India’s economy has grown from being 10th in the world to 5th in the economic ranking. This is indeed a huge achievement for this government. This and various such symbolic achievements have dotted the speech of Union Budget 2023. Referring to this Union Budget 2023 period and the governance years as “Amrit Kaal” – the auspicious time in Vedic astrology when humans, angels and metaphysical beings meet and work towards equality and harmony, FM Nirmala Sitharaman has marked her 5th Budget speech.
This is the last year and full-fledged Budget before the general elections. The bet was on how much will growth be supported with layers of subsidies and populist measures. This government and its economic policies have always tried to lead a measured line between the two. Yet it would not be unfair to say the measures have been announced with an eye on the polls.

Let us look at the various macroeconomic indicators as announced by the Economic Survey 2022 – 2023
- GDP – a baseline GDP growth of 6.5% in real terms in FY24
- Gross Tax Revenue – a YoY growth of 15.5 percent from April to November 2022
- GST collections – increasing at 24.8 per cent on YoY basis during April – December 2022
- CAPEX – increased from a long-term average of 1.7 percent of GDP (FY09 to FY20) to 2.5 percent of GDP in FY22 PA. This outlay has been increased by 33 percent to Rs 10 lakh crore – 3.3 percent of the GDP
- Fiscal Deficit – 6.4 percent of GDP in FY23
These are basic indicators to judge the solvency and performance of an economy. While growth took a hit in 2020 and early 2022 owing to fears of the Ukraine-Russia war, the growth of exports in FY22 and the first half of FY23 has given a new buoyancy.
Private Consumption as a percentage of GDP stood at 58.4 percent in Q2 of FY23 – this is an amazing number showing the resiliency of Indian consumers and the prosperity moving towards self-sufficiency.

Union Budget 2023’s Economic Survey at a Glance

Let us see the most awaited and followed sectors and how they have been treated vis-a-vis their expectations.
Agriculture

Expectations
- According to Deloitte India research, the agriculture sector has the potential to generate revenue of $800 billion for India with an investment of over $270 billion by 2031. So, to modernize agriculture, the government must implement policies that will encourage the use of technology. The government must also assist agri-tech startups to boost access for small-holder farmers, according to the report.
- Experts expect that stocks of fertilizer and other agrochemical companies with urea and nitrogen exposure would profit the most from the Union Budget 2023 allocation. In addition, allocation and subsidies will help to increase agricultural yield.
Actual
- The government plans to establish an agricultural accelerator fund to assist rural entrepreneurs’ startups so that they can provide affordable and innovative solutions to farmers’ challenges. The goal is to use modern technology to alter agricultural techniques and increase India’s agricultural output. The purpose of the fund is to stimulate startup interest in this sector. Experts believe that it may prove to be a game changer in addressing severe challenges in India’s agri-value chains.
- The government plans to set up a national cooperative database and a massive de-centralized storage capacity to help farmers store their produce. The step is taken to boost allied agricultural activities in the hinterland. Further, this will facilitate the setting up of fisheries, farm and dairy cooperative societies in uncovered villages over the next five years.
- The Union Budget 2023 lays a major emphasis on enhancing the supply and input aspects of the agriculture value chain. Farm production will be boosted by raising access to financing, encouraging better quality inputs through a clean plant program, investing in digital infrastructure, and boosting skill development. The shift to decentralized storage will also help to decrease waste and increase the shelf life of agricultural products.
- The government’s push for millet cultivation, consumption, and exports, as well as increased investment in fisheries and the promotion of natural farming, will contribute to crop diversification, sustainability, and improved nutrition. Moreover, better administration of cooperatives and producer collectives will allow farmers to earn better prices for their produce. The agriculture accelerator initiative, which encourages ag-tech startups will boost yields and productivity on the supply side while simultaneously enhancing price realization for farmers on the demand side through more effective market linkages.
Gems & Jewellery

Expectations
- The GJEPC (Gem & Jewellery Export Promotion Council) wanted the government to reduce the tax on imported gold, silver, and platinum to 4%. They believe that the current tax is taking away money from exporters and causing problems for the economy. Although it may bring in more money for the government, it will not help improve the balance of payments or make the economy stronger.
- The council also expected that the government will abolish import duty on LGD (lab-grown diamond) seeds to make them affordable.
Actual
- Earlier this fiscal year, the Indian government hiked import duties on gold bars and gold dore to 12.5% and 11.85%, respectively. In the 2023 Union Budget, the government raised the duty on items manufactured from these materials to widen the duty disparity, resulting in higher gold prices in the domestic market. The increase in import charges on silver dore, bars, and articles will also support silver prices in the short run. At the same time, increasing precious metals duties will boost the value of the Indian Rupee.
- As expected, the government proposed a cut in import duty on seeds used to make lab-grown diamonds to boost domestic manufacturing and provide employment opportunities. The government will also provide financial support to IITs for R&D to boost the production of lab-grown diamonds and reduce import dependency.
Oil & Mfg

