MBAUniverse.com Editorial Desk | Updated on February 03, 2024
Indian Finance Minister Nirmala Sitharaman introduced the Interim Budget 2024 in Parliament on February 1, placing significant emphasis on India's macroeconomic growth and fiscal consolidation. As 2024 marks an election year, with Lok Sabha Elections anticipated in April-May, the finance minister chose to present an Interim Budget or a “Vote on Account” in February, rather than a complete Annual Budget. The anticipation is for the unveiling of the new full Budget in July 2024, post the establishment of the new government. However, some experts believe that since there are several months to go before the new government is formed, Interim Budget 2024 could have done a lot more to push the economy and business.
Given the paramount importance of the Government Budget for the Economy and Business, the analysis of Budget 2024 emerges as a crucial GD Topic for MBA Admission and other entrance exams. For a thorough exploration of Budget 2024 GD Topic, refer to this analysis on MBAUniverse.com.
GD Topic for MBA Admission – Union Interim Budget 2024
- Taxation Adjustments: In virtually every budget, the finance minister customarily extends a few incentives to individuals subject to income tax. However, Sitharaman refrained from altering this aspect in the most recent budget. As she articulated, “I…propose to maintain the existing tax rates for direct taxes.” Personal income tax stands as one category of direct tax, with corporate income tax representing the other. This signifies a more consistent income tax regime, which is deemed favorable.
- Gross Domestic Product Outlook: The budget has outlined a nominal gross domestic product (GDP) of ₹327.7 trillion for 2024-25, reflecting a surge of 10.5% from ₹296.6 trillion in 2023-24, the current fiscal year. GDP serves as a metric for measuring the size of an economy within a specific year. All major budgetary figures are also expressed as a percentage of the GDP. The nominal GDP is predicted to elevate by 8.9% in 2023-24.
- Fiscal Deficit Overview: At its core, the budget serves as a reflection of the government’s financial accounts. In 2023-24, the fiscal deficit is anticipated to be ₹17.35 trillion or 5.8% of the GDP. Fiscal deficit denotes the variance between government earnings and expenditures. For 2024-25, it is forecasted to decline to ₹16.85 trillion or 5.1%, aligning with the government’s objective of reducing the deficit to less than 4.5% by 2025-26.
- Government’s Financial Obligations: The government finances its fiscal deficit mainly through borrowing and inflows from the small savings scheme. The sum invested in these schemes at any given time, among other factors, constitutes the government’s liabilities. As of March 2024, the debt and liabilities are projected to reach ₹168.72 trillion or 56.9% of the GDP. By March 2025, this is expected to reach ₹183.67 trillion or 56%. What does this imply? The government’s gross borrowing in 2024-25 is estimated at ₹14.13 trillion, lower than the ₹15.43 trillion expected borrowing in 2023-24. Additionally, funds derived from small savings schemes, post redemptions by investors in 2024-25, are projected at ₹4.66 trillion compared to ₹4.71 trillion in 2023-24. This translates to reduced government borrowings in 2024-25, easing the availability of funds for private sector borrowing.
- Direct Tax Collections: 2024-25 will mark only the third instance since 1991-92 when personal income tax collections are predicted to surpass corporate income tax. The years 2020-21 and 2023-24 are the only other instances of this occurrence. Anticipated personal income taxes are set at ₹11.56 trillion, or 3.5% of the GDP, in contrast to corporate taxes of ₹10.43 trillion or 3.2%. Corporates continue to reap the benefits of the rate cut implemented in 2019.
- Goods and Services Tax Scenario: In 2024-25, the government envisions collecting a total goods and services tax (GST) of ₹10.68 trillion or 3.3% of the GDP. This encompasses central GST, integrated GST, and GST compensation cess. This represents a slight uptick from 3.2% in 2023-24. As articulated by the finance minister in her address, “the average monthly gross GST collection has nearly doubled to ₹1.66 trillion, this year.” The monthly GST collections include the share of state governments as well.
- Capital Expenditure Projections: Over the last four years, there has been a threefold increase in asset-creating capital expenditure. In 2024-25, the central government anticipates expending ₹11.11 trillion, equivalent to 3.4% of the GDP, as capital expenditure. This reflects an approximate 17% surge from the expected capital expenditure of ₹9.5 trillion in 2023-24. The capital expenditure anticipated for 2023-24 is poised to be over 28% higher than that of 2022-23.
- Taxation Demands Discourse: The finance minister addressed the issue of 'a substantial number of minor, unverified, unreconciled, or disputed direct tax demands,' some dating as far back as 1962. In her speech, she proposed to ‘withdraw such outstanding direct tax demands up to ₹25,000 concerning the period up to the financial year 2009-10 and up to ₹10,000 for financial years 2010-11 to 2014-15’. Any measure that simplifies the lives of income taxpayers is always a welcome initiative.
- Major Initiatives: The finance minister unveiled plans to assist middle-class citizens in acquiring or constructing their homes, enhance home construction under the PM Awas Yojana, and extend healthcare coverage under the Ayushman Bharat scheme to all Asha and Anganwadi workers. Furthermore, the announcement of rooftop solarization aims to empower one crore households to receive up to 300 units of free electricity every month.
Conclusion
As India strides into a crucial election year, the Interim Budget 2024 sets the stage for economic resilience and progress. The fiscal projections, taxation strategies, and targeted initiatives for housing, healthcare, and renewable energy signify the government's commitment to a stable and flourishing economy. The upcoming months hold the promise of further financial insights and policies as the nation navigates through the democratic process and charts its course towards sustained growth.
However, some experts believe that since there are several months to go before the new government is formed, Interim Budget 2024 could have done a lot more to push the economy and business.
Union Budget 2023: Key Highlights & Priorities
Given the importance of Union Budget in context of Indian economy, this is a hot topic for GD and Essay for 2023. There are a host of measures for a number of sectors given priority in Union Budget 2023 and are aimed at boosting growth amid rising inflation. Giving relief to middle class, the Finance Minister Nirmala Sitharaman has brought cheer to the middle class by introducing widespread changes to the income tax structure, by changing the slabs, raising the rebate level and providing incentives to those falling under higher brackets. However, there is a catch! The Budget incentives can only be enjoyed by those who opt for the new tax regime, which was introduced in Union Budget 2020. MBAUniverse.com has reviewed and publishes below the highlights of Union Budget 2023.
