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VOL. 17 NO. 28
Thursday, February 2, 2023
livemint.com
mint primer
QUICK EDIT
All that you need
to know about
this year’s budget
Tax: Value
for money
BY VIVEK KAUL
Finance minister Nirmala Sitharaman’s budget speech was all of 13,761
words, a little over two-fifths longer than her speech in 2022. Here are
the major points of the budget.
Cut to the chase
This time too, Sitharaman kept it short, and completed her speech in
about 90 minutes.
20,223
Length of budget speech (in words)
20,931
17,031
13,761
9,701
2019
2020
2021
2022
2023
Source: indiabudget.gov.in
1
Personal income tax
The big move here was the
increase in the rebate limit to ₹7 lakh
under the new tax regime. Up until
now, individuals with an income of
up to ₹5 lakh had to pay no income
tax under the new regime and the old
regime. Now, it largely makes sense
for everyone with an income of up to
₹7 lakh to move to the new regime.
2
Changed tax slabs
Further, the government has
changed the tax slabs under the new
regime. For example, up until
2022-23, those with an income of
₹5-7.5 lakh came under the 10% tax
bracket. From 2023-24 onwards,
those with an income of
₹6-9 lakh will come under this
bracket. This seems to be a nudge to
tax-filers to move towards the new
tax regime, which is simpler but
doesn’t come with the deductions
and exemptions like the old one
does. Nonetheless, if your income is
beyond ₹7 lakh, whether you should
be on the new regime or the old one,
depends on the exemptions and
deductions you claim, and your
specific salary structure.
3
Other goodies
The amount of money that can
be invested in the Senior Citizens
Savings Scheme has been increased
from ₹15 lakh to ₹30 lakh. The
current rate of interest on this
scheme is 8%. Most bank fixed
deposits currently offer 7.5% interest
to senior citizens. Other than this,
the maximum deposit under the
monthly income scheme of the post
office has been doubled to ₹9 lakh for
a single account.
didn’t increase the tax and the stock
market gave it thumbs up as soon as
the budget speech ended. But the
mood soon changed, with the Nifty
50 index ending the day almost flat at
17,616.3 points. In all this, Adani
Enterprises, fell by around 27% to
close the day at ₹2,179.75.
6 Economic growth
The Economic Survey released
on 31 January offered three reasons
for the revival of growth in 2022-23;
the pent-up consumer demand, a rise
in exports during the first few
months of 2022 and an increase in
the government capital expenditure.
The pent-up demand is expected to
run out of steam during 2023-24,
whereas a high growth in goods
exports looks dicey because growth
in developed countries is expected to
slow down. So, the government has
to play a major role in driving
economic growth all over again. The
budgeted government capital
expenditure is at ₹10 trillion during
2023-24, more than a third-higher
than in 2022-23. This money will go
towards the creation of new assets
and, hence, drive jobs and growth.
Finance minister Nirmala
Sitharaman seems to have
pulled off a fine balance, giving
significant relief to the salaried
without going overboard in her
last full budget before national
elections. Those earning up to
₹700,000 will be able to avail
rebate under the country’s new
income tax regime, up from
₹500,000, while its basic
exemption limit has been lifted
to ₹300,000 from ₹250,000.
To enhance the new tax option’s
appeal, the benefit of standard
deduction has been thrown in,
and its slabs have been reduced
to ease the burden on middlerange earners. There is relief for
the rich, too, with India’s top
effective tax rate slashed to 39%
from almost 43%. This move is
especially commendable, given
the psychological put-off that a
rate closer to half one’s earnings
than a third tends to constitute.
We need to stay globally competitive on this front, too, since
the well-off can move residence
easily, as some high-end tax
advisors recommend. While
nudging the middle class to shift
tax regimes is a good idea,
retaining would-be jurisdiction
shoppers is even better. The
exchequer is expected to take a
net ₹35,000 crore hit for these
giveaways. But it will probably
prove value for money.
9 Fiscal deficit
7
Jobs
The government plans to take
up the promotion of tourism on
mission mode. If done well, this can
create many jobs at the local level. It
also plans to launch Pradhan Mantri
Kaushal Vikas Yojana 4.0 to skill
lakhs of youth. This is an idea which
has been tried before. Further, the
government plans to set up 100 labs
for developing applications using 5G
services.
The fiscal deficit for 2023-24 is
expected to be at ₹17.9 trillion or 5.9%
of the gross domestic product (GDP).
