BUDGET 2023
BREAKUP OF INCOME
FISCAL DEFICITS: IMPROVEMENT ON TRACK
QUALITY OF EXPENDITURE IMPROVING
CAPEX INCREASE
B.I.G. Budget For Growth & Employment
Banks- Credit Demand would increase due to a boost in Infrastructure-
Infrastructure- ₹10Tn Capital investment outlay increase of 3x the outlay of
FY20, ₹2.4Tn Capex allocated to Railway , ₹790Bn under PM Awas Yojana
Fund
Green Growth- ₹100Bn to set up Compressed natural gas (CNG) plants,
₹350Bn for energy transition by MoPNG
FOCUS ON 3Gs
Growth - Fiscal consolidation & Infrastructure spending
Governance - Improving Tax Compliance
Green - Energy independence through green energy
Higher spending on Infrastructure than expectations to help Capex and
Growth
Consumption to get a boost - Tax cuts
Multiplier effect on growth by pulling in private investment
Nudge To Move To New Tax Regime
Proposed changes under New Tax Regime (Default Option)
• Tax rebate limit raised to ₹7 lakh from ₹5 lakh i.e. No tax if you earn less than 7 Lakh per year
• Introduction of standard deduction of INR 50,000 from salary and INR 15,000 from family pension
• Surcharge on annual income above 5 crores reduced from 37% to 25% i.e. max tax with surcharge will be
39% (current tax 42.74%,highest in world)
CONSISTENT, CREDIBLE AND PRUDENT
Focus on investments and long-term growth maintained
Fiscal discipline and consolidation intact:
Lower thrust on consumption spends
Credible estimates:
Key Policy Announcement
To provide boost to the agriculture sector: a) Digital public infrastructure for
agriculture will be built as an open source; b) Agriculture Accelerator Fund
will be set-up to encourage agri-startups by young entrepreneurs ; c)
Atmanirbhar Clean Plant Program will be launched to boost the horticulture
crops; e) the Indian Institute of Millet Research, Hyderabad will be supported
as the Centre of Excellence for sharing best practices, research and
techonlogies at international level to make India a global hub for millets.
Taking forward the cooperative-based economic development model,
government plans to set up massive decentralised storage capacity that will
help farmers store their produce and realize remunerative prices through sale
at appropriate times.
To eliminate Sickle Cell Anaemia by 2047, a mission will be launched that will
entail awareness creation, universal screening of 70 mn people in the age
group of 0-40 years in affected tribal areas, and counselling through
collaborative efforts of central ministries and state government.
To improve the socio-economic condition of the particularly vulnerable tribal
groups (PVTGs), Pradhan Mantri PVTG Development Mission was announced,
with an outlay of INR 150 bn
To empower the youth in the country, various schemes were announced
focusing on skilling the youth o Pradhan Mantri Kaushal Vikas Yojana 4.0 to be
launched with emphasis on (i) On-job training, (ii) industry partnership, and
(iii) alignment of courses with needs of industry.
To boost the logistic sector, 100 critical transport infrastructure projects, for
last and first mile connectivity for ports, coal, steel, fertilizer, and food
grains sectors have been identified, with an investment outlay of INR 750 bn,
including INR 150 bn from private sources
To transform cities into ‘sustainable cities of tomorrow’, states and cities will
be encouraged to undertake urban planning reforms and actions through
efficient use of land resources, adequate resources for urban infrastructure,
transit-oriented development, enhanced availability and affordability of
urban land, and opportunities for all.
The government announced an Urban Infrastructure Development Fund (UIDF)
through the use of priority sector lending shortfall, which will be managed by
the National Housing Bank. The fund will be used by public agencies to create
urban infrastructure in Tier 2 and Tier 3 cities.
To support MSMEs, government announced a revamped credit gurantee
scheme through an infusion of INR 90 bn to the corpus. o The scheme would
enable additional collateral-free guranteed credit of INR 2 tn.
The government announced the continuation of 50-year interest free loan to
state governments for one more year to spur investment in infrastructure,
earmarks INR 1.3 trn in FY24BE for this purpose.
The government announced ‘Mahila Samman Savings Certificate’ for a two-
year period up to March 2025. It offers deposit facility upto INR 0.2 mn in the
name of women or girls for a tenor of 2 years at fixed interest rate of 7.5%
with partial withdrawal option.
To enhance ease of doing business, more than 39,000 compliances have been
reduced and more than 3,400 legal provisions have been decriminalized.
To give a boost to the tourism sector and enhance tourism experience, atleast 50
destination will be selected, wherein all the aspects of the destination to be made
available on an App
The government announced ‘Green Credit Programme’ to incentivize
environmentally sustainable and responsive actions by companies, individuals and
local bodies, and help mobilize additional resources for such activities
The government announced INR 350 bn for priority capital investments towards
energy transition and net zero objectives, and energy security by Ministry of
Petroleum & Natural Gas.
To support development of Artificial Intelligence in India, government announced
three centres of excellence to be set-up in top educational institutions.
SECTORWISE DETAILS- AUTOMOBILE
Push towards net zero, clean tech and green mobility led by EVs
The government wants to promote battery manufacturing via reduction of
duty in capital goods w.r.t to lithium-ion cell manufacturing.
Adequate support to be provided for scrappage of old vehicles at both Centre
and state levels.
25% increase in road infrastructure outlay
AGRI
Fertilizer allocation for nutrient based subsidy (NBS) is down 38% from revised
estimates to Rs 440bn while for Urea is down 14.9% from revised estimates to
Rs 1.3trn.
The agriculture credit target has been increased to ~Rs20 trillion with focus
on animal husbandry, dairy and fisheries.
MSME FINANCING
a) Credit guarantee allocation of Rs 90bn effective 1st April 2023
b)Entity DigiLocker for MSME
Vehicle replacement
Higher Capital Expenditure – Capital investment outlay increased by ~25% to
Rs 13.4t
Pradhan Mantri Awas Yojana (PMAY) allocation increased by 66bn/4% YoY from
FY23 BE/RE to Rs 790bn
Insurance/Non banking
financials/Mutual Funds
Life Insurance: Proceeds from premium paid on insurance policies (ex ULIP)
exceeding Rs 0.5mn in a year will be taxable (Except in case of death benefit)
Income from Market linked Debentures (MLD) to be taxed at short term
capital gain (STCG)
New Tax regime to be made default tax regime progressively
MLD Taxation
Infrastructure
25% increase in capex spending. Key focus sectors include Roads (25% YoY),
Railways (15% YoY) and Defence (8% YoY).
NHAI spending increased by 14.5% to 1.6 trn
Strong capex growth (+55% YoY) in allocation to Ministry of Road Transport and
Highways (MORTH)
No borrowings have been budgeted for NHAI in FY24 similar to FY23
Railways capex increased by 15% to Rs 2.9 trn Majority of spending is through
budget vs IEBR
Defence expenditure increased by 8.4% to Rs 1.66 trn
Consumer staples
Changes in the new tax regime: Income up to Rs 3 lakh will be tax-exempt.
Those with income of up to Rs 7 lakh will get a rebate
Allocations to most rural schemes have not seen a meaningful increase
Chemicals
Focus on Make in India through reduction in input cost and incentive to new
energy sectors.
Govt. reduced Basic Custom Duty on raw materials like Denatured Ethyl
Alcohol, Acid grade fluorspar, crude glycerin, Vinyl Chloride and others.
Emphasis on battery energy storage systems with a capacity of 4,000 MWH
will be supported with VGF. BCD exemption have been extended on lithium-
ion cells, EVA sheet/solar tempered glass used in solar cells or modules by one
year.
