhancing opportunities for private investment in Infrastructure: The Infrastructure Finance Secretariat will help increase private investment in railways, roads, urban infrastructure, and power.
- Railways: A capital outlay of INR 2.40 lakh crore has been provided for the Railways. The highest ever.
- Logistics: 100 critical transport infrastructure projects will be taken up with an investment of 75,000 crores, including 15,000 crores from private sources.
- Regional Connectivity: 50 additional airports and landing grounds will be revived for better regional air connectivity.
- 13 Sustainable Cities of Tomorrow: Encourage states and cities to implement urban planning reforms to create a more sustainable future for our cities.
- Making Cities ready for Municipal Bonds
- Development of Urban Infrastructure Development Fund
- Urban Sanitation: All towns and cities will be enabled for 100% mechanical desludging of septic tanks and sewers. The aim is to transition from manhole to machine-hole mode. Furthermore, the focus will be towards the scientific management of wet and dry waste.
4 – Unleashing the Potential
- Mission Karmayogi: Provide continuous learning opportunities for lakhs of government employees. Enhance the ease of doing business with lesser compliance.
- Centres of Excellence for Artificial Intelligence: Set up three AI centres of excellence across top educational institutions to realize the vision of “Make AI in India and Make AI work for India”.
- Development of National Data Governance Policy
- Simplification of Know Your Customer (KYC) process.
- One-stop solution for identifying and updating demographics using Aadhaar as foundational identity and DigiLocker service.
- PAN will be the Common Business Identifier for all digital systems.
- Unified Filing Process
- Vivad se Vishwas I – Relief for MSMEs
- Vivad se Vishwas II – Settling Contractual Disputes
- State Support Mission: Continuation of NITI Aayog for three years.
- Result Based Financing: Better allocation of scarce resources for competing development needs. Financing will be changed, on a pilot basis, from ‘input-based’ to ‘result-based’.
- E-Courts: Phase-3 of the outlay will launch E-Courts.
- Fintech Services: The number of documents available in DigiLocker for individuals will be increased.
- Entity DigiLocker: For MSMEs, large businesses & charitable trusts, entity Digi locker will be set up to access documents easily.
- 5G Services: 100 new labs for developing apps using 5G services to be set up in engineering colleges to find a new range of opportunities.
- Lab Grown Diamonds: Encourage the production of more Lab Grown Diamonds (LGD).
5 – Green Growth
- Green Hydrogen Mission: Target is to reach an annual production of 5 MMT by 2030.
- Energy Transition: This Budget provides INR 35,000 crore for priority capital investments. The focus is towards energy transition and net zero carbon objectives.
- Energy Storage Projects: To drive sustainable economic growth, battery energy storage systems with a capacity of 4,000 Mega Watts will receive funding through the Viability Gap Program.
- Renewable Energy Evacuation: The inter-state transmission system for the integration and evacuation of 13 GW of renewable energy from Ladakh will be built with an investment of 20,700 crores, including central support of 8,300 crores.
- Green Credit Programme: The programme will be put into effect under the Environment (Protection) Act to encourage environmentally responsible actions from companies, individuals, and local bodies. This will provide incentives for sustainable behaviour and help gather additional resources for related activities.
- Launch of PM-PRANAM: Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth to incentivize States and UTs for balanced use of chemical fertilizers to promote alternative fertilizers.
- GOBARdhan scheme: 500 new ‘waste to wealth’ plants under Galvanizing Organic Bio-Agro Resources Dhan scheme will be established to promote a circular economy.
- Bhartiya Prakritik Kheti Bio-Input Resource Centres: The centre aims to support 1 crore farmers in transitioning to natural farming over the next three years. By establishing 10,000 Bio-Input Resource Centers, and building a nationwide network for micro-fertilizer and pesticide production.
- MISHTI: ‘Mangrove Initiative for Shoreline Habitats & Tangible Incomes’, will be taken up for mangrove plantation along the coastline and on salt pan lands.
