Our Finance Minister Nirmala Sitharaman is preparing to present the last full Union Budget under National Democratic Alliance (NDA) led by the Narendra Modi government’s current term.
People have high expectations for the focussed policies related to raising the income levels, generating more jobs through greater investment in infrastructure, increasing farm incomes to raise the rural economy, and adapting favourable policies to attract more foreign and domestic investment.
Following are the areas which need to be watched out for:
Capital Gains Tax: Depending on the movable or immovable asset holding period, the long-term or short-term capital gain tax is levied on its sale. Different rates of capital gains tax are levied on the assets depending on the asset classes such as real estate, equity investments, debt instruments, and others. The tax rate within the asset class also differs depending upon the period of holding or maturity.
Individual Income Tax: Individuals and salaried class people will look out for a simple income tax slab and rate construct that may replace a two-system structure followed since 2020.
Capital Expenditure: The Finance Minister may disclose huge spending plans for crowding in private investment. The government will give a boost to the capital expenditure in the union budget of 2023-24 focussing on the state’s spending on capital assets, unlike the previous year which saw a huge hike in the centre’s capex plan. Infrastructural projects like roads will stimulate our economic activity, boost construction and create job opportunities. This particular sector is the largest creator of direct and indirect employment of around 40 million people and contributes to around 8 percent of GDP.
Fiscal Deficit: This figure is for the market and policymakers. The Finance Minister is anticipated to continue with Fiscal consolidation. In the year 2022, there was an increase in welfare-related spending due to the pandemic. In the year 2021-22, the fiscal deficit was around 6.9 percent of the GDP which is expected to lower down to 6.4 percent of the GDP. To attain a level of fiscal deficit to a lower value of 4.5 percent of GDP by 2025-26 fiscal consolidation will be a continuous process.
Food Subsidy Bill: The free foodgrain scheme under the Pradhan Mantri Gareeb Kalyan Ann Yojana (PMGKAY) as Covid relief is brought under the National Food Security Act (NFSA) and is extended for the year 2023. The Centre’s annual food subsidy costs around Rs. 1.1 lakh crores from 2015-16 to 2019-20 which is expected to roughly double by next year’s bill.
Fertiliser Subsidy: There is already an additional fertiliser subsidy by the government of around Rs. 58,430 crores leading to an increase of the 2021-22 budget from Rs. 79,500 crores to Rs. 1.38 lakh crore. The government is expected to announce a higher fertiliser subsidy this year due to the global increase in the net sowing area, and high input and fertiliser costs.
Nominal GDP growth: According to data released by the statistics ministry on 6th January 2023, India’s nominal GDP is estimated to be 15.4 percent for FY23 compared to 19.5 percent for FY22. According to the World Bank’s last month’s prediction, the GDP growth forecast for India is 6.9 percent for 2022-23 claiming that our economy is showing easy recovery from globally tough challenges.
Section 80(C): Under the popular “Section 80(C)” scheme there will be an increase in Tax breaks on money deposits in saving instruments such as bank fixed deposits, insurance premiums, and mutual funds from Rs.150000 to Rs. 200000. This will lead people to transact their savings into the banking and financial system rather than holding cash.
Asset Monetisation: The government’s National Asset Monetisation (NMP) pipeline could miss the target this year as in the last fiscal year, transactions worth Rs 96,000 crore under the NMP were completed, exceeding the target of Rs 88,000 crore. The government will still own the assets under the National Monetisation Pipeline (NMP), which will be returned to the government after some time.
Millets: The government may announce a scheme for millets as India is prepared for the celebration of International Millet Year 2023 and promote the cultivation and consumption of nutri-cereals.They are known as smart foods as they are easy to cultivate and contain high nutritional value. The United Nations General Assembly (UNGA) accepted India’s proposal for International Year of Millets (IYM) 2023 led by Prime Minister Narendra Modi. Our Prime Minister has requested IYM 2023 will be considered a “People’s Movement” and position India as the “Global hub for Millets”.