Union Budget 2023-24: Highlights and Key Takeaways

In accordance with the Constitution of India’s Article 112, it is necessary to present a budget at the Parliament before the beginning of every financial year. The budget is presented by the Union Finance Minister on 1st February every year.

Ahead of the presentation of the Union Budget 2023-24, the Economic Survey of India pegged India’s economic growth at 6-6.8% in the 2023-24 FY, which is slightly lower than the 7% growth rate of the current FY (2022-23).

Genesis of the word Budget:

• The word ‘budget’ has been borrowed from the English word “Bowgette” which traces its origin to the French word “Bougette”.  Word “Bougette” has arrived from the word, ‘Bouge’ which means a leather bag.

About Union Budget

• The Union Budget contains details about the projected receivables and payables of the government for a particular fiscal year. This budget statement is divided into two major parts-capital budget and revenue budget.

Capital budget

• Capital budget accounts for government-related capital payment and receipts. Capital receipts include loans from the public or that from the Reserve Bank of India (RBI), while capital payment includes expenses incurred towards health facilities, development and maintenance of equipment, as well as educational facilities.

Revenue budget

• As the name suggests, a revenue budget accounts for all the revenue expenditure and receipts. If the revenue expense is in excess of the receipts, the government suffers a revenue deficit.

Understanding the importance of a Union Budget

• The general objective of the Union Budget is to bring about a rapid and balanced economic growth of our country coupled with social justice and equality. Following are the key objectives that highlight the importance of Union Budget in India.

1. Ensure efficient allocation of resources
   It is necessary to employ the available resources in the best interest of the country. Allocating resources optimally helps to achieve profit maximization for the government so as to foster public welfare.
2. Reduce unemployment and poverty level
   Another objective of the Union Budget is to wipe out poverty and create more job opportunities. This will ensure that every citizen of the country is able to meet his/her basic needs of food, shelter, and clothing, along with facilities for health care and education.
3. Reduce wealth and income disparities
   The budget aids in influencing the distribution of income through subsidies and taxes. It helps to ensure that a high rate of tax is levied on the rich class, thereby reducing their disposable income. On the other hand, a lower rate of tax is charged on the lower income group to ensure they have sufficient income in hand.
4. Keep a check on prices
   The Union Budget aids in controlling the economic fluctuations as well. It ensures proper handling of inflation and deflation, thus bringing about economic stability. During inflation, surplus budget policies are implemented, while deficit budget policies are devised during deflation. This aids in maintaining a price stability in the economy.
5. Change tax structure
   The Union Budget also dictates the possible changes in the direct and indirect taxes of the country. It brings about changes to income tax rates and tax brackets.

Union Budget 2023-24 Key Takeaways

• Finance Minister Nirmala Sitharaman announced hiking the capital expenditure by 33 percent to Rs 10 lakh crore for infrastructure development for 2023-24 and will be at 3.3 per cent of the GDP. 
• She further added that India will target a budget deficit of 5.9% of GDP for 2023/24.
• Amid the looming global recession and slowing growth in India, Finance Minister Nirmala Sitharaman presented the Union Budget 2023-24 on February 1. 
• With greater emphasis on the rural sector, social sector schemes, infrastructure creation, and the middle class, the FM tabled a fiscally prudent budget in the Parliament.

Key takeaways on tax regime:

New tax regime a default regime; will have the option to choose old regime – No tax for income up to Rs 3 lakh/year – Will cut personal income tax slabs to 5 From 6 – Tax Exemtion up to Rs 7 lakh/year is under new tax regime – To remove minimum Threshold of Rs 10,000 on TDS – Exempt tax on income of boards for housing, other activities – Reduce highest surcharge rate to 25% from 37% in new tax regime.

The new tax regime is now the default tax regime. The government has taken a slew of measures to make the voluntary tax regime more attractive and will forego revenue in the process.

Direct Taxes

Processed more than 6.54 cr Returns this year on the tax portal, average processing period of 93 days in FY13-14 reduced to 16 days now; 45% Returns processed within 24 hours.

Nirmala Sitharaman lists 7 priorities

• Inclusive development
• Reaching the last mile
• Infrastructure and investment
• Unleashing the potential
• Green growth
• Youth power
• Financial sector

Income tax rate

• Currently, the highest rate is 42.74% income tax under the new regime. The FM has proposed to reduce the highest surcharge from 37% to 25% in the new tax regime, max rate of 39%.

Personal income tax

0-3 lakh- nil

3-6 lakh -5%

6-9 lakh – 10%

9-12 lakh-15%

12-15 lakh -20%

Above 15 lakh – 30%

Major relief to all tax payers in new regime: FM

Green Growth

• – Green hydrogen, clean energy storage and transmission are the key drivers of the government’s “Green Growth” priority sector.
• – Battery energy storage systems with capacity of 4,000 MWh will be supported with viability gap funding.
• – A detailed framework for pumped storage will also be formulated.
• – The inter-state transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh will be constructed with an investment of Rs 20,700 crore including Central support of Rs 8,300 crore.
• – A green credit programme for encouraging behavioural change will be notified under the Environment Protection Act.

 Custom duty

• – Mobile phone production in India increased from 5.8 crore units valued at about Rs 18,900 crore in 2014-15 to 31 crore units valued at Rs 2,75,000 crore in last fiscal year.
• – Relief in custom duty on import of certain parts of mobile phones like camera lens and batteries by another year.

Key Numbers

• FY23 growth estimated at 7%
• To spend Rs 2200 crore for high value horticulture
• Agri credit target incresed to Rs 20 lk cr
• To spend Rs 2200 crore for high value horticulture
• Proposed capital expenditure of Rs 10 lk cr for FY24, up 33%
• Plan to increase PM Housing outlay to Rs 79000 crore
• Plan to spend Rs 15000 cr vulnerable tribal group (PVTG) over 3 years.

Health:

• Union finance minister Nirmala Sitharaman announced in the Budget 2023 that a 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.

Rural focus 

• – FM announces that the centre will spend Rs 2lakh cr on food grains for all priority households under PM Garib Kalyan Yojana
• – The Centre will provide food grains to all antyodaya and priority households until December 2023.