JAMMU: Finance Minister Nirmala Sitharaman is presenting her fifth straight budget today. This is also last the full budget of Modi 2.0 govt before the next parliamentary elections in 2024.
The Finance Minister has unveiled a capex bazooka with a 33% hike over last year signifying that the government means business and is willing to walk the extra mile to push growth. The expansion of capex is a huge positive for markets as it will help in crowding in private investment
All eyes are glued to the Budget announcements being made by Finance Minister Nirmala Sitharaman in the Parliament. Govt is planning to spend Rs 2200 crore for high-value horticulture and an increase in agri credit target to Rs 20 lakh crore are some of the key announcements so far.
Finance minister Nirmala Sitharaman’s budget comes amid looming global recessions and slowing growth. Sitharaman also announced that PAN will be used as a common identifier for all digital systems of specified government agencies.
In the Economic Survey 2023, the finance ministry forecasted gross domestic product growth of 6.5% in the fiscal year ahead, compared with the 7% estimated for the current period.
Here are the key Budget 2023 highlights:
Good news for taxpayers
FM Sitharaman proposes to increase income tax rebate limit from Rs 5 lakh to Rs 7 lakh in new tax regime
Govt to enhance grievance redressal mechanism for direct tax payers
An individual with annual income of Rs 9 lakh will have to pay only Rs 45,000
No tax for income up to Rs 3 lakh; 5 percent tax on Rs 3-6 lakh; highest tax rate of 30 percent on income above Rs 15 lakh under new tax regime.
An individual with income of Rs 15 lakh will have to pay Rs 1.5 lakh tax, down from Rs 1.87 lakh under new tax structure
Govt to provide higher limit of Rs 2 lakh per member for cash deposit and loans by Primary Agricultural Credit Societies
FM Sitharaman says…
Govt to reduce customs duty on shrimp feed to promote exports: FM Sitharaman
Taxes on cigarettes hiked by 16 percent
Basic import duty on compounded rubber increased to 25 percent from 10 percent.
Basic customs duty hiked on articles made from gold bars
Customs duty on kitchen electric chimney increased to 15 percent from 7.5 percent.
Customs duty on parts of open cells of TV panels cut to 2.5 percent.
Govt proposes to reduce customs duty on import of certain inputs for mobile phone manufacturing.
FM Sitharaman says…
Indirect Tax proposals aim to promote exports, boost domestic manufacturing, enhance domestic value addition,encourage green energy and mobility.
A simplified tax structure reduces compliance burden and improves tax adminsitration.
Propose to reduce the basic customs duty rates on goods other than textile and agriculture from 21 to 13.
DigiLocker expansion for fintech companies
Finance Minister Nirmala Sitharaman has announced the expansion of the Government digital certificate depository Digilocker services for the fintech sector. This is a boost for fintech startups as so far the DPI only allows individuals to store and share their certificates, such as academic records, driving licence, PAN cards. Documentation availability will be the focus for the DigitLocker expansion for the fintech sector, The fintech sector has been facilitated by digital services, PM Jan Dhan Yojana, Indian Stack and UPI,” Sitharaman said.
100 labs to be established for developing apps using 5G
100 labs for developing apps using 5G services will be set up in engineering institutions. To realise new range of opportunities, business models and employment potential, labs will cover among others, apps such as smart classrooms, precision farming, intelligent transports systems and healthcare, announced FM Sitharaman.
FM Sitharaman says…
Phase 3 of the eCourt’s project will be launched with an outlay of Rs 7,000 crore, for efficient administration of justice.
FY24 fiscal deficit pegged at 5.9% of GDP
The Union Budget has fixed the fiscal deficit target for 2023-24 at 5.9 percent of GDP. This would represent a reduction of 50 basis points from this year’s fiscal deficit target of 6.4 percent, which Finance Minister Nirmala Sitharaman said would be met.
As per data released on January 31, the Centre’s fiscal deficit for the first nine months of 2022-23 accounted for 59.8 percent of the full-year target.