The Finance Minister of India, Nirmala Sitharaman presented Union Budget 2023 in lower house of Parliament, ‘Lok Sabha’ on February 1, 2023. This was the Finance Minister's fifth Budget presentation since 2019. The Budget 2023 has more significance as this is the last full Budget before the 2024 general elections. The Union Cabinet headed by Prime Minister Narendra Modi on Wednesday January 31, 2023, approved the Budget for the fiscal year 2023-24 (April 2023 to March 2024). The Finance Minister has set following priorities in her Budget speech 2023
Union Budget 2023: Focus on 7 Key ‘Saptarishi’ Areas
Beginning her Budget speech in Parliament, FM Sitharaman outlined 7 ‘Saptarishi’ priority sectors and said that this Budget will focus on the following areas:
- Inclusive development
- Reaching last mile
- Infrastructure and investment
- Unleashing potential
- Green growth
- Youth power
- Financial sector
Let us know brief details about each of the 7 priorities ‘Saptarishi’ as outlined in Budget 2023. It will help you in your GD preparation also:
1. Inclusive development
The government's Sabka Saath Sabka Vikas policy has benefitted many sections, including women, SCs, STs, OBCs, and other underprivileged groups.
2. Reaching the last mile
Building on the huge success of Aspirational District program, the Aspirational Blocks program have recently been launched, covering 500 blocks for saturation of government services.
3. Infrastructure and investment
The Capex outlay is increased steeply by 33% to Rs 10 lakh crore, which would be 3.3% of the GDP.
4. Unleashing the potential
A National Data Governance Policy will be brought up enabling access to anonimised data to unleash innovation and research by startups and academia.
5. Financial sector
The revamp schemes will take effect from 2023 through an infusion of Rs 9,000 crore in the corpus.
6. Green growth
This budget provides for Rs 35,000 crore capital investment towards energy transition and net zero objective and energy security by the Ministry of petroleum and natural gas.
7. Youth power
There will be a launch of the PM Kaushal Vikas Yojana 4.0 to skill lakhs of youth. The scheme will cover new age courses.
But before getting into the key provisions and changes announced in the Budget 2023 to achieve the various economic targets, let us know - What is the Union Budget; Who presents it; When and Why it is presented...
What is Union Budget of India?
Popularly known as the “Budget”, the Union Budget of India, also referred to as the Annual Financial Statement in the Article 112 of the Constitution of India, is the annual budget of India. Budget is presented on the first day of February by Finance Minister of Government of India in Parliament. Budget provisions are implemented from the beginning of new financial year, starting in April. Until 2016 it was presented on the last working day of February.
Budget: An Account of Govt’s Income & Expenditure
Union Budget keeps the account of the government's finances for the fiscal year that runs from 1st April to 31st March.
Union Budget: Classification
Union Budget is classified into two major parts: a) Revenue Budget and b) Capital Budget. Let’s understand the difference.
Revenue Budget
Revenue budget includes the government's revenue receipts and expenditure. There are two kinds of revenue receipts - Tax and Non-Tax revenue. Revenue expenditure is the expenditure incurred on day to day functioning of the government and on various services offered to citizens. If revenue expenditure exceeds revenue receipts, the government incurs a revenue deficit.
Capital Budget
Capital Budget includes capital receipts and payments of the government. Loans from public, foreign governments and RBI form a major part of the government's capital receipts. Capital expenditure is the expenditure on development of machinery, equipment, building, health facilities, education etc. Fiscal deficit is incurred when the government's total expenditure exceeds its total revenue.
Union Budget of India 2023: Presentation
Union Budget 2023 was presented by Union Minister of Finance Smt. Nirmala Sitharaman on February 1, 2023 in Parliament after holding the Pre-Budget Consultation Meeting with the leading Economists and Representatives of Industry and Various sectors to help prepare the General Budget 2023-24.
Union Budget of India 2023: Important Announcements
The focus of Union Budget 2023 is on initiatives needed to achieve $5 trillion economy, job-oriented growth with focus on Inclusive development, reaching the last mile, infrastructure & investment, green growth, youth power, and the financial sector. This entails growth in manufacturing and services, transparency of fiscal arithmetic, monetary transmission, Government’s fiscal prudence and fiscal stimulus and targeting the inflation check among others. Before making Budget announcements, the FM highlighted India’s achievements in her Budget speech 2023, and said:
- Indian economy has become more formalised as witnessed by significant enhancement in digital payments
- The Government ensured that no one went hungry during pandemic by providing free foodgrains to 80 crore poor people
- India's growth at 7 per cent in current fiscal highest among major economies; Indian economy on right track
- Economy has grown from tenth to fifth largest in the world
- G20 presidency gives us unique opportunity to strengthen India's role in world economic order
The 10 Important Announcements by the Finance Minister Nirmala Sitharaman in her long budget speech which lasted 1 hour 25 minutes, in nine years of the Narendra Modi government included key reforms that sought to address both economic and social aspects of the country. She started her address in the Parliament and made following important announcements
Budget 2023: Estimated Receipts, Expenditure & Fiscal Deficit
- Total receipts or receipts other than borrowing is Rs 24.3 lakh crore of which net tax receipts are Rs 20.9 lakh crore
- Estimated Total Expenditure is Rs 41.9 lakh crore, of which the capital expenditure is about Rs 7.3 lakh
- Estimated Fiscal Deficit for FY 2023-24 is 5.9% of GDP
Union Budget 2023: Changes in Tax Regime
The Finance Minister has announced raising of the Income Tax exemption limit from 5 to 7 lakh rupees in the new tax regime and also proposed that the new tax regime would be made the default tax regime.
- Income tax rates are lowered and revised slabs are introduced for salaried individuals.
- There are three categories of individual taxpayers namely, Individuals (below the age of 60 years) which include residents as well as non-residents; resident senior citizens (60 years and above but below 80 years of age) and resident super senior citizens (above 80 years of age)
- Personal Income Tax new tax rates are 0 to Rs 3 lakhs – nil; Rs 3 to 6 lakhs – 5%; Rs 6 to 9 Lakhs – 10%; Rs 9 to 12 Lakhs – 15%; Rs 12 to 15 Lakhs – 20% and above 15 Lakhs – 30%
- Highest surcharge rate reduced from 37% to 25%
Source: Indian Express
- The rebate under section 87A of new income regime hiked to Rs 7 lakh
- The tax exemption limit increased to Rs 3 lakh
- Basic custom duty rates on goods other than textiles and agriculture reduced from 21% to 13%. As a result, there are minor changes in the basic custom duties, cesses & surcharges on some items including toys, bicycles, automobiles
- One-time new small savings scheme ‘Mahila Samman Saving Certificate’ to be made available for 2 years upto March 2025, with deposit facility of upto Rs 2 lakh in name of women, with 2 year tenor, with 7.5% fixed rate & partial withdrawal option
- The maximum deposit for senior citizen saving scheme to be enhanced from Rs 15 lakh to Rs 30 lakhs.
- The government will set up a National Financial Information Registry to serve as a central repository of financial and ancillary information
Budget 2023: Focus on Agriculture – Key Takes
The Union Government’s focus on reforming the agriculture sector continues, after its legal reforms were repealed. Key Take away on Agriculture in Union Budget 2023 are:
- The government will set up an agriculture accelerator fund to encourage startups in rural areas.
- Agriculture credit target increased to Rs 20 lakh crore.
