Budget 2023 Live Updates: Not Forcing Anyone To Move To New Tax Regime, Nirmala Sitharaman Says

Finance Minister Nirmala Sitharaman has unveiled a budget that was big on capital expenditure and income tax revisions, while maintaining a fiscal glide path.

The Union Budget 2023-24 adopted "seven priorities" --- inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power and financial sector --- to guide India through the "Amrit Kaal".

Here are the key highlights of her budget speech:

Here’s what to expect from the Budget 2023 from a macroeconomic point of view.

Nominal GDP Growth

The government had estimated a nominal GDP growth of 11.1% in 2022-23 (that is real growth plus inflation). Against that backdrop, a number between 10.5% and 11.5% is estimated. A number much higher or much lower may be out of sync with market expectations or beliefs.

Fiscal Deficit

The consensus is a lower figure in the budget estimate for FY24 versus 6.4% in FY23. Most economists and experts that we spoke to expect a number of 5.9%. If it's below the 6% mark, it will show that the government is serious about maintaining fiscal discipline.

Subsidies

Food subsidy in FY23 was Rs 2.9 lakh crore, including Rs 1.5 lakh crore for free food. There is an expectation that the food subsidy as a percentage of GDP would be lower in the FY24 estimates, with no expansion in scope envisaged. Similarly, fertiliser subsidy, which overshot FY23BE of Rs 1.1 lakh crore to more than Rs 2 lakh crore, is expected to moderate.

Market Borrowings

Most experts expect FY24 net borrowings to be around Rs 12-12.5 lakh crore, compared with Rs 9.3 lakh crore in FY23. This would mean that around two-thirds of the fiscal deficit will be funded by market borrowings. Keep in mind that the scope for going for an out-and-out populist texture to the budget looks bleak amid the heavy market borrowing in addition to the moderating tax revenue in FY24.

Also Read: Budget 2023: Trade-Off Between Capex And Consolidation

India’s economy is likely to grow 6.5% in 2023-24 compared with 7% this fiscal and 8.7% in 2021-22, according to the Economic Survey for 2022–23.

The recovery from the pandemic was relatively quick, with growth next fiscal to be supported by solid domestic demand and a pick-up in capital investment, the survey said. The uptick in private consumption has also boosted production activity, resulting in an increase in capacity utilisation across sectors, it said.

Despite strong global headwinds and tighter domestic monetary policy, if India is still expected to grow between 6.5 and 7.0%, and that too without the advantage of a base effect, it is a reflection of India’s underlying economic resilience—of its ability to recoup, renew and re-energise the growth drivers of the economy, the survey said.

The government is also on track to achieve its fiscal deficit target of 6.4% of GDP for FY23. “The gradual decline in the fiscal deficit as a percentage of GDP, in line with the fiscal glide path envisioned by the government, is a result of careful fiscal management supported by buoyant revenue collection over the last two years,” stated the survey.

Click here to read more on the Economic Survey 2022-23.

The Indian benchmark indices have been almost flat despite scaling new records since the last budget as the economy faced multiple headwinds .

The Sensex and Nifty have risen 1.17% and 0.49%, respectively, from Feb. 1, 2022. Public sector banks, fast-moving consumer goods and auto sectors led the advances. 

The headline indices also advanced leading up to Budget 2023 on Wednesday. The NSE Nifty 50 Index is up 0.33%, while the S&P BSE Sensex has risen 0.37% in the last two trading sessions. (read more)

Also Read: Nifty In Technical Charts: Budget And The Modi Years

Union Finance Minister Nirmala Sitharaman has arrived at the Rashtrapati Bhavan to call upon President of India Droupadi Murmu ahead of her budget speech in Parliament. Earlier, she was seen at the Ministry Of Finance with her "bahi khaata".

The rupee strengthened against the US dollar ahead of Finance Minister Nirmala Sitharaman's budget speech today. local currency was higher by 14 paise at 81.78. It closed at 81.92 on Tuesday.