- Amrit Dharohar: Optimize wetlands use and boost biodiversity, carbon stock, eco-tourism and income for local communities in the next 3 years.
- Coastal Shipping: Promote it as cost-effective, energy-efficient transport via PPP with viability gap funding.
- Vehicle Replacement: Replace old, polluting vehicles.
6 – Youth Power
- Pradhan Mantri Kaushal Vikas Yojana 4.0: Aim to skill lakhs of youth.
- Skill India Digital Platform: Expand the digital skilling ecosystem with a unified platform for demand-based formal skilling, employer linkages, and entrepreneurship access.
- National Apprenticeship Promotion Scheme: Provide stipend support for 47 lakh youth.
- Tourism: 50 destinations will be selected through a challenge mode with an integrated approach for enhancing the tourist experience. All relevant information will be available on an app, with a focus on both domestic and foreign tourists. “Dekho Apna Desh” initiative was launched to encourage the middle class to prefer domestic tourism.
- Unity Mall: States will be encouraged to establish a Unity Mall to promote and sell their own ODOPs (one district, one product) and GI products, as well as handicraft products from other states. The mall will be located in a state capital or major tourism centre, or financial hub.
7 – Financial Sector
- Credit Guarantee for MSMEs: The MSME Credit Guarantee scheme will begin on April 1, 2023, with a corpus infusion of 9,000 crores. 2 lakh crores of additional collateral-free guaranteed credit and a 1% reduction in credit cost.
- National Financial Information Registry: A central repository of financial and ancillary information to be set up.
- Financial Sector Regulations: To regulate the financial sector, public consultation will be incorporated into the regulation-making process, and existing regulations will be reviewed for simplification, ease and cost reduction. Regulated entities and the public will be asked for suggestions, and decision time limits will be set for applications under various regulations.
- GIFT IFSC & Data Embassy
- To enhance business activities in GIFT IFSC, the following measures will be taken:
- Delegating powers under the SEZ Act to IFSCA to avoid dual regulation,
- Setting up a single window IT system for registration and approval from IFSCA, SEZ authorities, GSTN, RBI, SEBI and IRDAI,
- Permitting acquisition financing by IFSC Banking Units of foreign banks,
- Establishing a subsidiary of EXIM Bank for trade re-financing,
- Amending IFSCA Act for statutory provisions for arbitration, ancillary services, and avoiding dual regulation under SEZ Act, and
- Recognizing offshore derivative instruments as valid contracts.
- Setting up of Data Embassies in GIFT IFSC.
- Improve Governance and Investor Protection in the Banking Sector
- Capacity Building in the Securities Market: SEBI will regulate norms and standards for education at the National Institute of Securities Markets and have the power to recognize awarded degrees, diplomas and certificates to build capacity of securities market professionals.
- Set up of Central Data Processing Centre
- Integrated portal for reclaiming of shares and dividends
- Continuous Fiscal support for Digital Payments infrastructure
- Mahila Samman Bachat Patra: Launch of a new small savings scheme for 2 years up to March 2025, offering deposit facility up to INR 2 lakh in the name of women or girls, with a fixed interest rate of 7.5% and partial withdrawal option.
- Senior Citizens: Increase the deposit limit for Senior Citizen Savings Scheme to 30 lakhs and for Monthly Income Account Scheme to 9 lahks (single) and 15 lahks (joint).
Simplification of Indirect taxes to promote higher exports, higher domestic manufacturing, more value addition to the economy and encourage green energy and mobility.
- Green Mobility: Exempt excise duty on GST-paid compressed biogas contained in it. Customs duty exemption for import of machinery and capital goods for the manufacture of lithium-ion cells for batteries that are used in electric vehicles.
- Electronics: Relief in customs duty on the import of certain mobile inputs and parts like a camera lens. A continued concessional duty on lithium-ion cells for batteries for another year. Reduction of the basic customs duty on TV parts of open cells to 2.5%.
- Electrical: The basic customs duty on the electric kitchen chimneys is being increased from 7.5% to 15%, and on heat coils, is reduced from 20% to 15%.