- Government to spend Rs 2200 crore for high-value horticulture
- The Budget envisages an open-source digital infrastructure for agriculture
- These steps will help the nascent agri-tech industry and could help boost the sector which still employs nearly half of the country’s workforce.
- Decentralized storage capacity will be set up that will help farmers store their produce.
- The budget envisages India becoming a global hub for Sri Ann or Millets
- The Indian Institute to Millet Research will be supported as a centre of excellence
- Mission to eliminate sickle cell anaemia by 2047 will be launched by the government. This will entail awareness creation, universal screening of 7 crore people in the age group of 0-40 years in tribal areas and collaborations between central institutions and state governments.
Budget 2023: 33% Enhancement in Capital Outlay
- The Finance Minister has enhanced Capital outlay by 33% with focus on Housing for all
- The Capex outlay increased by 33% to 10 lakh crore. This will make up 3.3 per cent of GDP.
- PM Awas Yojana enhanced by 66% to Rs 79,000 crore.
Budget 2023: National Digital Library
- National digital library for children and adolescents will be set up for facilitating quality books
- The National Book Trust, Children's Book Trust will replenish non-curricular titles in regional languages and English to digital libraries
Budget 2023: Food Security Scheme
Government is implementing scheme to supply free grains to poor under PMGKAY with expenditure of ₹ 2 lakh crore from Jan 1. The Finance Minister said, "Continuing our commitment to food security, we are implementing from January 1. a scheme to supply free food grain to all Antyodaya and priority households for one year under PM Garib Kalyan Ann Yojana."
Atmanirbhar Clean Plant Programme
The government will launch the Atmanirbhar Clean Plant Programme to improve availability of disease-free quality planting material for high-value horticultural crops at an outlay of Rs. 2,200 crore.
Empowering Women
The government aims to empower women by way of self-help groups focused on raw material supply, branding and marketing of products.
Highest Ever Railway Outlay
The budget 2023 provides for the highest ever Railway outlay at Rs 2.4 lakh crore, boosting affordable regional connectivity and logistics of cargo freights.
Budget announcements on Digital Initiatives
These initiatives focus on artificial intelligence in the education sector
- Three centres of excellence for artificial intelligence will be established in top educational institutions
- 100 laboratories in engineering institutions will be developing applications using 5G services
- A national digital library will be set up for children and adolescents for facilitating the availability of quality books across geographies, languages and genres
- Centre to recruit 38,800 teachers and support staff for 749 Eklavya Model Residential Schools that will service 3.5 lakh tribal students
Union Budget 2023: What becomes Cheaper and what becomes Expensive?
A large number of commonly used items will become more expensive and certain goods will become cheaper as the government has slashed the customs duty according to the Union Budget 2023-24. Here’s is a list of items that will become cheaper and costlier.
List of Items that Become Cheaper in Budget 2023
- Mobile phones and TV sets manufactured in India
- Denatured ethyl alcohol
- Acid grade fluorspar
- Shrimp feed
- Lab-grown diamonds
- Fish lipid oil used in manufacturing aquatic feed
- Machinery for manufacturing lithium ion cell to be used in electric vehicles
- Raw materials for manufacture of CRGO Steel, ferrous scrap and nickel cathode
List of Items that Become More Expensive in Budget 2023
- Fully imported cars, including electric vehicles (EV)
- Kitchen chimney
- Imported bicycles and toys
- Articles made of gold, platinum
- Imitation jewellery
- Silver dores, bars, articles
- Copper scrap
- Compounded rubber
- Cigarettes
Budget 2023 at a Glance
Major announcements made by the Finance Minister in Budget 2023 include:
- 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
Budget 2023: Government Receipts
Budget 2023: Government Expenditure
Budget 2023 : Deficit Statistics – Last 3 Years
Since taking charge in 2014, Prime Minister Narendra Modi has ramped up capital spending including on roads and energy, while attracting investors through lower tax rates and labour reforms, and offering subsidies to poor households to clinch their political support.
Nirmala Sitharaman on Tuesday tabled the Economic Survey for this financial year. It said that India's economic recovery from the Covid pandemic is complete and the economy is expected to grow in the range of 6 per cent to 6.8 per cent in the coming financial year 2023-24. This is in comparison to 7 per cent this fiscal and 8.7 per cent in 2021-22.
Budget 2023: Reactions
Top Industrialists, Bankers, Chief Ministers, Economists have largely welcomed the budget while a few also criticized it
Odisha CM Naveen Patnaik: "The budget has some good aspects which need to be appreciated including increased capital investment, support for drinking water initiatives and increasing rural housing. These will accelerate growth as well as have a social impact in rural areas ... I welcome PM's trust in millets. Odisha millet mission is a pioneering initiative. I'm happy that millet was given importance in budget. Focus on new-world technologies like artificial intelligence is appreciable. The focus on primitive tribal groups is a welcome step"
Y Viswanatha Gowd, MD & CEO of LIC Housing Finance: “The Budget has a clear progressive intent via the 7 Priorities of Budget 2023 as India enters into ‘Amrit Kaal’. The priorities reinforce the support to government’s 'Aatmanirbharta' mission, by focusing on Inclusive development, Youth Power, Infrastructure and investment, Financial Sector, and women empowerment. The raise in CAPEX by 33% is promising news as it accelerates the infrastructural development which will spur further growth in the Real Estate sector. Allocation of Rs 79,000 cr towards Pradhan Mantri Awas Yojana (PMAY) serves well for the ‘Housing for All’ mission. The modification under the new tax regime puts more money in the hands of the common man which will certainly boost consumption. Overall, Budget exudes great optimism to set the stage for very good economic growth.”
GP Hinduja, co-chairman of Hinduja Group: When India is the lone shining star in the world facing threats of recession, FM Nirmala Sitaraman has delivered a perfectly focused growth-oriented budget with massive capital investment outlays at 4.5% of GDP while staying on track with the fiscal deficit reduction plan. What is remarkable is the holistic, sustainable and inclusive approach taken covering every element of infrastructure and capability building and making the best use of the world-class digital public infrastructure. The budget clearly reflects PM Modi’s long-term vision for India and it aims to engage with and carry every section of society towards the goal of a self-reliant and strong India”
Devesh Srivastava, CMD, General Insurance Corporation of India: “The FM has taken commendable steps to strengthen our agriculture sector. The new ‘Agriculture Accelerator Fund’ will not only motivate our young entrepreneurs in rural areas towards Agri start-ups but also, benefit the farmer by providing innovative and affordable solutions for the challenges faced by them. Raise in CAPEX by 33% to Rs 10 lakh crore will shore up demand and consumption in the economy. This massive capital expenditure planned will give a boost to the reinsurance sector."
Krishna Bodanapu, MD & CEO, Cyient: “It is a good budget that balances the three pillars of the Indian economy – agriculture, manufacturing, and services. It is very promising to see long-term investments with a significant increase in capital expenditure and the focus on accelerating technology with initiatives in 5G labs, agricultural tech, and AI.
