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Budget Expectations 2023 – A Complete Analysis

calendar31 Jan, 2023
timeReading Time: 8 Minutes
Budget Expectations 2023 – A Complete Analysis

The Finance Budget for 2023 (Budget Expectations 2023) shall be presented in the parliament on 1 February 2023. The budget[1] is expected to focus on improving the funding for infrastructure, creating jobs, manufacturing, rural economy, and other important sectors. It is largely expected that the government shall provide tax reprieve to senior citizens and salaried employees while creating job opportunities and balancing fiscal deficit and capital expenditure. The government is also expected to allocate more funds to farmers and agriculture in general. Different industries and sectors have different expectations from the budget.  Scroll down to check Budget Expectations 2023.

In Agriculture Sector – Budget Expectations 2023

As per the Budget Expectations 2023, Industry experts open that the government should focus on increasing the cash assistance provided to farmers under the Pradhan Mantri Kisan scheme so that farmers can buy a sufficient amount of crop inputs like seeds, pesticides and fertilisers. There is also a need to provide incentives to agritech startups to facilitate the adoption of innovations and technologies in the agricultural sector, like drones, precision farming, and artificial intelligence, among other things. Farmers should be able to purchase drones at subsidised rates, and the manufacturers must be reimbursed the subsidy amount. Incentives and schemes to aid farmers in adopting new crop technology shall drastically help improve yields and returns.

Capital Expenditure

Many experts believe that the budget should focus on increasing capital expenditure and reviving the growth of private consumption in the country. The economy of India is majorly fuelled by consumption led by the middle class. Reducing direct and indirect taxes, which primarily affect the middle income and lower income groups, will help increase the consumption levels. An increase in capital expenditure will also help create employment and reduce systemic inefficiency.

Infrastructure Development

Considerable allocation of funds is expected for infrastructure development, with the railway, road and urban infrastructure being significant beneficiaries upcoming budget.

Manufacturing and Make in India

As per the Budget Expectations 2023, Industry players are expecting the broader focus of the budget it will be to continue promoting local manufacturing and exports open, keeping in line with the agenda of Make in India. Industry experts say that the supply side is being managed well, but the demand side of the supply chain needs more attention. Inflation has been difficult for a large group of society, and the government should look at producing both direct and indirect taxes.

The industry expects incentives Make in India to be extended to various sectors like furniture, toys, bicycle, white goods, and battery ecosystems, among other things, through the launch of PLI schemes. Many stakeholders also expect the government to facilitate the rationalisation of intermediates for sectors that have grown due to the PLI schemes and custom duty rates on finished goods. The PLI has already been rolled out by the government in many sectors like pharma, automobile, textiles, speciality steel, food products other things.

Tax Benefits – Budget Expectations 2023

It is expected that the government will provide some tax benefits and reprieve to the salaried employees and the middle class in an economy that is trying to recover from the pandemic and trying to stay afloat amidst inflation and global economic slowdown. The middle class is looking for some reprise in the front of personal tax with the hope that the basic exemption limit gets increased to ₹5,00,000 from ₹2.5 lakhs as it exists now. Moreover, people are also looking are the government to address the rising issue of unemployment and inflation and to make essential services and goods more affordable.

In the Budget Expectations 2023 that the threshold for exemption of interest from deposits made by senior citizens (fixed deposits, Savings Bank accounts, recurring deposit accounts) may be increased from the existing ₹50,000 to ₹75,000 – ₹1,00,000, which will have a lower fiscal cost.

Employment and Skill Development – Budget Expectations 2023

It is likely that the government will keep focusing on promoting economic growth and creating a favourable business environment which may also include various measures to increase the hiring of skilled professionals and other executives. It is also expected that the budget may have policies or schemes focusing on vocational training and skill development to increase the number of skilled workforce in the country which shall prove to be beneficial during executive hiring.

