2-Feb-2023: Highlights of the budget 2023-24

Part A

Introduction

• The Budget builds on the foundation laid in the previous year's Budget.
• Envisions a prosperous and inclusive India.
• Aims to reach all regions and citizens, especially youth, women, farmers, OBCs, Scheduled Castes, and Scheduled Tribes.

Resilience amidst multiple crises

• India's rising global profile.
• Unique World Class Digital Public Infrastructure: Aadhaar, Co-Win, and UPI.
• Unparalleled COVID-19 vaccination drive.
• Proactive role in frontier areas: climate-related goals, mission LiFE, and National Hydrogen Mission.
• Scheme to supply free food grains to over 80 Crore persons during the pandemic for 28 months.
• From 1st January 2023, another scheme to supply free food grain to all Antyodaya and priority households for the next one year has been implemented under PM Garib Kalyan Anna Yojana (PMGKAY). The entire expenditure of about Rs 2 lakh crore will be borne by the Central Government.

G20 Presidency

• gives India an unique opportunity to strengthen its role in the world economic order.
• Theme of 'Vasudhaiva Kutumbakam.'
• India is steering an ambitious, people-centric agenda to address global challenges and facilitate sustainable economic development.

Achievements since 2014

• Better quality of living and a life of dignity for all citizens.
• Per capita income more than doubled to Rs 1.97 lakh.
• Indian economy increased in size from being the 10th to the 5th largest in the world.
• Economy has become more formalized.
• Efficient implementation of many schemes with universalisation of targeted benefits.
• Inclusive development achieved through several schemes:
  • 11.7 crore household toilets under Swachh Bharat Mission.
  • 9.6 crore LPG connections under Ujjawala.
  • 220 crore Covid vaccinations of 102 crore persons.
  • 47.8 crore PM Jan Dhan Bank Accounts.
  • Insurance cover for 44.6 crore persons under PM Suraksha Bima and PM Jeevan Jyoti Yojana.
  • Cash transfer of Rs 2.2 lakh crore to over 11.4 crore farmers under PM Kisan Samman Nidhi.

Vision for Amrit Kaal

• Technology-driven and knowledge-based economy
• Strong public finances
• Robust financial sector
• Jan Bhagidari through Sabka Saath Sabka Prayas

Economic Agenda

• Facilitating ample opportunities for citizens, especially the youth
• Providing strong impetus to growth and job creation
• Strengthening macro-economic stability

Transformative Opportunities

Economic Empowerment of Women

•  Deendayal Antyodaya Yojana National Rural Livelihood Mission has achieved remarkable success by mobilizing rural women into 81 lakh Self Help Groups and we will enable these groups to reach the next stage of economic empowerment through formation of large producer enterprises or collectives with each having several thousand members and managed professionally.

PM VIKAS Scheme:

• Assistance for traditional artisans and craftspeople
• Improving quality, scale, and reach of products
• Financial support, skill training, digital techniques, green technologies, brand promotion, market linkage, digital payments, and social security
• Benefits Scheduled Castes, Scheduled Tribes, OBCs, women, and weaker sections

Tourism:

• Huge potential for domestic and foreign tourists
• Offers opportunities for jobs and entrepreneurship, particularly for youth
• Promotion on mission mode with  active participation of states, convergence of government programmes, and public-private partnerships

Green Growth:

• India implementing many programmes for green fuel, energy, farming, mobility, buildings, and equipment
• Policies for efficient use of energy in various economic sectors
• Reducing carbon intensity of the economy
• Providing for large-scale green job opportunities.

Priorities of this Budget

Smt. Nirmala Sitharaman listed seven priorities of the Union Budget and said that they complement each other and act as the ‘Saptarishi’ guiding us through the Amrit Kaal. They are as follows: 1) Inclusive Development 2) Reaching the Last Mile 3) Infrastructure and Investment 4) Unleashing the Potential 5) Green Growth 6) Youth Power 7) Financial Sector

Priority 1: Inclusive Development

• Sabka Saath Sabka Vikas philosophy
• Focus on farmers, women, youth, OBCs, SCs, STs, Divyangjan, and economically weaker sections
• Priority for underprivileged (vanchiton ko variyata)
• Sustained focus on Jammu & Kashmir, Ladakh, and North-East

