[ad_1]
The first budget of the Amrit Kaal continues to lay out a roadmap for a prosperous and inclusive India@100 and provides the needed impetus to achieve the $5 trillion economic vision. Like last year’s Budget, Union Budget 2023 continues the tradition of introducing the government’s plan in the form of themes. The seven priorities of the budget or the ‘saptarishis’ are growth oriented while still being sustainable and inclusive. They aim to set India firmly on the path to digital and technological innovation through several announcements on infrastructure development, youth empowerment, robust financial structure, artificial intelligence, and a shift to a carbon-neutral future by 2070.
Despite a slowdown in global growth and recessionary pressures in major advanced economies, India continues to be one of the fastest-growing economies at 6.5-7 per cent GDP growth. With its significant focus on infrastructure building, this growth-oriented budget will help us continue on this upward trajectory. The government proposes an effective capital expenditure of Rs 13.7 trillion, an increase of around 30 per cent over last year. This includes significantly revamping railways (50 per cent expenditure growth), logistics and regional connectivity, and furthering the Gati Shakti initiatives introduced in last year’s Budget. The significant increase in allocation to transport and railways is likely to help us reduce logistics costs, making us more competitive on the global stage. At the same time, the budget is also fiscally responsible, with the fiscal deficit estimated at 5.9 per cent of the GDP and a commitment to bring this below 4.5 per cent by FY26.
On the direct tax front, the budget supports ease of doing business, simplifies provisions and reduces compliance burdens. Interestingly, these are all elements that we mentioned in our wishlist of measures for Budget 2023 as part of PwC’s Immersive Outlook released earlier this year. A new rationalised income tax return form and deployment of 100 joint commissioners for disposal of small appeals are steps in this direction. Further, the government has attempted to make the new personal tax regime more attractive by increasing the rebate limit to Rs 7 lakh, favourably revising slab rates, extending standard deduction and reducing the highest surcharge rate from 37 per cent to 25 per cent (highest effective tax rate will become 39 per cent from 42.74 per cent). These tax reliefs are expected to leave more money in the hands of the consumer. While the aim is to boost consumption, the extent of the impact remains to be seen.
For certain sections of business, the potential impact of divergent measures will need to be analysed. For example, the extension of the sunset date of incorporation for claiming tax holidays and relief in relation to carrying forward and set-off of losses over an extended 10-year period will provide a boost to the start-up ecosystem. On the other hand, the proposal to tax investments from foreign entities that are above fair market valuation could dampen foreign funding in start-ups.
In line with the government’s agenda of strengthening domestic production and supply chains, relief has been provided in the form of reduced basic customs duty on several products, although the much-anticipated amnesty scheme was not announced. Further impetus to GIFT IFSC was expected and India Inc appears not to have been disappointed. GIFT continues to be a focus area of the government as we build a robust and globally competitive financial services centre in India. With investments in agricultural reforms, education and skill development, improving socioeconomic conditions for vulnerable groups, urban infrastructure development and renewable energy sector, no focus area appears to have been left unaddressed. At the same time, as the government takes various measures to help us achieve our targets, we must monitor the global geopolitical and business environment as it has the potential to impact our economy, specifically in terms of commodity prices.
All in all, the government has delivered on the heightened anticipation and expectations from this year’s budget and managed to please almost everyone by striking a fine balance between economic stability and turbocharging development. This Amrit Kaal budget has a futuristic and ambitious outlook in line with the government’s efforts towards strengthening India’s position in the global economy.
The writer is chairperson, PwC in India
[ad_2]
Source link