It may be expected that the government may announce tax benefits for companies which increase the hiring of scale professionals and executives. There could also be tax incentives for companies conducting development and training programmes along with deductions for executive compensation.

Strengthening the Startup Ecosystem – Budget Expectations 2023

It is expected that the government shall take measures to strengthen the startup ecosystem and address duty issues in various sectors to promote manufacturing domestically. It is also expected (Budget Expectations 2023) that the fiscal incentives shall be announced under the production linked incentive scheme for more sectors. Moreover, the government is also considering providing funds for various infrastructure project projects which have been approved by the Network Planning Group or the NPG, which was constituted under the PM Gati Shakti Initiative.

Strengthening the Fintech Industry – Budget Expectations 2023

The expectations of the fintech industry from the budget are to have more regulatory clarity with respect to acceptable business models on the web3 platform, tax incentives and reducing restrictions on merchant discount rates. Tax incentives are expected for businesses that aid the digitisation of financial services, and tax incentives in relation to mergers and acquisitions which might help in consolidating an industry which is highly fragmented. Tax benefits for web3 platforms might help reduce capital drain and brain drain, which has been increasingly observed in non-fungible tokens, digital assets and the web three space. Relaxed rules around the merchant discount rate or MDR are also expected as also synchronising the legal framework spanning across various regulatory authorities to facilitate efficient compliance.

Tax benefits are expected for retailers, consumers and Ecosystem enablers in relation to the growth of digital payments. Moreover, industry players are on the upcoming budget to provide support collaborations between fintech and banks to boost innovations in the fintech industry.

Moreover, it is also believed that the ESOP policy how to be more relaxed in order to avoid dual taxation. The government was also looking into making more flexible co-lending modules for large private banks and PSUs to participate on the basis of the credit underwriting modules.

GST subsidy is expected for fintech players reaching tier 2, tier 3, and tier 4 towns using technology and successfully running microfinance programs for the unbanked segment of the society.

Industry players also expect that the priority status granted to gold loan NBFCs be restored with respect to gold loans along with micro loans to micro businesses and farmers. It is also expected that the government allows the securitisation of short term goal loans, the other requirement of the minimum holding but with the 20% minimum retention requirement of the book value of the loans which are being securitised or 20% cash flows arising from the assigned assets.

Real Estate Sector – Budget Expectations 2023

In Budget Expectations 2023, It is expected that the government extends the credit linked subsidy scheme or CLSS what three more years up until 20:27 in the budget in order to provide incentives to first time homebuyers. The CLSS was introduced by pm Narendra Modi for the middle-income group in 2016. The CLSS has already been granted an extension till 2024.

Stakeholders and the industry will be expecting an increase in the percentage of house rent allowance in metro cities which the employees can claim as tax deductions which shall, in turn, offset a higher cost of living in such areas. The creation of a separate section for principal repayment deduction of housing loans under the Income Tax Act will make it easier for taxpayers to claim reduction and also give an additional incentive to people to invest in properties. Also, The government should consider raising the maximum loss, which can be claimed tax deduction under house property. This will allow financial relief to individuals who own many properties incurring losses due to many factors like income from the rent being less than payment of mortgage interest or vacancy.

Industry players are also looking to follow government take measures to improve rural housing. Since the low income rural housing segment, with the ticket sizes ranging between ₹8,00,000 to 15,00,000 and the income of the borrower being under ₹3,00,000 annually is where there is an acute need for adequate housing. It is expected that the government provides special incentives to builders and customers in this area to address the supply and demand mismatch, as there are limited projects catering to consumers in this section.

In Budget Expectations 2023, it is also expected that the government revises the limits on home loan principal and interest rebates under Section 80 C and Section 24 to help the consumer during inflation.