Fiscal deficit is the difference
between what a government earns
and what it spends. This is lower than
the fiscal deficit of 6.4% for 2022-23.
Nonetheless, the government plans
to finance a bulk of this through a net
borrowing of ₹12.3 trillion in the next
financial year, slightly more than the
₹12 trillion it expects to borrow
during the current financial year.
Now this will happen in an
environment where household
financial savings have fallen. If the
situation stays the same, interest
rates will continue to stay high,
leading to high EMIs. If savings
increase, then consumption will take
a beating. There is no free lunch
here. The cost of the government
driving growth through higher
capital expenditure will be paid for
somewhere.
10
net worth
individuals
4 High
The highest effective income tax rate
currently stands at 42.74%. In 202324, this will be reduced to 39%. On
the flip side, the government has
decided to limit income tax
exemption from proceeds of
insurance policies of high value, with
an exemption being available only if
the aggregate premium during the
year is up to ₹5 lakh.
5
Stocks
The stock market was
primarily worried about any increase
in the long-term capital gains made
on the sale of listed shares and equity
mutual funds. The government
8 Interest paid on debt
In the last few years, the
government has had to spend more
to drive economic growth. This extra
spending has been majorly financed
through higher borrowing, leading
to the government having to pay a
higher interest on its accumulated
borrowings. In 2022-23, the
government will end up paying ₹9.4
trillion as interest on its borrowings
or around 22.5% of its expenditure.
In 2023-24, the interest payments
are expected to jump to ₹10.8 trillion
or around 24% of its expenditure.
Interest payments are the
government’s biggest expenditure.
Taxes
Tax collections are
expected to be robust in 2022-23,
with the revised gross tax numbers
standing at ₹30.4 trillion or a little
over 10% more than the budgeted
number. This has ensured that the
government’s fiscal deficit didn’t go
up, despite its expenditure increasing
to ₹41.8 trillion against the budgeted
₹39.4 trillion. The tax jump also
helped cover for the government not
being able to meet its disinvestment
target of ₹65,000 crore, with the
revised disinvestment figure
expected to be at ₹50,000 crore. The
government expects tax collections
in 2023-24 to be at ₹33.6 trillion or
around 10.4% higher than in the
current financial year, in line with
the assumed growth of 10.5% in the
nominal GDP (or GDP which hasn’t
been adjusted for inflation)
(Vivek Kaul is the author of Bad
Money. )
PLAIN FACTS
ASHISH ASTHANA/MINT
WHAT THE BUDGET
MEANS FOR YOU
New slabs with reduced tax rates
Budget 2023 has introduced a range of changes to the concessional tax regime, popularly known as the
new tax regime. This has made the new tax regime more attractive than before.
What's changed
Standard deduction of 50,000 for the salaried.
Surcharge of 25% (down from 37%) for incomes over 5 crore.
Tax exemption limit upped from 2.5 lakhs to 3 lakhs.
Tax rates rejigged - lower than before for many taxpayers.
Concessional tax regime (popularly known as 'new tax regime')
FY 2022-23
Income (in )
Up to 2,50,000
FY 2023-24
Tax rate (in %)
Income (in )
Nil
Tax rate (in %)
Nil
Up to 3,00,000
2,50,001 - 5,00,000
5
3,00,001 - 6,00,000
5
5,00,001 - 7,50,000
10
6,00,001 - 9,00,000
10
7,50,001 - 10,00,000
15
9,00,001 - 12,00,000
15
10,00,001 - 12,50,000
20
12,00,001 - 15,00,000
20
12,50,001 - 15,00,000
25
Above 15,00,000
30
Above 15,00,000
30
Source: Budget documents
Budget 2023 has proposed to reduce surcharge on incomes above ₹5 crore from 37% to
29%. This brings down the maximum marginal tax rate to 39% from 42.74% under the
concessional tax regime.
Budget 2023 has sweetened the concessional tax regime pot. It has proposed to hike the basic exemption limit to ₹3 lakh,
cut the tax slab rates and enhance tax rebate limit to ₹ 7 lakh from the current ₹5 lakh, which means individuals with incomes
of up to ₹7 lakh won’t pay any tax under the concessional regime. There is relief for the super-rich as well: the surcharge on
incomes above ₹5 crore is being slashed from 37% to 29%. This brings down the maximum marginal tax rate to 39% from
42.74%. The aim is to attract more taxpayers to the simplified concessional regime as it has found few takers since its introduction. While the proposed changes will considerably reduce the tax outgo for those who have already opted for the new regime,
switching from the old regime to the new one may not necessarily benefit you. Back of the envelope calculations show that
taxpayers who make investments to the tune of ₹4.2 lakh to avail tax sops under the old regime will fare better by sticking
to it. The table above shows the old tax slabs and the new tax slabs of the concessional tax system.
