As the first month of each year draws to a close, all of India waits with bated breath for the announcement of the Union Budget on 1st February. Every year on this day, the country’s Finance Minister heads to the Parliament and presents various introductions, revisions, and other redressive measures for the upcoming financial year. Union Budgets have been part and parcel of our country’s financial prowess as well as our overall development.
It is one of the most important annual documents released in the country, affecting each citizen from every stratum of society. The middle class hopes for tax cuts or higher returns, while industrial sectors look forward to higher funding or relaxation of certain norms. Indeed, the Union Budget brings something for everyone. The etymology of the word ‘Budget’ traces back to the old word ‘Bougette’ in French, which means ‘little bag’ in English.
Some Interesting Facts About the Budget:
The ‘Halwa’ Ceremony
A few days prior to the Budget presentation, a halwa ceremony is held every year. In this, the country’s Finance Minister stirs halwa in a large vessel, and then distributes the sweet to ministry officials and other members. This ceremony flags off the beginning of the budget’s ‘lock-in’ period.
A Different Lockdown
After the halwa ceremony, all the officials and staff directly involved in preparing the Budget have to compulsorily stay in the North Block, i.e., the building which houses the Ministry of Finance at Raisina Hill, New Delhi. They are kept there, cut off from the outside world, including their friends and families., till the Budget announcement on February 1. This practice has been mandatory since 1950, when the country’s Budget document was leaked!
First Female Budget Presenter
Indira Gandhi, the former Prime Minister of India, was the first woman to present the Union Budget in 1970. She was tasked with handling the Finance portfolio as an additional duty.
Maximum Budgets Presented
Morarji Desai, another former Prime Minister of the country, presented the Union Budget for a record 10 times. After him, P. Chidambaram presented it 9 times, and Pranab Mukherjee 8 times.
Every year, expert officials from the Ministry of Finance, hold numerous consultations with members of NITI Aayog, the Department of Expenditure, and other ministries to draft the Budget. The main onus of creating the Union Budget falls on the Budget Division of the Department of Economic Affairs under the Ministry of Finance.
Key Highlights of Union Budget 2023:
The Union Budget 2023 was the last budget prior to the Central Elections to be held next year. In it, the government’s focus was on introducing key measures to expand the Capital Expenditure. Alongside, they highlighted several priorities such as green growth, youth employment, and inclusive development. The budget drew a lot of attention from the common man as it brought about major changes in the tax structure for salaried individuals. This included revisions in tax slabs, with an evident intention to promote the new tax regime.
‘Saptarishi’ – A Sevenfold Path
Union Finance Minister Nirmala Sitharaman called the 2023 Union Budget as the first Budget of India’s ‘Amrit Kaal’, adding that the Indian economy is the fastest growing among major global economies. This year, the Budget adopted seven priorities, each complementing the other. Sitharaman said that these were the ‘Saptarishi’ that would guide the country through this Amrit Kaal. These include:
- Inclusive Development
- Reaching the Last Mile
- Infrastructure and Investment
- Unleashing the Potential
- Green Growth
- Youth Power
- Financial Sector
- The Finance Minister raised the limit of rebates applicable on income tax to ₹7 Lakh per annum. Citizens can avail of this facility with the new tax regime, which Sitharaman announced, will be made the new default regime from FY2023-24.
- The taxable ranges of yearly personal income under the new tax regime were brought down to five from six. In parallel, the tax exemption limit was increased to ₹3 Lakh.
- Beyond that, people earning within ₹3-6 Lakh per year will have to pay 5% tax, while those with ₹6-9 Lakh annual income will be charged 10%. Similarly, the income tax bracket is 15% and 20% for citizens earning ₹9-12 Lakh and ₹12-15 Lakh, respectively. Individuals with an annual income of ₹15 Lakh or more will have to pay 30% income tax under the new regime.
- The Budget increased the capital expenditure for Indian Railways to a record high of ₹2.40 Lakh Crore. According to the Finance Minister, the outlay was made 9 times of that set in FY2013-14.
