OPINION: Union Budget 2023–Growth Meets Inclusion

World Economic Forum (WEF) founder and executive chairman Klaus Schwab recently said that Prime Minister Narendra Modi's leadership is critical in this fractured world.

“I commend the country’s decisive action on the climate case for renewables, its contribution to the global healthcare ecosystem, the focus on an economic model for women-led development, and its leadership on digital public infrastructure," Schwab said. "India remains a bright spot amid global geoeconomics and geopolitical crises," the WEF founder, Schwab further added, in a stellar display of uninhibited appreciation of Prime Minister Modi's astute leadership, that has catapulted India to the top league.“India’s G20 presidency comes at a crucial time, Prime Minister Modi’s leadership is critical in this fractured world,” Schwab, further reiterated.

Schwab only reiterated what leaders across the world are acknowledging, given the gigantic strides by India, which displaced the UK in 2022, to become the world's 5th largest economy in terms of nominal GDP. Freebies to win votes and fiscal profligacy were indeed the overwhelming themes under the erstwhile, inept, Congress dispensation in India. However, for Prime Minister Narendra Modi, good politics is all about good economics.

In the 75th year of India’s Independence, the world has recognised the Indian Economy as a ‘bright star’ as the economic growth is estimated at 7% which is the highest among all major economies, in spite of the massive global slowdown caused by COVID-19 and Russia-Ukraine War.

This Amrit Kaal Budget is inclusive with a focus on our youth, women, farmers, OBCs, Scheduled Castes, and Scheduled Tribes. India’s rising global profile is due to several accomplishments under the dynamic leadership of PM Modi, namely, a unique world-class digital public infrastructure like Aadhaar, Co-Win, and UPI; COVID-19 vaccination drive in unparalleled scale and speed; proactive role in frontier areas such as achieving climate-related goals, mission LiFE, and National Hydrogen Mission, among many others. Free food grain to all Antyodaya and priority households for the next year, under PM Garib Kalyan Anna Yojana (PMGKAY) at a cost of Rs 2 lakh crore will be borne by the Modi government, in a befitting example of Modinomics that is both reformist and compassionate. Per capita income has more than doubled to Rs 1.97 lakh, in the last nine years, with the Indian economy moving from being the 10th largest in nominal GDP terms under a corrupt Congress, to the 5th largest in the world, under the Modi government. Moreover, the economy has become a lot more formalized now, with EPFO membership, more than doubling to 27 crore,s and 7400 crore digital payments worth Rs 126 lakh crore being transacted through UPI in 2022. In fact, the UPI success story under PM Modi's leadership has been a stellar one.

Efficient implementation of many schemes, with the universalization of targetted benefits, has resulted in inclusive development, such as 11.7 crore household toilets under the Swachh Bharat Mission, 9.6 crore LPG connections under Ujjawala, 220 crore Covid vaccinations of 102 crore persons, 47.8 crore PM Jan Dhan bank accounts, Insurance cover for 44.6 crore persons under PM Suraksha Bima and PM Jeevan Jyoti Yojana and cash transfer of Rs 2.2 lakh crore to over 11.4 crore farmers, under PM Kisan.

PM Modi's vision for Amrit Kaal includes a technology-driven and knowledge-based economy with strong public finances and a robust financial sector through Jan Bhagidari. Deendayal Antyodaya Yojana National Rural Livelihood Mission (DAY-NRLM),has achieved remarkable success by mobilizing rural women into 81 lakh Self Help Groups (SHGs) and these groups will be enabled to reach the next stage of economic empowerment through the formation of large producer enterprises or collectives.

For the first time, PM Vishwakarma Kaushal Samman (PM VIKAS), has been conceptualized to improve the quality, scale, and reach of the products of our traditional artisans or Vishwakarma and to integrate them with the MSME value chain, by enduring linkages with local and global markets. This will greatly benefit the Scheduled Castes, Scheduled Tribes, OBCs, women, and people belonging to weaker sections.

Apart from Vishwakarmas, the promotion of tourism will be taken up on mission mode, with the active participation of States and convergence of public-private partnerships.

Dwelling on the subject of "Green Growth", India is implementing many programmes for green fuel, green energy, green farming, green mobility, green buildings, and green equipment, across various economic sectors, to reduce the carbon intensity of the economy. In fact, India has taken the lead globally in climate change mitigation initiatives in the last 9 years.