Sensex rises 400 points, Nifty above 17,750 ahead of Finance Minister Nirmala Sitharaman's budget speech at 11:00 am. (read more)

Union Finance Minister Nirmala Sitharaman has arrived at the Parliament to deliver her budget speech at 11:00 am. A union cabinet meeting will be held in the Parliament at 10:00 am, following which she will table Union Budget 2023.

Finance Minister Nirmala Sitharaman will present a paperless budget for the third straight time. Ahead of the speech, she posed for photographs outside her office with an iPad wrapped in a traditional 'bahi-khaata'-style pouch. She then went straight to the Parliament after meeting President Droupadi Murmu at Rashtrapati Bhawan.

Finance Minister Nirmala Sitharaman is the sixth minister in independent India to present five consecutive budgets.

Other ministers who have presented five straight annual financial statements include Arun Jaitley, P Chidambaram, Yashwant Sinha, Manmohan Singh and Morarji Desai.

Prime Minister Narendra Modi has arrived in the Parliament to chair a union cabinet meeting ahead of the budget presentation.

After the cabinet approved the Budget 2023, it will be presented in the parliament by Finance Minister Nirmala Sitharaman.

India's industrial activity eased in January but remained above the long-run series trend, according to S&P Global.

The Manufacturing Purchasing Managers' Index stood at 55.4 in January, from 57.8 in December. A reading above 50 indicates expansion.

The union cabinet, chaired by Prime Minister Narendra Modi, has approved Union Budget 2023-24 to be presented by Finance Minister Nirmala Sitharaman shortly.

This is the first budget in Amrut Kaal, Finance Minister Nirmala Sitharaman says as she begins her Budget 2023 speech.

This budget hopes to build on the foundation laid in the previous budget, with a vision of a prosperous, inclusive India in which fruits of development reach all sections, she says.

In the 75th year of Independence, world has recognised Indian economy as bright star, she says. India’s growth is in spite of slowdown globally owing to Covid-19.

India's GDP growth is estimated at 7% in FY23, she says.

India’s rising global profile is because of several accomplishments, such as Aadhaar, Cowin and UPI, Finance Minister Nirmala Sitharaman says in her budget speech.

• During the pandemic, the Narendra Modi government ensured no one went to bed hungry, she says.

• The entire expenditure of Rs 2 lakh crore under PM Gareeb Kalyan Anna Yojana will be borne by the centre.

• The government has made significant progress in many sustainable development goals.

• The economy has become a lot more formalised as reflected by doubling of EPFO membership.

"Continuing our commitment to food security, we’re implementing from Jan. 1, 2023, a scheme to supply free food grain to all Antyodaya and priority households for one year under PM Garib Kalyan Ann Yojana," Finance Minister Nirmala Sitharaman says in her budget speech.

"The entire expenditure of about Rs 2 lakh crore will be borne by the central government."

There are seven priorities of Union Budget 2023-24, Finance Minister Nirmala Sitharaman says in her budget speech. They are:

• Inclusive Development

• Reaching The Last Mile

• Infra and Investment

• Unleashing Potential

• Green Growth

• Youth Power

• Financial Sector

The government also aims to empower women by way of self-help groups focused on raw material supply, branding, and marketing of products, she says.

The government will launch the Atmanirbhar Clean Plant Programme to improve availability of disease-free quality planting material for high-value horticultural crops at an outlay of Rs 2,200 crore, Finance Minister Nirmala Sitharaman says in her budget speech.

The government will set up an agriculture accelerator fund to encourage startups in rural areas, Finance Minister Nirmala Sitharaman says in her budget speech.

The Indian Institute of Millet Research will be supported as a centre of excellence, she says. The agriculture credit target set at Rs 20 lakh crore in FY24.

The government has also initiated computerisation for 63,000 primary agricultural credit societies with an investment of Rs 2,516 crore.

