- As Prime Minister Narendra Modi mentioned before the budget presentation, all eyes were on India and especially on Finance Minister Nirmala Sitharaman anticipating eagerly the annual budget for the year 2023-24. Needless to mention, Indian citizens too were keen to know what is in store for them vis-à-vis relief, burden, incentives, or difficult times as what was at stake is hard-earned personal money. Now that suspense is behind us since the budget was presented by the Finance Minister, let’s dissect to understand what it entails for us and the country in general. The general opinion circulating around the country after the budget presentation is not only positive but also appreciated by the various stakeholders.
PC: freepik
- Undoubtedly, Finance Minister Nirmala Sitharaman’s fifth budget is her best by far. Prima facie, one can easily make out three standout features of Budget 2023-24 as it’s economically smart, reflects political confidence, and is fiscally credible. No arguments on this front here. Mind you, they are not discrete aspects of the budget but blend seamlessly which is what makes this also the best budget, maybe since 2014. India’s investment, or gross capital formation, as a proportion of the GDP, fell from 34.1% in the pre-pandemic year to 31.5% after its outbreak. Budgets since then have stepped in to keep investment high by enhancing effective capital expenditure. Between 2019-20 and 2022-23, it doubled to Rs 10.5 lakh crore.
- Most welcomingly, the recent budget increased effective capital expenditure by another 30% to Rs 13.7 lakh crore. Economically, it’s the best approach in the present context and it’s even resulted in the spending on transport exceeding the defence outlay. Yes, emphasizing infrastructure development not only ensures much-needed job opportunities for the workforce but also provides income to expend leading to robust economic activities. The salaried employees, who often feel grossly neglected by successive regimes, too have something to cheer about. Mind you, salaried employees always feel short-shrift since benefits extended is never in commensurate with the tax deducted at source.
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- The smart economics underpinning the budget showed up in a significant personal income tax calibration. Based on the experience of a couple of years, the new tax regime, which is based on negligible exemptions and lower rates, was tweaked. The changes make it more attractive for most taxpayers in the old regime to switch and save on tax outgo. Further, in a year when global growth is expected to be slower, additional domestic consumption via the additional disposable income may offset the inevitable hit on exports. Now, we are also aware that some of the crucial state assembly elections are due in the year followed by the Lok Sabha polls in 2024. As such, it’s a given fact that political undertones usually drive any budget inevitably. Not this time though.