Union Budget 2023 laid out the ‘Saptarishi’ guiding us through Amrit Kaal. The Saptarish model is as follows: 1) Inclusive Development, 2) Reaching the Last Mile, 3) Infrastructure and Investment, 4) Unleashing the Potential,5) Green Growth, 6) Youth Power, 7) Financial Sector. Digital public infrastructure for agriculture will be built as an open-source, open-standard and interoperable public good. This will enable inclusive, farmer-centric solutions for crop planning and health, improved access to farm inputs, credit, and insurance for agri-Startups. The "Agriculture Accelerator Fund" will be set up to encourage agri-Startups by young entrepreneurs in rural areas. India is at the forefront of popularizing Millets, whose consumption furthers nutrition, food security, and the welfare of farmers. In fact, India is the largest producer and second largest exporter of ‘Shree Anna’ in the world as it grows several types of 'Shree Anna' such as jowar, ragi, bajra, kuttu, ramdana, kangni, kutki, kodo, cheena, and sama.Indian Institute of Millet Research, Hyderabad, will be supported for excellence in sharing best practices, research, and technologies.

The agriculture credit target has been raised to Rs 20 lakh crore with a focus on animal husbandry, dairy, and fisheries. A new sub-scheme of PM Matsya Sampada Yojana with a targetted investment of Rs 6000 crore has been further earmarked. A new Ministry of Cooperation was formed with a mandate to realize the vision of ‘Sahakar Se Samriddhi’. To realize this vision, the government has already initiated the computerization of 63,000 Primary Agricultural Credit Societies (PACS) with an investment of Rs 2516 crore. A national cooperative database is being prepared for the country-wide mapping of cooperative societies.

On the health front,157 new nursing colleges will be established in co-location with the existing 157 medical colleges established since 2014. A mission to eliminate sickle cell anemia by 2047 will be launched, which will entail awareness creation and universal screening of 7 crore people in the age group of 0-40 years in affected tribal areas, and counseling through collaborative efforts of central ministries and State governments.

On education, district Institutes of education and training will be developed as vibrant institutes of excellence for this purpose.

Also, a National Digital Library for children and adolescents will be set up for facilitating the availability of quality books across geographies, languages, genres, and levels, and device-agnostic accessibility. States will be encouraged to set up physical libraries for them at panchayat and ward levels and provide infrastructure for accessing the National Digital Library resources. To build a culture of reading and to make up for pandemic-time learning loss, the National Book Trust, Children’s Book Trust, and other sources will be encouraged to provide and replenish non-curricular titles in regional languages and English to these physical libraries.

Prime Minister Vajpayee’s government had formed the Ministry of Tribal Affairs and the Department of Development of the North-Eastern Region to provide a sharper focus on the objective of ‘reaching the last mile’. The Modi government has done even better by forming the ministries of AYUSH, Fisheries, Animal Husbandry and Dairying, Skill Development, Jal Shakti, and Cooperation, in a stellar outreach to provide last-mile delivery to the poor, the marginalized, and the underprivileged.

To improve the socio-economic conditions of the particularly vulnerable tribal groups (PVTGs), Pradhan Mantri PVTG Development Mission will be launched. This will saturate PVTG families and habitations with basic facilities such as safe housing, clean drinking water and sanitation, improved access to education, health, and nutrition, road and telecom connectivity, and sustainable livelihood opportunities. An amount of Rs 15,000 crore will be made available to implement this mission in the next three years under the Development Action Plan for the Scheduled Tribes. Also, in the next three years,38,800 teachers and support staff will be recruited for the 740 Eklavya model residential schools, serving 3.5 lakh tribal students.

Speaking of last-mile delivery, PM Awas Yojana's allocation has been enhanced by 66% to over Rs 79,000 crore, showcasing PM Modi's commitment to the unhoused. Investments in infrastructure and productive capacity have a large multiplier impact on growth and employment and in view of this capital investment outlay is being increased steeply for the third year in a row by 33% to Rs 10 lakh crore, which would be 3.3% of GDP, almost 3x the outlay in 2019-20. The effective capital expenditure is budgeted at Rs 13.7 lakh crore, which will be 4.5% of GDP. In a classic show of cooperative federalism, the Modi government has decided to continue the 50-year interest-free loan to State governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of Rs 1.3 lakh crore. A capital outlay of Rs 2.40 lakh crore has been provided for the Railways, which is the highest ever outlay and about 9x the outlay made in 2013-14. Hundred critical transport infrastructure projects, for last and first-mile connectivity for ports, coal, steel, fertilizer, and food grain sectors have been identified and they will be taken up on priority with an investment of Rs 75,000 crore, including Rs 15,000 crore from private sources. Fifty additional airports, heliports, water aerodromes, and advanced landing grounds will be revived for improving regional air connectivity. Infrastructure has tremendous multiplier effects and clearly, the Modi government is focussing on infra, to fuel growth.

