Union Budget 2023-24

GS Paper 3

Syllabus: Government Budgeting

Source: PIB

 Direction: The article covers a brief discussion on the Union Budget 2023-24.

Context: While presenting the Union Budget 2023-24 in the Lok Sabha, the Union Finance Minister emphasised that the Indian economy is on the right track, and despite a time of challenges, heading towards a bright future.

What is the ‘Union Budget’?

• According to Article 112 of the Indian Constitution, the annual financial statement is a statement of the estimated receipts and expenditures of the government for a particular year.
• The receipts and expenditures are shown under three parts, namely, the Consolidated Fund of India and the Public Account of India (Article 266), and the Contingency Fund of India (Article 267).
• It is prepared by the Department of Economic Affairs, Ministry of Finance, for the fiscal year that runs from 1st April to 31st March.

Highlights of the Union Budget 2023-24 speech:

• Resilience amidst multiple crises: The economic growth is estimated at 7%, which is the highest among all major economies, despite the massive global slowdown caused by COVID-19 and Russia-Ukraine War.
• G20 Presidency: With the theme of ‘Vasudhaiva Kutumbakam’, India is steering an ambitious, people-centric agenda to address global challenges and facilitate sustainable economic development.
• Achievements since 2014 – Leaving no one behind:

• Vision for Amrit Kaal – An empowered and inclusive economy:
  • The term ‘Amrit Kaal’ comes from Vedic astrology and indicates a sort of golden era.
  • It signifies that the coming period in India is going to be its most prosperous, with economic growth and social justice.
  • ‘Amrit Kaal’ also describes the hope for a better future, where India would be self-reliant and fulfil all of its humanitarian obligations.
• Future prospects: This Budget hopes to build on the foundation laid in the previous Budget, and the blueprint drawn for India@100, which envisions a prosperous and inclusive India.

The Budget Estimates 2023-24:

• The total receipts other than borrowings and the total expenditure are estimated at Rs 27.2 lakh crore and Rs 45 lakh crore respectively.
• The net tax receipts are estimated at Rs 23.3 lakh crore and the fiscal deficit is estimated to be 5.9% of GDP.
  • Set to benefit the economy because it means more funds available for private players.
  • The government has decided to continue the path of fiscal consolidation, reaching a fiscal deficit of below 4.5% by 2025-26.
• To finance the fiscal deficit in 2023-24, the net market borrowings from dated securities are estimated at Rs 11.8 lakh crore.
  • The balance financing is expected to come from small savings and other sources.
  • The gross market borrowings are estimated at Rs 15.4 lakh crore.
• The capital expenditure by the government has been raised to Rs 10 lakh crore. This is more than double the amount of money allocated when compared to 2020-21.
  • Capital expenditure is the money that is spent on building productive assets such as roads and bridges and ports.
  • This has a greater return to the economy and every Rs 100 spent leads to a Rs 250 gain for the economy. Revenue expenditure returns less than Rs 100.

Tax proposals in the Union Budget 2023-24:

Personal Income Tax:

• The rebate limit in the new tax regime has been increased to ₹ 7 lakh, meaning that peons in the new tax regime with income up to ₹ 7 lakh will not have to pay any tax.
• The tax structure in the new personal tax regime has been changed by reducing the number of slabs to five and increasing the tax exemption limit to ₹ 3 lakh.

Indirect Tax Proposals:

• It emphasised simplification of tax structure with fewer tax rates so as 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.

Better targeting of tax concessions: For better targeting of tax concessions and exemptions, the deduction from capital gains on investment in residential houses has been capped at ₹ 10 crores.

Proposals relating to MSMEs: Describing MSMEs as growth engines of the Indian economy, the Budget proposes enhanced limits for micro-enterprises and certain professionals for availing the benefit of presumptive taxation.

Cooperation: New cooperatives that commence manufacturing activities by 31st March next year shall get the benefit of a lower tax rate of 15%.

Start-ups: The Budget proposes to extend the date of incorporation for income tax benefits to start-ups from 31.03.2023 to 31.03.2024.

Amendments in CGST Act: The Budget provides for amending the CGST Act so as to raise the minimum threshold of tax amount for launching prosecution under GST from ₹ 1 crore to ₹ 2 crores.

Implications of tax changes: The revenue of about ₹ 38,000 crores will be foregone as a result of these proposals in the direct and indirect taxes, while revenue of about ₹3,000 crores will be additionally mobilised.

Budgetary allocation for key ministries and social sector schemes since 2021-2022

Direction: Emphasize the increasing and decreasing trends. Figures may be skipped