- Chemicals and Petrochemicals: Exempt basic customs duty on it. The basic customs duty on acid-grade fluorspar will be reduced from 5% to 2.5% to improve the competitiveness of the domestic fluorochemicals industry. The customs duty on crude glycerin for use in epichlorohydrin manufacture will be reduced from 7.5% to 2.5%.
- Marine products: Duty reduced on key inputs for domestic manufacture of shrimp feed.
- Lab-Grown Diamonds: Reduce basic customs duty on LGD seeds used in their manufacture.
- Precious Metals: Increase the import duty on bars, silver dore, and articles to align them with that on gold and platinum.
- Metals: CRGO Steel raw materials, ferrous scrap, nickel cathode to continue being exempt from Basic Customs Duty. Copper scrap to have a 2.5% concessional BCD to ensure availability for MSME sector secondary copper producers.
- Compounded Rubber: The customs duty on compounded rubber will be raised from 10% to 25% or 30/kg, whichever is lower, to prevent duty avoidance, matching the rate for natural rubber.
- Cigarettes: National Calamity Contingent Duty (NCCD) is increased by about 16%.
- MSME: Enhanced limits for micro-enterprises and professionals. They will avail benefits of presumptive taxation; 95% of receipts are non-cash. Deduction on payments is allowed only when the actual payment is made to MSMEs.
- Cooperatives: Extending 15% corporate tax benefits to new co-operatives, commencing manufacturing till 31st March 2024. The higher limit of 32 lahks per member for deposits & loans in cash by PACS and PCARDBs. The higher limit of INR 3 crore for TDS on cash withdrawal for co-operative societies
- Start-ups: Extend date of incorporation for income tax benefits by 1 year, extend carry-forward of losses from 7 to 10 years on change of shareholding
- Rationalization: Exempt certain statutory Union/State authorities, boards, commissions from income tax, extend tax benefits for funds relocating to IFSC, GIFT City till 2025-03-31.
Personal Income Tax
- Increase in rebate limit to 7 lakh in the new tax regime. Thus, persons in the new tax regime with income up to 7 lakh will not have to pay any tax.
- Change in Tax Slabs Under New Tax Regime
|Annual Income Slab||Income Tax Rates|
|0 – 3 lakhs||0%|
|3 lakhs – 6 lakhs||5%|
|6 lakhs – 9 lakhs||10%|
|9 lakhs – 12 lakhs||15%|
|12 lakhs – 15 lakhs||20%|
|More than 15 lakhs||30%|
A major relief to all taxpayers in the new regime. If your annual income is INR 9 lakh you will pay only INR 45,000. This is only 5% of your income. This is a reduction of 25% on what you pay now, i.e., INR 60,000.
Similarly, if your income is INR 15 lakh you will be paying only INR 1.5 lakh or 10% of your income. This is a reduction of 20% from the existing liability of INR 1,87,500.
- For employees and pensioners, including family pensioners, enjoy the benefit of the standard deduction to the new tax regime. Each salaried person with an income of INR 15.5 lakh or more will stand to benefit by INR 52,500.
- The highest personal tax rate is 42.74%. Reduction in the highest surcharge rate from 37% to 25 % in the new tax regime. As a result, the maximum tax rate is now 39%.
- The higher limit on the tax exemption of leave encashment of INR 3 lakh on retirement for non-government salaried employees increased to INR 25 lakh.
Going forward, the new income tax regime is the default tax regime. However, the taxpayers will have the option to continue with the old income tax regime.
As a result of the above proposals, revenue of about INR 38,000 crore – INR 37,000 crore in direct taxes and INR 1,000 crore in indirect taxes will be forgone. At the same time, the revenue of about INR 3,000 crore will be additionally mobilized. Thus, the total revenue forgone is about INR 35,000 crore annually.
Union Budget Highlights 2022
The focus of Union Budget 2022 was on ‘digital and technology,’ but not limited to it. Furthermore, the Union Budget set the groundwork and laid out the economic roadmap for the next 25 years, from India 75 to India 100.
