Constitutional Provisions Regarding the Budget

Article 112 of the Indian Constitution designates the Union Budget of a year as the Annual
Financial Statement (AFS). This statement outlines the government's projected receipts and
expenditures for the financial year, which starts on April 1st of the current year and ends on
March 31st of the following year.

The Budget includes:

● Estimates of revenue and capital receipts

● Methods for raising revenue
● Estimates of expenditures
● Details of actual receipts and expenditures from the previous financial year, with
explanations for any deficit or surplus
● The economic and financial policy for the upcoming year, including taxation
proposals, revenue prospects, spending programs, and new schemes/projects

In Parliament, the Budget undergoes a six-stage process:

1. Presentation of the Budget

2. General discussion
3. Scrutiny by Departmental Committees
4. Voting on Demands for Grants
5. Passing of an Appropriation Bill
6. Passing of a Finance Bill

The Budget Division of the Department of Economic Affairs in the Ministry of Finance is
responsible for preparing the Budget. The first Budget of Independent India was presented
in 1947.
 Highlights of Budget 2023-24

A major theme of the Union Budget 2023-24 is inclusive development, summarized by the
slogan "Sabka Sath, Sabka Vikas," which focuses on:

● Farmers, women, youth, Scheduled Castes (SCs), Scheduled Tribes (STs), Other
Backward Classes (OBCs), persons with disabilities (Divyangjan), and Economically
Weaker Sections (EWS).
● Prioritizing support for the underprivileged (vanchiton ko variyata).
● Continuing emphasis on the Union Territories of Jammu & Kashmir and Ladakh, as
well as the Northeast Region (NER).

The Budget aligns with the two-pronged growth strategy introduced in 2019:

1. Encouraging private sector involvement to create jobs and drive growth.

2. Promoting "Minimum Government, Maximum Governance" by increasing capital
expenditure and generating more revenue through disinvestment.

Key Takeaways:

● Adjustments in the new income tax regime, including changes in rebate limits and
tax slabs.
● A proposed 33% increase in capital investment outlay, bringing it to Rs 10 lakh crore,
the highest in the past decade.
● Modifications in customs duties, including reductions for certain mobile phone
manufacturing inputs and shrimp feed, and increases for items like cigarettes, gold
articles, and compounded rubber.
● The highest ever capital outlay for railways, set at Rs 2.40 lakh crore.
 Part – A: What is the Budget’s Vision for Amrit Kaal?

Amrit Kaal:

The Finance Minister of India described the 2023-24 Union Budget as the first Budget of Amrit Kaal. The
vision for Amrit Kaal is to create an empowered and inclusive economy characterized by:

● Technology-Driven Growth: Emphasizing the role of advanced technologies in driving economic

progress.
● Knowledge-Based Development: Building an economy based on knowledge, innovation, and
education.
● Robust Financial Sector: Strengthening the financial sector to support sustainable and inclusive
growth.

This vision aims to foster a modern and progressive India, ensuring that economic growth benefits all
sections of society

Transformative Opportunities Identified in the Budget for Amrit Kaal

The Budget for 2023-24 highlights four key transformative opportunities to be leveraged in the journey towards
India@100:

1. Economic Empowerment of Women through SHGs:

○ Strengthening Self-Help Groups (SHGs) to empower women economically, enhancing their
role in the economy and fostering financial independence.
2. PM Vishwakarma Kaushal Samman (PM VIKAS):
 ○ Launching the PM VIKAS initiative to support traditional artisans and craftspeople, enhancing
their skills and market access, and promoting traditional crafts.
3. Tourism Promotion in Mission Mode:
○ Developing and promoting tourism with a focused, mission-oriented approach to boost
economic growth and create employment opportunities in the sector.
4. Green Growth:
○ Prioritizing sustainable development through green growth initiatives, including investments in
renewable energy, conservation, and eco-friendly practices to ensure environmental
sustainability.

What are the Priorities of Budget 2023-24?

