Union Budget 2023-24

Why in the news?

In Parliament, Smt. Nirmala Sitharaman, Union Minister of Finance and Corporate Affairs presented the Union Budget for 2023–24.

What are the key highlights of the Budget?

The highlights of the Budget are as follows:

Part A: Major Announcements

(1) The "Saptarishi" budget"s seven priorities

  • These include the financial sector, infrastructure and investment, unleashing potential, green growth, youth power, and inclusive development.

(2) Welfare

  • Affordable housing: The PM Awas Yojana budget has been increased by 66% to more than Rs. 79,000 crores.
  • Silver Economy: The Senior Citizen Savings Scheme's maximum deposit amount will increase from Rs. 15 lahks to Rs. 30 lahks.
  • Mahila Samman Savings Certificate: In honour of Azadi Ka Amrit Mahotsav, a brand-new, limited-time small savings program will be introduced. For two years (through March 2025), it will provide deposit facilities up to Rs 2 lakh in the name of women or girls at a fixed interest rate of 7.5% with the option of partial withdrawal.

(3 )Enhancement of the industrial sector

  • Entity DigiLocker: To securely store and share documents online, Entity DigiLocker will be set up for use by MSMEs, large corporations, and charitable trusts.
  • PAN as a business identifier: According to FM, all digital systems of the designated departments of the government will use the Permanent Account Number (PAN) as a single business identifier.
  • Credit facilitation for MSMEs: A revised credit guarantee scheme for MSMEs will go into effect on April 1, 2023, with the injection of Rs 9,000 crore into the corpus. With the help of this scheme, an additional Rs 2 lakh crore of collateral-free guaranteed credit would be possible. It would also lower the cost of credit by roughly 1%.
  • Establishing a central processing centre will enable quicker responses to businesses by centralizing the processing of the various forms submitted to field offices per the Companies Act.
  • To encourage domestic production of LGD seeds and equipment and to lessen reliance on imports, the diamond industry has received a research and development grant for the lab-grown diamonds (LGD) sector.
  • For the promotion and sale of their ODOPs (One District, One Product), GI products, handicrafts, and those produced by all other states, states are urged to establish a Unity Mall.

(4) Infrastructure push

  • Creating a new infrastructure finance secretariat will increase opportunities for private infrastructure investment.
  • Enormous expenses 75 billion rupees will be invested in 100 crucial transportation infrastructure projects, including 15,000 billion rupees from private sources, to provide last and first-mile connectivity for the ports, coal, steel, fertilizer, and food grains sectors.
  • The Railways have received a capital outlay of Rs. 2.40 lakh crore, the highest amount ever and roughly nine times that of 2013–14.
  • The National Housing Bank will administer the Urban Infrastructure Development Fund (UIDF), which public agencies will use to build urban infrastructure in Tier 2 and 3 cities. It will be established through the use of the priority Sector Lending shortfall.

(5) Agricultural boost

  • Agri-startups by young businesspeople in rural areas will be supported by the Agriculture Accelerator Fund, which will be established.
  • Millet boost: The Indian Institute of Millet Research, Hyderabad, will be supported as the Centre of Excellence for sharing best practices, research, and technologies at the international level to make India a hub for "Shree Anna" on a global scale.
  • PRANAM Scheme: To encourage States and Union Territories to promote alternative fertilizers and balanced use of chemical fertilizers, the "PM Programme for Restoration, Awareness, Nourishment, and Amelioration of Mother Earth" (PM-PRANAM) will be introduced.
  • 20 lakh crore of agricultural credit is earmarked for dairy, fisheries, and animal husbandry. With a targeted investment of 6,000 crores, a new sub-scheme of the PM Matsya Sampada Yojana will be introduced to facilitate further the activities of fish vendors, fishermen, and micro- and small businesses, increase value chain efficiency and broaden the market.
  • To support the growth of the agri-tech sector and start-ups, digital public infrastructure for agriculture will be developed as an open source, open standard, and interoperable public good. 
  • APMC Storage: A sizable decentralised storage capacity will be established to assist farmers in storing their produce and realizing lucrative prices through timely sales.
  • A budget of 2200 crore has been allocated for the Atmanirbhar Clean Plant Program, which will be implemented to increase the supply of high-value horticultural crops with disease-free, high-quality planting material.
  • Bio-Input Resource Centers: Over the next three years, the centre will assist one crore farmers in switching to natural farming. 10,000 Bio-Input Resource Centers must be established to create a national distribution network for the production of micro-fertilizers and pesticides.

(6) Health sector boost

  • Mission to Eliminate Sickle Cell Anaemia: FM announced a mission to eradicate sickle cell anaemia by the year 2047, which will involve universally screening seven crore people in affected tribal areas between the ages of 0 and 40.
  • Medical research: A few ICMR labs have been chosen to promote collaborative research and innovation in the joint public and private medical research. There will be the launch of a new program to support pharmaceutical research.
  • Additional nursing schools will open in tandem with the 157 medical schools that have already been operational since 2014, totalling 157 new nursing schools.