Education Sector – Budget Expectations 2023

Increased budgetary allocations towards the edtech sector to execute NIPUN Bharat through remote teaching models, along with partnerships between private and public stakeholders, will be considered a welcome step. As provided under the NEP 2020, The priority of education systems m word universal foundational numeracy and literacy to students are the primary school level by the year 2025. However, the recent ASER report has shown a sharp decline in the basic arithmetic and reading skills of young students in primary schools in India. To achieve the basic requirement of reading, arithmetic and writing at the foundational level, it is expected that there would be an increase in funds allocated to the NIPUN Bharat scheme.

The pandemic saw education being imparted efficiently through remote means using smartphones and other digital devices. Increased fund allocation to bridge the digital divide in underserved communities can help effectively implement the NIPUN Bharat scheme using similar teaching methods.

In Healthcare Sector – Budget Expectations 2023

Due to the adverse effects of the COVID-19 pandemic on the nation’s public healthcare system, it is anticipated that public expenditure on healthcare will be one of the main areas of focus in the upcoming budget. The budget of 2022 allocated ₹86201 Crore to the ministry of health and family welfare which was a considerable increase of almost 16.5% from what was allocated in the year 2021. A similar rise is expected in the budget 2023 as the healthcare sector needs to continuously develop sustainable infrastructure and ensure having a system in place which can handle the rising healthcare demands of the country.

The government of India is expected to increase the nation’s primary healthcare structure by tapping into the private and public partnership model. Moreover, measures to ensure ease of doing business in India and piece of GST norms increase investment in the healthcare sector to facilitate long term growth in the industry. Digital healthcare, which has been the focus of the Ayushman Bharat digital mission, is expected to we are located funds to contribute to its growth. It is expected that by the year 2047, there will be efficient digitalisation what the healthcare sector, which shall cover nearly the whole of India.

The healthcare sector has been urging the government to increase spending on research and development and innovation in the healthcare sector adoption of new technology in budget 2023. It has also been expressed that the allocated health budget requires a hike of at least 30-40 per cent in order to meet the needs of the healthcare industry.

Owing to the steep increase and many lifestyle related and non communicable diseases along with the impending chance of resurgence of the pandemic, the focus will lie on preventive healthcare in the upcoming budget with various incentives and policy frameworks put in place to support the healthcare sector along with investing in various technologies, widening accessibility, increasing patient safety and the number of skilled medical professionals in India. Many medical experts have opined there are high expectations for the allocation of funds to standardise the diagnostic industry across the country.

Indian Medical Association has proposed to the government that deficit funding is the prominent reason for the lack of penetration of the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana. It is also suggested that the funds for AB-PMJAY should be exclusively used for the private sector to create a retainer system and for strategic purchases and not to fill the critical gaps in the government hospital funding.

Tech Sector

The industry experts an increase in strategic investment and boosting tech companies that play a significant role in strengthening significant campaigns of government. Industry players expect the government to allocate more funds to promote research and development, rationalise taxes, and provide incentives turn increase manufacturing which is in line with the vision of the Make in India campaign. Another essential factor which the upcoming budget should address is cost management in the logistics industry, which is currently at 14% of GDP, and the reduction expected is 8 to 10%. Moreover, a reduction in corporate taxes will eat Indian tech companies to expand their business in the global market.

It is also expected that there will be a greater allocation of funds to technology and artificial intelligence for various solutions like face recognition best ticket systems, GPS based toll systems, and automated highway management, among other things.

Expectations of Women

To fuel women’s empowerment further, it can be expected that the government may increase the number of schemes which shall be funded under the gender budget or increase the monetary cap in the existing women centric schemes, provide subsidies for tax relief to women entrepreneurs, special reservations in startup schemes, rise in the amount of pension plan or coverage for women among other things.

Conclusion

The budget of finance for the year 2023 shall be presented in the parliament on 1 February 2023. The government is expected to focus largely on job creation, agriculture, manufacturing, infrastructure, and tax benefits to senior citizens and salaried employees.

Read Our Article: Budget 2022-23: Major Highlights And Key Announcements

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