BEST FOR THE LAST

How Finance Minister Nirmala Sitharaman hit the spot with her fifth and final full Union Budget

Sunjoy Hans

Expectations were running sky-high in the days leading up to the unveiling of Union Budget 2023-24. Given that this was the last full budget of the Modi 2.0 government what with the Lok Sabha elections coming up next year, stakeholders across all sectors – not to mention the common people at large – were hoping that Finance Minister Nirmala Sitharaman would go all out to address their concerns and redress their problems this time. The fact that she had been holding numerous rounds of discussions with public officials from various sectors and representatives of several industries ahead of the big day had added to the anticipation in no small measure.

As the Finance Minister began presenting her fifth straight Union Budget in the morning of February 1, she further added to that sense of optimism by announcing right at the outset that the Indian economy was on track towards a bright future. “Our focus on reforms and sound policies resulting in Jan Bhagidari (public participation) helped us in trying times, our rising global profile is due to several accomplishments,” Sitharaman said, hailing the rise of India from being the 10th largest economy in the world to being the fifth largest one over the past nine years.

Declaring that the Narendra Modi government’s vision was focused on providing opportunities to the public, giving impetus to growth and employment creation, and strengthening the nation’s macroeconomic stability, Sitharaman outlined the seven priority areas of the Union Budget: inclusive development; reaching the last mile; infrastructure and investment; unleashing the potential; green growth; youth; and the financial sector.

By the time the Finance Minister completed her Budget speech, which lasted for 1 hour and 25 minutes, it was clear that she and the Modi government were walking the talk.

First and foremost, the budget was replete with relief for taxpayers. A new tax regime will come into effect, in which the slabs will be simplified. From now on, no tax will be levied on income up to Rs 7 lakh per annum. The previous limit used to be Rs 5 lakh per annum. The decision to have smaller slabs has clearly been aimed at benefiting the nation’s burgeoning middle class, which – despite the resilience and growth of the Indian economy – has been feeling the heat of price rise since the onset of the pandemic and the Russia-Ukraine war. The government has also offered added convenience to the taxpayers by clarifying that although the new tax regime will be the default tax system, those who wish to may still continue with the older tax regime for now. No wonder this move is being widely lauded by the Indian public.

Many experts were surprised about the reduction in budgetary allocation for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) to Rs 61,032.65 crore for 2023-24 – which is 30 per cent less than the revised estimate of Rs 89,154.65 crore for 2022-23. The decision was questioned all the more because – as a rural job guarantee scheme – it had been a lifeline for migrant workers after they were forced to return to their native places after the Coronavirus-induced nationwide lockdown was imposed by the government in March 2020. In addition to that, the budgetary allocation for food and public distribution too was decreased from Rs 2,96,303 crore for 2022-23 to Rs 2,05,513 crore for 2023-24.

However, the government more than made up for that in other ways. It has ramped up the agricultural credit target to Rs 20 lakh crore, a move that is widely believed to be aimed at placating the nation’s farmers and helping both sides move on from the year-long agitation that certain sections of the agricultural community had launched against the three controversial farm laws.

It has announced an Agriculture Accelerator Fund for encouraging young agri-entrepreneurs with their startup efforts in rural areas. The main goal of the fund will be to facilitate innovative and affordable solutions for challenges faced by the farming community, apart from ushering in modern technologies to transform agricultural practices, increase productivity and profitability.

Also, the government has raised the allocation for Pradhan Mantri Aawas Yojana (PMAY), a scheme aimed at providing housing for rural and urban poor, by a whopping 66 per cent to Rs 79,000 crore.

Stakeholders from all sectors of the agriculture industry have hailed the Budget as one that envisages a positive outlook for the agriculture and animal husbandry, dairy and fisheries sectors and one that will ensure long-term growth in all these sectors in the coming years.

“The Budget has proven to showcase that the future of the agriculture sector in the country is bright, with its well-researched, and nuanced focus towards the sector,” said Karthik Jayaraman, Co-Founder and Managing Director, WayCool Foods and Products Ltd, a food and agri-tech platform.

Suguna Group chairman B. Soundararajan said: “We are glad to hear a number of farmer-friendly initiatives by Finance Minister Nirmala Sitharaman which undoubtedly will support our agricultural economy and accelerate growth amongst other sectors such as animal husbandry, dairy and fisheries.”

The Agriculture Acceleration Fund would be extremely useful in stimulating agricultural start-ups in rural areas through a collaboration between the farmers, state, and the sector, he added.

In its continuing bid to revive and boost national economic growth in the post-pandemic era, the Modi government has allocated a record Rs 10 lakh crore on longer-term capital expenditure, a hike of 33 per cent from the previous Union Budget which will make for 3.3 per cent of the GDP in the 2023-2024 financial year.

While Sitharaman set the fiscal deficit target of 5.9 per cent of GDP for 2023-24, she also revealed that the government is committed towards bringing it below the 5 per cent mark by 2025-26.

The Finance Minister’s statement about the economy being on track to a brighter future was evident as the Budget announced an outlay of Rs 2.4 lakh crore for railways – four times higher than last year’s budget and probably the highest in the past decade.

“This is about nine times the outlay made in 2013-14,” Sitharaman said, comparing it with the final year of the Congress-led UPA regime.