Nandita Tripathi, Partner, M&A and PE Tax and ENR Tax Lead, KPMG in India: “India has been leading the race in energy transition and the announcements in the budget are clearly reflective of country’s roadmap to achieve net zero target. The commitment of INR 35,000 crore for priority capital investments towards energy transition and energy security will help in improving viability of the projects. Electric mobility has got a renewed push in the budget as customs duty exemption has been proposed for import of capital goods required for manufacture of lithium-ion cells for EV batteries.
Lt. Gen. Dr. S.P. Kochhar, Director General, COAI: “The Union Budget 2023-24 has introduced some provisions which are expected to indirectly have a positive impact on the telecom sector. The budget lays emphasis on innovation, job creation and skilling, with continued push towards Digital India. The capital investment outlay has been increased by 33% to INR 10 lakh crore and we hope the same would include development of infrastructure for proliferation of telecom and digital services.
Daniel Mazon, Vice Chairman and Managing Director, Philips Indian Subcontinent: “We welcome the announcements made by the Finance Minister in 2023-24 Budget as there is a higher emphasis on expanding health infrastructure and development of technology-based solutions in India. The decision to set up three Centres of Excellences of Artificial Intelligence (AI) will foster innovation to develop cutting edge applications and scalable solutions in healthcare. We are also encouraged by the Government’s focus on increasing the number of skilled healthcare professionals in the country through new educational institutions as it will increase accessibility to quality healthcare. Philips, as a health-tech company, is committed to work with the Government to further strengthen our country’s digital healthcare infrastructure and improve the lives of fellow Indians."
Suresh Agarwal, MD & CEO, Kotak Mahindra General Insurance Company: "Taking it a notch above the expectations of the middle class, the budget has special thrust on women and youth which makes it truly citizen-centric. To remain the fastest growing major economy in the world, it demonstrates the government’s intent to improve a taxpayer’s purchasing power through income tax rebates, enhanced grievance redressal mechanism for direct tax payers and capital deductions from capital gains on investments, while being overall fiscally prudent to address inflation. Further, rolling out a host of initiatives to support domestic industries, the budget sets positive sentiments in placing India in a resilient position amidst a global slowdown."
Lakshmi Venkataraman Venkatesan, Founding and managing trustee of BYST: “94% MSME are microunits with 2-3 employees. Budgets don’t often address the issues faced by micro and small enterprises. Only 20% are regd even under Udyami. Rest 80% can’t benefit from many of the schemes and programs. Budget should integrate unregistered units into to formal sector.
Naveen Munjal, Managing Director, Hero Electric: We welcome the Union Budget 2023 presented by the Hon’ble Finance Minister, with sustainability and green growth across sectors at its core. It encourages the implementation of programmes across sectors to reduce carbon intensity and create green jobs through unique initiatives like ‘Green Credit’, PM Pranam Yojna, Green Hydrogen Mission, etc. Fronting the ‘Net Zero Emission’ mission, it focuses on the promotion of battery energy storage systems to aid in fueling the electric mobility revolution. The Budget 2023 reflects the government's inclination to support the EV transition, enabling the creation of a carbon-free nation that thrives on sustainable, futuristic, and alternative fuel technology. We are confident that initiatives under green growth and sustainability will build awareness and help everyone contribute towards a clean and green future.
Budget 2023 – Criticisms
Bhupesh Baghel, CM Chhattisgarh: "This can be called Nirmala Sitharaman’s ‘nirmam’ budget. There is nothing in this budget for youth, farmers, women, tribals or scheduled castes. It was made purely focusing on the upcoming elections. There is nothing for Chhattisgarh in the budget"
Mamata Banerjee, Bengal CM: Terming the Union Budget "anti-people", West Bengal chief minister Mamata Banerjee on Wednesday said it will deprive the poor. She claimed that the changes in the income tax slabs will not help anyone. "This budget is not futuristic, it is totally opportunistic, anti-people and anti-poor. It will benefit only one class of people. This Budget will not help address the country's unemployment issue. It has been prepared with an eye on the 2024 Lok Sabha elections," she said. "This Budget is full of lies, falsehoods and fake claims. Give me half an hour and I will show you how to prepare a Budget for the poor"
Union Budget 2022
Finance Minister Nirmala Sitharaman presented the Union Budget 2022-23 in Parliament on February 1. There were a host of measures for a number of sectors, aimed at boosting growth amid high & rising inflation. There, however, were few changes to the personal income tax structure and Union Budget 2022 India saw no major populist giveaways. Given the importance of Union Budget and its impact on Indian Economy and Industry, Union Budget 2022 is an important GD Topic.
Union Budget 2022: Top Highlights
Here are the key Budget 2022 highlights as announced by the Finance Minister Nirmala Sitharaman
- The government's total expenditure has been increased by 4.8 per cent to ₹ 39.5 lakh crore.
- A 30 per cent tax will apply on income from the sale or acquisition of virtual and digital assets such as cryptocurrency.
- There is no change to Income Tax slabs.Taxpayers can file updated income tax returns within two years in one-time window.
- The surcharge on long-term capital gains has been capped at 15 per cent.
- A Gati Shakti Master Plan for expressways to facilitate faster movement of people and goods. A data centre and energy storage system will be given infrastructure status to provide easy financing to the sector.
- A digital rupee will be introduced by the Reserve Bank of India in 2022-23.
- 5G mobile services will be rolled out in the country within the next financial year.
- e-Passports with embedded chips will be launched next year for more convenience to the public. In a big boost to the electric vehicles sector, battery swapping will be introduced.
Before we progress, let’s understand the key terms and a bit about the history of Union Budget India.
What is Union Budget?
The Union Budget is the blueprint of the Government’s revenue and expenditure for a fiscal year, starting from 1st April of one year to 31st March of the following year. It is presented during the month of February so that it can be materialized before the start of a new financial year. According to Article 112 of the Indian Constitution, it is an extensive financial statement that presents the Government’s estimation of revenue sources and estimated expenses for the year. It is classified into two parts – revenue budget and capital budget. Revenue budget contains the government's revenue receipts and expenditure, while the Capital Budget comprises of the government's capital receipts and payments.
The first Union Budget of India, a concept introduced when the country was still under the British colonial rule, was presented on 7th April, 1860, by the then Finance Minister of India, James Wilson. The first Union Budget India of Independent Nation was presented on November 26, 1947, by Sir R.K. Shanmugham Chetty, the first Finance Minister of Independent India.
Now, let’s check key highlights of Union Budget 2022 on various sectors of India
Overall Economy
Top focus of the budget this year are PM Gati Shakti, Inclusive Development, Productivity Enhancement, Sunrise Opportunities, Energy Transition, Climate Action, Financing of investments
- Capital Expenditure target expanded by 35.4 per cent — from Rs 5.54 lakh crore to Rs 7.50 lakh crore. FY23 effective capex seen at Rs 10.7 lakh crore.