Expectations
- In the fiscal year 2023, the oil marketing companies (OMCs) suffered huge losses due to elevated crude oil prices. In Oct 2022, the Government of India (GoI) sanctioned a one-time grant of Rs. 22,000 crores to PSU OMCs for losses incurred. Thus, the industry expects an adequate budgetary provision to compensate for losses incurred on the sale of auto fuels and LPG.
Actual
- A plan called GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) will be launched to promote the circular economy. At a total investment of Rs. 10,000 crores, these would comprise 200 compressed biogas (CBG) facilities, 75 of which will be in metropolitan areas, and 300 community or cluster-based plants.
- The government’s steps to exempt the basic customs duty on denatured ethyl alcohol will support the Ethanol Blending Programme and facilitate our endeavor for the energy transition.
- India is steadily approaching the net-zero carbon emission target of 2070, which would usher in a green industrial and economic transformation and this Union Budget 2023 will expand our focus on green growth. The Rs. 35,000 crore capital investment announced includes Rs. 5,000 crore for strategic storage filling of oil reserves and Rs. 30,000 crores in capital support for oil marketing companies (OMCs) to undertake initiatives that contribute to energy transformation goals.
- Further, the government has reduced the basic customs duties on many products, which will greatly benefit the manufacturing sector.
Personal Tax / Trading / Personal Finance

Expectations
- As per the recently published data, personal income tax collected by the government constitutes 46% of the total net direct tax collections. It indicates that individuals are major contributors to taxes in the country. The major expectations from a personal tax perspective are to enhance the limit for tax deductions under section 80C and enhance the threshold limit under section 80D.
- Prior to 2020-21, any dividend received from domestic companies was non-taxable however, this was abolished by the government and dividends were taxable. The current taxation policies on dividends earned are more favorable for the NRIs (20%) than the local citizens (20.8% to 35.88%). Hence, the capping of income tax on dividends will be closely monitored and there are certain reliefs expected here.
Actual
Five major announcements made in the space of personal tax:
- The rebate limit increased to Rs. 7 lacks in the new tax regime. Thus, persons in the new tax regime, with income up to Rs. 7 lacks will not have to pay any tax.
- The tax structure changed in this regime by reducing the number of slabs to five and increasing the tax exemption limit to Rs. 3 lacks.
- The benefit of the standard deduction is extended to the new tax regime for the salaried class and the pensioners including family pensioners. Each salaried person with an income of Rs.15.5 lakh or more will thus stand to benefit by Rs.52,500.
- The highest surcharge rate is reduced from 37% to 25% in the new tax regime. This would result in the reduction of the maximum tax rate to 39% from 42.74%.
- Lastly, the limit of Rs. 3 lakhs tax exemption on leave encashment on the retirement of non-government salaried employees is increased to Rs.25 lakh.
Entrepreneurship/MSME

Expectations
- The major expectation here is to get enhanced access to working capital and a simplified tax and compliance structure. The business here is small and functions with a limited workforce – taxation and compliance can be a costly affair for MSMEs. A simplified structure is expected so that businesses can focus on their primary objectives and devote additional time to building innovations.
Actual
- The Finance Minister announced a revamped Credit guarantee scheme for MSMEs from 1 April 2023. It infuses Rs 9000 crore into the corpus. This enables an additional collateral-free credit guarantee of Rs 2 lakh crore and lowers the cost of credit by 1 percent. It comes as good news for MSMEs that are still recovering from the wrath of the pandemic.
- Micro enterprises with a turnover of up to Rs. 2 crore and certain professionals with a turnover of up to Rs. 50 lakh can avail of the benefit of presumptive taxation.
- The Union Finance Minister proposes to provide enhanced limits of Rs. 3 crores and Rs. 75 lacks respectively, to the taxpayers whose cash receipts are no more than 5%.
- Moreover, to support MSMEs in the timely receipt of payments, the deduction is allowed for expenditure incurred on payments made to them only when payment is actually made.
- In cases of failure by MSMEs to execute contracts during the Covid period, 95 percent of the forfeited amount relating to bid or performance security, will be returned to them by government and government undertakings. This will provide relief to MSMEs.
- The Finance Minister, while citing entrepreneurship as vital for a country’s economic development, proposed to extend the date of incorporation for income tax benefits to start-ups from 31 March 2023 to 31 March 2024. Additionally, startups were provided with the benefit of carrying forward losses on change of shareholding from seven years of incorporation to ten years.
IT & Exports

