Want to Subscribe?
Read Corporate India and add to your Business Intelligence
Unlock Unlimited Access
Published: Feb 15, 2023
Updated: Feb 15, 2023
In the last full-fledged union budget of the Modi government before the 2024 general elections, Finance Minister Nirmala Sitharaman has, as the saying goes, endeavoured to kill several birds with one stone. In her well-thoughtout budgetary exercise, she seems to have succeeded in gaining the attention of the middle class, the backbone of her Bharatiya Janata Party, with an eye on the forthcoming Lok Sabha elections next year. At the same time, she has taken steps to bolster the Prime Minister’s vision of ‘Make in India’ and ‘Atmanirbhar (self reliant) Bharat’.
Ms Sitharaman has also not lost sight of the global gloom over fears of a US recession and its consequent impact on global economies in general and on the Indian economy in particular. With a view to strengthening the Indian economy in such a likely situation, she has hiked capital expenditure for infrastructure development by 33 per cent to Rs 10 lakh crore and enhanced the outlay for the railways to a record Rs 2.4 lakh crore, expecting that this will boost industrial development and job creation. At the same time, to reaffirm her government’s commitment to decarbonisation and creation of green jobs, the fiscal 2023 budget has allocated Rs 35,000 crore for priority capital investment towards energy transition, which in turn will help capitalise the country’s Net Zero journey. Viability gap funding for battery storage projects, a significant outlay for grid expansion for renewable energy, and a green credit programme to incentivize sustainable behaviour are timely steps that will accelerate clean energy adoption.
According to a fiscal strategy expert, ‘Budget 2023’ emphasises economic growth through capital expenditure, all-around inclusive development, continuous policy and administrative reforms, a supportive business environment and a reduction in the tax outgo for individual taxpayers. It also strongly signals the global investment and business community by reiterating the government’s position on containing the fiscal deficit.
The underlying theme of the tax policy has been consistency, certainty and predictability. Several initiatives in the fine print will further help businesses by reducing compliances, disputes and litigation.
The rationalisation of tax slab rates will benefit a large number of taxpayers and further smoothen the process of making the new tax regime the default one. Reducing the highest effective tax rate for high-income earners is an unexpected but welcome change and directionally positive.
Clearly with an eye on extending the Bharatiya Janata Party's hegemony at the Centre, come the Lok Sabha polls early next year, little wonder as the budget presentation was over, the Modi government constituted committies of ministers and part leaders to spread the message of the budget to the voters in the forthcoming Lok Sabha Elections.
Prime Minister Narendra Modi's trusted lieutenant, Finance Minister Nirmala Sitharaman, has wooed the widest possible cross-section of India's one billion-plus citizens with a slew of sops, including tax benefits for the middle-class and schemes galore for the less privileged. A massive capex outlay of Rs 10 lakh crore for infrastructure development is the main pillar on which the government's vision of making the country the world's third largest economy rests.
To bring the country up to speed with the rest of the world in technology, special emphasis has been laid on digitalizing the citizen-institution interface, while farmers, senior citizens and women also find a prominent place in the budgetary provisions. Corporate India recommends ‘most promising' post-budget stocks across growth sectors.
Major achievements
Seven budget priorities — ‘Saptarishi’
These include inclusive development, reaching the last mile, infrastructure and investment, unleashing the country’s potential, green growth, youth power and the financial sector.
Needless to say, Prime Minister Modi has showered praise on his lady deputy, saying that “this budget will fulfill aspirations and resolutions of developed India.”
Maintaining that the first Union budget in ‘Amrit Kaal’ has established a strong base to fulfill the aspirations and resolutions of a developed India, he said, “This budget gives priority to the deprived and strives to fulfil the dreams of the aspirational society, poor, villages and the middle class. I congratulate Finance Minister Nirmala Sitharaman and her team for a historic budget.”
However, the budget is not without its critics. Rahul Gandhi of new ‘Bharat Jodo’ fame Congress leader has pooh-poohed claims of an ‘Amrit Kaal’ budget and says it is a ‘Mitr Kaal’ budget. His grouse: “There is no road map to build India’s future, no vision to create jobs, no plan to tackle ‘Mahngai’ (inflation), no intent to stem inequality, 1 per cent of the richest own 40 per cent of the country’s wealth, 50 per cent of the poorest pay 64 per cent of GST, and 42 per cent youth are unemployed.”
Terming the budget ‘anti-people, West Bengal Chief Minister Mamata Banerjee has called it an ‘opportunistic exercise’ on the eve of the forthcoming elections.
Referring to modest tax exemptions to the middle clas she posed a question “what is the benefit of such concessions amid skyrocketing inflation? She adds “this is an anti-poor Budget. There is no proposal for the unemployed people in the budget.
According to Mr. Bhupesh Baghel, Chief Minister of Chhattisgarh “This budget can be called Nirmala Sitharaman’s ‘Nirmam’ budgetary exercise. There is nothing in this budget for youth, farmers, women, tribals or scheduled castes. This has been made purely focusing on the upcoming elections.”