Agriculture and Cooperation

• Digital Public Infrastructure for Agriculture
• Built as an open source, open standard, and interoperable public good
• Enables inclusive, farmer-centric solutions
• Provides relevant information services for crop planning and health, improved access to farm inputs, credit, and insurance
• Helps with crop estimation, market intelligence, and supports agri-tech industry and start-ups

Agriculture Accelerator Fund

• Set-up to encourage agri-startups by young entrepreneurs in rural areas
• Aims to bring innovative and affordable solutions for challenges faced by farmers
• Brings in modern technologies to transform agricultural practices and increase productivity and profitability

Enhancing Productivity of Cotton Crop

• Government adopts cluster-based and value chain approach through PPP to enhance productivity of extra-long staple cotton
• Collaboration between farmers, state, and industry for input supplies, extension services, and market linkages

Atmanirbhar Horticulture Clean Plant Programme

• Government to launch Atmanirbhar Clean Plant Programme
• Aims to boost availability of disease-free, quality planting material for high value horticultural crops with an outlay of Rs 2,200 crore

Global Hub for Millets: ‘Shree Anna’

• India is at the forefront of popularizing Millets
• India is the largest producer and second largest exporter of ‘Shree Anna’
• It grows several types of 'Shree Anna' such as jowar, ragi, bajra, kuttu, ramdana, kangni, kutki, kodo, cheena, and sama.
• Millets have health benefits and have been an integral part of our food for centuries
• Indian Institute of Millet Research, Hyderabad will be supported as the Centre of Excellence for sharing best practices, research and technologies

Agriculture Credit:

• Agriculture credit target will be increased to Rs 20 lakh crore
• Focus on animal husbandry, dairy and fisheries
• PM Matsya Sampada Yojana sub-scheme with targeted investment of Rs 6,000 crore for fishermen, fish vendors, and micro & small enterprises
• Improve value chain efficiencies and expand the market

Cooperation:

• Promoting cooperative-based economic development model for farmers and marginalized sections
• New Ministry of Cooperation formed with a mandate to realize the vision of ‘Sahakar Se Samriddhi’
• Computerization of 63,000 Primary Agricultural Credit Societies (PACS) with an investment of Rs 2,516 crore
• Formulated model bye-laws for PACS enabling them to become multipurpose PACS
• National cooperative database being prepared for country-wide mapping of cooperative societies
• Plan to set up massive decentralized storage capacity to help farmers store their produce and realize remunerative prices
• Facilitate setting up of a large number of multipurpose cooperative societies, primary fishery societies, and dairy cooperative societies in uncovered panchayats and villages in the next 5 years.

Health, Education and Skilling

Medical & Nursing Colleges

• 157 new nursing colleges to be established in co-location with existing medical colleges
• Mission to eliminate Sickle Cell Anaemia by 2047 with awareness creation, universal screening, and counseling
• ICMR Labs to be made available for collaborative research and innovation in select areas of medical research
• New programme to promote research and innovation in pharmaceuticals through centers of excellence

Teachers’ Training

• Innovative pedagogy, curriculum transaction, and continuous professional development to re-envision teachers' training
• District Institutes of Education and Training to be developed as vibrant institutes of excellence for teachers' training
• National Digital Library for Children and Adolescents to be set up for facilitating availability of quality books across geographies and levels, with device agnostic accessibility
• Physical libraries to be set up for accessing National Digital Library resources at panchayat and ward levels
• National Book Trust, Children’s Book Trust, and other sources to provide and replenish non-curricular titles in regional languages and English to physical libraries

Priority 2: Reaching the Last Mile

• Ministry of Tribal Affairs and Department of Development of North-Eastern Region formed under Vajpayee government
• Modi government formed ministries of AYUSH, Fisheries, Animal Husbandry and Dairying, Skill Development, Jal Shakti and Cooperation
• Objective of ‘reaching the last mile’

Aspirational Districts and Blocks Programme

• Aspirational Districts Programme successful
• Aspirational Blocks Programme launched, covering 500 blocks for saturation of essential government services
• Multiple domains covered: health, nutrition, education, agriculture, water resources, financial inclusion, skill development, and basic infrastructure

