In her fifth Union Budget 2023, Finance Minister Nirmala Sitharaman attempted to steer domestic consumption and reluctant private investments upward in an effort to carve out an ark for India amid a floundering global economy. In just 200 or so words, the FM summarized the BJP-led government’s accomplishments since 2014 as leaving no one behind, outlining how the economy has become more globalized and how targeted benefits have been expanded. She then utilized the remainder of her Budget address to reassure social groups that may have lagged behind slightly during its nine year term.
The smart economies that underpin the budget were reflected in a significant personal income tax calibration. Based on a couple of years of experience, the new regime, which is based on negligible exemptions and lower rates, was tweaked.
The tax-free limit under the new exemption-less income system was raised from Rs. 5 lakh to Rs. 7 lakh in order to to help the salaried middle class, which had been deflated by a sustained period of high inflation. The limit on non-government employees retirement benefits has been increased from Rs. 3 lakh to Rs. 25.
The changes make it more appealing for most taxpayers in the previous regime to switch and save money on taxes. In two ways, this Budget exuded political confidence. By lowering the effective income tax rate for the wealthy, it defied conventional wisdom. More importantly, lower taxes for the middle class demonstrate that the BJP recognises that this group will grow in size and importance in politics.
The Minister stated that the first Budget of the Amrit Kaal, the 25-year period building up to the centenary of Indian Independence in 2047, aims to expand on current “inclusive development” initiatives that give the impoverished general priority. She introduced PM Particularly Vulnerable Tribal Groups Development Mission and the PM Vishwakarma Kaushal Samman, which help artisans from scheduled castes, Scheduled Tribes, and other Other Backward Classes, were two new socioeconomic development programs.
The underlying message was aimed at India's restless youth and their hopes of finding work. Giving a boost to growth and job creation, as well as creating opportunities, she said, was a key focus of the government's economic agenda for achieving its vision for the Amrit Kaal, which will culminate in 2047.
For the third year in a row, the budget has increased the allocation for public capital expenditures. The 33% increase brings the budget Capex outlay to Rs. 10 lakh crore, or 3.3% of GDP. This is three times the amount allocated for public capital expenditures in 2019-20.
Not only has the central government increased its spending on Capex, but states have also been given concrete incentives to do so.
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