Union Budget 2023 Brief: Vision for a Technology-Driven Economy
Hon’ble Finance Minister, Nirmala Sitharaman in her Budget 2023-24 speech declared that India’s economic growth for the current year is 7%, which is the highest among all major economies globally. In the 75th year of its independence, India’s vision for the Amritkaal includes a technology-driven and knowledge-based economy with strong public finances and a robust financial sector.
The economic agenda for achieving the mission of Sabka Saath Sabka Vikas focuses on the following objectives:
- Facilitating ample opportunities for citizens, especially the youth to fulfill their aspirations.
- Providing a strong impetus to growth and job creation.
- Strengthening the macroeconomic stability to service these focus areas.
In the ensuing journey to India@100, the following seven priority areas (Saptarishi) have been identified:
- Inclusive Development
- Reaching the Last Mile
- Infrastructure and Investment
- Unleashing the Potential
- Green Growth
- Youth Power
- Financial Sector
Outlay on Major Schemes
Space Technology: Increased by 16% o Rs. 9441 crores.
Space Applications: Increased by 21.5% to Rs. 1559 crores.
INSAT Satellite Systems: Increased by 17.5% to Rs. 531 crores.
Mahatma Gandhi National Rural Employment Guarantee Program (MGNREGA): Cut by 17.8% to Rs. 60,000 crores.
Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana: Increased 12% to Rs. 7200 crores
Blue Revolution: Increased 42% to Rs. 2025 crores.
Jal Jeevan Mission: Increased 27% to Rs. 70,000 crores.
National Education Mission: Cut by 17.5% to Rs. 32,612 crores.
National Health Mission: Cut by 9% to Rs. 33,708 crores.
PM Awas Yojana: Increased by 60% to Rs. 77,130 crores.
PM Gram Sadak Yojana: Remains the same, Rs. 19,000 crores.
Swachh Bharat Mission: Cut by 13% to Rs. 2000 crores.
AMRUT and Smart Cities Mission: Increased by 8.5% to Rs. 15,300 crores.
PM Ayushman Bharat Health Infrastructure Mission: Cut by 55% to Rs. 1885 crores.
Rashtriya Krishi Vikas Yojana: Cut by 33% to Rs. 7000 crores
Interlinking of Rivers: Cut by 21% to Rs. 1100 crores.
Allocation to Ministries
Ministry of Science and Technology: Rs. 16,361.42 crores (Hike of 15%). DST receives Rs. 7931.05 crores
Ministry of Earth Sciences: Rs. 3,319 crores (Hike of 25.11%)
Ministry of Electronics and Information Technology: Rs. 16,549.04 crores (Hike of 16%).
Department of Space: Rs. 12,543.91 crores (Cut by 8%)
The philosophy of Sabka Saath Sabka Vikas facilitates inclusive development covering, in specific, farmers, women, youth, OBCs, Scheduled Castes, Scheduled Tribes, Divyangjan, and economically weaker sections, apart from areas like Jammu & Kashmir, Ladakh, and the Northeast. The Budget 2023 builds on these efforts.
- A digital public infrastructure for Agriculture will be built as an open-source, open-standard, and interoperable public code to enable inclusive, farmer-centric solutions through relevant information services. The solution will help address crop planning and health, improved access to farm inputs, credit and insurance, crop estimation, and market intelligence while supporting the growth of the tech industry and startups.
- An Agriculture Accelerator Fund will be set up to encourage startups by young entrepreneurs in rural areas to bring in modern technologies for transforming agricultural practices and increasing productivity and profitability.
- Cluster-based and value chain approach through public-private partnerships for input supplies, extension services, and market linkages for extra-long staple cotton.
- Proposed app for Clean Plant Programme to boost the availability of disease-free quality planting material for high-value horticultural crops at an outlay of Rs. 2200 crores.
- Indian Institute of Millet Research, Hyderabad, to be developed as a Centre of Excellence for sharing best practices, research, and technologies at the international level.