- Budget noted that Productivity-linked incentive schemes in 14 sectors have received excellent response; has received investment intentions worth Rs 30 lakh crore
Overall, economic recovery is benefitting from public investment and capital spending. This Budget will provide further impetus to growth.
Expenditure and deficit & other key numbers
- Proposed fiscal deficit of 4.5% of GDP by 2025/26
- Projected fiscal deficit of 6.4% of GDP in 2022/23
- Revised fiscal deficit for 2021/22 at 6.9% of GDP
- Receipt from disinvestment proceeds in next financial year pegged at Rs 65,000 crore, lower than the current year's mobilisation of Rs 78,000 crore.
Taxes
- Government promises a stable and predictable tax regime
- The government will tax income from digital asset transfers at 30%
- Governmentto provide one-time window to correct omissions in ITRs filed, updated returns to be filed within 2 years
- Gift of cryptocurrencies to be taxed at receiver's end
Duties on Industry
- Import duty on certain chemicals being/to be cut
- Customs duty exemption on steel scrap will be extended for another year for MSMEs
- Will revoke customs duty on stainless steel, flat products, high steel bars
- Beginning October 2022, unblended fuel to get additional duty of Rs 2/litre
- Import duty on cut and polished diamonds and gemstones to be cut 5 per cent and on sawn diamond to nil
- Customs duty concessions to be given to certain consumer electronic devices to promote manufacturing across wearables, hearables and specific mobile phone components
Jobs
- Efforts of central, state governments leading to jobs, entrepreneurial opportunities
- Digital ecosystem for skilling and livelihood to be launched.
- This will aims to skill, reskill, upskill citizens through online training.
- API based skill credentials, payment layers to find relevant jobs and opportunities
Infrastructure & manufacturing sector
- A lot of focus on this sector
- Four multi-modal national parks contracts will be awarded in FY23
- PM Gatishakti masterplan for expressways will be formulated in next financial year
- 100 PM Gati Shakti terminals to be set up in next three years
- Focus on public investment to modernise infrastructure over the medium term, leveraging tech platform of Gati Shakti via a multi-modal approach
- PM Gati Shakti will pull forward the economy and will lead to more jobs and opportunities for the youth
Digital Currency
- Launch of blockchainbasedDigital Rupee starting 2022-23
- To launch scheme for taxation of virtual digital assets
- Income from virtual digital assets to be taxed at 30%
Housing, Urban Planning, Real Estate Sector
- Rs 48,000 crore is allotted for PM AwasYojana
- In 2022-23, 80 lakh houses will be completed for identified beneficiaries of PM AwasYojana; 60,000 houses will be identified as beneficiaries for PM AwasYojana in rural & urban areas
- 60,000 crore allocated for providing access to tap water to 3.8 crore households
- In 2022-23, 80 lakh households will be identified for the affordable housing scheme
- Rs 60,000 cr allocated to provide tap water connections to 3.8 crore households in 2022-23
- Modern building by-laws will be introduced
- A high-level panel to be set up for urban planning
- Govt to promote use of public transport in urban areas
Start-ups & MSMEs Sector
- Rs 6,000 crore programme to rate MSMEs to be rolled out over 5 years
- MSMEs such as Udyam, e-shram, NCS &Aseem portals will be inter-linked, their scope will be widened
- PE/VC invested Rs 5.5 lakh crore in startup, expert committee will be set up to suggest measures to help attract investment
- Existing tax benefits for startups, which were offered redemption of taxes for 3 consecutive years, to be extended by 1 more year
Agriculture Sector
- 2022-23 has been announced as International Year of Millets
- Government to pay Rs 2.37 lakh crore towards procurement of wheat and paddy under MSP operations
- Railways will develop new products for small farmers and MSMEs
- A rationalised scheme to increase domestic oilseed production will be brought in to cut down imports
- Kisan Drones for crop assessment, land records, spraying of insecticides expected to drive a wave of technology in agro sector
- Ken Betwariver linking project worth Rs 44,605 crore announced. Draft DPRs for 5 river links have been finalised.
- Finance startups to be incentives to aid rural enterprises
- Natural farming will be promoted along Ganga river corridor
- Govt will promote chemical-free natural farming throughout the country to boost sustainable agricultural productivity and income of farmers
- A completely paperless, e-bill system will be launched by ministries for procurement
- Financial support will be provided to farmers to take up agro-forestry
Electric Vehicles (EV) Sector
- Battery swapping policy to allow EV charging stations for automobiles will be framed
- Private sector will be encouraged to create sustainable and innovative business models for battery and energy as a service, improving the efficiency in the EV ecosystem
Education & skilling
- World-class university to be allowed in GIFT IFSC free from domestic regulation
- To launch National Skill Qualification Framework (NSQF) to cater to dynamic industry needs
- Digital university to be set up to provide education; to be built on hub and spoke model
- 1-Class-1-TV Channel to be implemented to provide supplementary education to children to make up for loss of formal education due to Covid
Banking & Finance Sector
- Digital Rupee to be rolled out by 2023
- Rs 1 lakh crore financial assistance to states to be provided in 2022-23 to catalyse investments
- Proposed to introduce Digital Rupee by RBI using blockchain technology, starting 2022-23
- Measures will be taken to step up private capital in infra sector
- 100% of 1.5 lakh post offices will come on the core banking system, enabling financial inclusion and access to accounts through net banking, mobile banking, ATMs, and also provide online transfer of funds between post office accounts and bank accounts
- 75 digital banks in 75 districts will be set up by scheduled commercial banks to encourage digital payments
- The use of surety bonds as a substitute for bank guarantee will be made acceptable in government procurements
Healthcare Sector
- An open platform for the national digital health ecosystem will be rolled out
- It will consist of digital registries of health providers and health facilities, unique health identity and universal access to health facilities
- 95 per cent of 112 aspirational districts have made significant progress in health, infra
- For mental health counselling, a National Tele Mental Health Program will be launched
Ease of Business &Living
- 75,000 compliances have been eliminated and 1,486 union laws repealed to make it easier for businesses
- India to launch the next phase of Ease of Doing Business EODB 2.0 and Ease of Living.
- Voluntary exit for corporates to be cut down to 6 months from 2 years
- Special Economic Zones Act to be replaced with new legislation
Defence Sector
- Government committed to reduce import and promote self-reliance in defence sector
- 68 per cent of capital for defence sector to be earmarked for local industry
- Defense R&D will be opened up for industry with 25% of defence R&D budget
- Private industry will be encouraged to take up the design and development of military platforms and equipment in collaboration with DRDO and other organizations.