India’s GDP of 9.2% is amongst the highest rate across all the economies. Moreover, Amidst the Covid-19 and its variants, the economy was able to perform well. The country plans to keep up with its vaccine efforts and believes the vaccination drives have made a significant difference. Union Budget 2022 includes a significant rise in public investment and capital spending.
Goals of ‘Amrit Kaal’
- Focus on growth and all-inclusive welfare
- Promoting technology-enabled development, energy transition and climate action
- Virtuous cycle starting from private investment, crowded in by public capital investment
Union Budget 2022
Budget Allocation for 2022-23
- In FY23, India is expecting to have a 6.4% fiscal deficit.
- The revised fiscal deficit is anticipated to be 6.9% of GDP.
- States will receive INR 1 lakh crore in interest-free loans over 50 years to help support PM Gati Shakti’s initiatives.
- In 2022-23, the government expects its effective capital spending to be INR 10.68 lakh crore or 4.1% of GDP.
- In 2022-23, the capital expenditure budget to increase by 35.4%, from Rs 4.54 lakh crore to Rs 7.50 lakh crore.
- A new provision allows taxpayers to amend a previous return and include omitted income by making an extra tax payment. Also, you can update the returns within two years from the end of the relevant assessment year.
- For start-ups, the tax incentive period to extend by one year. Tax incentives will now be available to eligible companies formed under Section 80-IAC until 31st March 2023.
- Reduction in corporate surcharge from 12% to 7%.
- Furthermore, a reduction in Alternate Minimum Tax (AMT) for co-operative societies to 15%.
- Income from digital assets (cryptos) will be taxable at 30%. Also, no deductions are available except the cost of acquisition of digital assets. Furthermore, the loss on the sale of digital assets cannot be offset by any other income.
- The Finance Ministry recommended raising the employer contribution to the National Pension Scheme (NPS) Tier-I account from 10% to 14% to achieve parity between central and state government employees.
- Once the parent or guardian of the differently-abled has reached the age of 60, the payment of the annuity or lump sum can be deducted from the parent’s or guardian’s taxes.
- Also, Surcharges and Cess on income cannot be a business expense.
- Carry forward loss cannot be set off against the undisclosed income discovered during any search or survey.
- The due date for amendments, corrections, uploading missed sales invoices or notes or claims (Input Tax Credit or ITC) of one financial year is 30th November of the following year, rather than September of the following year.
- The largest gross GST revenue collection since the start of GST was INR 1,40,986 crore in January 2022.
- Concessional customs duty on capital goods imports will be phased out, with a starting rate of 7.5%.
- Over 350 import exemptions for agricultural products, chemicals, pharmaceuticals, and other items will be phased out.
- Import duty exemptions for phone chargers, transformers, and other electronic components enable domestic production.
- Higher import taxes on fake jewellery to discourage their use.
- Reduction in duty on some types of leather and packaging boxes to encourage exports.
- Furthermore, reduction in customs duty on cut and polished diamonds and stones to 5%.
- Extension on the tariff exemption on steel scrap for another year to assist MSMEs.
- Reduction in Methanol’s customs duty.
- Higher excise fee on unblended fuel to encourage fuel blending (INR 2 per liter).
- An open platform for the National Digital Health Ecosystem. This consists of digital registries of health practitioners and facilities, a unique health identity, and also universal access to health services.
- The pandemic has brought mental health to the forefront. There will be the launch of a nationwide tele mental health programme.
- Upgrading over 2 lakh Anganwadi.
- Setting up a digital university for online education. Also, it will focus on ICT using a hub and spoke model.
- In all states, select ITIs will offer skilling courses.
- PM eVIDYA’s “one class, one TV channel” programme to expand from 12 to 200 TV channels. As a result, all states will be able to provide extra education in regional languages to students in grades 1 through 12.
- The Production Linked Incentive (PLI) Scheme for attaining Aatmanirbhar Bharat has gotten a strong response, potentially creating 60 lakh new employment and additional production of 30 lakh crore during the next Keycap digit five years.