(7) Rural Development

  • Offering 500 blocks, the Aspirational Blocks Program: was launched in order to provide all people with access to basic infrastructure as well as health, nutrition, education, agriculture, water resources, financial inclusion, and other essential government services.
  • The goal of PVTG Development: With a budget of Rs 15,000 crore, FM announced the beginning of a national mission for tribes that are at risk. The mission's objectives include helping India's most vulnerable tribes with health, access to clean water and sanitation, basic infrastructure, and opportunities for sustainable livelihoods. 

(8) Higher Education  

  • The district education and training institutes will grow into thriving centres of excellence for teacher preparation.
  • It will be possible to access high-quality books across all levels, genres, and languages with the help of the National Digital Library for Children and Adolescents, which will be created.
  •  One lakh ancient inscriptions will be digitally preserved as part of the "Bharat Shared Repository of Inscriptions," which will be housed in a museum of digital epigraphy.

(9) Finance Sector

  • 'Effective Capital Expenditure' of Centre: Rs. 13.7 lakh crore
  • Continued 50-year interest-free loan: This loan will be extended to state governments for another year to encourage them to invest in infrastructure and implement complementary policies.
  • In order to facilitate adequate credit flow, advance financial inclusion, and foster financial stability, a national financial information registry will be established. It will act as the central repository for financial and related information. To oversee this credit public infrastructure, a new legislative framework must be created in consultation with the RBI.

(10) Urban development

  • Urban planning reforms and other initiatives to make our cities into "sustainable cities of tomorrow" are encouraged by the concept of "sustainable cities of tomorrow," which is a concept that states and cities can adopt.
  • Mechanized sanitation work: Enable all cities and towns to completely automate the desludging of septic tanks and sewers to transition from manhole to machine-hole mode.

(11) Skill development

  • A comprehensive online training platform called iGOT Karmayogi was introduced to allow thousands of government workers to upgrade their skills and support a people-centric approach.
  • Digital platform for Unified Skill India: In order to link with employers, including MSMEs, enable demand-based formal skilling, and facilitate access to entrepreneurship programs, this initiative will be launched.
  • The National Apprenticeship Promotion Scheme uses a pan-Indian Direct Benefit Transfer system. For 47 lakh young people over three years, the National Apprenticeship Promotion Scheme will be implemented.
  • Tribal education: Over the next three years, 3.5 lakh tribal students will be served by 740 Eklavya Model Residential Schools, which will hire 38,800 teachers and support staff.
  • The 4.0 Pradhan Mantri Kaushal Vikas Yojana: Within the next three years, it will be launched to train tens of thousands of young people in modern skills for Industry 4.0, including coding, AI, robotics, mechatronics, IOT, 3D printing, drones, and soft skills. To prepare young people for opportunities abroad, 30 Skill India International Centers will be established in various States.

(12) Ease of Doing Business

  • 42 Central Acts have been proposed for amendment in the Jan Vishwas Bill to advance trust-based governance.
  • Decriminalization of some regulations: To improve the ease of doing business, more than 39,000 regulations were cut, and more than 3,400 legal provisions were made less punishable. 

(13) IT push

  • A national data governance policy will be released to encourage entrepreneurship and academic research.
  • To realize the vision of "Make AI in India and Make AI work for India," top educational institutions will host three centres of excellence for artificial intelligence.
  • In order to realize a new range of opportunities, business models, and employment potential, 100 labs will be set up to develop 5G services-based applications. 
  • For effective justice administration, Phase-3 of the E-Courts project will be launched with an investment of Rs. 7,000 crores.

(14) Energy

  • 5% Compressed Biogas Blend Requirement: There will be a 5% Compressed Biogas Requirement for all businesses marketing Natural Gas and Biogas.
  • Green hydrogen: The Green Hydrogen Mission aims to produce 5 MMT of green hydrogen annually by 2030, reducing reliance on imported fossil fuels and assisting in the economy's transition to low carbon intensity.
  • Storage of batteries: The government will provide viability gap funding to help India set up a battery storage facility with a 4,000 MWH capacity.
  • Integrating a renewable energy grid and the evacuation of Ladakh are funded with a budget of 20,700 crores.

(15) Climate change mitigation

  • GOBARdhan Boost: Under the GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme, 500 new "waste to wealth" plants will be built with a total investment of Rs 10,000 crore.
  • "Mangrove Initiative for Shoreline Habitats & Tangible Incomes," or MISHTI, is an initiative to plant mangroves along the coast and on saltpan lands using a combination of funding from the MGNREGS, the CAMPA Fund, and other sources.
  • The Green Credit Programme will be notified under the Environment (Protection) Act to encourage and mobilise additional resources for environmentally responsible and responsive actions.
  • The Amrit Dharohar scheme will be implemented over the following three years to promote the best possible use of wetlands, improve biodiversity, carbon stocks, and ecotourism opportunities, and generate income for nearby communities.
  • Net zero commitments: 35,000 crore investment for net zero, energy security, and energy transition goals.
  • Green credit program: According to FM, the Environment Protection Act will be notified of a green credit program.

