‘Shree Anna’, ‘Saptarishi’, small saving sops and tax relief: Union Budget 2023 eyes key polls

Karnataka, headed for Assembly polls this year and the only South Indian state where the BJP is in power, found special mention in the budget.

BySouth First Desk

Published Feb 01, 2023 | 7:14 PMUpdated Feb 01, 2023 | 7:27 PM

Union budget 2023

Declaring that India’s economy was on the right track, Union Finance Minister Nirmala Sitharaman on Wednesday, 1 February, presented the Narendra Modi government’s last full budget this term.

Ahead of some key elections, including in crucial states like Karnataka, Madhya Pradesh, and Telangana lined up this year, the Union Budget 2023-24 was high on promises and doles. This was Sitharaman’s fifth consecutive budget speech.

She raised the personal income tax rebate limit under the new tax regime, doled out sops on small savings for women, and announced one of the biggest hikes in capital spending in the past decade.

Sitharaman did a tightrope walk in the Union Budget — between staying fiscally prudent and meeting public expectations — in the year before the general elections.

With a focus on a big push for millets — production, marketing and development  — under the tag “Shree Anna”, the Union government proposed to set up a centre of excellence in Hyderabad.

Poll-bound Karnataka was the only state to find mention by name in the budget, when Sitharaman announced Central assistance of ₹5,300 crore to the Upper Bhadra irrigation project.

On the tax and savings front

The most popular takeaway from the budget was the personal income tax rebate. The limit to avail this rebate was increased to ₹7 lakh from the fiscal year starting from 1 April, but it would be applicable only under the new tax regime.

No rebate has been announced for those filing personal income tax under the old tax regime, which offers exemptions and deductions. Under this regime, the rebate is now applicable only for income up to ₹3 lakh.

Tax slabs have been reduced to five from the previous seven.

The maximum income tax rate has been reduced to about 39 percent from 42.7 percent after a reduction in the highest surcharge to 25 percent from 37 percent.

The income tax relief provided for individual taxpayers would be a 25 percent reduction in tax outgo of an individual with an annual income of ₹9 lakh as they would be required to pay only ₹45,000 as against ₹60,000.

Similarly, an individual with an income of ₹15 lakh would have to pay ₹1.5 lakh tax, down from ₹1.87 lakh earlier, Sitharaman said.

“This will provide major relief to all taxpayers in the new regime,” she said.

Also, the ₹50,000 standard deduction provided in the old tax regime has now been extended to the new tax regime.

Senior citizens’ deposit limit increased

In a move that is sure to bring cheer to the elderly, the deposit limit for senior citizens’ savings schemes was doubled to ₹30 lakh. The limit on the Monthly Income Account Scheme too was enhanced to ₹9 lakh.

The finance minister also announced a new women-centric one-time scheme — the Mahila Samman Saving Certificate. The small savings scheme for women would be made available for a two-year period up to March 2025.

The scheme is expected to offer a deposit facility of up to ₹2 lakh at a fixed interest rate of 7.5 percent per annum with a partial withdrawal option.

Sitharaman announced customs duty relief on mobile phone components as well as on capital goods for lithium batteries and other such items to boost green energy and exports.

This is the final full budget before the general elections in April-May next year.

An interim budget, called vote on account, is to be presented in February next year and the new government will present the full budget sometime in July 2024.

‘Money matters’ in Union Budget

For 2023-24, the capital investment outlay increased steeply for the third year in a row — by 33 percent to ₹10 lakh crore, which would be 3.3 percent of the GDP. This will be almost three times the outlay in 2019-20.

Since coming to power in 2014, the Narendra Modi-led government has ramped up capital spending, including on roads and energy, while wooing investors through lower tax rates and labour reforms and offering subsidies to poor households to clinch their political support.

“This budget hopes to build on the foundation laid in the previous budget, and the blueprint drawn for India@100,” Sitharaman said in her speech in the Lok Sabha.

The Indian economy, she said, was a “bright star” with the current 7 percent GDP growth being the highest among all the major economies.

Sitharaman said that despite a global slowdown because of the Covid-19 pandemic and the Russia-Ukraine war, the Indian economy was “on the right track”.

The total expenditure was seen rising 7.4 percent to ₹45 lakh crore. The government would target a budget deficit of 5.9 percent of GDP in 2023-24, down from 6.4 percent for the current year. That would entail a gross borrowing of ₹15.43 lakh crore.

Seven priorities, aka ‘Saptarishi’

Sitharaman said the budget for 2023-24 adopted seven priorities — inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power, and the financial sector.

While the agriculture credit target increased to ₹20 lakh crore with a focus on animal husbandry, dairy, and fisheries, the increased investment in infrastructure and productive capacity was aimed at having a multiplier impact on growth and employment.

An additional ₹9,000 crore was provided towards credit guarantee for medium and small enterprises

The railways were provided with a capital outlay of ₹2.40 lakh crore — the highest ever and about nine times the outlay in 2013-14.

An Urban Infrastructure Development Fund (UIDF) would be established for the creation of urban infrastructure in Tier 2 and Tier 3 cities.

The budget also allocated ₹35,000 crore for energy transition and net zero objectives.

Battery Energy Storage Systems with a capacity of 4,000 MWh would be supported with viability gap funding, and ₹20,700 crore would be spent on building a transmission system to evacuate 13 GW of renewable energy from Ladakh.

(With PTI inputs)