An Urban Infrastructure Development Fund (UIDF) will be established through the use of priority sector lending shortfall, which will be managed by the National Housing Bank (NHB) and will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities. For enhancing the ease of doing business (EODB), more than 39,000 compliances have been reduced and more than 3400 legal provisions have been decriminalized, in an exemplary endorsement of "Minimum Government, Maximum Governance", by PM Modi. For furthering trust-based governance, the Modi government has introduced the Jan Vishwas Bill to amend 42 Central Acts. Three Centers of excellence for Artificial Intelligence (AI) will be set up in top educational institutions. Leading industry players will partner in conducting interdisciplinary research and in developing cutting-edge applications and solutions in the areas of agriculture, health, and sustainable cities, which will galvanize an effective A-I ecosystem.

To unleash innovation and research by Startups and academia, a National Data Governance Policy will be brought out, which will enable access to anonymized data. On 5G Services,100 labs for developing applications using 5G services will be set up in engineering institutions to realize a new range of opportunities and employment potential. Prime Minister Modi has given a vision for “LiFE”, or Lifestyle for Environment, to spur a movement of an environmentally conscious lifestyle. India is moving forward firmly towards ‘panchamrit’ and net-zero carbon emission by 2070, to usher in a green industrial and economic transition. The recently launched National Green Hydrogen Mission, with an outlay of Rs 19,700 crore, will facilitate the transition of the economy to low carbon intensity and reduce dependence on fossil fuel imports. The target is to reach an annual production of 5 MMT by 2030. The Budget also provides Rs35,000 crore for priority capital investments towards energy transition and net zero objectives. 500 new ‘waste to wealth’ plants under GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme will be established for promoting a circular economy. These will include 200 compressed biogas (CBG) plants, including 75 plants in urban areas and 300 community or cluster-based plants at a total investment of Rs 10,000 crore. Over the next 3 years, the Modi government will facilitate one crore farmers to adopt natural farming. For this, 10,000 Bio-Input Resource Centers will be set up, creating a national-level distributed micro-fertilizer and pesticide manufacturing network. In furtherance of the vehicle scrapping policy mentioned in Budget 2021-22, adequate funds to scrap old vehicles and ambulances of the Central government and States will also be made available.

Pradhan Mantri Kaushal Vikas Yojana 4.0 will be launched to skill lakhs of youth within the next three years. On-job training, industry partnership, and alignment of courses with the needs of the industry will be emphasized. Thirty Skill India International Centres will be set up across different States. To provide stipend support to 47 lakh youth in three years, Direct Benefit Transfer (DBT) under a pan-India National Apprenticeship Promotion Scheme will also be rolled out. States will be encouraged to set up a "Unity Mall" in their State for the promotion and sale of their own ODOPs (one district, one product), GI products, and other handicraft products.

Revamping of the credit guarantee scheme for MSMEs will take effect from 1st April 2023 through the infusion of Rs 9000 crore in the corpus. This will enable additional collateral-free guaranteed credit of Rs 2 lakh crore. Further, the cost of the credit will be reduced by about 1%. For commemorating Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, Mahila Samman savings certificate, will be made available for a two-year period up to March 2025. This will offer a deposit facility of up to Rs 2 lakh in the name of women or girls for a tenor of 2 years at a fixed interest rate of 7.5%, with a partial withdrawal option. This is an excellent step to further add to the financial stability of women.