- The Budget also increased the overall capital investment for the 3rd consecutive year. It received a 33% hike to hit ₹10 Lakh Crore, which accounts for around 3.3% of the country’s GDP.
- The Budget estimated that the country’s fiscal deficit would be 5.9% of the national GDP in FY2023-24.
- To finance this fiscal deficit, the Budget calculated that net borrowings would amount to ₹11.8 Lakh Crore. The minister added that the balance financing would likely come from sources like small savings.
- As per the Budget estimates,the total market borrowings are ₹15.4 Lakh Crore. Sitharaman further verified the aim to bring down this fiscal deficit to 4.5% of the GDP by FY2025-26.
- The credit target for the agriculture industry is to be raised to ₹20 Lakh Crore. A key focus will be on fisheries and animal husbandry.
- The Budget also stated that an Agriculture Accelerator Fund would be set up to encourage budding entrepreneurs to form agro-based startups in rural areas.
- The 2023 Budget introduced the first-ever assistance package for traditional craftspeople and artisans:the PM Vishwakarma Kaushal Samman (PM VIKAS) scheme. This will help to improve the quality, scale and popularity of the products made by traditional artisans and craftspeople.
- This scheme would provide such workers with financial support, knowledge of modern digital techniques, advanced skill training, efficient green technologies, the ability of digital payments, and overall social security.
- The credit guarantee for MSMEs has been further infused with a fund of ₹9,000 Crore, along with a collateral-free, assured surplus credit of ₹2 Lakh Crores. Moreover, the credit cost will be reduced by approximately 1% from 1st April 2023.
- Under the provisions of the Budget, the government has undertaken several initiatives related to green energy, green fuel, green mobility, green farming, green equipment, and green buildings. It will also introduce and improve policies to ensure efficient energy use across all economic sectors.
- These green growth initiatives will help to reduce the carbon dependency in the Indian economy as well as create largescale job opportunities in green energy.
- The Government will introduce the Pradhan Mantri Kaushal Vikas Yojana 4.0 scheme, which will train the country’s youth with various skills for international job opportunities through 30 Skill India International Centres set up in different Indian states.
- A pan-India National Apprenticeship Promotion Scheme will be rolled out on a Direct Benefit Transfer basis to provide 47 lakh youth with stipend support over three years.
- The government hiked the tax levied on certain cigarettes by up to 16%.
- Basic customs duty on crude oil and glycerine was reduced to 2.5%.
- The import duty for silver bars was raised to come at par with gold and platinum.
- Customs duty on open cells of television panels was decreased to 2.5%
- The budget enhanced the maximum limit of deposits for Senior Citizen Savings Schemes from ₹15 Lakh to ₹30 Lakh.
- The limit on Monthly Income Scheme (MIS) was doubled to ₹9 Lakh, while that for joint accounts became ₹15 Lakh.
- A one-time new saving scheme for women, the Mahila Samman Saving Certificate, will soon be available by March 2025.
- The Union Budget allocated a total of ₹89,155 Crore to the country’s health sector.
- Sitharaman announced a mission to wipe out sickle cell anaemia from India by 2047.
- The budget allocation for the Pradhan Mantri Swasthya Suraksha Yojana will be ₹3,365 Crore for FY2023-2024.
- 157 nursing colleges will be set up beyond the 157 medical colleges present since 2014.
What Lies in Store?
Nirmala Sitharaman said that the country’s economy is not only on the right track but also heading toward a brighter future. In the last 9 years, it has grown from the 10th largest to the 5th largest around the world. India has been recognised as a bright star in terms of economic development, with a 7% growth estimated for FY2024.
The Finance Minister stuck to the path of the growth strategy that was first unveiled in the 2019 Union Budget, when she announced a ground-breaking reduction in corporate taxes. This growth strategy aimed to incentivise the private economic sector by investing in productive capacity on the one hand. This would lead to a higher push for growth and job creation. On the other, it focused on increasing the capital expenditure and revenue-raising through privatisation and disinvestments.