Pradhan Mantri PVTG Development Mission

• Pradhan Mantri PVTG Development Mission to be launched to improve socio-economic conditions of particularly vulnerable tribal groups
• Basic facilities to be provided: safe housing, clean drinking water and sanitation, improved access to education, health and nutrition, road and telecom connectivity, and sustainable livelihood opportunities
• Rs 15,000 crore allocated to implement the Mission in the next three years
• 38,800 teachers and support staff to be recruited for 740 Eklavya Model Residential Schools, serving 3.5 lakh tribal students

Water for Drought Prone Region

• Central assistance of Rs 5,300 crore to be given to Upper Bhadra Project in drought prone central region of Karnataka
• Aim is to provide sustainable micro irrigation and filling up of surface tanks for drinking water

PM Awas Yojana

• Outlay for PM Awas Yojana being enhanced by 66 per cent to over Rs 79,000 crore

 ‘Bharat Shared Repository of Inscriptions’ will be set up in a digital epigraphy museum, with digitization of one lakh ancient inscriptions in the first stage.

Priority 3: Infrastructure & Investment

• Investments in infrastructure and productive capacity have multiplier impact on growth and employment
• Capital investment outlay increased by 33% to Rs 10 lakh crore (3.3% of GDP)
• Effective capital expenditure budgeted at Rs 13.7 lakh crore (4.5% of GDP)

Support to State Governments for Capital Investment: 50-year interest-free loan to state governments extended for 1 more year with enhanced outlay of Rs 1.3 lakh crore

Railways

• Capital outlay of Rs 2.40 lakh crore provided for railways, highest ever outlay and 9 times the outlay in 2013-14
• 100 critical transport infrastructure projects identified for last and first mile connectivity with investment of Rs 75,000 crore (including Rs 15,000 crore from private sources)

Regional Air Connectivity: 50 additional airports, heliports, water aerodromes, and advance landing grounds to be revived for improving regional air connectivity

Urban Infrastructure Development Fund (UIDF)

• UIDF to be established through use of priority sector lending shortfall, managed by National Housing Bank, used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities
• States encouraged to leverage resources from grants of the 15th Finance Commission and existing schemes while accessing the UIDF
• Government to make available Rs 10,000 crore per annum for this purpose.

Priority 4: Unleashing the Potential

Ease of doing business

• Over 39,000 compliances reduced
• Over 3,400 legal provisions decriminalized
• Trust-based governance: Jan Vishwas Bill introduced to amend 42 Central Acts

National Data Governance Policy

• To unleash innovation and research by start-ups and academia
• Enables access to anonymized data

Entity DigiLocker

• Set up for use by MSMEs, large business and charitable trusts
• For storing and sharing documents online securely with various authorities, regulators, banks, and other business entities

Centers of Excellence for Artificial Intelligence

• Three centers of excellence for AI to be set up in top educational institutions
• Leading industry players to partner in conducting interdisciplinary research
• To develop cutting-edge applications and scalable problem solutions in the areas of agriculture, health, and sustainable cities
• To galvanize an effective AI ecosystem
• To nurture quality human resources in the field

5G Services

• One hundred labs to be set up in engineering institutions for developing applications using 5G services to realize a new range of opportunities, business models, and employment potential.
• Labs to cover applications such as smart classrooms, precision farming, intelligent transport systems, and healthcare applications.

Priority 5: Green Growth

• PM's vision for "LiFE" lifestyle for environment to spur a movement of environmentally conscious lifestyle.
• Aim for "Panchamrit" and net-zero carbon emission by 2070 to usher in green industrial and economic transition.
• National Green Hydrogen Mission with Rs 19,700 crore outlay
  • Transition to low carbon intensity
  • Reduce dependence on fossil fuel imports
  • Make the country assume technology and market leadership in this sunrise sector.
  • Target to reach an annual production of 5 MMT by 2030.
• Rs 35,000 crore for priority capital investments towards energy transition and net zero objectives, and energy security by Ministry of Petroleum & Natural Gas
• Battery Energy Storage Systems with capacity of 4,000 MWH supported with Viability Gap Funding
• Inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh with the investment of Rs 20,700 crore including Central support of Rs 8,300 crore.