Next year’s target is in line with economists’ expectations of 5.9 percent. However, some questions have been raised – particularly by global ratings agencies like Moody’s Investors Service and Fitch Ratings – about how the medium-term target of 4.5 percent will be met by 2025-26.
Personal finance proposals
One-time, new savings scheme for women with a tenure of two years to offer 7.5 percent interest rate with partial withdrawal option.
For senior citizen maximum deposit limit for saving will be from 15 lakh to 30 lakh
Investment limit in small savings schemes like Senior Citizen Saving schemes (SCSS) increased to Rs 30 lakh from 15 lakh earlier.
Investment limit in Monthly income scheme (MIS) increased to Rs 9 lakh, up from rs 4.5 lakh, for single account. For joint accounts the limit has gone up to Rs 15 lakh, up from Rs 9 lakh.
Revamped credit guarantee scheme–Good news for MSMEs
Revamped Credit guarantee scheme for MSMEs will take effect from 1 April 2023 with infusion of Rs 9000 crore into the corpus, the FM says. This will enable additional collateral free credit guarantee of Rs 2 lakh crore rupees, which will enable to lower cost of credit by 1 per cent. Good news for MSMEs that are still recovering from the impact of pandemic.
Small is beautiful
MSME assistance to continue. Government infuses Rs 9000 cr into the corpus, reduces the cost of credit. The credit guarantee scheme had a choppy start but over the last two years banks have been brought on board to lend, the scheme has helped in alleviating stress in the sector.
Indian Biogas Association on ‘green growth’ goals
With the Budget focusing on a ‘green growth’ strategy, it prioritizes the adoption of green fuel, energy, and building practices to reduce carbon intensity and create new green job opportunities. The 7 main priorities, referred to as “Saptrishi,” aim to drive sustainable and environmentally-friendly economic development. The government’s commitment to this ‘green growth’ approach is a step towards building a cleaner and more prosperous future for all Indians. This is in the direction of India seeking a leadership role in mitigating the global climate crisis.
Cheer for auto sector
FM Sitharaman says: Replacing old government vehicles will provide a fillip to the economy. It would translate into growing orderbooks of auto companies, increased output and create jobs. This was last done in India on a mass scale around 2008 after the Lehman brothers collapse.
PM Awaas Yojana allocation increased
CRISIL View: The 64 pecrcent increase in allocation for PM Awaas Yojana to Rs 79,000 crore will be a positive for commercial vehicles and tractors used for moving materials for construction.
Calamity cess on cigarettes
Cigarettes get hit by a steep 16 percent increase in the calamity cess imposed on them. This will lead to an increase in cigarette prices and could hurt volume growth in the near term. ITC will get affected but so will other tobacco stocks.
FM on Green Hydrogen Mission
India is moving forward firmly to achieve the net zero target. The recently launched national green hydrogen with an outlay of Rs 19,700 crore will facilitate the transition of the economy to low carbon intensity and reduce dependency on fossil fuel imports. Our target is to reach an annual production of 5 MMT by 2030. This budget provides for Rs 35,000 crore capital investment towards energy transition and net zero objective and energy security by the Ministry of petroleum and natural gas, the FM declared.
Lab grown diamonds get more lustre
To encourage production and sales of lab grown diamonds (lab grown diamonds are artificially produced but have similar properties as natural diamonds and are cost effective). Government will provide R&D grant in lab grown diamond area as well as consider custom duty reduction on key raw material (lab grown seeds). Lab grown diamonds have huge potential in both domestic and export markets. This is positive for lab grown players like Goldiam International.
Centre to establish National Digital Library for children, adolescents
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, announced FM Sitharaman
Eklavaya Model Schools to recruit 38,800 teachers
In the next three years, Eklavaya Model Residential Schools, the Centre will recruit 38,800 teachers and support staff for 740 schools serving 3.5 lakh tribal students, announced FM Nirmala Sitharaman
Rs 15,000 crore for PMPBTG Development mission
To improve social-economic condition of the particularly tribal groups, PMPBTG Development mission will be launched, to saturate PBTG habitations with basic facilities. Rs 15,000 cr to be made available to implement scheme in next 3 years, announced FM Sitharaman
FM Sitharaman says…
For enhancing ease of doing business, more than 39,000 compliances have been reduced, over 3,400 legal provisions decriminalised.
