Budget 2023/24 – Foundation for Vishwa guru Bharat
Gopal Krishna Agarwal
The last full-fledged budget
before the general elections next year has resisted to be a populist budget and
the Government must be applauded for it. It takes confidence and commitment to
stick to the fundamentals of prudent book-keeping when it makes complete sense
to go all out political. This attribute, which was also visible during the ‘Aatmanirbhar
Bharat’ package in the wake of Covid - 19 crisis, will keep the economy on an
even keel.
When the global economies are reeling under inflation and
being sucked into recessionary cycle, India continues to be an outlier with
manageable inflation, high GDP growth rate and well calibrated fiscal
consolidation glide path. The difference of Modi Government’s approach to
balance the macroeconomic challenges of fighting recession, controlling
inflation and meeting fiscal deficit consolidation target is very much evident
in budget 2023-24.
A major achievement of the Government has been its management
of fiscal affairs. Several challenges on macro-economic front that stemmed from
external factors and were unseen at the time of presentation of budget last
year unfolded as the year rolled by. The actual expenditure on food and
fertilizer subsidy for the current year is much more than was initially
budgeted while the excise tax collected had to come down due to energy price
relief provided to the consumers. Despite this Modi Government has managed to
adhere to the budgeted target of 6.4 percent for fiscal deficit for the year
2022-23. The fiscal deficit target for the coming financial year has been put
at 5.9 percent of the GDP. Thus the march on the path of fiscal consolidation
continues and the Government has committed to bring it down in the range of 4.5
percent by the year 2025-26.
The highlight of 2023-24 budget undoubtedly has to be the increased allocation for capital expenditure which has been increased by 33 percent to Rs 10 lakh crore. Anyone, familiar with the concept of ‘multiplier effect’ of expenditure would know that government Capex has a much bigger effect on the economy than government or private consumption expenditure. After two consecutive years of increase in government Capex, the Government would have stepped off the accelerator, but, the increase in Capex under this context is really heart-warming.
The budget focuses on MSME growth. Capital allocation for
collateral free lending to MSME sector has been increased to Rs 9,000 crores.
This will lead to an incremental lending of Rs. 2 lakh crore to this sector.
Custom duties have been reduced on a number of commodities to make
manufacturing in India more competitive with raw material availability at lower
costs. These steps, together with the continued work on ‘ease of doing
businesses’, will help the MSME sector in a major way. Government has reduced
39,000 compliances and de-criminalized more than 3,000 laws and also introduced
Vivad Se Vishwas 2 scheme for enhancing business and government trust.
Relief in personal income tax was widely demanded and the
budget has respected the wishes of the people. An individual can now earn up to
Rs 7 lakh per annum and not pay any income tax. This is a whopping 40 percent
increase over the current exemption limit of Rs 5 lakh per annum. Also the
surcharge on income above Rs 5 crore per annum has been reduced and the highest
marginal rate of taxation will come down from above 42 percent to about 39
percent.
This year’s budget is a document with the futuristic vision. Government has listed 7 priorities- saptarishi- that will guide policymaking up to 2047. These have elements of green growth and energy transition while not losing sight of inclusive development and reaching the last mile. The focus and commitment to sustainable growth can be seen from schemes like MISHTI- for Mangrove plantation along the coastline and Amrit Dharohar – for preserving the bio-diversity in wetlands.
Scrapping of old vehicles also finds a detailed mention in
the budget. Establishing Centre of excellence for artificial intelligence (AI)
shows that the budget has vision as well as ambition. Skill India scheme will
henceforth include futuristic skills like AI, robotics, 3D printing etc. The government
plans to set up 100 labs for developing 5G services. Government has identified
the potential of tourism industry to propel employment and growth of economy
and it will see a number of schemes to realize its true potential.
Government’s support to agricultural
sector and its commitment to the rural economy is evident from the setting up
of agricultural acceleration fund and millet development program. Schemes
like Govardhan yojana and facilitating natural farming are a case in point. The
Government has committed itself to provide large scale support to the
cooperative sector at the Panchayat level which can enhance financial inclusion
and empowerment of small farmers. The target for credit to agriculture sector
has been fixed at Rs 20 lakh crore. It will ensure that the agriculture sector
continues to grow at over 4.5 percent per annum.
With this budget and the presidency of
G20 this year, Indian economy is poised to see a new level of global engagement
and ensure to achieve the vision of our prime minister to make India an
economic superpower in the coming decade. Truly this budget is an Amrit Budget-
a foundation for Vishwa guru Bharat.