Author – Dibash Sarkar | Dibash Sarkar (@dibash_sarkar) / Twitter
As a professional financial advisor, I must emphasize the significance of the upcoming budget presented by Finance Minister Nirmala Sitharaman. The budget is expected to be a visionary one, aiming to shape India’s future for the next 25 years. With a strong focus on growth, self-reliance, job creation and financial inclusion, the government is poised to create a robust environment for businesses to thrive and grow.
Union Budget 2023-24
The Union Budget presented by Finance Minister Nirmala Sitharaman is expected to have a major focus on boosting India’s infrastructure, defense, and logistics sector. The government is likely to allocate higher funds for these sectors, which would lead to windfalls for the companies that operate in these areas. The Budget Session of Parliament began on Tuesday, 1 February, and the first part is expected to conclude on 13 February.
The Parliament will reconvene on 12 March for the second part of the Budget Session, which will conclude on 6 April. This Budget is being viewed as the last full-fledged Union Budget of the Modi government before the 2024 Lok Sabha elections, and so will likely be closely watched for its impact on the Indian economy.
The Budget is expected to bring in much-needed funds for infrastructure, defense, and logistics sectors, while also providing a boost to the government’s economic reform agenda. Additionally, it will be interesting to see if the government takes any measures to help revive the ailing MSME sector and provide further incentives for foreign investment in the country.
ADVERTISEMENTCONTINUE READING BELOW
The increased tax collection numbers are a testament to the government’s efforts to broaden the tax base and create a sustainable financial framework. This, in turn, paves the way for the government to channel its resources towards promoting manufacturing and transforming India into a global manufacturing hub.
As the last full budget before the next general election, it will be crucial for the government to make the right moves and set the foundation for long-term growth and development. With a strong emphasis on growth and job creation, the government is well positioned to drive economic growth and create opportunities for the citizens of India.
The upcoming budget is a reflection of the government’s commitment to driving India towards a brighter future. As financial advisors, it is important for us to stay informed and guide our clients to make informed decisions in line with their financial goals and objectives.
Taking a General Look at Taxation in 2023
It is important to keep abreast of the latest developments in the tax arena. The current financial year has seen a robust tax collection, which has been a positive indicator of the economy’s stability.
While the tax collection has been robust, it is unlikely that there will be any major changes in the personal income tax, corporate tax, and GST fronts. However, some experts and the middle class have called for an increase in deductions under sections 80C and 80D, as well as a redesign of tax slabs and an increase in standard deductions.
While these changes would be welcome by many, the government is facing significant fiscal challenges, including an increase in capital expenditure, making it difficult to implement these changes. Nevertheless, as a financial advisor, it is important to keep our clients informed and guide them towards making informed tax-saving decisions.
While the tax collection has been robust, the government’s focus is expected to be on managing its finances and addressing its fiscal challenges. Therefore, it is imperative that financial advisors stay informed of the latest developments and guide their clients to make informed decisions in line with their financial goals and objectives.
Growth is Driven by Capital Expenditures
It is important to understand the importance of the Capex number. This number tells us the amount of money the government will allocate for capital expenditure, which is essential for economic growth and development. In order to maintain the pace of growth in the economy, it is expected that the amount allocated in the previous budget of 7.5 lakh crores will be increased to at least 9 lakh crores. In spite of the fact that the deficit is expected to increase, it is expected to remain under 19 lakh crores. While on the other hand, the government may also be able to open up many other sectors by enhancing their export competitiveness. In the upcoming budget, it is anticipated that the figure of ₹7.5 lakh crores for the last year will increase to at least ₹9 lakh crores. This increase is significant, as it will help spur economic growth and open up many other sectors for competition.
However, it is important to note that the government will keep the fiscal deficit tightly under control, with a target of ₹19 lakh crores. By doing so, they will be able to maintain their commitment to fiscal discipline while still providing the necessary resources for capital expenditure.
Different sectors’ expectations for this budget Manufacturing
The Indian government’s “Atmanirbharta” initiative has aimed to promote local manufacturing and increase domestic production, reduce imports and attract international investment. One of the major announcements is the Production Link Incentive Scheme (PLI) outlay, which could be increased by 25 to 30%, and has already emerged as a game changer in a number of industries.
ADVERTISEMENT CONTINUE READING BELOW
As part of the Make in India campaign, there are a number of benefits that come with the PLI Scheme. The government’s priority appears to be to increase employment by including new sectors such as toys manufacturing, cycle manufacturing, leather shoe manufacturing, container manufacturing, chemical manufacturing and healthcare equipment manufacturing.
This scheme is expected to positively impact the economy, with increased job creation, domestic production, foreign investment, and competitiveness in the manufacturing sector. Furthermore, it could create a number of business opportunities for entrepreneurs. The scheme is also expected to benefit the MSME sector by providing them with access to technology, capital and infrastructure.