Swaraj India leader Yogendra Yadav laments that the budget has nothing for 99 per cent of the citizens of the country. While alleging that the government is only concerned about a few rich people, he has accused the government of not paying any heed to farmers in the budget. Congress leader and former Union Finance Minister P Chidambaram has put it more strongly, saying, “This is a callous budget that has betrayed the hopes of a vast majority of the people.”
According to Samyukt Kisan Morcha “this union budget is the most anti-farmer budget in history of the nation.”
Expressing, shock and bewilderment at the Union Budget the SKM maintains that “While it is universally known that farming and farmers have been economically neglected by the BJP led Union Govt, we had expected that after the sustained and determined protest of the farmers at Delhi, the party-inpower would appreciate the importance of the farm sector and the need to secure income and future of the rural farming community, who form the bulk of India’s population. Instead, the Union Budget 2023 is the most anti-farmer budget in history of the nation so far.”
Expenditure: The government proposes to spend Rs 45,03,097 crore in 2023-24, which is an increase of 7.5% over the revised estimate of 2022-23. For 2022-23, total expenditure is estimated to be 6.1% higher than the budget estimate.
Receipts: Receipts (other than borrowings) in 2023-24 are expected to be Rs 27,16,281 crore, an increase of 11.7% over the revised estimate of 2022-23. For 2022-23, total receipts (other than borrowings) are estimated to be 6.5% higher than the budget estimates.
GDP: The government has estimated a nominal GDP growth rate of 10.5% in 2023-24 (i.e., real growth plus inflation).
Deficits: Revenue deficit in 2023-24 is targeted at 2.9% of GDP, which is lower than the revised estimate of 4.1% in 2022-23. Fiscal deficit in 2023-24 is targeted at 5.9% of GDP, lower than the revised estimate of 6.4% of GDP in 2022-23. While the revised estimate as a percentage of GDP was the same as the budget estimate, in nominal terms, fiscal deficit was higher by Rs 94,123 crore (increase of 5.7%) in 2022-23. Interest expenditure at Rs 10,79,971 crore is estimated to be 41% of revenue receipts.
Ministry allocations: Among the top 13 ministries with the highest allocations in 2023-24, the highest percentage increase in allocation is observed in the Ministry of Railways (49%), followed by the Ministry of Jal Shakti (31%) and the Ministry of Road Transport and Highways (25%).
Changes in the new income tax regime: The number of tax slabs has been reduced from six to five. Table 1 compares the current tax income structure with the proposed income tax structure. The surcharge on income when it exceeds Rs 5 crore will be reduced from 37% to 25%. Currently, those with income up to Rs 5 lakh can avail a rebate and not pay any tax; this limit has been raised to Rs 7 lakh. Further, standard deduction will be available under the new tax regime.
The Union Budget presented by the Finance Minister is a refreshing exercise in meeting multiple objectives within the given resources. The overall savings in certain budgetary allocations like fuel and fertilizer subsidies have been reallocated towards increased capital expenditure and infrastructure spending, which augurs well for the economy. The higher capex spends also enable ringfencing against global recessionary pressures and will hopefully spur higher private sector investments going forward. The overall fiscal deficit numbers also look achievable considering that the nominal growth rate has been assumed at 10.5% only, while the overall net government borrowings are also within an acceptable range.
On the tax policy front, the underlying theme has been consistency, certainty and predictability. Rationalisation of tax slab rates will benefit a number of individual taxpayers and further smoothen the process of moving to the new optional tax regime. Reduction in the highest effective tax rate for ultra-high income earners is an unexpected but welcome change and is directionally positive
Robust tax collections both on the GST and the income tax front have helped contain the fiscal deficit. This is an area to watch out for in the next year, keeping in view the uncertainty surrounding the global economy and its impact on Indian exports and business sentiment.
The key thrust areas in the budget according to me are:
Fiscal Discipline: The revised estimates have reaffirmed meeting the targeted 6.4% of GDP. The targeted fiscal deficit for FY24 is 5.9%, a 0.50% reduction combined with a reassurance to take the fiscal deficit under 4.5% by FY26. States have been permitted to maintain 3.5% of their GSDP as fiscal deficit for FY24.
Boost in Capex: The capex allocation has been increased by 33% and taken to Rs 10 trillion. The all-time high allocation of Rs 2.4 trillion to the Railways is good news.
Boost in Consumption: The announcements on the personal income-tax have been aligned to incentivising taxpayers to move to the new tax regime, wherein the tax slabs have been enhanced and rates have been lowered. The old tax regime has tax incentives based only on savings/investments that are eligible for deductions and which did not incentivise consumption. The lower taxes in the new interest regime will lead to higher disposable incomes at the lower end of the income-tax brackets, that will be used for consumption by these households, thereby supporting consumption. The highest tax rate has also been brought down by 3.7 percentage points to allay some of the concerns of the HNIs.
Self-reliance: The government has been criticised in the past on the increase of import duties in the garb of self-reliance. The budget has lowered the customs duties on several components and items used for manufacturing, indicating that India actively seeks to be a part of the global value chain.
