Announcing its last full budget before the 2024 elections, the NDA government focused on a slew of measures that expanded Capital Expenditure spending and tied in various priorities including Green Growth, Youth Power and Inclusive Development. This was also accompanied by major tax announcements for the salaried class, with changes in tax slabs and a clear intention to shift to the new tax regime.
The Union Finance Minister highlighted that the current year’s economic growth is estimated to be at 7%, “highest among all the major economies.” Finally, with regards to the fiscal deficit, she retained it to the target of 6.4% in the revised estimate for FY2022-23 and reduced it to 5.9% for the next fiscal. Fiscal deficit would be brought down to below 4.5% by 2025-26, Sitharaman said.
Key highlights from the budget speech:
- Finance Minister Nirmala Sitharaman upped the rebate limit for paying income taxes to ₹7 lakh/annum. This would be facilitated under the new tax regime which would be made the new default regime.
- The income slabs under the new personal income tax regime have been revised from six to five. The tax exemption limit has been increased to ₹3 lakh.
- The new applicable tax rates hold zero taxes for those earning upto ₹3 lakh, 5% for ₹3-6 lakh, 10% for ₹6-9 lakh, 15% for ₹9-12 lakh, 20% for ₹12-15 lakh and 30% for ₹15 lakh and beyond.
- Railways accorded its highest-ever capital outlay at ₹2.40 lakh cror. Sitharaman stated that this was 9 times more than the outlay accorded in 2013-14.
- The FM announced the setting up of a new, one-time savings scheme for women and girls, called the Mahila Samman Bachat Patra (savings certificate). The scheme will have a deposit facility of up to ₹2 lakh for women. It will be valid for a period of two years, up to March 2025. It will provide a fixed interest rate to the beneficiaries at 7.5% per annum and will also offer a partial withdrawal option.
- Modifications in the in the Senior Citizen Savings Scheme, with the maximum deposit limit under this scheme enhanced to ₹30 lakh from ₹15 lakh.
- The Finance Minister also announced an increase in the maximum deposit limit of the Monthly Income Account Scheme. This will be increased from ₹4.5 lakh to ₹9 lakh for single accounts, and from ₹9 lakh to ₹15 lakh for joint accounts.
- For high networth individuals, the highest effective income tax rate currently stands at 42.74%. This will be reduced to 39%.
- The FM has reduced income tax exemptions for high insurance value policies. In case the aggregate premium of life insurance policies (other than ULIP) issued on or after April 1, 2023 is above ₹5 lakh, income from only those policies with aggregate premium up to ₹5 lakh shall be exempt. This will not affect the tax exemption provided to the amount received on the death of the person insured.
Equity benchmarks Sensex and Nifty ended on a mixed note on Wednesday as the euphoria about the Budget fizzled out, with investors going for profit-taking ahead of the Fed interest rate decision. The 30-share BSE benchmark Sensex climbed 158.18 points or 0.27% to settle at 59,708.08 after it trimmed most of the intra-day gains.
During the day, it had zoomed 1,223.54 points or 2% to 60,773.44.
In contrast, the broader NSE Nifty declined 45.85 points or 0.26% to end at 17,616.30. “A well-tuned budget with strong emphasis on consumption and capex has lifted optimism in the market; however, volatility sparked in the latter half as focus shifted back to the Adani saga and FOMC meeting,” said Vinod Nair, Head of Research at Geojit Financial Services.
MGNREGA budget slashed 33% from this year’s revised estimates
In line with the recent trend of slashing the budget of its flagship rural jobs scheme, the Union Budget allocated only ₹60,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme for 2023-24. That is 18% lower than the ₹73,000 crore budget estimates for the current year, and 33% lower than the ₹89,000 crore revised estimates for the scheme.
In the last budget presented by Finance Minister Nirmala Sitharaman, the MGNREGA allocation saw a 25% cut to ₹73,000 crore. Left with a spiralling unpaid balance at the end of the year, the Rural Development Ministry had demanded an additional ₹25,000 crore to meet the shortfall in the scheme. The Finance Ministry only approved ₹16,000 crore, taking the revised budget for this financial year to ₹89,000 crore.
Despite the higher revised estimates, less than 3% of the households employed under MGNREGA completed the 100 days of work they are legally entitled to. As The Hindu reported on January 26, the average days of employment provided per household is at a five-year low in this financial year. Till January 20, the average days of employment provided per household was only 42, while it ranged between 48 and 52 days in the preceding four years.
On the eve of the Union Budget, a consortium of activists and academics working under the umbrella group of Peoples’ Action for Employment Guarantee and the NREGA Sangarsh Morcha had said that, in order to provide the legally guaranteed 100 days of work to all households who have worked in the current year, the scheme required an allocation of ₹2.72 lakh crore. According to their calculations, even giving each active household just 40 days of work would require funding of ₹1.24 lakh crore, more than double the current allocation.
