Budget 2023 - A Budget For All: CareEdge Analysis

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CareEdge Research Report

Delivering the right budget is always tricky. Some hard decisions need to be taken for financial prudence while keeping in mind the interest of the larger social welfare. The Budgets before a general election gain even more prominence because of the heightened public interest and the Honourable Finance Minister Nirmala Sitharaman has done an exceptionally good job this time as the Budget puts the growth in clear perspective along with a commitment to fiscal discipline.

Aiming to go below 6% next year while adhering to the 6.4% fiscal deficit for the current year is commendable.

Sectoral Announcements and Analysis

Agri and Allied - Fertilizer - High upfront subsidy budget, positive for fertilizer companies

Proposal:

Upfront fertilizer subsidy budget (including urea and nutrient based subsidy) is enhanced to Rs 1.75 lakh crore for FY24 compared to Rs 1.05 lakh crore as per last budget.
PM - PRANAM scheme to be launched to incentivize States and Union territories to promote alternative fertilizers and balanced use of chemical fertilizers

Impact:

Aggregate fertilizer subsidy budget for FY23 was Rs 2.25 lakh crore (including initial budget for Rs 1.05 lakh crore which was later on increased to Rs 2.25 lakh crore). High upfront subsidy budget along-with decline in the prices of key raw materials and natural gas is likely to be adequate for FY24 which in turn augurs well for fertilizer companies.
PM - PRANAM scheme shall go a long way for promotion of the use of organic fertilisers in India. Also, it would help to reduce soil erosion due to excessive use of chemical fertilizers and lower the fertilizer subsidy requirement in the long-run.

Banking

Proposal:

Allocated Rs 2,000 crore to National Investment and Infrastructure Fund.
PM Awaas Yojna allocation increased by 66% to Rs 79,000 crore.
Revamp of MSME Credit Guarantee scheme and relaunched wef April 2023 with fund infusion of Rs 9,000 crore.
Digital push
1. Financial information registry as the central repository.
2. Expansion of Digilocker services for the fintech sector and simplified KYC process.
Allowing carry forward of losses on strategic disinvestment including that of IDBI Bank Ltd.;
Increase limits for TDS and cash business for cooperatives.
Vivad se Vishwas I: Government and government undertakings to return 95% of the forfeited amount relating to bid or performance security in cases of failure by MSMEs to execute contracts during the Covid period.

Impact:

Allocation for FY23 (Rs 5,000 crore) has been spread over FY23 and FY24 (Rs 2,000 crore each).
Move towards housing for all. Extends credit for low-cost affordable housing for weaker sections.
Likely to facilitate additional credit of Rs 2 lakh crore and reduce borrowing cost by 1%.
Increased digitalisation to support ease of doing business, improved credit abilities of lenders and innovation by fintech players.
Will support strategic initiatives of the government.
Will support grass root formalisation of banking business.
Will improve credit profile of MSMEs.

Roads and Railways

Proposal:

70% YoY increase in budgetary allocation of Rs 2.40 lakh crore to railways.
38% YoY increase in allocation to roads and highways allocation.
Identification of 100 critical transport infrastructure projects at an investment of Rs 75,000 crore.
50 additional airports, heliports, water aerodromes and advanced landing grounds to be revived for improving regional air connectivity.
Focus on Urban Infrastructure in tier-II and tier-III cities via the establishment of Urban Infrastructure Development Fund with a corpus of Rs 10,000 crore per annum.

Impact:

Substantial allocation in railways is in alignment with National Logistics Policy. Sharp Growth of 1.40 times towards investment in rolling stock, new lines and electrification shall pave way for an increase in the freight share of railways and boost last-mile connectivity.
Reduction in transit time and carrying cost of inventory while complementing operations of dedicated freight corridor.
Improved revenue visibility for EPC contractors engaged in transport infrastructure and urban development.
Enhanced regional air connectivity especially for tier-II and tier-III cities.
Additional avenue for urban local bodies to augment low-cost debt finances for capex programs including transport infrastructure.

Click on the attachment to read the full Analysis of budget 2023 on various sectors:

CareEdge Analysis of The Union Budget 2023-24.pdf

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Also Read: Budget 2023: Finance Minister Nirmala Sitharaman Outlines Seven Priorities

More Research Reports On Budget 2023 Reviews, Highlights, Impacts

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