■ Saptarishi:
Priority 1: Inclusive Development

Agriculture: Key Initiatives and Strategies

Digital Public Infrastructure

● Development: Establishing digital public infrastructure for agriculture as an open-source,

open-standard, and interoperable public good.
● Objectives:
○ Providing inclusive, farmer-centric solutions.
○ Offering relevant information services for crop planning and health.
○ Improving access to farm inputs, credit, and insurance.
○ Supporting the growth of the agri-tech industry and startups.

Funding for Agri-Startups

● Agriculture Accelerator Fund: Setting up a fund to encourage young entrepreneurs in rural areas
to develop agri-startups.
 Agri-Credit

● Increased Target: Raising the agriculture credit target to Rs 20 lakh crore, focusing on animal
husbandry, dairy, and fisheries.
● PM Matsya Sampada Yojana: Launching a new sub-scheme with a targeted investment of Rs 6,000
crore for fishermen, fish vendors, and MSMEs.

Horticulture

● Atmanirbhar Clean Plant Programme: Introducing a program with an outlay of Rs 2,200 crore to
ensure the availability of disease-free, high-quality planting material for high-value horticultural crops.

Millets

● Global Hub for 'Shree Anna': Supporting the Indian Institute of Millet Research, Hyderabad as the
Centre of Excellence to promote best practices, research, and technologies globally.

Agri-Cooperatives

● Sahakar Se Samriddhi Vision: Planning to establish decentralized storage capacity and multiple
cooperative societies in uncovered villages over the next five years.
○

■ Education and Skilling:

■ Health:
○ 157 new nursing colleges will be established in co-location with
the existing 157 medical colleges established since 2014.
 ○ A Mission to eliminate Sickle Cell Anaemia by 2047 will be
launched.

Priority 2: Reaching the Last Mile

■ New ‘Aspirational Blocks Programme’:

○ Building on the success of the Aspirational Districts Programme,
the Aspirational Blocks Programme was recently launched
covering 500 blocks.
○ It is aimed at improving the performance of areas across multiple
domains such as health, nutrition, education, agriculture, water
resources, financial inclusion, skill development, and basic
infrastructure.
 ■ PM PVTG Development Mission:
○ To improve socio-economic conditions of the Particularly
Vulnerable Tribal Groups (PVTGs), Pradhan Mantri PVTG
Development Mission will be launched.
○ An amount of Rs 15,000 crore will be made available to implement
the Mission in the next 3 years under the Development Action Plan
for the Scheduled Tribes.
○ The Centre will also recruit 38,800 teachers and support staff for
the 740 Eklavya Model Residential Schools, serving 3.5 lakh tribal
students.
■ Water for Drought Prone Region:
○ In the drought prone central region of Karnataka, central
assistance of Rs 5,300 crore will be given to the Upper Bhadra
Project to provide sustainable micro irrigation and filling up of
surface tanks for drinking water.
■ Other Initiatives:
○ The outlay for PM Awas Yojana is being enhanced by 66% to over
Rs 79,000 crore.
○ A ‘Bharat Shared Repository of Inscriptions (Bharat SHRI)’ will be
set up in a digital epigraphy museum, with digitization of 1 lakh
ancient inscriptions in the first stage.

Priority 3: Infrastructure and Investment

■ Increase in Capex for Infra:

○ Capital investment outlay increased for the third consecutive year -
by 33% to Rs 10 lakh crore making it 3.3% of GDP.
○ The ‘Effective Capital Expenditure’ is budgeted at Rs 13.7 lakh
crore - 4.5% of GDP.
■ Support to State Govts for Cap-Investment:
 ○ The Government has decided to continue the 50-year interest free
loan to state governments for one more year to spur investment in
infrastructure and to incentivize them for complementary policy
actions.
○ The enhanced outlay for this is Rs 1.3 lakh crore.
■ Railways:
○ A capital outlay of Rs 2.40 lakh crore has been provided for the
Railways - the highest ever outlay and about 9 times the outlay
made in 2013- 14.
■ Aviation:
○ 50 additional airports, heliports, water aerodromes and advanced
landing grounds will be revived for improving regional air
connectivity.
■ Other Transportation Projects:
○ 100 critical transport infrastructure projects, for last and first mile
connectivity for ports, coal, steel, fertiliser, and food grains sectors
have been identified and will be taken up on priority with
investment of Rs 75,000 crore, including Rs 15,000 crore from
private sources.
○ An Urban Infrastructure Development Fund (UIDF) will be
established through use of priority sector lending shortfall.
● UIDF will be managed by the National Housing Bank,
and will be used by public agencies to create urban
infrastructure in Tier 2 and Tier 3 cities.
● Rs 10,000 crore on a yearly basis will be allocated for
this purpose.
Priority 4: Unleashing the Potential