- A new sub-scheme for PM Matsya Sampada Yojana is to be launched, with a targeted investment of Rs. 6000 crores to further enable the activities of fishermen, fish vendors, and micro and small entrepreneurs.
- Promoting cooperative-based economic development model.
- Computerization of 63,000 primary agricultural credit societies with an investment of Rs. 2560 crores in consultation with all stakeholders. State model byelaws and PACS will be formulated to enable them to become multi-purpose.
- National cooperative database being prepared for countrywide mapping of cooperative societies. A massive, decentralized storage capacity is to be set up.
- Select ICMR labs to be made available for research by public and private sector medical college faculty and private sector R&D teams.
- New program to promote research and innovation in pharmaceuticals to be taken up through Centres of Excellence.
- Industry to be encouraged to invest in research and development in specific priority areas.
- Dedicated courses are to be started in institutions to facilitate futuristic medical technologies, high-end manufacturing, and research.
Skilling and Education
- Teachers’ training is to be re-envisioned through an innovative pedagogy curriculum with a focus on continuous professional development and ICT implementation.
- National digital library for children and adolescents to be set up in collaboration with NGOs.
Reaching the Last Mile
The Government of India has been trying to reach the last mile through its line ministries of AYUSH, Fisheries, Animal Husbandry and Dairy, Skill Development, Jal Shakti, and Cooperation. Some other initiatives proposed in this year’s budget include:
- Aspirational Blocks Programme was launched covering 500 blocks for saturation of essential government services across domains like health, nutrition, education, agriculture, water resources, financial inclusion, skill development, and basic infrastructure.
- PM PVTG (Particularly Vulnerable Tribal Groups) Improvement launched to improve their socioeconomic conditions with facilities like safe housing, clean drinking water and sanitation, improved access to education, health, nutrition, road and telecom connectivity, and sustainable livelihood opportunities. An amount of Rs. 15,000 crores is to be made available for the mission in the next 3 years.
- Central assistance of Rs. 5,300 crores has been allotted to Upper Bhadra Project in drought-prone Karnataka.
- The outlay of PM AWAS Yojana is being enhanced by 66% to over 79,000 crores.
- Digitization of 1,00,000 ancient inscriptions and their archival in a Digital Epigraphic Museum.
Infrastructure and Investment
Investments in infrastructure and productive capacity have a large multiplier impact on growth and employment. After the subdued period of the pandemic, investments are again growing. The Budget takes the lead to ramp up the virtuous cycle of investment and job creation.
- Capital investment outlay steeply increased by 33% to Rs. 10 lakh crores, which would be 3.3% of the GDP. The substantial increase is focused on enhancing growth potential and job creation, attracting private investment, and providing a cushion against global inflation.
- Capital expenditure of the Centre is budgeted at Rs. 13.7 lakh crores, which would be 4.5% of the GDP.
- 50-year interest-free loans to state governments to be extended for 1 more year to spur investments in infrastructure and incentivize states for complementary policy actions.
- Capital outlay of Rs. 2.40 lakh crores for Railways.
- 100 critical transport infrastructure projects for first- and last-mile connectivity identified across ports, coal, steel, fertilizer, and food grain sectors, with an investment of Rs. 75,000 crores.
- 50 additional airports, heliports, water aerodromes, and advanced landing grounds are to be revived for improving regional air connectivity.
- Cities are encouraged to undertake urban planning reforms and actions to transform into sustainable cities of tomorrow, including efficient use of land resources, open infrastructure, transit-oriented development, enhanced availability and affordability of urban land, property tax governance reforms, and ringfencing user charges on urban infrastructure.
- Urban Infrastructure Development Fund (UIDF) to be established through priority sector lending, managed by the National Housing Bank, and available for public agencies to use for creating urban infrastructure in tier 2 and 3 cities. Rs. 10,000 crores to be made available per annum for the purpose.
- All cities and towns will be enabled for 100% mechanical smudging of septic tanks and sewers to transition from manhole to machine mode.
- Scientific management of dry and wet waste to be enhanced.