The government will launch a sub-scheme under PM Matsya Sampada Yojana with an outlay of Rs 6,000 crore to further enable those involved in fisheries, Finance Minister Nirmala Sitharaman says in her budget speech.

The government has proposed to set up a national digital library for children and adolescents to make up for the learning loss during the pandemic, Finance Minister Nirmala Sitharaman says in her budget speech.

The National Book Trust, Children’s Book Trust will replenish non-curricular titles in regional languages and english to digital libraries, she says.

Additionally, 157 new nursing colleges will be established in co-location with existing 157 medical colleges established since 2014.

The central government also aims to recruit over 38,000 teachers over the next three years. (read more)

The Budget 2023 proposes to set up a PM Primitive Vulnerable Tribal Groups Mission to improve socio-economic conditions of vulnerable tribal groups, Finance Minister Nirmala Sitharaman says.

Rs 15,000 crore will be made available over three years for PM Primitive Vulnerable Tribal Group Mission, she says.

The government has raised its capital investment outlay by 33% to Rs 10 lakh crore, Finance Minister Nirmala Sitharaman says in Budget 2023.

That translates to 3.3% of India's gross domestic product.

As a consequence, effective capital expenditure of the central government will increase to Rs 13.7 lakh crore in FY24.

• Capital outlay of Rs 2.40 lakh crore provided for railways in FY24.

• 50 additional airports, heliports, water aerodromes, advanced landing zones to be revitalised.

• Cities to be incentivised to improve creditworthiness for municipal bonds.

• 100 critical transport infra projects for steel, ports, fertiliser, coal, foodgrain sectors have been identified with an investment of Rs75,000 crore including Rs 15,000 crore from private sources.

• To enhance ease of doing business more than 39,000 compliances have been reduced, more than 3400 legal provisions have been decriminalised.

• Interstate transmission system for evacuation and grid integration of 13 GW renewable energy from Ladakh to be constructed with outlay of Rs 20,700 crore including Central support of Rs 8,300 crore.

The overall expenditure outlay for the Pradhan Mantri Awas Yojana or the mission for 'housing for all' has been increased by 66% for the fiscal 2024, Finance Minister Nirmala Sitharaman says in her budget speech.

The government has increased the expenditure for financial year 2023-24 to over Rs 79,000 crore.

Nirmala Sitharaman allocates Rs 19,700 crore to the National Hydrogen Mission. The objective is to reach hydrogen production capacity of 5 metric million tonnes by 2030. (read more)

Budget 2023 provides Rs 35,000 crore for priority capital investment towards energy transition and net zero objectives and energy security.

200 compressed biogas plants, including 75 in the urban areas and 300 community-based plants to be set up with investment of Rs 10,000 crore.

The government will set up 30 Skill India international centres in multiple states, Finance Minister Nirmala Sitharaman says in Budget 2023. The government will also provide stipend support to 47 lakh youths. A direct benefit transfer programme will also be rolled out.

The government has revamped the credit guarantee scheme for MSMEs with an infusion of Rs 9,000 crore. This will come into effect from April 1, 2023. This will reduce cost of credit by 1 percentage point.

Separately, states to be encouraged to set up unity malls for promotion and sale of products under "one district one product" programme, Finance Minister Nirmala Sitharaman says in her budget speech. (read more)

The government will set up a National Financial Information Registry to serve as a central repository of financial and ancillary information, Finance Minister Nirmala Sitharaman says in her budget speech.

India has set itself a fiscal deficit target at 5.9% of GDP for FY24, Finance Minister Nirmala Sitharaman says. The gap is seen at 6.4% of GDP in FY23.

• Gross market borrowing seen at Rs 15.43 lakh crore in FY24.

• Net market borrowing in FY24 seen at Rs 11.8 lakh crore.

• FY23 net tax receipts revised estimate stands at Rs 20.9 lakh crore.

