Budget 2023 HIGHLIGHTS: FM announces big tax sops, highest-ever capital outlay

Fifth time brings a fortune. No one ever said that.  

But on Wednesday, Finance Minister Nirmala Sitharaman fired up her fifth budget, precisely making the point.

Budget 2024 covered all bases right from the poor to the middle class to the rich. It promised to never leave the barrel of wheat and the jar of oil empty for poorer households, contains the magic election pudding of long-awaited tax sops, a jaw-dropping jump in capital expenditure, and yet sticks to a market-friendly fiscal deficit of 5.9%.

The unconventional mix of populism and growth as the length and breadth of the budget, makes the NDA government's last full budget before the general election, a mighty dragon slayer of all the ills holding back the Indian economy -- slow growth, slack in private investments, weak household consumption and high unemployment.

READ full column by Sunitha Natti

Read the full text of the Finance Minister's Budget 2023 speech HERE

* Railways get Rs 2.4 lakh crore, which is the highest ever allocation to it

* Agricultural credit target increased to Rs 20 lakh crore

* Mobility Infra --- 50 additional airports, heliports

* 50 destinations to be selected through challenge mode for tourism

* Mahila Samman Savings Certificate will be made available for two years, deposits of up to Rs 2 lakh at 7.5 per cent interest

* Senior Citizens' Savings Scheme deposit limit raised to Rs 30 lakh from Rs 15 lakh

* Income tax rebate limit increased from Rs 5 lakh to Rs 7 lakh under new tax regime

* Allocation for PM Awas Yojna increased by 66 per cent to over Rs 79,000 crore

* Capital investment outlay to be raised by 33 per cent to Rs 10 lakh crore, which will be 3.3 per cent of GDP in fiscal 2024

* Effective capital expenditure of centre to be - Rs 13.7 lakh crore

* 157 new nursing colleges in major locations

* Mission to eliminate sickle cell anaemia by 2047

* Tribals to get Rs 15,000 crore over next three years for safe housing, sanitation, drinking water, and electricity

* Manhole to machine-hole mode -- All cities and towns will be enabled for 100 per cent transition of sewers and septic tanks

* Eklavya Model Residential Schools - 38,800 teachers will be hired

* Goal 'Make AI in India', 'Make AI Work For India' -- three centres for excellence for AI will be set up in top educational institutes

* Rs 2,516 crore for Computerisation of 63,000 credit societies

* 100 labs to develop apps using 5G services to be set up in engineering institutions

* Rs 35,000 crore for energy transition to net-zero emission goals

* Green Hydrogen Mission for reduced dependence on fossil fuel

* Battery energy storage systems of 4000 MWh will be supported

* 39,000 compliances reduced for ease of doing business,

* 30 Skill India international centres to be set up

* Natural Farming - one crore farmers will get assistance

* 'Mangrove Initiative for Shoreline Habitats & Tangible Incomes', MISHTI, to be taken up for mangrove plantation along the coastline and on salt pan lands, through convergence between MGNREGS, CAMPA Fund and other sources.

The sari worn by finance minister @nsitharaman while presenting the #Budget2023 has been woven in #Navalgund of #Dharwad
It was gifted to her by a woman entrepreneur from the district @santwana99 @NewIndianXpress @XpressBengaluru @KannadaPrabha @HubliCityeGroup @Namma_HD pic.twitter.com/TzuzlooQno

— Amit Upadhye (@Amitsen_TNIE) February 1, 2023

The current highest personal tax rate of 42% is the the highest in the world. The Finance Minister proposed to reduce the surcharge for highest income earners from 37% to 25%, taking the highest tax rate down to 39%.

Hard-working middle-class to be rewarded, says Finance Minister. IT rebate threshold increased to Rs 7 lakh in the new tax regime. No tax till that limit.

5% tax on income of Rs 9 lakh and 10% tax on those with income of Rs 15 lakh.

• 0 to Rs 3 lakh - nil
• Rs 3 - 6 lakh - 5%
• Rs 6 - 9 lakh - 10%
• Rs 9 - 12 lakh - 15%
• Rs 12 - 15 lakh - 20%
• Above Rs 15 lakh - 30%

TNIE's Shadow Budget 2024 has proven to be on the money

FY23 total expenditure revised estimate Rs 41.9 lakh crore, in line with TNIE's shadow budget estimates of Rs 41 lakh crore.