The maximum deposit limit for senior citizen savings schemes too stands enhanced from Rs 15 lakh to Rs 30 lakh, which is a huge bonanza for those above 60 years. Also, the maximum deposit limit for the monthly income account scheme stands enhanced from Rs 4.5 lakh to Rs 9 lakh for a single account and from Rs 9 lakh to Rs 15 lakh for a joint account. So a rattled Opposition claiming that this Budget has ignored women or our elderly have completely missed the plot. Clueless Rahul Gandhi,who has always undermined India's vibrant corporate sector, by making veiled digs at corporate czars, would do well to know that PM Modi's focus is the needy and the poor but equally "New India" also believes in the strength of India Inc.

The Revised Estimate (RE) for FY23 of total receipts other than borrowings is Rs 24.3 lakh crore, of which the net tax receipts are Rs 20.9 lakh crore. The RE of total expenditure is Rs 41.9 lakh crore, of which capital expenditure is about Rs 7.3 lakh crore. Similarly, the RE of fiscal deficit is 6.4% of GDP for 2022-23 (FY23), adhering to the Budget Estimate (BE)The total receipts other than borrowings and the total expenditure is estimated at Rs 27.2 lakh crore and Rs 45 lakh crore respectively for FY24. The net tax receipts are estimated at Rs 23.3 lakh crore. The fiscal deficit is estimated to be 5.9% of GDP in FY24. The Modi government plans to continue the path of fiscal consolidation, reaching a fiscal deficit below 4.5% by 2025-26 with a fairly steady decline over the period. To finance the fiscal deficit in FY24, 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 in FY24. Very rarely does a Budget achieve the twin objectives of both growth and fiscal stability, but this Amrit Kaal Budget has achieved that herculean task by ensuring government spending is used to create productive assets and not frittered away in unproductive expenditure.

There are five major announcements relating to personal income tax. The rebate limit in the new tax regime has been increased to Rs 7 lakh, meaning that those in the new tax regime with income up to Rs 7 lakh will not have to pay any tax. The tax exemption limit has been raised from Rs 2 lakh to Rs 3 lakh per annum. This will provide major relief to all taxpayers in the new regime, which will now be the default regime, as it is far more attractive. However, citizens will continue to have the option to avail the benefits of the old tax regime, should they wish to.

The benefit of standard deduction has been extended to the salaried class and pensioners including family pensioners under the new tax regime. Salaried individuals will get a standard deduction of Rs 50,000 and pensioners Rs 15,000 as per the proposal. Each salaried person with an income of Rs 15.5 lakh or more will thus gain 52,500 from the above proposals.The highest surcharge rate in personal income tax has also been reduced from 37% to 25% in the new tax regime for income above Rs 2 crore. This would result in the maximum tax rate of personal income tax coming down to 39%, which was earlier 42.74%. The Modi government has sent out a strong message that it stands for the poorest of the poor and does not believe in crony capitalism, but equally, it stands for wealth creation too, and being rich is certainly not a crime. The limit of tax exemption on leave encashment on the retirement of non-government salaried employees has been increased from just Rs 3 lakh to a massive Rs 25 lakh. The best thing about this Budget is that it is low on incrementalism and high on sweeping changes that can have a virtuous, multiplier effect. Revenue of about Rs 38,000 crore will be foregone as a result of these proposals, while revenue of about Rs 3000 crore will be additionally mobilized. Thus the total revenue foregone is about Rs 35,000 crore annually, on account of these proposals. So while the benefits via the new tax regime to the middle class will be huge, the impact on the government exchequer will be minimal, which is what great budgeting is all about.

The indirect tax proposals announced in the Budget emphasized on simplification of the tax structure with fewer tax rates, to help in reducing the compliance burden and improving tax administration. The basic customs duty rate on goods, other than textiles and agriculture, has been reduced from 21% to 13%. There are minor changes in the basic customs duties, cesses, and surcharges on items including toys, bicycles, automobiles, and naphtha, too. To further deepen domestic value addition in the manufacture of mobile phones, relief in customs duty on the import of certain parts and inputs like camera lenses was announced . The concessional duty on lithium-ion cells for batteries will continue for another year. Basic customs duty on parts of open cells of TV panels has been reduced to 2.5%. The Budget also proposes changes in the basic customs duty to rectify the inverted duty structure and encourage the manufacturing of electrical kitchen chimneys. So while gold, silver, and diamonds are more expensive now, many items of daily consumption are cheaper. Denatured ethyl alcohol has been exempted from basic customs duty. Basic customs duty has also been reduced on acid-grade fluorspar and crude glycerin. Duty is being reduced on key inputs for the domestic manufacture of shrimp feed. Basic customs duty on seeds used in the manufacture of lab-grown diamonds has also been reduced.