For the business establishments required to have a permanent account number, the PAN will be used as a common identifier for all digital systems of specified government agencies.
Market wide put call ratio of 0.74 at multi year higher high, the 14 day moving average of this data on charts is at the highest since 2009, says IndiaCharts’ Rohit Srivastava. This means there is too much caution in the market, and this is usually a contra-indicator.
Key announcements so far
Increase in capital expenditure by 33 percent to Rs 10 lakh crore, which would be 3.3 percent of the GDP
The 50-year, interest free loan to states for capex purposes has now been increased to Rs 1.3 lakh crore, 30 percent more than what was allocated for 2022-23.
A new programme for research in pharmaceuticals will be formulated and the industry will be encourage to invest in research
Govt to launch a Rs 2,200 crore Aatmanirbhar clean plan programme
Green growth would be one of the priorities of the budget.
FM Sitharaman opts for pragmatism over populism
The government has outlined its priority. With a bumper increase in capex, PM Awaas Yajna outlay and hike in Railway capex the Modi government in its last full Budget has targeted job creation and infra development over populism.
FM Sitharaman says…
Railways capex outlay of 2.40 lakh crore, highest ever; 9x of what was in 2013
PM Awas Yojana outlay hiked by 66 pc to Rs 79,000 cr
Govt to provide Rs 5,300 cr assistance to drought-prone central region of Karnataka
Market reacts to Capex hike
Capex outlay increased by 33% to Rs 10 lakh crore for FY24. At this level, public capex will be 3.3% of GDP. Equity indices are in the green so far. But bond markets are getting jittery as expenditure looks elevated so far. 10-year bond yield has climbed 2 basis points to 7.38% since the FM announced the hike in capex outlay. A lower fiscal deficit will cool bond markets.
Nifty at day’s high!
Nifty rebounds, now again marching towards day’s highs. FIIs are heavily short in index futures. Over the last few expiry series, this has typically resulted in short covering. Can domestic traders win this round as well?
FM proposes more long-term loans to states for capex
The 50-year, interest free loan to states for capex purposes has now been increased to Rs 1.3 lakh crore, 30 percent more than what was allocated for 2022-23. The finance ministry has previously said there has been huge demand for these interest-free loans from states.
The 50-year, interest free loan to states will be part of the Centre’s capex. While budgetary support for capex has been pegged at Rs 10 lakh crore, the effective capital expenditure of the government has been estimated at Rs 13.7 lakh crore for 2023-24. In contrast, the effective capital expenditure for 2022-23, as per the budget estimate, was Rs 10.68 lakh crore.
Market shuns higher agricultural credit target
Market does not seem to be taking the higher agricultural credit target kindly. The NSE PSU Bank index is under pressure, down 0.74 percent even as the Nifty Bank Index as a whole is up 1.2 percent.
FM Sitharaman announces another big jump in capex
At Rs 10 lakh crore, the Centre’s capex target for 2023-24 is 33 percent higher than the budget estimate of Rs 7.5 lakh crore for 2022-23. The government’s focus on capex to boost economic growth cannot be denied. But what really matters is the revival of the private investment cycle. For the private sector, the situation is one of what comes first: chicken or the egg? Investments are undertaken when capacity utilisation crosses 80 percent or so and demand is anticipated to grow. With India’s GDP growth expected to weaken in 2023-24 and global growth too seen slowing down and hitting India’s exports, the private sector has been waiting on the sidelines, leading to the finance minister publicly asking the industry a few months ago why they weren’t investing.
FM Sitharaman unleashes the Capex bazooka
FM has proposed to increase capital expenditure by 33 percent to Rs 10 lakh crore, which would be 3.3 percent of the GDP.