TNIE's shadow budget also spot on FY24 fiscal deficit of 5.9%, which the FM announced on Wednesday.

FM estimates FY24 gross borrowing target at Rs 15.43 lakh crore, which is much lower than our estimates at Rs 17.85 lakh crore.

Monthly Income Scheme limit doubled to Rs 9 lakh and Rs 15 lakh for joint accounts: FM

To enhance ease of doing business, more than 39,000 compliances have been reduced and over 3,400 legal provisions decriminalised. The government will bring a National Data Governance policy, which will simplify the KYC process while anonymising individual data, Finance Minister Nirmala Sitharaman said.

Folks, direct tax announcements now!

Finance Minister Nirmala Sitharaman fixes fiscal deficit for 2023-24 at 5.9 per cent. The Govt will achieve its fiscal deficit target of 4.5% of GDP by 2025-26.

One-time new small saving scheme Mahila Samman Saving Certificate to be made available for 2 years up to 2025: FM

100 critical transport infrastructure projects for last- and first-mile connectivity for ports, coal, steel, fertilizer and food grain sectors on priority. This will involve an investment of Rs 75000 crores, including Rs. 15000 crores from private sources, says Finance Minister.

Senior citizens savings scheme maximum deposit limit will be enhanced to Rs 30 lakh: FM

Credit guarantee for Micro, Small and Medium Enterprises - Rs 9000 crores infused in the corpus which will allow additional collateral-free credit of Rs 2 lakh crores; to be effective from 1st April 2023: FM Sitharaman

• 50 tourist destinations will be selected through challenge mode to be developed as a whole package for domestic and international tourism, the FM said. 
• States will be encouraged to set a ‘Unity Mall’ in State capital or the most popular tourist destination in the state for the promotion and sale of ‘One District, One product’ and GI products and other handicrafts, she said. READ FULL STORY HERE

Our columnist Shankkar Aiyar observes on Twitter that the "Government is the largest litigant. Settlement scheme is good but more important is basic reforms to reduce government litigating in courts."

• Finance minister announces Central assistance of Rs 5,300 crores to be given to the Upper Bhadra Project in drought-prone central regions of Karnataka. This will provide sustainable micro-irrigation and filling up of service tanks for drinking water. 
• The Upper Bhadra Project envisages lifting of 17.40 thousand million cubic feet (TMC) of water from river Thunga to Bhadra reservoir and 29.90 TMC from Bhadra reservoir for utilisation in Upper Bhadra Project.
• The project is crucial for the state as it will help meet the water requirements in the parched regions.

Poor persons who are in prisons and aren’t able to afford penalty or bail amount, required financial support will be provided: FM Nirmala Sitharaman @NewIndianXpress @TheMornStandard

— Shruti Kakkar (@Shrutikakk) February 1, 2023

* Aspirational Blocks programme covering 500 blocks has been launched for saturation of govt. programmes;  Pradhan Mantri Primitive Vulnerable Tribal Groups Development Mission is being launched to improve conditions of vulnerable tribal groups

* The Mission will saturate these families with basic facilities such as safe housing, clean drinking water, improved access to education, health, nutrition and sustainable livelihood opportunities; Rs. 15,000 crores to implement the Mission in 3 years

More teachers in these regions too

* In the next three years the Centre will recruit 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools serving 3.5 Lakh tribal students.

* 38,000 teachers and support staff to be recruited in next 3 years, for 740 Eklavya Model Residential Schools serving 3.5 lakh tribal students

To the green growth pillar of the budget.

Programs like green fuel, green energy and many other green initiatives being implemented for efficient use of energy across economic sectors. These measures will help reduce carbon intensity of economy and generate largescale job opportunities, says the Finance Minister

A National Digital Library for Children and Adolescents will be set up for ensuring that quality books across languages, geographies and genres are made available to kids. States will also set up physical libraries and provide infra to access the library resources.

The National Child Trust, Children's Book Trust and others will be encouraged to 'provide and replenish non-curricular titles' in regional languages and English, to these libraries.

Also announced, a collaboration with NGOs (like Pratham?) working to promote literacy.