GOBARdhan Scheme

• 500 new ‘waste to wealth’ plants to be established
• 200 compressed biogas (CBG) plants, including 75 plants in urban areas
• 300 community or cluster-based plants
• Total investment of Rs 10,000 crore
• Introduction of a 5% CBG mandate for organizations marketing natural and bio gas
• Fiscal support for bio-mass collection and distribution of bio-manure

Bhartiya Prakritik Kheti Bio-Input Resource Centres

• Facilitation of one crore farmers to adopt natural farming
• 10,000 Bio-Input Resource Centres to be set up
• Creation of a national-level distributed micro-fertilizer and pesticide manufacturing network

Vehicle Scrapping Policy

• Adequate funds allocated to scrap old vehicles of the Central Government
• Support for states to replace old vehicles and ambulances.

Priority 6: Youth Power

• National Education Policy focused on skilling, adopted economic policies
• Economic policies for job creation and have supported business opportunities.
• Pradhan Mantri Kaushal Vikas Yojana 4.0
  • Skilling lakhs of youth in 3 years
  • Emphasis on on-job training, industry partnership, and courses aligned with industry needs
  • New age courses for Industry 4.0 like coding, AI, robotics, mechatronics, IOT, 3D printing, drones, and soft skills.
• 30 Skill India International Centres to be setup for skilling youth for international opportunities
• National Apprenticeship Promotion Scheme: Stipend support for 47 lakh youth in 3 years through Direct Benefit Transfer under a pan-India National Apprenticeship Promotion Scheme will be rolled out..
• Unity Mall: States are encouraged to set up Unity Malls for promoting and selling ODOPs, GI products, and handicrafts and providing space for products from all other States.

Priority 7: Financial Sector

Credit Guarantee for MSMEs

• Revamping of the credit guarantee scheme for MSMEs from 1st April 2023.
• Infusion of Rs 9,000 crore in the corpus enabling additional collateral-free guaranteed credit of Rs 2 lakh crore.
• Reduced cost of credit by about 1%

National Financial Information Registry

• Central repository of financial and ancillary information will facilitate efficient flow of credit, financial inclusion, and stability.
• New legislative framework in consultation with RBI will govern this credit public infrastructure.

Central Processing Centre

• For faster response to companies through centralized handling of various forms filed with field offices.

Mahila Samman Savings Certificate

• One-time new small savings scheme
• Available for a two-year period up to March 2025
• Deposit facility up to Rs 2 lakh in the name of women or girls
• Tenure of 2 years
• Fixed interest rate of 7.5% with partial withdrawal option

Senior Citizens

• Maximum deposit limit for Senior Citizen Savings Scheme enhanced from Rs 15 lakh to Rs 30 lakh
• Maximum deposit limit for Monthly Income Account Scheme enhanced
  • From Rs 4.5 lakh to Rs 9 lakh for single account
  • From Rs 9 lakh to Rs 15 lakh for joint account

Fiscal Management:

• Fifty-year interest free loan to States
  • To be spent on capital expenditure within 2023-24
  • Part conditional on states increasing actual capital expenditure
  • Linked to specific purposes
• Revised Estimate of total receipts other than borrowings is Rs 24.3 lakh crore
  • Net tax receipts are Rs 20.9 lakh crore
• Revised Estimate of total expenditure is Rs 41.9 lakh crore
  • Capital expenditure is about Rs 7.3 lakh crore
• Revised Estimate of fiscal deficit is 6.4% of GDP

Budget Estimates 2023-24

• Total receipts other than borrowings estimated at Rs 27.2 lakh crore
• Total expenditure estimated at Rs 45 lakh crore
• Net tax receipts estimated at Rs 23.3 lakh crore
• Fiscal deficit estimated to be 5.9% of GDP
• Government plans to continue fiscal consolidation, reaching fiscal deficit below 4.5% by 2025-26
• Net market borrowings from dated securities estimated at Rs 11.8 lakh crore
• Gross market borrowings estimated at Rs 15.4 lakh crore.
• The balance financing expected to come from small savings and other sources.

Part B

Major relief in the personal income tax. The indirect tax proposals contained in the budget aim to promote exports enhance domestic value addition, encourage green energy and mobility.