Climate & Net Zero
- Energy transition and action on climate to be major priority for govt
- Risks of climate change are strongest externalities for the world
- Funds will be used for projects that will help reduce carbon intensity of the economy
- Sovereign green bonds to be launched to fund green infra, to be part of government’s borrowing programme in FY23
- Proceeds to be deployed in public sector projects
- 4 pilot projects for coal gasification to be set up
- Rs 19,500 cr additional allocation for PLI for manufacturing high efficiency solar modules has been made
- Low carbon development strategy opens up employment opportunity
Union Budget 2021: Key Highlights, Analysis, Pros & Cons – GD Topic
Union Budget of a year, also referred to as the annual financial statement, is a statement of the estimated receipts and expenditure of the government for that particular year. Union Budget is the account of the government's finances for the fiscal year that runs from 1st April to 31st March. Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented 2021 Budget on 1.2.2021. Given the impact of Budget on Society, Business and Economy, this becomes a very important GD, WAT, Extempore, Interview topic for MBA Admissions and other competitive exams. MBAUniverse.com presents a detailed analysis of Budget 2021.
What is 'Union Budget'
According to Article 112 of the Indian Constitution, the Union Budget of a year, also referred to as the annual financial statement, is a statement of the estimated receipts and expenditure of the government for that particular year. Union Budget is the account of the government's finances for the fiscal year that runs from 1st April to 31st March. Union Budget is classified into Revenue Budget and Capital Budget.
What is Revenue Budget and Capital Budget?
Let’s understand this basic and important difference. Revenue budget includes the government's revenue receipts and expenditure. There are two kinds of revenue receipts - tax and non-tax revenue. Revenue expenditure is the expenditure incurred on day to day functioning of the government and on various services offered to citizens. If revenue expenditure exceeds revenue receipts, the government incurs a revenue deficit. Capital Budget includes capital receipts and payments of the government. Loans from public, foreign governments and RBI form a major part of the government's capital receipts. Capital expenditure is the expenditure on development of machinery, equipment, building, health facilities, education etc. Fiscal deficit is incurred when the government's total expenditure exceeds its total revenue.
Sectoral Impact
|
Sectors |
Budget proposals |
Impact on sectors |
|
Auto |
|
Neutral: Some positive for Electric Vehicle segments and broadly neutral for all other segment players
Investment allocation increase in infrastructure will have positive indirect impact on Commercial Vehicle segment.
|
|
Banks / NBFCs / HFCs |
|
Positive: Positive for banks & NBFC’s - as MSME sector (including Hospitality sector) was more impacted due to pandemic. The extension as well as higher allocation would ensure that the sector comes out of pandemic strongly Positive: Would not only support higher credit growth for the sector, but would also ensure stable asset quality for Banks & NBFC Positive: For Banks & HFC’s Positive: For Banks & HFC’s, as this would facilitates easy access to finance Positive: For the sector, as digital adoption will increase Positive: Digital adoption would not only provide boost to digital economy, but would also lead to more efficient and cheaper currency management Positive: Resolution of NPA would expedite |
|
Capital goods |
|
Positive: Removal of concessional custom duty and restoration of higher duty (7.5%) is positive for domestic manufacturers of these capital goods as imports become costlier. |
|
Cement and building materials |
|
Positive: This can aid demand from housing and infrastructure sector |
|
Coal |
|
Positive: Biomass blending will impact demand of coal by the power sector. However, impact is likely to be limited to 5-7% of overall coal demand. Success in coal gasification and coal-tochemical will aid domestic coal demand. |
|
Consumer |
|
Positive: it will benefit Cigarette companies as this will help in cigarette volume recovery. Positive: It will benefit Jewellery companies as this will lead to lower retail prices and boost volume. Negative: Negative for Spirits companies as this will be inflationary for ENA (extra neutral alcohol) prices in medium to long term. Negative: Negative for FMCG companies as FY23 outlay is lower for MGNREGA and flat for PM Kisan compared to the revised FY22 budget outlay. Government schemes like MGNREGA, PM Kisan help boost rural demand. Negative: Negative for companies selling Pan masala (containing tobacco) as effective duty/ taxes increase. |
|
Defense |
|
Positive: Higher capital outlay, lower imports should lead to higher order book for Defence companies. |
|
Fertilizers |
|
Neutral: Budget allocation has decreased despite the prevailing high global fertilizer prices, likely on expectation of some moderation in global prices from peaks of FY22. If fertilizer prices remain elevated it is likely that the government will increase budget allocation as it did in FY22. |
|
Healthcare |
|
Neutral. Ayushman Bharat is making treatment available to the “bottom of the Pyramid”. However, no major increase should not have any material impact. Neutral. No increase in budget will have a neutral impact for the healthcare sector, including pharmaceuticals. Positive. NDHRM would boost tele-medicine and expand quality healthcare services into tier-II/III towns without commensurate need to build physical infrastructure. |
|
Infrastructure |
|
Positive: Higher capital spends will aid order inflows, revenue growth for Industrial and EPC companies. Positive: Good traction in road sector awarding to continue. Positive: Higher capex will aid demand for Industrial, EPC companies. Steel companies will benefit from higher demand for rails led by new lines, track renewals, new coaches. Positive: These River-linking projects can entail large capital outlay over next few years and aid revenues of EPC, Industrial companies. It will also aid demand for steel and cement companies. Positive: Higher capital lay will aid order inflows for EPC, Pipe, Steel companies, etc. Positive: Green Bonds will aid capex in clean energy infrastructure. This will aid order flows for EPC, Industrial companies. Positive: Higher capital lay will aid order inflows for EPC, Steel, Wire rope companies, etc. |
|
IT Services |
|
No immediate impact but Medium-term Positives: Higher borrowing target and fiscal deficit could mean a weaker INR over time. Rupee depreciation improves profitability in the near term and competitiveness in the medium term for the sector. Focus on digitisation (such as National Digital Health Ecosystem, digitisation of land records, 100% availability of post offices on core banking platform etc) would provide tailwinds to IT Services spending. But, won’t have a meaningful impact on sector growth, as exports contribute to ~80% of revenues |
|
Logistics |
|
Positive: To facilitate multi-modal logistics in the country and help bring down the logistics costs |
|
Sectors |
|
Impact on sectors |
|
Metals |
|
Neutral: Extension of exemption of Basic custom duty on steel scrap will continue to aid lower production costs for long steel companies for another year. Neutral: Steel prices at present and for past few years are much higher than rates set for antidumping duty. While anti-dumping duty could have aided domestic prices in case of sharp fall in steel prices on imports from these regions in future, near-to-medium term impact is neutral given much higher steel prices at present. |
|
Oil & gas |
|
Negative: Budgetary provision could prove to be inadequate if prices are not increased in the scenario of oil prices remaining at $80/b Neutral: This is to encourage blending of ethanol/bio diesel into Petrol and Diesel. Netural: Overall exposure to these is limited in the refining mix for most refiners Mixed: Negative for FO producing refiners but positive for FO/VGO importing refiners Negative: Refining capex for any new expansion will likely increase from 2023 onwards Negative: Cost of conversion kits will increase marginally Negative: Refining capex for any new expansion will likely increase from 2023 onwards HPCL is likely to have installed these units before 2023 so should remain insulated from the same for its current ongoing capex program Negative: Cost of conversion kits will increase by 7-8% but this is unlikely to impact conversion in any meaningful way |
|
Pharmaceuticals |
|
Negative. Govt.’s curtailed procurement program will create oversupply situation for vaccine manufacturers. Neutral. Already known, nothing incremental here. Neutral. Jan Aushadhi is a small part of the market and do not pose a significant threat to the private players |
|
Power |
|
Positive: The budget proposals are in positive direction. Support to Make-in-India through PLI schemes and import duties will encourage manufacturing. |
|
Real Estate |
|
Neutral: Affordable housing and Housing for all remains focused area for government. Data Centers getting infrastructure sector to drive increased investment in the space. |
|
Telecom |
|
Neutral: Auction timeline was widely expected. Also, there are expectation that reserve price for 5G spectrum will be lowered, govt budgeted receipt from the sector points to this possibility Positive: If PLI gets interest from network equipment supplier, overall costs for the industry is likely to come down Positive: Improved fibre connectivity to not only increase digital penetration but will also bring reduced backhaul costs for telecom operators |
Source: HDFC Mutual Fund
Union Budget 2021
Union Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman presented 2021 Budget on 1.2.2021. She said that India’s fight against COVID-19 continues into 2021 and that this moment in history, when the political, economic, and strategic relations in the post-COVID world are changing, is the dawn of a new era – one in which India is well-poised to truly be the land of promise and hope.