- Mission Karmayogi at the Centre, States, and Union Territories for implementing capacity-building programmes for civil servants to be enhanced.
- Integrated online training programme iGOT Karmayogi to provide continuous learning opportunities for government employees to upgrade skills.
Ease of Doing Business
- More than 39,000 compliances have been reduced, and more than 3400 legal provisions decriminalized.
- Jan Vishwas Bill launched that will amend 42 Central Acts to foster trust-based governance.
- Centres of Excellence for Artificial Intelligence to be set up in top educational institutions where leading industry players will partner in conducting interdisciplinary research, developing cutting-edge applications, and scalable problem solutions in areas like agriculture, health, and sustainable cities.
- National Data Governance Policy to unleash innovation and research by startups and academia will be brought out.
- Access to the anonymized KYC process will be simplified. Financial sector regulators will be encouraged to have a KYC system fully amenable to meet the needs of Digital India.
- One-stop solution for reconciliation, identity, and address updating maintained by various government agencies regulators and regulated entities to be facilitated through the DigiLocker service and Aadhar as foundational identities.
- PAN is to be used as the common business identifier for all digital systems of specified government agencies, facilitated through a legal mandate.
- A common portal for Unified Filing Process will be set up which will share data with select government agencies as per the filer’s choice.
- Vivad se Vishwas Scheme:
- Relief for MSMEs in case of failure to execute contracts during COVID-19, 95% of forfeited amount related to bid or performance security will be returned to them by government or government undertakings.
- To settle contractual disputes wherein an arbitral award is under challenge in a court, a voluntary settlement scheme with standardized terms will be introduced, offering graded settlement terms.
- State support mission of NITI Aayog to be continued for three years.
- Financing of select schemes will be changed on a pilot basis from input-based to result-based.
- Phase 3 of the E-Courts project will be launched with an outlay of Rs. 7000 crores.
- An Entity DigiLocker will be set up for use by MSMEs, large businesses and charitable trusts for storing and sharing documents line securely.
- 100 labs to be established for developing applications using 5G services in engineering institutions. applications will include smart classrooms, precision farming, intelligent transport systems, and healthcare applications.
- Indigenous production of lab-grown diamond seeds and machines will be encouraged to reduce import dependency. A research and development grant will be provided to one of the IITs for five years.
India is moving forward firmly for the Panchamrit, achieving the Net Zero carbon emissions goal by 2070. The government’s focus is on spurring the movement for an environmentally conscious lifestyle through following initiatives.
- National Green Hydrogen Mission with an outlay of Rs. 19,700 crores will facilitate the transition of the economy to low carbon intensity, reduce dependence on fossil fuel imports, and make the country assume technology and market leadership in this sunrise sector. Annual production of 5 MMT targeted by 2030.
- The Budget provides Rs. 35,000 crores for priority capital investment towards energy transition and net zero objectives and energy security by the Ministry of Petroleum and Natural Gas.
- Battery energy storage systems with a capacity of 4000 MWH will be supported with viability gap funding. A detailed framework for pump storage projects will also be formulated.
- The Interstate Transmission System for evacuation and grid integration of 13 GW renewable energy from Ladakh will be constructed with an investment of Rs. 20,700 crores.
- Green Credit Programme for encouraging behavioral change will be notified under the Environment Protection Act to incentivize environmentally sustainable and responsive actions by companies, individuals, and local bodies.
- PM PRANAM To be launched to incentivize States and union territories to promote alternative and balanced use of chemical fertilizers.
- GOBARdhan Scheme will be established for promoting the circular economy concept. It will establish 200 compressed biogas plants, including 75 plants in urban areas and 300 community of cluster-based plants with a total investment of Rs. 10,000 crores.
- 5% CBG mandate will be introduced for all organizations marketing natural and biogas.
- Fiscal support will be provided for the collection of biomass and distribution through Bharatiya Prakritik Kheti Bio-Resource Centres, enabling a national-level distributed micro fertilizer and pesticide manufacturing network.