MSME Boost: Several announcements have been made to provide the impetus for growth of MSMEs, the most important being the continuation of the Credit Guarantee Line for MSMEs with additional allocation to the corpus of Rs 90 billion that is estimated to facilitate an additional collateral-free guaranteed credit of Rs 2 trillion. Tax amendments under Section 43B (allowances on payment basis) have been introduced to support the cash flows of micro and small units.
Ease of Doing Business: Risk-based KYC norms, entity-based PAN, and DigiLocker for KYC and sharing documents; unified filing process to avoid duplication will lead to improvements in the business environment.
I would also like to highlight some of the key changes in Direct and Indirect Taxation:
Impacting Corporates:
(Mr. Nilesh Ganjwala, reputed financial and strategy consultant is the CEO of Innergize Solutions Pvt.
Ltd., specialised business and strategy consultancy firm based in Mumbai.)
The Union budget presented by Finance Minister Nirmala Sitharaman on February 1 is an imaginative and effective exercise to boost the economic growth of the country. What I admire most is her remarkable achievement of fiscal prudence with a lower deficit and that too by setting the path till fiscal 2026. To combat the fears of a recession seeping into the US economy and its having a negative impact on the Indian economy, she has given comprehensive tax cuts to the middle class with a view to pushing up consumption and doing away with fears of recession here.
I admire the Finance Minister for her ability to shoot multiple targets with one arrow in this budget. This is a please-all budget. She has given widespread tax benefits to middle-class salaried people, which will give a boost to consumption. With a view to improving the economy substantially, she has given a lot of emphasis on infrastructure development, which is turn will give a boost to several industries like cement and steel and at the same time help in creating large job opportunities. The budget will also help established businesses, farmers and start-ups in the agriculture and allied agri space. For young start-ups, the agri accelerator fund is a good initiative for supporting bio-based products to promote natural farming, and should also should boost the plant bio-stimulant and bio-fertiliser industry.
In the wake of the spiralling price inflation, the Finance Minister has done well by announcing widespread tax cuts for the middle class. The rationalization of tax slabs will benefit several tax payers and further smoothen the process of moving to the new (now, the default) tax regime. At the same time, reducing the highest effective tax rate for high- income earners is an unexpected but welcome change and directionally positive. The widespread tax cuts will put more income in the pockets of consumers and this in turn will boost consumption at a time when the economic sky is clouded with fears of a recession.
One more thing I like about this budget is a comprehensive programme of skill development devised imaginatively. The iGOT Karmayogi platform, the national apprentice ship promoting scheme and the Tribal Education Centre Scheme (setting up 740 Eklavya Model residential schools serving 3.5 lakh tribal students) will go a long way in creating job opportunities and reducing the source of unemployment in the country.
I welcome the budget’s emphasis on trust-based governance and providing an enabling environment through ease of doing business, especially for MSMEs. This is indeed a befitting budget to usher in ‘Amrit Kaal’ with a vision of knowledgebased growth and job creation. I feel the government has taken a big leap to embrace 5G much more swiftly by putting up 100 labs in engineering institutions for developing apps for 5G services. This will further boost the employment and business opportunities in the country.
The finance minister has taken an innovative step-up the case of agriculture. An Agriculture Accelerator Fund will be set up to encourage agri-startups in rural areas. A sub-scheme of PM Matasya Sampada Yojana will be launched with an investment of Rs 6,000 crore to support fishermen, fish vendors, and MSMEs. Decentralised storage capacity will be set up for farmers to store their produce. PM Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth (PM-PRANAM) will be launched to incentivise states/UTs to promote balanced use of chemical fertilisers and alternative fertilisers.
Madam Sitharaman has taken an significance of far reaching importance on the research and development (R&D) three centres of excellence for R&D in Artificial Intelligence will be established in select educational institutions. 100 labs will be set up in engineering institutions for developing applications using 5G services. A National Data Governance Policy will be released to enable access to anonymised data. A programme to promote research and innovation in pharmaceuticals will be taken up through centres of excellence.
(Mr. M.P. Taparia is an enlightened businessman and Supremo of the Supreme group of Industries)
May 31, 2025 - Second Issue
Industry Review
VOL XVI - 16
May 16-31, 2025
Want to Subscribe?
Read Corporate India and add to your Business Intelligence
Unlock Unlimited Access
Lighter Vein
1 Year *
Subscription
Rs 2400 /-
3 Year *
Subscription
Rs 6000 /-
5 Year *
Subscription
Rs 9000 /-
5
International
Subscription
$ 99.99
Read Corporate India and add to your Business Intelligence
Popular Stories
A modern-day enigma and a ramification of humanity's never-ending advancements, e-waste refers to the scum con- cealed by the outward glow of ever-advancing technology.
Archives
Office Address
Unit No. 405, 4th floor, Madhu Industrial Park, Avadh Narayan Tiwari Marg, Mogra Village Road, Andheri (East), Mumbai – 400069.
Call/Whatsapp
If you are interested in advertising with Corporate India, please don't hesitate to contact us. Our team is here to assist you with the process and answer any questions you may have. We look forward to the opportunity to work with you and help your business reach its full potential.
Fill out the form below to subscribe to our newsletter and never miss an update