Sitharaman’s Budget to set tone for 2047

Arijit Bose

New Delhi: In India,  the mood  has been upbeat around Amritkaal. As India marches towards its centenary year of India’s Independence in 2047, Union Finance Minister Nirmala Sitharaman believes that Budget 2023-24, the last major budget of the government’s current tenure, will set the tone for the next 25 years.

India’s future lies in driving the economy by fuelling powerful technological innovations that empower people, and accelerate efficiencies. This in turn will boost changes in growth and revenue generation patterns. In its attempt to be future ready, India has already hit the reset button.

As Nirmala Sitharaman presents the budget, she will bring about changes on the individual income-tax front and the capital gains tax regime will grab attention. Different asset classes like real estate, equity investments, debt instruments among others, attract different rates of capital gains tax.

This Budget 2023-24 provides a big opportunity for India to streamline and simplify complexity in the treatment of capital gains.

Preferably the government would do well to fix holding period for all kinds of financial assets at 12 months to qualify as Long Term Capital Gains. The holding period for immovable properties can be raised to 36 months. Experts believe that introducing a uniform rate of 10 percent for LTCG and 15 percent for STCG for all financial securities would work wonders.

In the modern scenario, broader tax slabs, lower taxes, and very few exemptions is what India is looking at. This budget could very well put forth a simpler individual income tax slab with feasible rates changing what was existing since 2020.

The Finance Minister should and hopefully would address the issue of income inequality and access to quality education.  With one of the largest millennial populations, Budget watchers will see what Sitharaman does to create meaningful employment opportunities for a long period of time in specialized domains like Al, cloud and cyberspace.  For the economy to grow at 8-9 percent, it is required that the manufacturing and the services sectors grow at 10-11 percent, assuming agriculture grows at 4 percent.

Union ministries should help in the boosting up the Startup Revolution in a big way.  District Industries Centres (DICS) can play an important role in reorienting, retraining for entrepreneurship development, advocacy, mentoring and handholding startup MSMEs. The Budget may lay a concrete roadmap for funding startups in manufacturing, which have potential for growth with funding and subsidy. Entrepreneurial education will be another key thrust area.

This at a time when Startup funding in India has hit a two- year low.

To further the work of skilling manpower, a single body to enforce guidelines concerning labour and wages would be a much-needed step. Skilling and training manpower for participating in government projects will be helpful.

Micro, Small and Medium Enterprises (MSMEs) contribute nearly 8 percent to India’s GDP, and also drive manufacturing output and  exports.

As the FM walks into Parliament with her red bag, her acumen will be on test with regards to dealing with re-launch of the old pension scheme, her decisions on non-merit freebies, expanding contingent liabilities, and the issues of power distribution companies that call for immediate attention.

There are experts who believe that continuing with long-term loans is in the best interest of the people.  The government must contribute to state capex through allocation under capital expenditure to sustain growth. Pundits say fiscal deficit should be kept between 5.8 percent and 6 percent to attain a target of 4.5 percent of the GDP

Through Budget 2023, the capital expenditure for the financial year 2022 2023 has been increased by 35.4 percent to Rs 7.5 lakh crore by the Finance Minister.

The Department of Economic Affairs of the Ministry of Finance has also invited suggestions from the public regarding the budget.

According to the FY 2023 Final Budget, the government has also received suggestions to increase the tax base and remove surcharge and cess. In the words of the Finance Minister, the past experiences have proved to be very inspiring.

Real estate companies are expressing hope that under the upcoming budget, the government will also take steps on the availability of loans for them. According to the Budget 2023 Consultation, the market is also hopeful of a change in the income tax structure.

The government is of the view that there should be a discussion on raising the investment limit under section 80c keeping inflation in mind.

The general budget for the financial year 2023 is going to be the fifth consecutive budget by the Finance Minister. This is the time when the Indian economy is recovering after the Covid-19 pandemic. A massive public spending program for the Indian economy was announced by the Finance Minister.

The country’s first Prime Minister Jawaharlal Nehru, Chaudhary Charan Singh, ND Tiwari, Indira Gandhi, Rajiv Gandhi, Madhu Dandwate, Sachindra Chaudhary and SB Chavan presented the country’s budget once each while being the Finance Minister. Nirmala Sitharaman will leave these leaders behind by presenting her 5th budget.

So far, the record of presenting the budget for the most number of times is with Morarji Desai, who has presented the budget 10 times. After this, the name of P Chidambaram comes on the second number in this list. Chidambaram presented the budget 9 times. Pranab Mukherjee’s name comes at number three, he presented the budget 8 times. Yashwant Rao Chavan, CD Deshmukh and Yashwant Sinha presented the budget 7-7 times. At the same time, Manmohan Singh and TT Krishnamachari presented the budget 6-6 times.

For the first six months of the ongoing financial year, India’s fiscal deficit stood at Rs 6.20 lakh crore, or 37.3 per cent of annual estimates, widening from 35 per cent reported in the comparable year-ago period. On account of major subsidies on petroleum, food, and fertilizers, the government spent close to Rs 2 lakh crore, 63 per cent of the annual budget aim. But on account of subsidy expenditure, the government is expected to incur an additional outgo of Rs 3 lakh crore, adding to the fiscal pressure.

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