• FY23 total expenditure revised estimate stands at Rs 41.9 lakh crore.

• Total receipts other than borrowings estimated at Rs 27.2 lakh crore in FY24.

• FY23 revised estimate of total receipts other than borrowing at Rs 24.3 lakh crore.

• FY24 net tax receipts seen at Rs 23.3 lakh crore.

“In Budget 2022, I had announced that we plan to continue the path of fiscal consolidation, reaching a fiscal deficit of below 4.5% by 2025-26, with a fairly steady decline over the period," Sitharaman says. "We've adhered to this part, and I reiterate my intention to bring the fiscal deficit to below 4.5% of GDP.” (read more)

The government has proposed customs duty exemptions on import of capital goods and machinery required for lithium-ion batteries, Finance Minister Nirmala Sitharaman says in her budget speech.

The government also proposes to increase customs duty on silver to align with duty on gold and platinum.

The customs duty has been reduced on key inputs used for manufacturing of shrimp feed, as well as on goods other than textiles and agriculture from 21 to 13.

New cooperatives that commence manufacturing by March 2024 will enjoy a lower tax rate of 15%, the finance minister says.

India revises income tax slabs for all under new regime.

• Income of up to Rs 3 lakh will attract zero tax.

• Income of Rs 3-6 lakh to be taxed 5% under new regime.

• Income of Rs 6-9 lakh to be taxed at 10% under new regime.

• Income of Rs 9-12 lakh to be taxed at 15% under new regime

• Income of Rs 12-15 lakh to be taxed at 20% under new regime.

• Income above Rs 15 lakh to be taxed 30% under new regime.

• Standard deduction for salaried taxpayers under the new regime.

• Surcharge rate for those earning more than Rs 50 lakh reduced from 37% to 25% in new tax regime.

The government has increased the income rebate limit to Rs 7 lakh from Rs 5 lakh under the new tax regime.

The new tax regime will now be the default tax regime, but citizens can still avail of benefits under old tax regime on opt-out basis, says Finance Minister Nirmala Sitharaman in budget speech.

For startups, the government has proposed to extend the date of incorporation for availing income tax benefits to March 31, 2024, Finance Minister Nirmala Sitharaman said in her budget speech.

The previous date was March 31, 2023.

The government has also proposed to provide the benefit for carry forward of losses on change of shareholding for startups from seven years of incorporation to 10 years.

To reduce the pendency of appeals at commissioner, the government has proposed to deploy 100 more joint commissioners for quicker disposal of appeals. (read more)

The government will promote and facilitate one crore farmers to adopt natural farming through Prime Minister Program for Restoration, Awareness, Nourishment and Amelioration of Mother earth.

The PM PRANAM yojna will be launched to incentivise states and Union Territories to promote alternative fertilisers and balanced use of chemical fertilisers, Finance Minister Nirmala Sitharaman said presenting the Budget for financial year 2024.

Under the GOBARdhan Scheme, a program for safe management of cattle and organic waste, the government aims to set up 500 new "waste to wealth plants." (read more)

The central government has allocated Rs 60,0000 crore for India’s rural jobs guarantee programme in the upcoming fiscal.

The revised estimate for the Mahatma Gandhi National Rural Employment Guarantee Act for FY23 now stands at Rs 89,400 crore, according to budget documents.

The scheme was pivotal to the rural economy's recovery during the pandemic, protecting the most vulnerable households against complete income loss. It continues to provide a safety net to a large section of the vulnerable rural population. (read more)

Finance Minister Nirmala Sitharaman's 87-minute budget speech was peppered with numbers. Here's a look at 10 of them:

• Nominal GDP growth expected in FY24: 10.5%

• Growth in gross tax revenue in FY24: 10.44%

• GST target for 2023-24: Rs 9.6 lakh crore, up 11.95%

• Fiscal deficit target for FY24: 5.9%

• Capex outlay for FY24: Rs 10 lakh crore

• Gross market borrowings in FY24: Rs 15.43 lakh crore

• Divestment target for FY24: Rs 51,000 crore

• Total subsidy target for FY24: Rs 3.74 lakh crore

• Food subsidy target for FY24: Rs 1.97 lakh crore

• Allocation for MGNREGA in FY24: Rs 60,000 crore

Click here for key highlights of Budget 2023.