PAN will be used as a common identifier for all digital systems of specified government agencies: FM

Emphasis on Teachers' training being reenvisioned. The Finance minister means this will be done through innovative pedagogy, continuous professional development and ICT implementation; District Institutes of Education and Training to be developed as vibrant institutes of excellence. Innovative pedagogy, we are yet to fully learn what that means. We would probably learn better of innovative pedagogy through innovative pedagogy?

Capital outlay of Rs 2.40 lakh crore for Railways is the highest ever and about nine times the outlay made in FY 2013-14, says the Finance Minister

#BudgetWithTNIE | FM #NirmalaSitharaman on manholes.#Budget2023
LIVE: https://t.co/XLsx2t43RV pic.twitter.com/A6xcNRbcJu

— The New Indian Express (@NewIndianXpress) February 1, 2023

Doubling of EPFO membership to 27 crore and Rs 7,400 crore digital payments through UPI in 2022 proof that the economy is becoming more formalised, says the Finance Minister

Professor Anil Sood says: "Setting up of Centres of Excellence for AI a good step. Let’s see the amount of resources that are being allocated."

63,000 Primary Agricultural Credit Societies are being computerized with investment of Rs. 2,516 crores; model bylaws were formulated for PACS, national database is being prepared, with this, massive decentralized storage capacity to be set up, says the Finance Minister.

Shankkar Aiyar, our columnist, shares this take on the Budget speech till now. "It reveals an Atmanirbhar GDP approach in the light of global challenges."

#BudgetWithTNIE | In a bid to support poor prisoners, FM #NirmalaSitharaman announces financial assistance in her #BudgetSession2023 speech

LIVE: https://t.co/KnRTaVkLiy pic.twitter.com/POXwePxuhV

— The New Indian Express (@NewIndianXpress) February 1, 2023

Professor Anil Sood says: "We were not expecting a 33% increase in GOI capex. The biggest increase is expected in railways. I was expecting an increase of about 12% considering the focus on fiscal consolidation." 

The FM announced an enhanced Capex of Rs 10 lakh crore for infra development, which is 3.3 per cent of the GDP.

Promotion of tourism to be taken up in mission mode with active participation of states and PPPs, says the Finance Minister. 

PM Awas Yojana scheme's outlay hiked by 66 per cent to Rs 79,000 crore: FM

The seven priorities of Budget2023 according to Nirmala Sitharaman are:

1. Inclusive development
2. Last-mile connectivity
3. Infrastructure and investment
4. Unleashing dormant potential
5. Green growth
6. Youth Power
7. Strengthening the financial sector

Capital investment outlay is being increased steeply for third year in a row to Rs 10 lakh crore

Agriculture Accelerator Fund to encourage stting up of agriculture startups by young entrepreneurs in rural areas. This will bring innovative and affordable solutions for farmers' challenges, will also enhance profitability and bring modern technology, says the FM.

Professor Anil Sood, our expert, says: PM Vikas is an interesting programme. Let’s see the level allocation and the role the state governments are expected to play. He says investment in decentralised storage capacity a good idea.

Facilities in select ICMR labs will be made available for research by public and private medical faculties: FM

The National Rural Livelihood Mission has achieved remarkable success by mobilising rural women into 1 lakh Self-Help Groups, said the FM.

The agricultural credit target will be increased to Rs 20 lakh crores with a focus on animal husbandry, dairy and fisheries. The Govt also plans to set up a massive decentralised storage capacity to help farmers: FM

Finance Minister Nirmala Sitharaman on Wednesday said the Budget for 2023-24 hopes to build on the foundation of the previous budget and blue print for India @ 100. India has made significant progress in many Sustainable Development Goals (SDGs) and the per capita income has increased to Rs 1.97 lakh, she said. 