■ Reduced Compliances and Jan Vishwas Bill:

○ To enhance ease of doing business, more than 39,000
compliances have been reduced and more than 3,400 legal
provisions have been decriminalised under the amendments to
the Companies Act 2013.
○ To further the trust-based governance, the Government introduced
the Jan Vishwas Bill to amend 42 Central Acts.
■ Centers of Excellence for AI:
○ To realize the vision of “Make AI in India and Make AI work for
India”, three centers of excellence for Artificial Intelligence will be
set-up in top educational institutions.
■ National Data Governance Policy:
 ○ To facilitate innovation and research by start-ups and academia, a
National Data Governance Policy will be brought out, which will
enable access to anonymized data.
■ Digilocker for Data Sharing:
○ An Entity DigiLocker will be set up for use by MSMEs, large
business and charitable trusts for storing and sharing documents
online securely, whenever needed, with various authorities,
regulators, banks and other business entities.
■ Resolving Disputes:
○ Vivad se Vishwas: Less stringent contract execution for MSMEs
(being provided as a relief to the MSMEs affected during the Covid
period).
● Easier and standardised settlement scheme enabling
faster settlement of contractual disputes of Govt and
Govt undertakings.
○ e-Courts: Phase III of e-courts will be launched for effective
administration of justice.
■ 5G Technology:
○ 100 labs for developing applications using 5G services will be set
up in engineering institutions to realise a new range of
opportunities, business models, and employment potential.
○ The labs will cover, among others, applications such as smart
classrooms, precision farming, intelligent transport systems, and
healthcare apps.

Priority 5: Green Growth

■ National Green Hydrogen Mission:
○ An outlay of Rs 19,700 crores has been allocated to the National
Green Hydrogen Mission to facilitate transition of the economy to
low carbon intensity, reduce dependence on fossil fuel imports,
and make the country assume technology and market leadership
in this sunrise sector.
○ The target is to reach an annual production of 5 MMT by 2030.
■ GOBARdhan Scheme:
○ 500 new ‘waste to wealth’ plants under GOBARdhan scheme will
be established to promote Circular Economy (200 compressed
biogas (CBG) plants and 300 community/cluster-based plants).
Total Investment - Rs 10,000 crore.
○ In due course, a 5% CBG mandate will be introduced for all
organizations marketing natural and biogas.
■ Bhartiya Prakritik Kheti Bio-Input Resource Centres:
○ Over the next 3 years, the Centre will facilitate 1 crore farmers to
adopt natural farming by setting up 10,000 Bio-Input Resource
Centres, creating a national-level distributed micro-fertilizer and
pesticide manufacturing network.
 ■ Other Investments in Green Energy:
○ Rs. 35,000 crore for priority capital investments towards energy
transition and net zero objectives, and energy security (Ministry of
Petroleum & Natural Gas).
○ Battery Energy Storage Systems with capacity of 4,000 MWH to be
supported with Viability Gap Funding.
○ Rs 20,700 crore (central support - Rs 8,300 crore) for inter-state
transmission system for evacuation and grid integration of 13 GW
renewable energy from Ladakh.