The government has cut estimated spending on food, fertiliser and fuel subsidies for 2023-24.

Expenditure on food, fertilisers and petroleum—the government's largest revenue expense after interest payments—is expected at Rs 3.74 lakh crore for FY24, 28% lower than the revised estimates for the ongoing financial year, according to Budget 2023 documents.

Subsidies in FY23, however, were 64% higher than the budget estimate as the government had to step up support in the form of free food grains and fertiliser subsidies amid higher commodity inflation. (read more)

The central government aims to raise Rs 51,000 crore through divestments in 2023–24, according to budget documents from the Ministry of Finance.

In FY23, the government had budgeted to raise Rs 65,000 crore through divestments but fell short. The revised estimate for disinvestments in FY23 stood at Rs 50,000 crore. (read more)

The government is not compelling anyone to move from the old tax regime to the new tax regime, Finance Minster Nirmala Sitharaman says at a press meet after presenting the Budget 2023 in Parliament.

That said, the new tax regime is now made more attractive with changes in income tax slabs and increase in rebates, she says.

"[We] wanted to make the new tax regime attractive for individuals," the finance minister says. "If individuals find that the old tax regime is more beneficial, they are welcome to use it."

More than 60% corporate tax comes from exemption-free tax regime, says Revenue Secretary Sanjay Malhotra. The exemption-free tax regime refers to the new tax regime.

"We are respecting the glide path on fiscal deficit set earlier," Finance Minister Nirmala Sitharaman says in a press meet following the budget announcement.

The government has itself a fiscal deficit target of 5.9% for the fiscal ending March 31, 2024. The fiscal deficit for FY23 is estimated at 6.4%.

The central government's capital expenditure is likely to cross budgeted levels, Finance Secretary TV Somanathan says. However, states might not reach the Rs 1 lakh crore tied to specific reforms, he says.

The government's divestment exercise on market conditions and other factors, DIPAM Secretary Tuhin Kanta Pandey says. The target of Rs 51,000 crore has been set keeping that in mind, he says.

The capital expenditure targets for railways, highways and states are high, as there are a lot of projects lined up requiring that kind of spending, says Finance Secretary TV Somanathan.

This budget is aimed at robust management of macroeconomics, Finance Minister Nirmala Sitharaman says. Prudent ways of effective expenditure, without reducing committed expenditure, are ways in which one can make money mean more.

"For every rupee you spend, you get a better set of returns," she says.

Private capital expenditure in India has been improving every year for the past three years, Chief Economic Adviser V. Anantha Nageswaran says. "Both in terms of intent and actual spend, private capital investment is showing clear signs of revival," he says.

If the economy continues to grow at the pace at which it is growing, we’re confident our borrowings and interest burden will continue to come down, Finance Secretary TV Somanathan says. The quality of public expenditure is increasing, he says.

Taxation will now be on net winnings, since the nature of online gaming is such that one plays several games in a series, Revenue Secretary Sanjay Malhotra says.

The tax deducted at source, or TDS, was previously calculated on every Rs 10,000 in winnings. "Some companies were then keeping the winning lower at Rs 10,000, so we’ve removed that now," he says.

The outlay for the vehicle scrapping policy has exceeded Rs 1,000 crore, Finance Secretary TV Somanathan says.

All central government vehicles beyond 15 years of age will be scrapped, money for this is provided for in different departmental budgets, because it’s not a macro number planned centrally.

For state governments, this is part of the scheme for state capex. States need to meet conditions under the National Scrapping Policy to avail this.