Here's What You Can Expect from Budget 2023
Published: Jan 30, 2023
The excitement of witnessing the maiden speech of President Murmu, India’s first tribal president, the first parade to march down the recently re-christened ceremonial boulevard, Kartavya Path, and the showcasing of India’s military might by the armed forces, where a notable aspect was the women officers leading the Indian Air Force and Navy contingents – The 74th Republic Day of India was truly spectacular. However, as the excitement of the day starts to wear off, Indians have another thing to look forward to. Many are in anticipation of the announcement of the Union Budget 2023, which is to be presented by the Finance Minister, Nirmala Sitharaman, on 1st February 2023, which, like the last two budgets, will also be delivered in a paperless format and will be made available on the ‘Union Budget Mobile App’.
The Situation as It Stands
Even as the world is emerging from the COVID-19 era fluster, there are several major occurrences around the world and in India that may have curious, varying effects on the Union Budget of the coming fiscal year. The global economy seems to be slowing, as news of layoffs, downsizing, etc. keep coming in from across the world. Add to this China’s aggressive reopening, marred slightly by another potential COVID-19 outbreak, and the present concerns regarding Japan’s economy and their control over their monetary policy, and you have a backdrop against which India may have to hesitate before making any costly commitments.
But that’s not all. On the flip side, this is also going to be the final budget by the current government before 2024’s national elections, even as the country’s focus has begun shifting focus from recovery, post the COVID-19 pandemic, to economic growth.
What People Want from the 2023 Union Budget
All things considered, it may be said that the people are expecting a growth-focused budget that will maintain its impetus in terms of investments in infrastructural development. If there were a wish list for the upcoming budget announcement, it would most probably include:
●Better tax benefits and waivers for senior citizens.
●Raising the upper cap of the deductions that can be claimed for health insurance premiums.
●Ample allocations for the healthcare infrastructure and health insurance sectors.
●Respite from high home loan rates so that the lowest segments of society can also be encouraged to take home loans.
●Addressing the tax treatment for mutual funds and other investment avenues.
●Better income tax benefits that cater to the common man.
The domestic population is seeking tax sops, while international companies are gravitating towards India’s manufacturing potential, and experts are secretly looking for a revival of the economy amidst the global slowdown while maintaining a call for a modest budget that focuses on fiscal prudence.
What Numbers Does Union Budget 2023 Need to Contend With?
●In 2021, the first quarter saw a 13.5% growth in GDP, while the second quarter only clocked in at a 6.3% growth, adding to the fear of an upcoming economic slowdown.
●As FY 2022-23 marked a GDP growth of 8.7%, the First Advanced Estimates (FAE) of GDP have pinned GDP growth for FY 2023-23 at 7%.
●NSO estimates India’s GDP to grow by 9.7% in the first half (2022-23).
●In the current fiscal year, ending in March 2023, India has budgeted a deficit of 6.4% of GDP. The government plans to bring this deficit down to 4.5% of GDP by FY 2025-26.
What People Expect from the 2023 Union Budget
Here’s an overview of the most common expectations that are doing the rounds across the nation regarding what the Union Budget may cover:
Tax Sops and Slab Rate Revisions
Budget 2022 had very few tax sops and there are not many people who like the new tax regime – these and many more reasons have led to some rather high hopes for a pocket-friendly budget this year. Some of the most common expectations of taxpayers from this budget include changes in the tax slabs and rates, raising of deduction limits, increased exemptions for health insurance, exemptions for new-age expenses like buying an electric vehicle, work from home expenses, etc.
Encouraging the Lending Sector
Several NBFCs and gold loan companies in India have expressed a wish for the budget to cover two aspects:
●Measures to ensure ease of doing business.
●Measures for the implementation of lending.
RBI’s scale-based regulations for NBFCs and policy for inflation control may lead to increased NBFC borrowing costs. But respite in gold loan interest rates, loan against property interest rates, and increased deduction limits for housing loans are some aspects that NBFCs are looking forward to.
Growth of the MSME Sector
The micro, small, and medium enterprises (MSME) sector generates more than 120 million jobs in India and is roughly 33% of the country’s GDP, close to 50% of its exports (2022) [Source 1, Source 2], and the MSME loan market had already grown to Rs 35.4 lakh crore in the first quarter of 2022. To promote India as a manufacturing destination, the government already has several initiatives in place, including simplified access to the MSME loan market, non-tax benefits, etc. Now, the industry expects enhanced working capital access, accelerated flow of credit, improvement of processes for conducting business, greater investment in innovations, better tax benefits, and other similar inclusions in budget 2023.
Housing for All
Despite the government’s aim to provide ‘housing for all’ and the ease of getting a home loan in India, factors like RBI’s repo hike and the interest payout involved in getting a home loan in India are still not very affordable for many. As interest rates for loans (against property, gold, personal, etc.) are on the rise almost everywhere, an increase in the deduction limit for interest paid in repayments for a home loan in India is one of the most expected inclusions in the budget. Other expectations include income tax relief for second home purchases, reduction of the capital gains tax, tax benefits for rental income, etc.
A majority of people are expecting a cautious budget with a dash of populism, but there’s no quelling the hope and expectations associated with the NDA government’s last Union Budget announcement of the term.