Expectations
- India exports have increased to a record high of $420 billion in FY23, despite the global supply chain disruption post-Covid pandemic. An increase in the Union Budget 2023 limit to Rs. 40,000 crores is expected by exporters in the Remission of Duties and Taxes on Export Products (RoDTEP) scheme.
- Council for Leather exports expects reinstatement of ‘duty-free’ imports for raw materials. The FIEO(Federation of Indian Exporting Organizations) is expecting support from the Centre and encouragement from large Indian entities to build an Indian shipping line to reduce dependency on foreign shipping lines.
Actual
- The allocation for FY23 in the IT Ministry is nearly double that in the year 2020-21.
- Fiscal support from the government for Digital Public Infrastructure (DPI) will continue and remain the same as in the previous year.
- The budget estimates for the Ministry of Electronics and Information Technology have been increased from Rs. 11719.95 crores to Rs. 16549.04 crores for this fiscal year.
Pharma

Expectations
- An introduction to population screening programs under the Ayushman Bharat Scheme for infectious diseases management.
- To set the pace for propelling the pharmaceutical industry forward, Union Budget 2023 should help fuel innovation and R&D. The Centre should provide supportive policies and easier GST norms and regulations for the pharmaceutical manufacturing Industry.
- A need to put the impetus on the research-linked incentive schemes for the long run. Incentive schemes expectations for companies making investments in drugs, chemical and biological entities and a 200% weighted deduction for those companies undertaking R&D in drugs and pharmacy.
Actual
- New programs to promote research in pharmaceuticals to be launched with Rs. 2,980 crores will be allocated towards health research.
- Union Budget 2023 allocation for the department of health is to be increased reaching Rs. 86,175 crores.
- Dedicated multidisciplinary courses for medical devices, implemented and supported by the government to ensure skilled manpower in MedTech and biotech sectors.
- Technology in select ICMR labs will be available for public and private medical institutions.
- The Finance Ministry in the written Union Budget 2023 has assured allocation of Rs. 1,250 crores for major government schemes like ‘Development of Pharmaceutical Industry’.
Rural

Expectations
- As per UBS India, the Union Budget 2023 is likely to boost rural/agri spending by $10 billion, 15% higher than the previous year.
- An increase in allocations of funds is expected in existing schemes like MGNREGA, rural housing, roads, etc. Centre expects the funding for food subsidies to fall to Rs. 2.3 lakh crores along with fertilizer subsidies to 1.4 lakh crores.
- The government might allocate Rs 1.6 trillion towards the rural development ministry this fiscal year. Rural unemployment remained above 7 percent and according to the rural development ministry website, it has spent almost 632.6 billion rupees on the jobs program.
Actual
- Agri accelerator fund will be set up to encourage agri startups in rural India. Special savings schemes will be started to empower rural women in households. There has been an increase in cash transfer schemes through PM Kisan Yojna and about 11.3 crore farmers have received income support with the scheme.
- The Finance Minister announced the agriculture credit target would be increased by 11% from the previous year to Rs. 20 lakh crores in FY23 targeted at Animal husbandry, Dairy and Fisheries sectors. A 2% interest subsidy to ensure farmers are allocated a loan of up to Rs. 3 lakhs with a 7% pa interest rate from financial institutions. Along with food, fertilizer subsidy allocation will remain at Rs. 1.75 lakh crore.
- The RBI has decided to increase the cap for collateral-free agriculture loans from Rs. 1 lakh crores to Rs. 1.6 lakh crores. 10,000 bio-input resource centers will be set up to facilitate 1 crore farmers in adapting natural farming.
- PM Kisan Samman Nidhi Yojna will remain unchanged at Rs. 6,000, to be paid in 3 equal installments over the year.
Conclusion
One can see that most measures were in line with the expectations. Yet, the challenge will remain to fulfill these outlay promises with in-line revenue receipts, primarily from indirect taxes and GST. The highest event outlay in Railways and infrastructure will require similar value-added earnings for the government as well.
DISCLAIMER: This article is not meant to be giving financial advice. Please seek a registered financial advisor for any investments.
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