The government’s proposed budget for 2023–24 calls for spending Rs. 45, 03,097 crore, an increase of 7.5% from the previously revised estimate for 2022–23 The receipts (other than borrowings) are expected to be Rs 27, 16,281 crore in 2023-24. The government plans to borrow a record 15.4 lakh crore from dated securities in order to close the revenue gap, as against the 14.21 lakh crore for the current financial years ending March 31, 2023. The budget estimate (BE) forecasts a 7% GDP growth rate which is highest among all the major economies. The Fiscal Deficit for Fiscal Year 2023-24 is estimated to be 5.9% of GDP.
Changes in the new income tax regime: The rebate limit in the new tax regime has been raised to 7 lakh. Individuals earning up to Rs. 7 lakh per year are exempted from paying income tax under the new tax regime. Furthermore, the number of tax slabs in the new personal tax regime has been reduced to five, and the tax exemption limit has been raised to 3 lakh. This change, however, has removed the tax-free benefit of high-value traditional insurance policies, making them less appealing as investments.
Moving to the specific initiatives under the various priorities, the following issues are worth to mention: The Budget allocates a record 22,138 crore to MSMEs, recognizing their importance as a major contributor to India’s gross value added (GVA) and in providing employment. Similarly, special packages have been allocated, in order for the country to become a technology-driven and knowledge-based economy, a large and expanding pool of adequately skilled human resources is required.
To support agri-startups in rural areas, a fund called the “Agriculture Accelerator Fund” will be established. With an investment of Rs 6,000 crore, a sub-scheme of the PM Matsya Sampada Yojana will be introduced to aid fishers, fish vendors, and MSMEs. Farmer storage facilities will be set up to accommodate their produce. To encourage states and UTs to promote the balanced use of chemical fertilizers and alternative fertilizers, the PM Programme for Restoration, Awareness, Nourishment, and Amelioration of Mother Earth (PM-PRANAM) will be introduced.
In the current Union Budget, the union government has chosen capital expenditure as the primary focus area. Capital expenses are those that cause a change in the government’s assets or liabilities (such as road construction or loan repayment), while revenue expenses are everything else (such as payment of salaries or interest payments). Capital expenditure is expected to rise by 33% to Rs 10, 00,961 crore in 2023-24, compared to revised estimates for 2022-23. The increase in capital expenditure is primarily due to the Ministry of Railways having the highest percentage increase in allocation (49%), followed by the Ministry of Jal Shakti (31%), and the Ministry of Road Transport and Highways (25%). In order to increase infrastructure investment, the Centre extends its 50-year interest-free loans to State governments for an additional 12 months with an outlay Rs 1.3 lakh crore.
The government’s plunge for capital spending suggests a push to encourage private investment & economic growth. The budget, on the other hand, has reduced government spending in the social sectors in order to free up resources for further increases in capital spending. The Union Budget 2023-24 has significantly reduced the amount of money allocated to subsidy schemes. Many subsidy schemes’ have also been eliminated in the instant budget.
The most shocking example of this is the sharp decrease in MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) expenditure to Rs 60,000 crore. It has been reduced by about 33% from the revised estimates of 89,400 crore in 2022-23. This was accomplished while India was suffering from the blight of unemployment.
In comparison to the revised estimates for the fiscal year, it reduced food subsidies by 29%, decentralized procurement subsidies under the NFSA (National Food Security Act) by 17%, mid-day meal allocations by 9.4%, and nutrient-based subsidies by 38%. The gross food subsidy has been reduced by 31% compared to revise estimates for 2022-23, implying that one segment of the poor has been squeezed in order to subsidize another. This was done at a time when India had the most hungry and malnourished people on the planet. Similarly, fertilizer subsidies have been reduced by Rs 50,121 crore. In the 2023-24 Budget, the government has allocated Rs 1, 75,099 crore for fertilizer subsidies, compared to Rs 2, 25,220 crore in the revised estimate for 2022-23.
LPG subsidies for the poor have also been reduced by 75%. The revised estimate for 2022-23 has been reduced from Rs 9,170 crore to Rs 2,257 crore, a reduction of Rs 6,913 crore. In addition to food, fertilizer, and petroleum product subsidies, the government provides interest subsidies for 15 schemes. These interest subsidy schemes’ have also been reduced by approximately Rs 10,000 crore. A total of Rs 4, 03,084 (less by about 28% from the RE) crore has been set aside for all subsidy schemes in the 2023-24 budget, against the 5, 62,080 crore in the revised estimate for 2022-23.
Consequently, the instant budget 2023-24 is a large displeasure for millions of working masses and weak sections who have undergone very tough time in the recent years due to the global slowdown caused by the Covid-19 Pandemic and the Russia-Ukraine war, which brought the world economies to a halt. Accordingly, the primary task before the 2023-24 budget was thus to improve the living conditions of the masses without time lags.
(Author is Research Scholar at Department of Economics, University of Kashmir.Email: [email protected])