The key highlights of the Union Budget 2021-22 are as follows:
6 pillars of the Union Budget 2021-22:
Budget 2021 is based on six key pillars.
- Health and Wellbeing
- Physical & Financial Capital, and Infrastructure
- Inclusive Development for Aspirational India
- Reinvigorating Human Capital
- Innovation and R&D
- Minimum Government and Maximum Governance
Let us understand key proposals and initiatives for each of these.
1. Health and Wellbeing
In the context of COVID 19, Health was the focus of Budget 2021. Here are more details:
- Massive Increase in Health Spending: Rs. 2,23,846 crore outlay for Health and Wellbeing in BE 2021-22 as against Rs. 94,452 crore in BE 2020-21 – an increase of 137%.
- Focus on strengthening three areas: Preventive, Curative, and Wellbeing
- Rs. 35,000 crore for COVID-19 vaccine in BE 2021-22
- Rs. 64,180 crore outlay over 6 years for PM Aatma Nirbhar Swasth Bharat Yojana – a new centrally sponsored scheme to be launched, in addition to NHM
- Mission Poshan 2.0 to be launched to strengthen nutritional content, delivery, outreach, and outcome.
- Universal Coverage of Water Supply. Rs. 2,87,000 crore over 5 years for Jal Jeevan Mission (Urban) - to be launched with an aim to provide 2.86 crore household tap connections
- Scrapping Policy announced. Voluntary vehicle scrapping policy to phase out old and unfit vehicles.
2. Physical and Financial Capital and Infrastructure
- Production Linked Incentive scheme (PLI). Rs. 1.97 lakh crore outlay in next 5 years for PLI schemes in 13 Sectors to create and nurture manufacturing global champions for an AatmaNirbhar Bharat. PLIs to help manufacturing companies become an integral part of global supply chains, possess core competence and cutting-edge technology.
- Textiles: Mega Investment Textiles Parks (MITRA) scheme, in addition to PLI launched. 7 Textile Parks to be established over 3 years. Textile industry to become globally competitive, attract large investments and boost employment generation & exports.
Infrastructure: National Infrastructure Pipeline (NIP) expanded to 7,400 projects. Around 217 projects worth Rs. 1.10 lakh crore completed. Measures in three thrust areas to increase funding for NIP:
- Creation of institutional structures
- Big thrust on monetizing assets
- Enhancing the share of capital expenditure
Big thrust on monetizing assets: National Monetization Pipeline to be launched. Important asset monetization measures to be taken:
- 5 operational toll roads worth Rs. 5,000 crore being transferred to the NHAIInvIT
- Transmission assets worth Rs. 7,000 crore to be transferred to the PGCILInvIT
- Dedicated Freight Corridor assets to be monetized by Railways, for operations and maintenance, after commissioning
- Next lot of Airports to be monetized for operations and management concession
- Other core infrastructure assets to be rolled out under the Asset Monetization Programme:
- Oil and Gas Pipelines of GAIL, IOCL and HPCL
- AAI Airports in Tier II and III cities
- Other Railway Infrastructure Assets
- Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED
- Sports Stadiums
- Roads and Highways Infrastructure: Rs. 1,18,101 lakh crore, highest ever outlay, for Ministry of Road Transport and Highways – of which Rs. 1,08,230 crore is for capital.
- Railway Infrastructure: Rs. 1,10,055 crore for Railways of which Rs. 1,07,100 crore is for capital expenditure.
- Urban Infrastructure: Raising the share of public transport in urban areas by expansion of metro rail network and augmentation of city bus service.
- Power Infrastructure: 139 Giga Watts of installed capacity and 1.41 lakh circuit km of transmission lines added, and additional 2.8 crore households connected in past 6 years. Consumers to have alternatives to choose the Distribution Company for enhancing competitiveness.
- Petroleum & Natural Gas: Extention of Ujjwala Scheme to cover 1 crore more beneficiaries.
- Financial Capital: A single Securities Markets Code to be evolved. Support for development of a world class Fin-Tech hub at the GIFT-IFSC.
- Increasing FDI in Insurance Sector: To increase the permissible FDI limit from 49% to 74% and allow foreign ownership and control with safeguards.
- Company Matters: Many important steps were announced. Like to decriminalize the Limited Liability Partnership (LLP) Act, 2008. Easing Compliance requirement of Small companies by revising their definition under Companies Act, 2013 by increasing their thresholds for Paid up capital from “not exceeding Rs. 50 Lakh” to “not exceeding Rs. 2 Crore” and turnover from “not exceeding Rs. 2 Crore” to “not exceeding Rs. 20 Cr”.
Disinvestment and Strategic Sale: This was another important aspect. Rs. 1,75,000 crore estimated receipts from disinvestment in BE 2020-21. Steps announced were:
- Strategic disinvestment of BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam limited etc. to be completed in 2021-22.
- Other than IDBI Bank, two Public Sector Banks and one General Insurance company to be privatized
- IPO of LIC in 2021-22
- New policy for Strategic Disinvestment approved; CPSEs except in four strategic areas to be privatized
- NITI Aayog to work out on the next list of CPSEs to be taken up for strategic disinvestment
- Incentivizing States for disinvestment of their Public Sector Companies, using central funds
- Special Purpose Vehicle in the form of a company to monetize idle land
- Introducing a revised mechanism for ensuring timely closure of sick or loss making CPSEs
3. Inclusive Development for Aspirational India
This was the third pillar of Budget 2021 and included Agriculture reforms. Lets note the key initiatives.