- MISHTI (Mangrove Initiative for Shoreline Habitats and Tangible Incomes) Scheme will take up mangrove plantation initiatives along the coastline.
- Unique conservation values of RAMSAR sites are to be encouraged through Amrit Dharohar Scheme which will encourage optimal use of wetlands, enhance biodiversity carbon stock, tourism opportunities, and income generation for local communities.
- Coastal shipping will be promoted as the energy-efficient and lower-cost mode of transport both for passengers and freight through PPP mode with viability gap funding.
In the wake of the comprehensive National Education Policy, the government is also focusing on scaling and economic policies that will facilitate job creation, and scale and support business opportunities.
- PM Kaushal Vikas Yojana 4.0 is to be rolled out to scale lakhs of youth within the next three years on the job training.
- Industry partnership and alignment of courses with the needs of the industry will be emphasized to cover new-age courses for Industry 4.0 including coding, AI robotics mechatronics, IoT 3D printing, drones, and other soft skills.
- India International Centres will be set up across different states for providing soft skills.
- A Unified Skill India digital platform will be launched enabling demand-based formal skilling linking with employers including SMEs and facilitating access to entrepreneurship schemes.
- Sector-specific skilling and entrepreneurship will be encouraged to achieve the objectives of Dekho Apna Desh initiative for integrated and innovative tourism.
Reforms in the financial sector and innovative use of technology are the focus areas for financial inclusion. The Budget proposes expanding access to credit, scaled and faster service delivery, and participation in financial markets.
- Revamping of Credit Guarantee Scheme for SMEs Through the infusion of Rs. 9000 crores in the corpus to enable additional collateral-free guaranteed credit of Rs. 2 lakh crores. the cost of credit will be reduced by about 1%.
- A National Financial Information Registry Will be set up to serve as the central repository of financial and ancillary information and facilitate the efficient flow of credit, promote financial inclusion, and foster financial stability. The credit infrastructure will be designed in consultation with the RBI and governed by a new legislative framework.
- To reduce the cost of and simplify Financial sector regulations, a comprehensive review of existing regulations will be carried out and suggestions taken from public and regulated entities.
- Dual regulations will be eliminated in SEZs, and a single-window IT system for registration and approval will be set up.
- Setting up Data Embassies for digital continuity solutions in different countries.
- Certain amendments are being proposed to the Banking Regulation Act, Companies Act, and Bank of India Act To improve bank governance and enhance investor protection.
- Capacity building for all functionaries and professionals in the security markets.
- Central Processing Centre to be set up for centralized handling of various forms filed with field officers.
- An integrated IT portal will be established to ease reclaiming of shares and dividends for investors.
Key Finance Bill Announcements
- Fiscal deficit target of 6.4% was retained in the Revised Estimate for FY23; 5.9% for FY24.
- Gross market borrowing seen at Rs 15.43 lakh crores in FY24.
- Net market borrowing in FY24 seen at Rs 11.8 lakh crores.
- FY23 net tax receipts revised estimate stands at Rs 20.9 lakh crores.
- FY23 total expenditure revised estimate stands at Rs 41.9 lakh crores.
- FY23 revised estimate of total receipts other than borrowing at Rs 24.3 lakh crores.
- FY24 net tax receipts seen at Rs 23.3 lakh crores.
Direct and Indirect Tax Reforms
- Focus on promoting domestic manufacturing and exports.
- Tax exemption on Capital Goods and Lithium batteries.
- Enhanced limit for 3 crore and 75 lakhs for presumptive taxation.
- Higher TDS limit of RS. 3 crores for Cooperatives
- New IT Return Form for easier filing.
- TDS reduced on EPF withdrawal.
- Section 54 and 54F to be amended.
- Rebate limit increased to Rs. 7 lakh in new tax regime.
- Number of slabs reduced from 7 to 5 in new tax regime.
- Salaried classes and pensioner’s Standard Deduction increased.
- Highest tax rate 42.74 % reduced.
- Proposal to reduced higher surcharge rate from 37 % to 25% in new tax regime.
Post featured image from Forbes India: Image Source
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