“Such a low allocation is clearly aimed at killing the law. This allocation does not meet even the minimum threshold. And you have to remember that even the revised estimate of ₹89,000 crore is after completely excluding West Bengal, which till the previous years had got 10% of the total MGNREGA budget,” Nikhil Dey, founder of Mazdoor Kisan Shakti Sangathan, said.
The Congress general secretary for communications and former Rural Development Minister Jairam Ramesh also expressed dismay at the sharp cut. “Even assuming MGNREGA is demand-driven, the cut is rather savage. But it is in line with the government’s steps to keep demand itself suppressed,” he told The Hindu.
Kerala Rural Development Minister and CPI(M) leader M.B. Rajesh called this “drastic reduction” a “brutal surgical strike on the poor” which reflects the government’s “anti-poor” slant. “The current budget allocation is less than one-fourth of what the country needs to follow the law in letter and spirit. This is the culmination of a systematic effort by the Narendra Modi government to sabotage MGNREGA. They shouldn’t forget that it was MGNREGA that helped in staving off starvation during the pandemic years,” Rajesh said.
Defence sector gets lion’s share
As Union Minister Nirmala Sitharaman presented the Union Budget 2023-24, the allocation of money to major Ministries presents a clear picture of the Modi government’s focus on revamping the economy.
The Education Ministry received ₹1,12,899 crore, marginally higher than the 2022 Budget where ₹1.04-lakh crore was allocated for the education sector. The Finance Ministry received ₹16,89,719 crore, the Home Ministry was given ₹1,96,034 crore, and the Ministry of Health and Family Welfare was allocated ₹89,155 crore.
Rural Development Ministry was given ₹1,59,964 crore.
The Consumer Affairs, Food and Public Distribution was allocated ₹2,05,764 crore, while the Home Affairs Ministry received ₹1,96,034 crore. Chemical & Fertilizers Ministry was given ₹1,78,481 crore and the Ministry of Rural Development was allocated ₹1,59,964 crore. Agriculture & Farmer’s Welfare was given ₹1,25,035 crore while the Communications Ministry was allocated ₹1,23,393 crore.
Siddique Kappan to walk out of jail; Lucknow Court signs bail order
A Sessions Court in Lucknow on February 1 signed orders to release Kerala journalist Siddique Kappan in connection with the Prevention of Money Laundering Act (PMLA) case lodged by the Enforcement Directorate (ED) on bail. According to reports, the court has accepted his bail bonds and he is likely to be released soon.
Earlier on December 23, 2022, the Lucknow bench of Allahabad High Court granted bail to Kappan. The jailed journalist had moved the High Court after being denied bail by a Lucknow sessions court on October 31, 2022, in the PMLA case which led the journalist to remain in prison despite being granted bail by the Supreme Court (SC) in the Unlawful Activities Prevention Act (UAPA) case in September 2022.
The Supreme Court on September 9 granted bail to Kappan in the Unlawful Activities Prevention Act (UAPA) case, stating that “every citizen has the right to free expression”.
Kappan who originally hails from Kerala worked as a reporter for Malayalam news website Azhimukham and also held the post of secretary in Delhi Unit of Kerala Union of Working Journalists (KUWJ).
A five-judge Constitution bench headed by Justice K. M. Joseph asked the mobile messaging app to give advertisement in five newspapers to publicise its undertaking given to the government.
“We record that the stand taken in the letter (to the government) and we record the submission of the senior counsel for WhatsApp that they will abide by the terms of the letter...till next date of hearing.
“We further direct that WhatsApp will give publicity to this aspect to the customers of WhatsApp in five national newspapers on two occasions,” the bench also comprising justices Ajay Rastogi, Aniruddha Bose, Hrishikesh Roy and C. T. Ravikumar said while posting the matter for hearing on April 11.
The apex court was hearing a plea filed by two students -- Karmanya Singh Sareen and Shreya Sethi -- challenging the contract entered into between WhatsApp and its parent Facebook to provide access to calls, photographs, texts, videos and documents shared by users is a violation of their privacy and free speech.
U.S. Deputy Defence Secretary Dr. Kathleen Hicks told National Security Advisor Ajit Doval that building alliances and partnerships are a “top priority” for her department, the Pentagon has said, amidst the Indo-Pacific region’s increasingly contested strategic environment and China’s aggressive behaviour. Hicks said this during a meeting with Doval in Washington and discussed priorities for the U.S.-India bilateral defence partnership, the Pentagon said on Tuesday. It said the discussions also included strengthening policy and operational coordination in the Indo-Pacific region and increasing defence industrial cooperation between the two countries.
Evening Wrap will return tomorrow.