The Finance Minister of India recently presented the last full-fledged Union Budget for 2023-24 ahead of the Lok Sabha elections in 2024. The Union Budget, based on Article 112 of the Indian Constitution, refers to the Annual Financial Statement (AFS). This crucial financial document outlines the estimated government receipts and expenditure for a Financial Year that runs from 1st April of the current year to 31st March of the following year.
The Components of Union Budget
The main elements of the budget include estimates of revenue and capital receipts, ways and means to raise the revenue, estimates of expenditure, detailed figures of the actual receipts and expenditure of the closing fiscal year, and the economic and financial policy for the coming year. The last aspect includes taxation proposals, revenue prospects, spending programmes, and introduction of new schemes or projects.
Before going into law, the Budget has to undergo six stages in Parliament: presentation of the budget, general discussion, scrutiny by departmental committees, voting on demands for grants, passing an Appropriation Bill, and passing of Finance Bill.
The History of India’s Budget
The first budget of independent India was presented in 1947, and the Budget Division of the Department of Economic Affairs in the Ministry of Finance is the nodal entity responsible for the preparation of the budget.
Main Highlights of Budget 2023-24
A salient highlight of the Union Budget 2023-24 is its focus on inclusive development – ‘Sabka Sath, Sabka Vikas’. The budget addresses the needs of various social groups including farmers, women, youth, the Scheduled Castes and Scheduled Tribes, Other Backward Classes (OBCs), persons with disabilities (divyangjan) and economically weaker sections (EWS).
In addition to this, special attention has been offered to the underprivileged and the Union territories of Jammu & Kashmir, Ladakh and the Northeast Region. The two-pronged growth strategy first unveiled in 2019 continues to be the guiding principle. This strategy advocates incentivising the private sector for job creation and economic growth, and practising ‘minimum government, maximum governance’.
Key Takeaways from the Budget
Some significant changes were announced in the new income tax regime. A substantial increase of 33% has been proposed in capital investment outlays, raising it to a record Rs 10 lakh crore. There were changes in customs duty on various goods. Lastly, the capital outlay for the railways was augmented to an unprecedented Rs 2.40 lakh crore.
The Vision for “Amrit Kaal”
The Finance Minister called the current budget the first one in the age of ‘Amrit Kaal’. The aim is to create an empowered and inclusive economy that is knowledge-based, technology-driven with a robust financial sector. The budget outlines four key opportunities: women’s economic empowerment, promotion of tourism, skilling through the PM Vishwakarma Kaushal Samman (PM VIKAS), and promoting green growth.
Priorities of Budget 2023-24
The budget for 2023-24 lays stress on seven priority areas or ‘Saptarishi’. These include inclusive development, reaching the last mile, infrastructure and investment, unleashing potential, green growth, youth power, and reforming the financial sector.
Reforms in Direct and Indirect Taxation
Several key reforms were proposed in direct and indirect taxation. In the sphere of personal income tax, the rebate limit in the new tax regime has been increased to Rs 7 lakh, meaning that individuals with income up to this threshold will not have to pay any tax. The structure of the new personal tax regime has been revisited, reducing the number of slabs from seven to five and raising the tax exemption limit to Rs 3 lakh.
In terms of indirect taxation, the basic customs duty rates for goods other than textiles and agriculture have been decreased from 21 to 13. There were increases in duties on products made from gold and platinum and imports duties on silver dore, bars and articles.
Fiscal Management Outlook
The budget document contains details about the government’s fiscal management strategies. It includes revised estimates for the fiscal year 2022-23 and budget estimates for 2023-24, such as total receipts (excluding borrowings), net tax receipt, total expenditure, capital expenditure, and the fiscal deficit as a percentage of GDP. The document also provides figures for the estimated market borrowing through dated securities to finance the fiscal deficit in 2023-24.