Agriculture stocks in focus
Shares of Kaveri Seeds, Mangalam Seeds, Bombay Burmah are trading in the green. In her Budget 2023 speech, FM sitharaman has proposed to increase agricultural credit to Rs 20 lakh crore. The government would also be launching a new scheme of PM MATSYA SAMPADA YOJANA. This should help boost agriculture demand.
FM Sitharaman on agriculture
Millets, artisans, agri credit, micro entrepreneurs, small farmers -focus areas of the budget speech so far.
Agriculture credit target expanded to Rs 20 lakh crore.
Decentralised storage capacity will be set up that will help farmers store their produce.
The budget envisages India becoming a global hub for Sri Ann or Millets
FM gives a big boost to agritech startups
The government announced digital public infrastructure for agriculture which will enable inclusive farmer-centric services that are relevant for crop protection, in what is a shot in the arm for agritech startups in the country. Agritech startups bucked the funding slowdown of 2022 and raised large sums from investors but India is yet to get its first agritech unicorn. With the government building digital public infrastructure for agriculture, will agritech startups attract more funding this year and grow faster?
FM Sitharaman says…
157 nursing colleges to be set up
9.6 cr LPG connections, 220 cr Covid vax for 102 cr people given, 47.8 cr JanDhan accounts opened
Govt to launch a Rs 2,200 crore Aatmanirbhar clean plan programme
FM Sitharaman says Budget is based on 7 priorities
- Green growth
- Youth power
- Inclusive development
- Reaching the last mile
- Infrastructure and investment
- Unleashing the potential
- Launch of digital platform
Making India a global hub for Sri Ann or Millets
The budget envisages India becoming a global hub for Sri Ann or Millets. India is already the largest producer and second largest exporter of millets and the continued focus on domestic production, consumption and export potential will not just earn us greenbacks but also add to India’s soft power.
Jet fuel prices hiked by 4% in line with firming international oil prices
Jet fuel price on Wednesday was hiked by 4 per cent in line with firming international oil prices, however petrol and diesel rates remained on freeze for a record 10th month. Aviation turbine fuel (ATF) price was increased by Rs 4,218 per kilolitre, or 3.9 per cent, to Rs 1,12,356.77 per kl in the national capital, according to a price notification of state-owned fuel retailers. The increase follows three rounds of reduction since November.
Finance Minister Nirmala Sitharaman said that ‘green growth’ would be one of the priorities of the budget. “We are implementing many programmes for green growth across various economic sectors…They will help reduce carbon intensity and create green jobs,” the FM said. The government hints at a more broad based growth in green energy.
A quick recap of what FM Sitharaman has said so far …
National Rural Livelihood Mission has achieved remarkable success by mobilising rural women into 1 lakh SHGs
Indian economy has become more formalised as witnessed by significant enhancement in digital payments
Per capita income has increased to Rs 1.97 lakh: FM Sitharaman
Indian economy has increased in size from being 10th to 5th largest in last nine years
FM says FY23 growth estimated at 7%, Sensex hits day’s high
Focus on macro stability
Finance minister’s focus on strengthening macroeconomic stability will soothe the nerves of the bond and forex markets. India’s external sector has emerged as an area of concern in 2022 and the going may be tough this year as well as the global economy slows. Experts, including those inside the government, have called for consolidating the fiscal deficit and ensuring that the current account deficit is brought back within the red line of 2.5-3 percent of GDP.
Finance Minister gets straight to the point, begins the speech with focus on rural India. Announces that the centre will spend Rs 2lakh cr on free food grains for all priority households under PM Garib Kalyan Yojana.
Budget for India @100
Finance Minister Nirmala Sitharaman sticks to the advance estimate for current fiscal year growth of 7 percent. Says India is a bright start in the world economy. As such, the budget will hope to build on the foundation laid in the previous budget and the blueprint drawn for India[email protected]
Economy to grow at 7% in the current year.
This is the highest among major economies. India is on the right track despite time of challenges. Govt’s effort since 2014 have ensured better quality of life. We have made a significant progress in many development goals.