India to near double per capita income in next 5 years: Nirmala Sitharaman
Union Finance Minister Nirmala Sitharaman on Friday said India would achieve near doubling of per capita income in the next five years.
Record capital investment of Rs 10 lakh crore proposed; income tax rebate raised to Rs 7 lakh in new tax regime for individuals.
The Union Budget, 2023-24 presented to Parliament by Finance Minister Nirmala Sitharaman on Wednesday, builds boldly on the momentum of post-pandemic growth, proposing a double-digit capital investment outlay of Rs 10 lakh crore, rationalising indirect taxes and raising tax rebate to Rs 7 lakh in the new tax regime for individuals.
The new tax regime for personal income was introduced in 2020 but only a small fraction of taxpayers opted for it. To incentivize the new regime, the Finance Minister has proposed several concessions, and the new tax regime is the default tax regime now. The taxpayers will however continue to have the option to avail the benefit of the old tax regime.
Currently, those with an income of up to Rs 5 lakh do not pay any income tax in both old and new tax regimes. The Budget has proposed to increase the rebate limit to Rs 7 lakh in the new tax regime. In another relief, the tax slabs for the middle-class individuals have been reduced to five from six, and the tax exemption limit is raised to Rs 3 lakh.
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This will provide a major relief to all taxpayers in the new regime, the finance minister said. An individual with an annual income of Rs 9 lakh will be required to pay only Rs 45,000. This is only five per cent of his or her income. It is a reduction of 25 per cent on what he or she is required to pay now, ie, Rs 60,000.
The Budget proposes a next-generation Common Income Tax Return Form for taxpayer convenience and strengthening of the grievance redressal mechanism.
For the benefit of the salaried class and the pensioners, including family pensioners, the standard deduction is being extended to the new tax regime. Each salaried person with an income of Rs 15.5 lakh or more will thus stand to benefit by Rs 52,500.
In another major change in personal income tax, the Budget proposes to reduce the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime. This would result in reduction of the maximum tax rate to 39 per cent. At present the highest tax rate in the country is 42.74 per cent.
The Budget proposes much-awaited changes sought by senior citizens. The maximum deposit limit for Senior Citizen Savings Scheme is being enhanced from Rs 15 lakh to Rs 30 lakh. The maximum deposit limit for the Monthly Income Account Scheme will be enhanced from Rs 4.5 lakh to Rs 9 lakh for a single account and from Rs 9 lakh to Rs 15 lakh for a joint account.
There is a substantial tax relief in leave encashment. The Budget said the limit of Rs 3 lakh for tax exemption on leave encashment on retirement of non-government salaried employees was last fixed in the 2002, when the highest basic pay in the government was Rs 30,000 per month. “In line with the increase in government salaries, I am proposing to increase this limit to Rs 25 lakh,” she said.
The 2023-24 Budget estimates total receipts, other than borrowings, at Rs 27.2 lakh, and the total expenditure at Rs 45 lakh crore.The net tax receipts are estimated at Rs 23.3 lakh crore.
The fiscal deficit is estimated to be 5.9 per cent of the GDP.
To finance this fiscal deficit in 2023-24, the net market borrowings from dated securities proposed are Rs 11.8 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at Rs 15.4 lakh crore.
“In my Budget Speech for 2021-22, I had announced that we plan to continue the path of fiscal consolidation, reaching a fiscal deficit below 4.5 per cent by 2025-26 with a fairly steady decline over the period,” Sitharaman said.
“We have adhered to this path, and I reiterate my intention to bring the fiscal deficit below 4.5 per cent of GDP by 2025-26,” said the Union finance minister.
In the current financial year 2022-23 (FY), the revised estimate of the total receipts, other than borrowings, is Rs 24.3 lakh crore, of which the net tax receipts are Rs 20.9 lakh crore.
The total expenditure for FY23 is expected to be Rs 41.9 lakh crore, of which the capital expenditure is about Rs 7.3 lakh crore. The current financial year is closing with a fiscal deficit of 6.4 per cent of GDP, adhering to the Budget Estimate.
In the coming financial year, the capital investment outlay of the government is being increased steeply for the third year in a row by 33 per cent to Rs 10 lakh crore, which will be 3.3 per cent of GDP. This will be almost three times the outlay in 2019-20, the Finance Minister said.
The direct capital investment by the Centre is complemented by the provision made for creation of capital assets through Grants-in-Aid to States. The ‘Effective Capital Expenditure’ of the Centre is budgeted at Rs 13.7 lakh crore, which will be 4.5 per cent of GDP.