Personal Income Tax

New tax regime

• Rebate limit increased to ₹7 lakh(peons in the new tax regime with income upto ₹ 7 lakh will not have to pay any tax.)
• Reduced number of slabs to five
• Increased tax exemption limit to ₹3 lakh

Standard deduction extended to salaried class and pensioners

• Salaried individual gets ₹50,000
• Pensioner gets ₹15,000
• Each salaried person with an income of ₹ 15.5 lakh or more will thus gain ₹ 52,500, from the above proposals.

• Reduction in highest surcharge rate from 37% to 25% for income above ₹2 crore. This would result in maximum tax rate of personal income tax come down to 39% which was earlier 42.74%.
• Limit of tax exemption on leave encashment on retirement increased from ₹3 lakh to ₹25 lakh.
• The new income tax regime has been made the default tax regime. However, the citizens will continue to have the option to avail the benefit of the old tax regime.

Indirect Tax Proposals

• Simplification of tax structure
• Fewer tax rates to help in reducing compliance burden and improving tax administration.
• The number of basic customs duty rates on goods, other than textiles and agriculture, has been reduced from 21 to 13.
• There are minor changes in the basic customs duties, cesses and surcharges on items including toys, bicycles, automobiles and naphtha.
• Exemption from excise duty on GST-paid compressed bio-gas contained in blended compressed natural gas.
• Customs duty exemption extended to import of capital goods and machinery required for manufacture of lithium-ion cells for batteries used in electric vehicles.
• Relief in customs duty on import of certain parts and inputs for manufacture of mobile phones.
• Basic customs duty on parts of open cells of TV panels reduced to 2.5%.
• Changes in basic customs duty to rectify inversion of duty structure and encourage manufacturing of electrical kitchen chimneys.
• Denatured ethyl alcohol exempted from basic customs duty.
• Basic customs duty reduced on acid grade fluorspar and crude glycerin.
• Duty reduced on key inputs for domestic manufacture of shrimp feed.
• Basic customs duty on seeds used in the manufacture of Lab Grown Diamonds reduced.
• Import duty on silver dore, bars, and articles increased to align with that on gold and platinum.
• Basic customs duty rate on compounded rubber increased.
• National Calamity Contingent Duty on specified cigarettes revised upwards by about 16%.
• Basic customs duty on crude glycerin for use in the manufacture of epichlorohydrin proposed to be reduced from 7.5% to 2.5%.

Common IT Return Form

• Next-generation common IT return form for tax payer convenience
• Strengthening of grievance redressal mechanism for direct taxes
• Deployment of about 100 Joint Commissioners for disposals of small appeals in direct tax matters
• Selective scrutiny of returns already received this year

Better targeting of tax concessions

• Deduction from capital gains on investment in residential house capped at ₹ 10 crore
• Income tax exemption from proceeds of insurance policies with very high value will have limit
• Proposals for rationalization and simplification of direct taxes

Other major proposals

• Extension of period of tax benefits to funds relocating to IFSC, GIFT City till 31.03.2025
• Decriminalisation under section 276A of the Income Tax Act
• Allowing carry forward of losses on strategic disinvestment including that of IDBI Bank
• Providing EEE status to Agniveer Fund

Proposals relating to MSMEs

• Enhanced limits for micro enterprises and certain professionals for availing the benefit of presumptive taxation
• Deduction for expenditure incurred on payments made to MSMEs only when payment is actually made

Cooperation

• New cooperatives that commence manufacturing activities till 31st March next year get 15% lower tax rate.
• Sugar cooperatives can claim payments made to sugarcane farmers for the period prior to assessment year 2016-17 as expenditure.
• Primary Agricultural Cooperative Societies and Primary Cooperative Agriculture and Rural Development Banks get a higher limit of ₹2 lakh per member for cash deposits and loans in cash.
• TDS on cash withdrawal for cooperative societies has a higher limit of ₹3 crore.

Start-ups

• Date of incorporation for income tax benefits to start-ups extended from 31.03.2023 to 31.03.2024.
• Benefit of carry forward of losses on change of shareholding of start-ups extended from 7 to 10 years.