- PLI initiatives in 14 sectors have sparked a massive reaction, resulting in the creation of 60 lakh jobs.
- The government will push funds for blended finance (with the government’s contribution limited to 20%) for sunrise prospects, including climate action, agri-tech, and so on.
- NABARD will support a fund to finance agriculture and rural enterprise start-ups that are important to the farm produce value chain. Also, FPOs to get support by start-ups, which will give technology to farmers.
- Promoting Kisan Drones for crop evaluation, land record digitization, insecticide and also nutrient spraying.
- Wheat procurement in Rabi season 2021-22 and anticipated paddy procurement in Kharif season 2021-22 will include 1208 lakh metric tonnes of wheat and paddy from 163 lakh farmers. This also includes INR 2.37 lakh crore in direct MSP payments to their accounts.
- Farmers will be able to access high-tech services for the first time.
- Promotion of chemical-free natural farming.
- Identify Eighty lakh families for the affordable housing project in 2022-23.
- 60,000 crore set aside to provide tap water more than 3.5 crore households.
- The Ken-Betwa link worth Rs 44,605 crore will provide irrigation to over 9.05 lakh hectares of drinking water, hydro and also solar power to 65 lakh people.
- ‘One Station – One Product,’ 400 next-generation Vande Bharat trains, and also 100 PM trains are among the new railway plans.
- Over the next three years, Gati Shakti cargo terminals will integrate NIP with Gati Shakti. This will be critical for job creation because the transportation network is rich in backward and forward linkages with the rest of the economy.
- DPR drafts for five river links finalized.
- 400 Vande Bharat trains to improve passenger efficiency would be created in the following three years.
- The Union Budget prioritizes public investment in infrastructure modernization over the medium term, leveraging Gati Shakti’s technology platform through a multi-modal approach.
- In FY23, to grant four contracts for multi-modal national parks.
- The upcoming financial year will see the formulation of PM Gatishakti’s highway master plan.
- PM’s Gatishaktu master plan will comprise seven engines of economic transformation.
Energy and EV
- The FM has announced a PLI allocation of INR 19,500 crore for solar modules.
- Emphasis on energy efficiency and conservation.
- Implement a battery-swapping regulation, to help the EV ecosystem along with interoperability standards.
Investments and Start-ups
- Formation of an expert committee to assess the regulatory framework for venture capital.
- Defence R&D would be available to businesses and entrepreneurs.
- Encourage Start-ups to facilitate ‘drone shakti,’ which will encourage the use of drones.
- To launch the next phase of ease of doing business.
- The government has taken steps to help MSMEs become more resilient and competitive.
- The Emergency Credit Line Guarantee Scheme (ECLGS) has aided 130 lakh MSMEs in mitigating the pandemic’s harshest effects.
- FM extends ECLGS till 23rd March to help industries that were disproportionately affected by the pandemic. Since MSMEs account for roughly 95% of ECLGS borrowers, this action will ensure that MSMEs and the services sector will continue to receive support.
- The services sector, which accounts for over 60% of India’s GDP, continues to be a key driver of economic growth, job creation, income production, and also livelihood assistance in the country.
- The extension of ECLG will boost lending to small and medium-sized businesses.
Internet and Connectivity
- In 2022-23, there will be a 5G spectrum auction.
- The PPP approach to award Bharatnet project contracts for optical fiber networks.
- Villages to have the same access to digital resources as cities.
- Launch of an online bill system to reduce delay in payment. Also, All central ministries will be using the online bill system.
- Credit surged by more than INR 5 lakh crore, the highest level in many years.
- Starting in 2022-23, the Reserve Bank of India (RBI) will issue a digital rupee based on blockchain technology.
- E-passports featuring futuristic technology will be issued in 2022-23.
- In 2022-23, the domestic defence industry will receive 68% of the capital procurement budget. Also, India will begin issuing e-passports in 2022-23, according to the finance minister.