ADVERTISEMENT CONTINUE READING BELOW
Overall, the PLI scheme is likely to help promote sustainable growth and secure India’s position as an economic superpower.
It is possible that a significant amount of funding could be allocated to sectors such as the following:
- Container (shipping) Manufacturing
- Toys manufacturing
- Chemical manufacturing
- Leather shoe manufacturing
- Healthcare equipment manufacturing
- Cycle Manufacturing
As these sectors generate a large number of jobs, promoting them can help reduce the reliance on China in these sectors. There is also a possibility that the government may increase allocations to the IT hardware manufacturing sector and the pharmaceutical sector, both of which are already covered by the PLI scheme. In addition, urban self-employment schemes and incentives will also likely be devised by the government.
An Inclusive Budget should be in Place
The Union Budget 2023 is expected to be a comprehensive one, with the government prioritizing inclusivity and the introduction of digital currency. The government is likely to focus on divesting from loss-making businesses, while also introducing some populist elements, such as increasing agricultural and social security spending. It is expected that this budget will also focus on improving the existing infrastructure and development of new infrastructure to promote economic growth and competitiveness. Tax reforms are also likely to be included, which may include measures to incentivize investments in infrastructure projects. Furthermore, incentives for start-ups and small and medium businesses are expected to be introduced to encourage job creation and support the MSME sector.
The budget is also likely to include measures to tackle issues such as environmental degradation, air pollution, water pollution, and climate change. This may include the introduction of the green tax, higher taxes on luxury items, and better incentives for sustainable practices. Additionally, reforms in the health and education sectors may be included to improve access to basic services.
LIVE Updates | Union Budget 2023-24
🙏
Union Budget FY23-24: FM has tabled the FY23-24 Union Budget document in the House. With that, we end this live broadcast. We will be back soon with a post-budget analysis. #Budget2023
📈
Midcap, Smallcap and Nifty all up about 1%. Yields down to 7.3%.
No change to capital gains regime. Will await fineprint to provide more details
🙏
Budget speech concluded. We will wait for the fineprint to provide more colour
Income Tax Update: The maximum tax rate will be reduced to 39%. #Budget2023
New income tax regime to be the default, although people would have a choice to opt for old regime
😅
Income Tax Update: Govt plans to reduce the personal income tax slabs from present 7 to 5. #Budget2023
Income Tax Update: Income tax rebate limit increased to Rs. 7 lakh under new tax regime. #Budget2023
Highest tax rate to be reduced to 39%
Rationalization of slabs in the new regime
In new tax regime, with income upto 7 lacs attracts 0 tax
🤯
Rebate limit increased to 7 lacs, from 5 lacs.
5 major accouncements which benefit middle class
🤞
Now personal income tax
Union Budget FY23-24: The national calamity contingency duty on cigarettes has been raised to 16%. #Budget2023
Limit income tax exemption, across real estate and very high value insurance policies
🦄
India is the 3rd largest hub for startups
Union Budget FY23-24: Basic custom duty on the compounded rubber increased to 25%, with riders. #Budget2023
🔻
ITC down 6%!!!!!
🤞
Direct Taxes!!!
🔋
Union Budget FY23-24: Govt extends the custom exemptions on machinery imports for producing lithium ion cells. #Budget2023
📱
Mobile phone production increased from 5.1 crore units in 2014-15 to 31 crore units in 2022-23
Telecommunications
📱
Union Budget FY23-24: The government intends to reduce import duties on mobile phone parts. #Budget2023
Telecommunications
🚀
Yields at day’s high of 7.3%. Nifty above 17800
Union Budget FY23-24: Govt plans to resuce the number of custom duty rates. #Budget2023
Union Budget FY23-24: Govt aims to reach the fiscal gap of 4.5% by 2026; plans gross borrowing for FY24 at 15.4 lakh cr. #Budget2023
And yields back to 7.3, after the lower than expected gross borrowing figure
By 25-26, Fiscal deficit to be below 4.5%
🚀
Yields shoot to ~7.4%
Fiscal deficit to be 5.9% of GDP in 23-24
Fiscal deficit of 6.4% of GDP. 2022-23
ADVERTISEMENT CONTINUE READING BELOW
👨🎓
Union Budget FY23-24: 4.7 mn youth will get stipend under skill development programme. #Budget2023
Fiscal deficit of states upto 3.5% of GSDP.
Now Fiscal management
Enhance limits in various Savings scheme
💁♀️
Mahila Samman Bachat Patra – New small savings certificate – 2 years upto Mar 2025 – Offers deposit upto 2lakh, fixed interest of 7.5%, tenure 2 years
🛡
Integrated IT portal for payments from Investor Protection fund.