To help state governments with capital expenditure, the finance minister said, “I have decided to continue the 50-year interest free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of Rs 1.3 lakh crore.” \
The entire 50-year loan to states has to be spent on capital expenditure within 2023-24. Most of this will be at the discretion of states, but a part will be conditional on states increasing their actual capital expenditure. Parts of the outlay will be linked to, or allocated for purposes like scrapping old government vehicles and urban planning reforms.
A capital outlay of Rs 2.40 lakh crore has been provided for the Railways. This highest ever outlay is about nine times the outlay made in 2013-14.
She said, “Our current year’s economic growth is estimated to be at 7 per cent. It is notable that this is the highest among all the major economies. This is in spite of the massive slowdown globally caused by Covid-19 and a war. The Finance Minister said in the 75th year of our Independence, the world has recognised the Indian economy as a ‘bright star’
To improve bank governance and enhance investors’ protection, certain amendments to the Banking Regulation Act, the Banking Companies Act and the Reserve Bank of India Act are proposed.
To commemorate Azadi Ka Amrit Mahotsav, a one-time new small savings scheme, the Mahila Samman Savings Certificate, will be made available for a two-year period up to March 2025. This will offer a deposit facility up to Rs 2 lakh in the name of women or girls for a term of two years at fixed interest rate of 7.5 per cent with partial withdrawal option.
Presenting the Budget, she said, “We envision a prosperous and inclusive India, in which the fruits of development reach all regions and citizens, especially our youth, women, farmers, OBCs, Scheduled Castes and Scheduled Tribes.”
India’s rising global profile is because of several accomplishments: unique world class digital public infrastructure, e.g., Aadhaar, Co-Win and UPI; Covid vaccination drive in unparalleled scale and speed, she said.
The finance minister said the indirect tax proposals aim to promote exports, boost domestic manufacturing, enhance domestic value addition, encourage green energy and mobility. A simplified tax structure with fewer tax rates helps in reducing compliance burden and improving tax administration. “I propose to reduce the number of basic customs duty rates on goods, other than textiles and agriculture, from 21 to 13,” she said.
Mobile production has increased several times in the country. “To further deepen domestic value addition in manufacture of mobile phones, I propose to provide relief in customs duty on import of certain parts and inputs like camera lens and continue the concessional duty on lithium-ion cells for batteries for another year,” she said.
“To promote value addition in the manufacture of televisions, I propose to reduce the basic customs duty on parts of open cells of TV panels to 2.5 per cent,” she said. The National Calamity Contingent Duty (NCCD) on specified cigarettes was last revised three years ago. This is proposed to be revised upwards by about 16 per cent, she said.
Ensuring food and nutritional security, from 1st January 2023, the government is implementing a scheme to supply free food grain to all Antyodaya and priority households for the next one year, under PM Garib Kalyan Anna Yojana (PMGKAY). The entire expenditure of about Rs 2 lakh crore will be borne by the Central government.
The outlay for PM Awas Yojana is being enhanced by 66 per cent to over Rs 79,000 crore. The government’s efforts since 2014 have ensured for all citizens a better quality of living and a life of dignity. The per capita income has more than doubled to Rs 1.97 lakh. In the nine years of the Narendra Modi Government, the Indian economy has increased in size from being 10th to 5th largest in the world.
The Budget focuses on seven priorities which complement each other and act as the ‘Saptarishi’ for guidance through the Amrit Kaal, the finance minister said. These are Inclusive Development, Reaching the Last Mile, Infrastructure and Investment, Unleashing the Potential, Green Growth, Youth Power and Financial Sector.
The agriculture credit target will be increased to Rs 20 lakh crore with focus on animal husbandry, dairy and fisheries. A new sub-scheme of PM Matsya Sampada Yojana will be launched with a targeted investment of Rs 6,000 crore to encourage activities of fishermen and related businesses.
Promotion of tourism will be taken up with a mission mode, with active participation of states, convergence of government programmes and public-private partnerships. With an integrated and innovative approach, at least 50 destinations will be selected through challenge mode.
For enhancing ease of doing business, more than 39,000 compliances have been reduced and more than 3,400 legal provisions have been decriminalized. For furthering the trust-based governance, we have introduced the Jan Vishwas Bill to amend 42 Central Acts. This Budget proposes a series of measures to unleash the potential of the economy, the Finance Minister said.
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