Priority 6: Youth Power

Priority 7: Financial Sector

■ Credit Guarantee for MSMEs:

○ In 2022, the credit guarantee scheme for MSMEs was revamped
and will take effect from 1st April 2023 through infusion of Rs
9,000 crore in the corpus.
● This will enable additional collateral-free guaranteed
credit of Rs 2 lakh crore.
● The cost of the credit will be reduced by about 1%.
■ Financial Information Registry:
 ○ A National Financial Information Registry will be set up to serve as
the central repository of financial and ancillary information.
○ This will facilitate efficient flow of credit, promote financial
inclusion, and foster financial stability.
○ A new legislative framework, designed in consultation with the
RBI, will govern this credit public infrastructure.
■ Small Savings Schemes:
○ To commemorate Azadi Ka Amrit Mahotsav, a one-time new small
savings scheme, Mahila Samman Savings Certificate, will be
made available for a two-year period up to March 2025.
● This will offer deposit facility upto Rs 2 lakh in the
name of women or girls (fixed interest rate of 7.5%)
with partial withdrawal option.
○ The maximum deposit limit for Senior Citizen Savings Scheme will
be enhanced from Rs 15 lakh to Rs 30 lakh.
○ The maximum deposit limit for the Monthly Income Account
Scheme will be enhanced from Rs 4.5 lakh to Rs 9 lakh (for single
account) and from Rs 9 lakh to Rs 15 lakh (for joint account).
What is the Status of Fiscal Management?

■ Utilisation of Funds for Capital Expenditure:

○ The Indian Finance Minister stated that all states must utilise their
fifty-year loan for capital expenses by the end of 2023-24.
○ Most of this will be at the discretion of states, but a part will be
conditional on states designated for specific purposes, such as:
● Replacing outdated government vehicles
● Improving urban planning
● Making urban local bodies eligible for obtaining
municipal bonds
● Building housing for police officers
● Constructing Unity Malls
● Creating libraries and digital infrastructure for
children and adolescents
 ● Contributing to the capital expenses of central
schemes.
■ Fiscal Deficit Allowed to States:
○ States are allowed to have a deficit of 3.5% of their Gross State
Domestic Product (GSDP), with 0.5% of this amount specifically
designated for power sector reforms.
■ Revised Estimates 2022-23:
○ Total receipts, (excluding borrowings): Rs 24.3 lakh crore
● Net tax receipt: Rs 20.9 lakh crore.
○ Total expenditure: Rs 41.9 lakh crore
● Capital expenditure: Rs 7.3 lakh crore.
○ Fiscal deficit : 6.4% of GDP.
■ Budget Estimates 2023-24:
○ Total estimated receipts (excluding borrowings): Rs 27.2 lakh
crore,
○ Total estimated expenditure: Rs 45 lakh crore.
● Net tax receipts: Rs 23.3 lakh crore.
○ Fiscal deficit: 5.9% of GDP.
● To finance the fiscal deficit in 2023-24, the net market
borrowings from dated securities are estimated at Rs
11.8 lakh crore.
● The gross market borrowings are estimated at Rs
15.4 lakh crore.
○ Also, the government is committed to sticking to this plan to
reduce the fiscal deficit to below 4.5% by 2025-26.
 Part – B

What are the Reforms Proposed in Direct Taxation?

■ Personal Income Tax:

○ There are five major announcements relating to the personal
income tax. The rebate limit in the new tax regime has been
increased to ₹ 7 lakh.
● It means that persons in the new tax regime with
income up to ₹ 7 lakh will not have to pay any tax.
○ The tax structure in the new personal tax regime has been changed
by reducing the number of slabs to five and increasing the tax
exemption limit to ₹ 3 lakh.
■ Other Tax Reforms:
○ Standard Deduction:
● The new tax regime has proposed to increase the
standard deduction for salaried individuals to 50,000
 rupees and the deduction for family pension up to
15,000 rupees.
○ MSMEs:
● The limits for presumptive taxation have been
increased for micro enterprises and certain
professionals as long as the amount received in cash
does not exceed 5% of the total gross
receipts/turnover.
● The deduction for payments made to MSMEs will only
be allowed when payment is actually made to support
their timely receipt of payments.
○ Cooperatives:
● New manufacturing co-operatives that start
manufacturing before 31.3.2024 will have a lower tax
rate of 15%.
● The limit for cash deposits and loans by Primary
Agricultural Co-operative Societies and Primary
Co-operative Agriculture and Rural Development
Banks has been increased to 2 lakh rupees per
member.
● Tax Deduction at Source (TDS) on cash withdrawals
for co-operative societies has been increased to 3
crore rupees.
○ Startups:
● The date for start-ups to receive income tax benefits
has been extended to 31.3.2024. The carry forward of
losses for start-ups has been increased from 7 years
of incorporation to 10 years.
○ Online Gaming:
 ● Taxability on online gaming will be clarified with TDS
and taxability on net winnings at the time of
withdrawal or at the end of the financial year.
○ Gold:
● Conversion of gold into electronic gold receipt and
vice versa will not be treated as capital gains.
○ Exception from Income Tax:
● Income of authorities, boards and commissions set
up by Union or State laws for housing, town and
village development, and regulation, will be exempt
from income tax.
● Agniveer Fund has been given
Exempt-Exempt-Exempt (EEE) status. Payments
received by Agniveers enrolled in Agneepath Scheme,
2022 will be exempt from taxes.
● Deduction in total income will be allowed
for contributions to the Agniveer Seva
Nidhi account by the Agniveer or the
Central Government.
■ Common IT Return Form:
○ To improve taxpayer services, the government rolled out a
proposal for next-generation Common IT Return Form for taxpayer
convenience, along with plans to strengthen the grievance
redressal mechanism.

■ Current and Proposed Tax Slabs:

 Proposed Income
Tax Rate Current Income Slab
Slab

Nil Up to Rs 2.5 lakh Up to Rs 3 lakh

Rs 2.5 lakh to Rs 5 Rs 3 lakh to Rs 6

5%
lakh lakh

Rs 5 lakh to Rs 7.5 Rs 6 lakh to Rs 9

10%
lakh lakh

Rs 7.5 lakh to Rs 10 Rs 9 lakh to Rs 12

15%
lakh lakh

Rs 10 lakh to Rs 12 Rs 12 lakh to Rs 15
20%
lakh lakh

Rs 12 lakh to Rs 15
25% -
lakh

30% Above Rs 15 lakh Above Rs 15 lakh

What are the Reforms Proposed in Indirect Taxation?

■ Custom Duties:
○ The number of basic customs duty rates for goods other than
textiles and agriculture has been decreased to 13 from 21.
 ○ National Calamity Contingent Duty (NCCD) on specified cigarettes
revised upwards by about 16%
○ Increased Duties:
● Articles made from gold and platinum
● Import duties on silver dore, bars, and articles
○ Exception from Duties:
● Compressed biogas contained in blended compressed
natural gas.
● Testing agencies that import vehicles, automobile
parts/components, sub-systems, and tires for testing
and/or certification purposes.
● Also, the deadline for the customs duty
on specified machinery for lithium-ion
cell manufacturing for EV batteries has
been extended to 31.03.2024.
● Denatured ethyl alcohol used in the chemical industry.
■ Legislative Changes in Customs Laws:
○ The Customs Act, 1962 is going to be revised to set a nine-month
deadline for the Settlement Commission to make a final decision
after an application has been filed.
○ The Customs Tariff Act will be revised to make the purpose and
scope of Anti-Dumping Duty (ADD), Countervailing Duty (CVD),
and Safeguard Measures clearer.
○ Changes will also be made to the Central Goods and Service Tax
Act:
● The minimum amount of tax for starting a prosecution
under GST will be raised from 1 crore to 2 crore.
● The compounding amount for tax will be reduced
from 50-150% to 25-100% of the tax amount.
● Certain offences will be decriminalised.
● The filing of returns or statements will be limited to a
maximum of three years from the due date.
● Unregistered suppliers and composition taxpayers will
be allowed to make intra-state supply of goods

through E-Commerce Operators (ECOs).Where does

the Rupee Come from and where does it Go?

Source: Union Budget 2023-24