🏢
Banks – Improve investor protection – Amendements to RBI and Banking acts
GIFT IFSC – Avoid dual regulation ; Single window for approval of entities; Permitting acquisition financing by banking units; subsidiary of EXIM Bank
🚜
Union Budget FY23-24: Govt plans to promote alternate fertilizers usage in states under PM PRANAM yojana. #Budget2023
Credit guarantee for MSME – 1 Apr 2023, infusion of 9000 crores. Additional collateral free credit of upto 2lk crores. Cost of credit to reduce by 1%
Priority – 7 Financial sector!!!
To facilitate 1 crore farmers through natural farming
Agriculture
🚊
Union Budget FY23-24: Capital outlay of Rs. 2.4 lakh cr will be provided for Railways; 9 times more since 2014. #Budget2023
🏝
Tourism – 50 destinations to be selected for focus. Enhance the tourist experience. Each destination as a complete package.
Next focus – Skilling the youth! Courses on AI, Coding, drones and other new subjects
Vehicle scrapping policy – To scrap old vehicles of central and state govt, including old ambulances
🚢 ⏫
Coastal shipping to be promoted, both for passengers and freight through PPP model
Union Budget FY23-24: Govt allocates Rs. 20,700 cr for renewal energy plan in Ladakh. #Budget2023
🍀⚡️
19700 Crore allocation for Green energy
Union Budget FY23-24: Govt plans to use PAN Number as the common business identifier. #Budget2023
☘️
Focus on integrating the Green energy grid across the country
Energy
🚀
Focus on green energy. Annual production of 5MMT by 2030. 35000 Cr capital investment in energy trnasition and net 0 objectives
Energy
🤞
100 Labs for developing 5G to be set up in engineering institutes
14 mins ago
Telecommunications
🚀
Nifty back to 17800. #Budget2023
🇮🇳
Union Budget FY23-24: National Data Governance Policy will be brought out. #Budget2023
🤞
Scope of documents in Digi locker to be expanded
Now fintech!!!
Result based financing for public projects, as opposed to input based. Improving efficieny in public works.
Relief for MSMEs with Vivad to Viswas
Bond yields continue to rise. Now at 7.38. #Budget2023 #FiscalDeficit
🚀
PAN to be common identifier for Companies. Will improve ease of doing business, facilated by legislation
🇮🇳
KYC process to be simplified. One stop solution for identity and address updation
🏥
3 centres of excellence on AI. Industry Academia partnership to make AI work for India in the areas of health, Agri and sustainable cities.
Health
🇮🇳
More than 3900 compliances have been removed. Improving ease of business.
🇮🇳
Union Budget FY23-24: The govt’s seven priorities are: inclusive development, closing the opportunity gap, infrastructure and investment, releasing the potential, green growth, youth power, and the financial sector. #Budget2023
✈️
Regional air connectivity to be promoted additional airports and helipads
Focus on Municipal Bonds and Urban Infrastructure in Tier II and Tier II cities
Bond yields rising to 7.37. #Budget2023 #FiscalDeficit
🏢
79000 crore outlay for PM AWAS yojana. Housing for all!!!
Realty: Capital investment outlay now at Rs. 10Lk crore
Infra outlay now 3.3% of GDP and at 3 times the outlay of 2019-20
Now onto Infrastructure
15000 crores to be spent for scheduled tribes
Union Budget FY23-24: Raises FY24 farm agri-credit target to Rs. 20 lakh cr. #Budget2023
Union Budget FY23-24: Govt to launch Aatmnirbhar Clean Plant Programme at an oulay of Rs. 2200 cr. #Budget2023
Joined by Media and Metals Index. #Budget2023
PSUBank index now in the red. #budget2023
Bank: 135 new nursing colleges to be established, in sync with Medical colleges established since 2014. Focus on healthcare #Budger2023
Union Budget FY23-24: The agriculture fund is going to support farmers and the entire agriculture ecosystem. #Budget2023
Agriculture: Focus on decentralized storage capacity. This will help farmers in storing gains easily, and realize better prices.
Agriculture: PM Matsya sampada yogana for fisherman and micro enterpreneurs
Note – Bond yields have risen to 7.36 from 7.34. And Nifty below 17800. Up ~0.6% from almost 1% earlier
Union Budget FY23-24: The government extends the Free Food Scheme for another year. #Budget2023
An Agriculture accelerator fund to be set up to fund agritech startups, and to help farmers.
Budget 2023 LIVE Updates: Budget for India @100 Finance Minister Nirmala Sitharaman sticks to the advance estimate for current fiscal year growth of 7 percent
Union Budget FY23-24: Nifty trades above 17800, Sensex rises 600 points as the FM begins his budget speech. #Budget2023
Tourism and Hotels are going to be focus area and to be taken up on mission mode
Formalization of the economy (reflected by growth in UPI payments and enrollements in EPFO) has been a big achievement of this government.
FM highlights that India is expected to be the fastest growing large economy in 2023-24