The enhanced outlay is expected to help the rollout of major projects, including new Vande Bharat trains (some 75 such trains are scheduled to be ready for operation by August this year), electrification of railway lines and others. As per the recently released Economic Survey 2022-23, Indian Railways has already witnessed impressive growth in capital expenditure (capex) on infrastructure. The Modi government’s infra push goes far beyond the railways sector, though; the new Budget promises 50 new airports and helipads as well, among other things.

The defence sector saw a massive hike of 12.9 percent in budgetary allocation, with Rs 5.93 lakh crore put aside for it in Budget 2023-24. While a much smaller hike of 6.57 per cent, at Rs 1.62 lakh crore, was placed in modernisation funds, the revenue budget – involving the pay and allowances of defence personnel – witnessed an increase of around 17.39 per cent. This includes Rs 4,266 crore towards the Agnipath scheme, which was announced last year, with the first batch of Agniveers across the three services currently undergoing training.

Just as the Finance Minister had promised earlier, the latest Budget was also focused on women’s empowerment. The Mahila Samman Savings Certificate – a one-time new small savings scheme – will be in effect for a two-year period up to March 2025. “This will offer deposit facility up to Rs 2 lakh in the name of women or girls for a tenure of two years at fixed interest rate of 7.5 per cent with partial withdrawal option,” Sitharaman said.

Announcing that the maximum deposit limit for senior citizen savings scheme would be doubled, from Rs 15 lakh to Rs 30 lakh, she added that the maximum deposit limit for monthly income account scheme would also be raised from Rs 4.5 lakh to Rs 9 lakh for single account and from Rs 9 lakh to Rs 15 lakh for a joint account.

The government’s commitment to support the weaker and more vulnerable sections of the society was perhaps most impressively visible in the Finance Minister’s announcement of a special development fund for tribal and marginalised communities.

“Pradhan Mantri PVTG (particularly vulnerable tribal groups) Development Mission is being launched to improve the socio-economic condition of the vulnerable groups. A total of Rs 15,000 crore will be made available to implement the scheme in the next three years.” the FM announced in her Budget speech.

Similarly, the Northeast region – which had been historically neglected until a few years ago – is set to gain substantially from the Budget 2023-24. Abhijit Barooah, former chairman of Confederation of Indian Industry (CII) North East Council, said that the Agri Accelerator Fund will go a long way in turning around the fortunes of agri start-ups, young entrepreneurs and farmers through facilitation of innovative solutions.

Hailing Sitharaman’s Budget announcement about the establishment of 157 new nursing colleges, which will be co-located with as many medical colleges launched since 2014, Barooah expressed confidence that India will reap demographic dividends through it. As Indian nurses, particularly from the northeastern states, are in demand worldwide, he told the media, the entire region will benefit from the move.

The CII Northeast Council leader also noted that what with the government’s focus on the energy sector, the Northeast – with four oil refineries – stands to gain much from the latest budgetary allocation of Rs 19,700 crore to the National Hydrogen Mission aimed at enhancing hydrogen production capacity of 5 metric million tonnes by 2030, along with fulfilling India’s net zero and green commitments.

The Modi government’s commitment to promoting tourism in mission mode this year will also help the Northeast, which has abundant scope of further showcasing its natural and cultural riches to the rest of the world, he continued.

Given the substantial numbers of Eklavaya Model Residential Schools in the region, Barooah added, said the Budget’s proposal of enhancing the number of teachers and support staff will improve the quality of education in the far-flung regions of the Northeast.

Barooah was among many others from India Inc that had high praise for the latest Union Budget.

The Federation of Indian Chambers of Commerce and Industry (FICCI) applauded the Budget as one that will strengthen the fundamental pillars of the economy and ensure resilience, inclusivity and sustainability.

Subhrakant Panda, president of FICCI, said: “Budget is balanced and progressive which gives primacy to inclusive growth. The announcements made today capture the pulse of the economy while retaining credibility both in terms of projections as well as committing to the fiscal consolidation glide path. Most importantly, a historic outlay for public capex is a continuation of the heaving lifting since the time of the pandemic and will have a multiplier effect across myriad sectors of the economy besides crowding in private investment.”

“The government is committed to ensuring manufacturing competitiveness, ease of doing business, reducing compliance touch points, and supporting livelihoods across sections. This indicates a continuation of the good work the government has done,” Panda added.

Hinduja Group Co-Chairman Gopichand P. Hinduja lauded the Finaance Minister, saying that when India “is the lone shining star in the world facing threats of recession”, she delivered a perfectly focused growth-oriented budget with massive capital investment outlays while reamining on track with the fiscal deficit reduction plan.

Hinduja also lauded the holistic, sustainable and inclusive approach of the Budget that “clearly reflects Prime Minister Narendra Modi’s long-term vision for India and it aims to engage with and carry every section of society towards the goal of a self-reliant and strong India”.

The Prime Minister himself described the Union Budget as the “first Budget of Amrit Kaal” (the 25-year period starting from 2022 through 2047, when India will celebrate 100 years of Independence), which would lay a strong foundation for a developed India.

“The first Budget of Amrit Kaal will build a strong foundation for building a developed India. It gives priority to the deprived. This budget will fulfil the dreams of an aspirational society including poor people, middle-class people, and farmers. I congratulate Nirmala Sitharaman and her team for this historic Budget,” he said in a televised address after the Union Budget was presented.

There can be no denying that the Union Budget 2023-24 is history in the making. If implemented as planned, it may in itself be more than enough to guarantee victory for the Bharatiya Janata Party in the Lok Sabha elections next year. The Finance Minister has not just met but exceeded the nation’s expectations with the latest Budget. She had saved the best for the last.