(16) Tourism Growth

  • Model destinations: To improve the tourist experience, at least 50 destinations will be chosen through challenge mode and made available on an app with physical and virtual connectivity, tourism security, and guides.
  • Sector-specific skill development and entrepreneurship promotion must work together to fulfil the goals of the "Dekho Apna Desh" initiative.
  • Infrastructure and amenities for border tourism will be provided in border villages as part of the vibrant village program.

(17) Others

Reforms by ISFC: The following actions need to be taken in GIFT IFSC to improve business activities: 

  • Granting IFSCA authority under the SEZ Act in order to avoid dual regulation.
  • Creating a single-window IT system for IFSCA, SEZ authorities, GSTN, RBI, SEBI, and IRDAI registration and approval.
  • allowing foreign banks' IFSC Banking Units to finance acquisitions
  • creating a trade re-financing subsidiary of the EXIM Bank
  • Abolishing dual regulation under the SEZ Act and amending the IFSCA Act to include statutory provisions for arbitration and ancillary services
  • Approving offshore derivatives as legal contracts.

Part B: Estimates

updated estimates for 2022–2023

  • There is 24.3 lakh crore in total receipts other than borrowings, of which 20.9 lakh crore are net tax receipts.
  • The total cost is $41.9 lakh crore, of which about 7.3 lakh is a capital expense.
  • In accordance with the Budget Estimate, the fiscal deficit is 6.4 percent of GDP.

Budget Estimates 2023-24

  • Estimates place the total income (other than borrowings) at 27.2 lakh crore and the total outlay at 45 lakh crore.
  • At around Rs 23.3 lakh crore, net tax receipts are expected.
  • A 5.9 percent of GDP fiscal deficit is predicted.
  • The estimated net market borrowings from dated securities for the fiscal deficit in 2023–24 is Rs 11.8 lakh crore.
  • An estimated Rs 15.4 lakh crore worth of gross market borrowings.

Part C: Direct Taxes

  • A higher personal income tax rebate threshold: the current Rs. 5 lahks will be raised under the new tax system to Rs. 7 lahks. In the new tax system, those with incomes up to Rs. 7 lahks are exempt from paying taxes.
  • Tax slabs: In the new personal income tax regime, which was implemented in 2020 with six income slabs, the tax structure will change by reducing the number of slabs to five and raising the tax exemption threshold to Rs. 3 lakhs.

New Tax Regime (current)

Tax Rates under the 2020 regime

Rs 0 to Rs 3 lakh – Exempt

Rs 3 to 6 lakh – 5%

Rs 6 to 9 lakh – 10%

Rs 9 to 12 lakh – 15%

Rs 12 to 15 lakh – 20% 

Above Rs 15 lakhs – 30%

Income till Rs 2.5 lakh – Exempt

Rs 2.5 to Rs 5 lakh – 5% 

Rs 5 lakh to Rs 7.5 lakh – 15% 

Rs 7.5 lakh to Rs 10 lakh – 20%

Above Rs 10 lakh – 30%

  • The Agniveer Corpus Fund payment received by Agniveers enrolled in the Agnipath Scheme, 2022, is proposed to be exempt from taxes and given EEE status. It is proposed to allow the Agniveer to deduct his or the Central Government's contribution to his Seva Nidhi account when calculating total income.

Part D: Direct Taxes

  • EV push: The deadline for the customs duty on certain capital goods and machinery used to make lithium-ion batteries for electrically powered vehicles (EVs) has been extended to March 31, 2024.

An effort to manufacture electronics

  • Customs duty on camera lenses and the inputs/parts used to make camera modules for mobile phones has been reduced to zero. The concessionary duty on lithium-ion batteries has been extended for an additional year.
  • Parts of TV panels with open cells now only have a basic customs duty of 2.5%.
  • The standard customs duty on electric kitchen chimneys was raised from 7.5 to 15%.
  • The basic customs duty for producing electric kitchen chimneys was reduced from 20% to 15%.

Laws Changing Customs Regulations 

  • Customs Act of 1962: To be amended to set a deadline of nine months from the date the application is filed for the Settlement Commission to pass a final order.
  • To clarify the purpose and application of the provisions relating to countervailing duty (CVD), safeguard measures, and anti-dumping duty (ADD) in the Customs Tariff Act.

CGST Act to be amended

  • to increase from one crore to two crores the minimum tax amount required to initiate a prosecution under GST;
  • To change the current range of the compounding amount, which is between 50% and 150% of the tax amount, to a range between 25% and 100%;
  • Reduce the severity of some offences;
  • To limit the time in which returns and statements may be filed to a maximum of three years following the applicable return's or statement's due date; and
  • To make it possible for composition taxpayers and unregistered suppliers to make intra-state product deliveries through ECOs.


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