Our vision for the Amrit Kaal includes a technology-driven and knowledge-based economy, with strong public finances and a robust financial sector. To achieve this 'janbhagidari' (people's solidarity) through 'sabka saath, sabka prayaas' (combined effort) is essential: FM Nirmala Sitharaman

The world has recognized India as a bright star, our growth for current year is estimated at 7%, this is the highest among all major economies, in spite of massive global slowdown caused by pandemic and the war: FM Sitharaman

Govt's efforts since 2014 have ensured for all citizens, a better quality of life & life of dignity. The per capita income has more than doubled to Rs 1.97 lakh. In these 9 years, the Indian economy has increased in size from being 10th to 5th largest in the world: FM Sitharaman

"This is the first Budget in Amrit Kaal," FM says. President Droupadi Murmu in her first address to the joint sitting of Parliament on Tuesday had said 'Amrit Kaal', described by the government as the 25-year period culminating in the centenary of India's independence, is the time to build an India which is 'aatmanirbhar' (self reliant) and also fulfils its humanitarian obligations. 

A scheme to supply free food grains to all priority households for the next one year under the PM's Garib Kalyan Anna Yojana: FM

India's economy is projected to grow 6.5 per cent in 2023-24, compared to 7 per cent this fiscal and 8.7 per cent in 2021-22, according to India's Economic Survey (2022-23), which was tabled by Finance Minister Nirmala Sitharaman in the Lok Sabha on Tuesday. It stated that RBI's projection of retail inflation at 6.8 per cent in the current fiscal is neither too high to deter private consumption, nor so low as to weaken inducement to invest.

Despite the slowdown in the global economy impacted by the pandemic, ongoing war, monetary tightening in advanced countries, India's economy emerges as the fastest growing with a 6.8% projected annual GDP growth rate for FY 23 and is poised to occupy the position of the third largest economy by 2029, moving up from the 10th position in 2014... Read Vineeta Hariharan's column here.

The Union Cabinet headed by Prime Minister Narendra Modi on Wednesday approved the Budget for the fiscal year 2023-24 (April 2023 to March 2024).

As per established tradition, the Finance Minister met the President at the Rashtrapati Bhawan before heading to Parliament.

#WATCH | Union Minister of Finance and Corporate Affairs Nirmala Sitharaman, MoS Dr Bhagwat Kishanrao Karad, MoS Pankaj Chaudhary and senior officials of the Ministry of Finance called on President Droupadi Murmu at Rashtrapati Bhavan before presenting the #UnionBudget2023, today pic.twitter.com/f3XjyQh46v

— ANI (@ANI) February 1, 2023

• Fiscal Deficit: The budgeted fiscal deficit, which is the difference between the government expenditure and income, for the current fiscal ending March 2023 is 6.4 per cent, against 6.71 per cent in the last fiscal. The number for 2023-24 would be in focus as it is widely expected that the government would open its purse strings in an election year.
• Disinvestment/Privatisation: In current fiscal year the budgeted disinvestment target is likely to be missed, like the past four years. It is expected the government would set a realistic target for next fiscal.
• Capital Expenditure: The government's planned capital expenditure for this fiscal year is budgeted at Rs 7.5 lakh crore, higher than Rs 5.5 lakh crore in the last fiscal. The government has been pushing infrastructure creation and also incentivising states to step up capex.
• Tax Revenue: The Budget had pegged direct and indirect tax mop-up at Rs 14.20 lakh crore and Rs 13.30 lakh crore for current fiscal, taking the total figure to Rs 27.50 lakh crore. The government's tax revenues are expected to overshoot the budget estimates by about Rs 4 lakh crore on buoyant income tax and customs duty.
• Borrowing: The government's gross borrowing budget was at Rs 14.31 lakh crore in current financial year ending March 31. The government borrows from the market to fund its fiscal deficit and with tax revenues seeing an uptick, the government has cut its gross borrowings by Rs 10,000 crore to Rs 14.21 lakh crore. The borrowing number would be watched by the market, especially on the back of expected higher capital expenditures to boost growth.
• Nominal GDP: India's nominal GDP growth (real GDP plus inflation) in the current fiscal is estimated to be 15.4 per cent. The numbers for next fiscal would be lower as the inflation has come down. The Budget is expected to give an outline on the nominal GDP growth numbers. Real GDP growth in current fiscal is projected at 7 per cent and come down to 6-6.5 per cent in the next.

India shouldn’t be looking at 8-9% GDP growth at this point because the difference between the first decade and now is that the global economy was booming then and now it is not, said  V Anantha Nageswaran, chief economic advisor, on Tuesday in a press conference on Economic Survey 2023.