The Union Budget also proposed to roll out a next-generation common IT return form for taxpayer convenience. It also stipulates a plan to strengthen the grievance redressal mechanism for direct taxes. For better targeting of tax concessions and exemptions, deduction from capital gains on investment in residential houses has been capped at Rs 10 crore. Income tax exemption from proceeds of insurance policies with very high value will also have a cap. Other major proposals in the Amrit Kaal Budget, relating to the extension of the period of tax benefits to funds relocating to IFSC, GIFT City till 31st March 2025; decriminalization under Section 276-A of the Income Tax Act; allowing carry forward of losses on strategic disinvestment including that of IDBI Bank; and Providing EEE status to Agniveer Fund.

MSMEs are growth engines of our economy, That said, micro-enterprises with a turnover of up to Rs 3 crore from earlier Rs 2 crore and certain professionals with a turnover of up to Rs 75 lakh from earlier Rs 50 lakh, will be eligible now for presumptive taxation. To support MSMEs in timely receipt of payments, the Budget now allows a deduction for expenditure incurred on payments made, only when payment is indeed actually made. This shows that the Modi government has a phenomenal eye for detail. These measures may look seemingly small and innocuous but will, in fact, be a big relief in terms of easing the regulatory burden for the over 64.2 million MSMEs in India.

The Budget has a slew of proposals for the cooperative sector too. New cooperatives that commence manufacturing activities by 31st March next year shall get the benefit of a lower tax rate of 15%. The Budget provides an opportunity for sugar cooperatives to claim payments made to sugarcane farmers for the period prior to assessment year (AY) 2016-17 as an expenditure. A higher limit of Rs 2 lakh per member has been provided for cash deposits and loans in cash by primary agricultural cooperative societies (PACS) and primary cooperative agriculture and rural development banks (PCARDBs). This Amrit Kaal Budget also proposed a higher limit of Rs 3 crore for TDS on cash withdrawal for cooperative societies, again an impactful decision.

The Budget also extended the date of incorporation for income tax benefits for Startups from 31st March 2023, to 31st March 2024. It also provides the benefit of carrying forward losses on change of shareholding of Startups from the earlier 7 years of incorporation, to 10 years now.

A less discussed but important measure has been the budgetary proposal for amending the CGST Act, so as to raise the minimum threshold of tax amount for launching prosecution under GST from Rs 1 crore to Rs 2 crore, except for the offense of issuance of invoices without a supply of goods and services or both. The compounding amount will be reduced from the present range of 50 to 150% of the tax amount to the new range of 25 to 100%. It will also decriminalize certain clauses of the CGST Act like obstruction and preventing any officer from discharging his duties, deliberate tampering of evidence, or failure to supply the requisite information.

PM Narendra Modi captured the true essence of this Amrit Kaal Budget when he said–“In the Budget, we have laid a lot of emphasis on technology and the new economy. Aspirational India of today wants modern infrastructure in every field like road, rail, metro, port, and waterways. Compared to 2014, investment in infrastructure has increased by more than 400%". It would be apt to conclude by remembering what Bob Sternfels, CEO of Mckinsey &Co., said recently while talking about India under the visionary leadership of PM Modi. Sternfels said, India will be the world's future talent factory as it will have 20% of the globe's working population by 2047, adding that it will not only be "India's decade, but India's century, going forward, with all key elements in place–a large working population, multinational companies reimagining global supply chains, and a country leapfrogging at digital scale-to achieve something special not just for the Indian economy, but potentially for the world".

Indeed, Modinomics is an inclusive idea that celebrates the holistic concept of "One Earth, One Family, One Future".

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The author, Sanju Verma, is an Economist, National Spokesperson of the BJP, and the bestselling Author of ‘The Modi Gambit’. Sanju has been ranked in Asiamoney, has worked as an Assistant Director in global giants like JP Morgan & as an Executive Director with HDFC Securities, besides working in leadership roles in several other top firms like Phillip Capital where she served as Head of the Institutional Business in India.

(Disclaimer: The views and opinions expressed within this article are the personal opinions of the author. The facts, analysis, assumptions, and perspectives appearing in the article do not reflect the views of Republic TV/ Republic World/ ARG Outlier Media Pvt. Ltd.)