Agriculture:
- Ensured MSP at minimum 1.5 times the cost of production across all commodities.
- With steady increase in the procurement, payment to farmers increased as under:
|
|
2013-14 (in Rs. crore)
|
2019-20 (in Rs. crore)
|
2020-21 (in Rs. crore)
|
|
Wheat
|
Rs. 33,874
|
Rs. 62,802
|
Rs. 75,060
|
|
Rice
|
Rs. 63,928
|
Rs. 1,41,930
|
Rs. 172,752
|
|
Pulses
|
Rs. 236
|
Rs. 8,285
|
Rs. 10,530
|
- SWAMITVA Scheme to be extended to all States/UTs, 1.80 lakh property-owners in 1,241 villages have already been provided cards Migrant Workers and Labourers: One Nation One Ration Card scheme for beneficiaries to claim rations anywhere in the country was announced. Migrant workers to benefit the most.
4. Reinvigorating Human Capital
Education sector was the fourth pillar of Union Budget 2021. Here are the key initiatives:
- School Education: 15,000 schools to be strengthened by implementing all NEP components. Shall act as exemplar schools in their regions for mentoring others. 100 new Sainik Schools to be set up in partnership with NGOs/private schools/states.
- Higher Education: Legislation to be introduced to setup Higher Education Commission of India as an umbrella body with 4 separate vehicles for standard-setting, accreditation, regulation, and funding.
- Skilling: Proposed amendment to Apprenticeship Act to enhance opportunities for youth was announced. Rs. 3000 crore for realignment of existing National Apprenticeship Training Scheme (NATS) towards post-education apprenticeship, training of graduates and diploma holders in Engineering was mentioned.
5. Innovation and R&D
Innovation and RD was the fifth pillar. · National Research Foundation (announced in July 2019) will have Rs. 50,000 crore outlay over 5 years to strengthen overall research ecosystem with focus on national-priority thrust areas.
6. Minimum Government, Maximum Governance
Finally, Governance was the last pillar. Rs. 3,768 crore allocated for first digital census in the history of India.
Tax Proposals
One of the highlights of Budget 2021 was that no new taxes were announced. Budget noted following:
1. Direct Taxes
Achievements:
- Corporate tax rate slashed to make it among the lowest in the world
- Burden of taxation on small taxpayers eased by increasing rebates
- Return filers almost doubled to 6.48 crore in 2020 from 3.31 crore in 2014
- Faceless Assessment and Faceless Appeal introduced
Relief to Senior Citizens:
- Exemption from filing tax returns for senior citizens over 75 years of age and having only pension and interest income; tax to be deducted by paying bank Attracting Foreign Investment for Infrastructure:
- Infrastructure Debt Funds made eligible to raise funds by issuing Zero Coupon Bonds
- Relaxation of some conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment
Supporting ‘Housing for All’:
- Additional deduction of interest, up to Rs. 1.5 lakh, for loan taken to buy an affordable house extended for loans taken till March 2022
- Tax holiday for Affordable Housing projects extended till March 2022
- Tax exemption allowed for notified Affordable Rental Housing Projects
2. Indirect Taxes
GST:
Measures taken till date:
- Nil return through SMS
- Quarterly return and monthly payment for small taxpayers
- Electronic invoice system
- Validated input tax statement
- Pre-filled editable GST return
- Staggering of returns filing
- Enhancement of capacity of GSTN system
- Use of deep analytics and AI to identify tax evaders
Electronic and Mobile Phone Industry:
- Some exemptions on parts of chargers and sub-parts of mobiles withdrawn
- Duty on some parts of mobiles revised to 2.5% from ‘nil’ rate
Achievements and Milestones during the COVID-19 pandemic
Budget noted following achievements by government during the COVID-19 pandemic:
- Pradhan Mantri Garib Kalyan Yojana (PMGKY):
- Valued at Rs. 2.76 lakh crore
- Free food grain to 80 crore people
- Free cooking gas for 8 crore families
- Direct cash to over 40 crore farmers, women, elderly, the poor and the needy
- AatmaNirbhar Bharat package (ANB 1.0):
- Estimated at Rs. 23 lakh crore – more than 10% of GDP
- PMGKY, three ANB packages (ANB 1.0, 2.0, and 3.0), and announcements made later were like 5 mini-budgets in themselves
- Rs. 27.1 lakh crore worth of financial impact of all three ANB packages including RBI’s measures – amounting to more than 13% of GDP
- Structural reforms:
- One Nation One Ration Card
- Agriculture and Labour Reforms
- Redefinition of MSMEs
- Commercialisation of the Mineral Sector
- Privatisation of Public Sector Undertakings
- Production Linked Incentive Schemes
- Status of India’s fight against COVID-19:
- 2 Made-in-India vaccines – medically safeguarding citizens of India and those of 100-plus countries against COVID-19
- 2 or more new vaccines expected soon
- Lowest death rate per million and the lowest active cases
Political & Industry Reactions to Budget 2021
Overall, Industry has liked and praised the Budget 2021. Stock Market was up nearly 5% on the Budget day! Opposition parties have of course criticized the budget. Here are some reactions:
Historic budget with growth as the centre piece: CII president
CII president Uday Kotak said: “Delivering on her promise of unveiling a ‘Budget Like No Other’, the Finance Minister announced a raft of prudent measures aimed at rejuvenating government spending towards critical areas of increasing allocation on infrastructure expansion, education, housing and health as India rolls out a vaccine drive to inoculate 1.3 billion people.”
Proposed tax relief bypasses tax paying working class, middle class:
P. Chidambaram
According to Former Finance Minister P. Chidambaram, the proposed tax reliefs completely bypass the tax paying working class and tax paying middle class. "As expected, the FM has paid special attention to election bound states. She announced large capital outlays for Kerala, Tamil Nadu, West Bengal and Assam," he said.
A reassuring Budget: Biocon CEO KM Shaw
Kiran Mazumdar Shaw, executive chairperson, Biocon Ltd.: “Overall, a reassuring Budget with no negative surprises that has buoyed overall sentiment. Healthcare & well-being has received top priority in this Budget, with more than doubling of the outlay to ₹2,23,846 crore, including the allocation of ₹35,400 crore towards COVID-19 vaccination and ₹64,184 Cr for a new scheme to strengthen the country’s primary, secondary and tertiary health infrastructure.”
Budget justifiably focused on resetting the Indian economy: Cognizant India chairman
Rajesh Nambiar, chairman and managing director for India, Cognizant: “Coming as it does during an unprecedented global crisis, the Union Budget for 2021 is justifiably focused on resetting the Indian economy and enabling it to emerge from the shadows of a prolonged and unforeseen disruption.”
Given the impact of Budget on Society, Business and Economy, this becomes a very important GD, WAT, Extempore, Interview topic for MBA Admissions and other competitive exams. Hope you found this MBAUniverse.com detailed analysis of Budget 2021 useful.