Amendments in CGST Act

• Minimum threshold of tax amount for launching prosecution under GST raised from ₹1 crore to ₹2 crore, except for the offence of issuance of invoices without supply of goods and services or both.
• Compounding amount reduced from the present range of 50 to 150% of tax amount to the range of 25 to 100%.
• Certain clauses of the Act decriminalized like obstruction and preventing of any officer from discharge of his duties, deliberate tempering of evidence or failure to supply the information.

Implications of tax changes

• Revenue of about ₹38,000 crore will be foregone as a result of these proposals, while revenue of about ₹3,000 crore will be additionally mobilized.
• Total revenue foregone is about ₹35,000 crore annually on account of these proposals.

6-Jan-2023: First Advance Estimates of National Income, 2022-23

The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation released the First Advance Estimates (FAE) of National Income at both Constant (2011-12) and Current Prices, for the financial year 2022-23.

The First Advance Estimates of GDP, introduced in 2016-17 to serve as essential inputs to the Budget exercise, is based on limited data and compiled using the Benchmark-Indicator Method i.e. the estimates available for the previous year (2021-22 in this case) are extrapolated using relevant indicators reflecting the performance of sectors.

Real GDP or GDP at Constant (2011-12) Prices in the year 2022-23 is estimated at ₹157.60 lakh crore, as against the Provisional Estimate of GDP for the year 2021-22 of ₹147.36 lakh crore, released on 31st May, 2022. The growth in real GDP during 2022-23 is estimated at 7.0 per cent as compared to 8.7 per cent in 2021-22.

Nominal GDP or GDP at Current Prices in the year 2022-23 is estimated at ₹273.08 lakh crore, as against the Provisional Estimate of GDP for the year 2021-22 of ₹236.65 lakh crore, released on 31st May, 2022. The growth in nominal GDP during 2022-23 is estimated at 15.4 per cent as compared to 19.5 per cent in 2021-22.

The sector-wise estimates have been compiled using indicators like (i) Index of Industrial Production (IIP), (ii) financial performance of Listed Companies in the Private Corporate sector available for Q1 and Q2 2022-23, (iii) Crop production targets and First Advance Estimates of Crop Production for 2022-23, (iv) Production targets for 2022-23 and production estimates of Major Livestock Products for summer season of 2022-23, (v) Fish Production, (vi) Production/ Consumption of Cement and Steel, (vii) Net Tonne Kilometres and Passenger Kilometres for Railways, (viii) Passenger and Cargo traffic handled by Civil Aviation, (ix) Cargo traffic handled at Major Sea Ports, (x) Sales of Commercial Vehicles, (xi) Bank Deposits & Credits, (xii) Accounts of Central & State Governments, etc., available for first 7-8 months of the financial year 2022-23. Percentage changes in the main indicators used in the estimation are given in the Annexure.

The total tax revenue used for GDP compilation includes non-GST revenue and GST revenue. The Budget Estimates of tax revenue for 2022-23, as available on Controller General of Accounts (CGA) and Comptroller and Auditor General of India (CAG) websites have been used for estimating taxes on products at current prices.  For compiling taxes on products at constant prices, volume extrapolation is done using volume growth of taxed goods and services. The total product subsidies were compiled using the latest information on major subsidies viz. Food, Urea, Petroleum and Nutrient based subsidy as available on CGA website and the expenditure incurred on subsidies by most States upto November, 2022 as available on CAG website along with the Centre/State-wise BE provision for 2022-23. Information available on Revenue expenditure, Interest payments, Subsidies etc. based on detailed analysis of budget documents of Centre and States for 2022-23 were also put to use for estimating Government Final Consumption Expenditure (GFCE).

However, these are early projections for 2022-23. Improved data coverage, actual tax collections and expenditure incurred on subsidies, data revisions made by source agencies etc. would have a bearing on subsequent revisions of these estimates. The First Revised Estimates for 2021-22 (benchmark year), due for release on 28.02.2023, may also lead to revision in growth rates reflected in FAE. Estimates are, therefore, likely to undergo revisions for the aforesaid causes in due course, as per the release calendar. Users should take this into consideration when interpreting the figures.

The Second Advance Estimates of National Income for the year 2022-23 and quarterly GDP estimates for the quarter October-December, 2022 (Q3 2022-23), along with First Revised, Second Revised and Third Revised Estimates of National Accounts for the years 2021-22, 2020-21 and 2019-20 respectively will be released on 28.02.2023.