How your tax outgo will reduce
Here's how the tax liability for someone under the concessional tax regime will change from FY24.
A taxpayer with income of ₹9 lakh will pay ₹45,000 in tax as
opposed to ₹60,000 under the current slab
All figures (in )
Tax outgo under concessional tax regime (popularly known as 'new tax regime')
Income
FY 2022-23
FY 2023-24
700,000
33,800
Nil
1,000,000
78,000
54,600
1,500,000
195,000
145,600
2,000,000
351,000
296,400
5,000,000
1,287,000
1,232,400
Includes health and education cess @ 4% of income tax.
Source: Budget documents
With the proposed changes, tax outgo for taxpayers already under the concessional tax regime will change from FY24.
Incomes up to ₹7 lakh are exempt from paying any tax with the tax rebate limit increased. In fact, with standard deduction
of ₹50,000 made available to the salaried and pensioners, taxpayers in these categories with incomes up to ₹7.5 lakh will
pay zero tax. For incomes above ₹7 lakh, tax outgo has reduced by 20-30%.
For instance, a taxpayer with income of ₹9 lakh will pay ₹45,000 in tax as opposed to ₹60,000 under the current slab
rates. Similarly, tax outgo on ₹20 lakh income will reduce by about 15%.
The super-rich with earnings above ₹5 crore not only benefit from the reduced tax rates but also lowering of surcharge
that will reduce the effective tax rate from 42.7% to 39%. The above table explains the reduction in tax outgo with the new
slab rates.
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VOL. 17 NO. 28
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28 PAGES
Thursday, February 2, 2023
livemint.com
Capital
expenditure
aim for FY24,
33% more than the FY23
budget
₹10 tn
Target for fiscal
deficit-to-GDP
ratio for FY24,
with aim to reduce it to
below 4.5% by FY26
Government
sets aside
record
budget for Indian Railways for
the next fiscal year
5.9%
₹2.4 tn
Union finance
minister
Nirmala
Sitharaman’s shortest Budget
speech so far
87 min
A FINE BALANCE
Finance minister aims to strike a balance between prioritizing growth and fiscal prudence
Dilasha Seth & Subhash narayan
POLICY SNAPSHOT
NEW DELHI
50-yr interest-free loans for states
extended for a year to boost capex,
outlay increased to ₹1.3 tn
F
inance minister Nirmala Sitharaman on Wednesday delivered an
expansive budget amid global
economic turmoil, striking a balance between prioritizing growth
and fiscal prudence.
In the last full budget before the 2024
elections, Sitharaman tried to address the
expectations of large sections of society,
including the middle class, small businesses, farmers, women, and high networth individuals, offering sops and new
schemes.
With nine assembly elections in 2023
and the 2024 general elections looming
on the horizon, the Union budget offers
glimpses of the ruling Bharatiya Janata
Party’s playbook for the next two years.
“First budget of the Amrit Kaal lays a
strong foundation for the aspirations and
resolutions of a developed India,” said
Prime Minister Narendra Modi, reacting
to the proposals.
Sitharaman’s budget offered a blend of
measures designed to spur consumption,
such as income tax relief for the middle
class, high earners, and working professionals, and a record ₹10 trillion allocation
for capital spending to stoke growth and
100 5G-enabled labs for developing
apps; two AI centres of excellence
planned at educational institutions
Green growth gets push: green credit
programme launched, excise duty
exemption on blended CNG
₹35,000 crore for priority capital
investments towards energy
transition and net zero objectives
A one-time new small savings scheme
for women for two years with a deposit
facility up to ₹2 lakh
₹75,000 crore to be pumped into
100 key infra projects to improve
connectivity for industries
Agriculture accelerator
fund proposed for agri-startups in
rural areas
job creation.
Experts lauded the budget for sticking
to the fiscal consolidation path and targeting to contain fiscal deficit to 5.9% of GDP
in the year starting 1 April from 6.4% of
GDP in FY23.
Sitharaman reiterated the government’s intention to keep the fiscal deficit
below 4.5% of GDP by 2025-26.
“This was a workman-like budget that
was a pleasant surprise. No big stuff. The
capex push has been the key focus area
over the last few years. What I liked especially was that there were no tall promises,
especially as elections are around the corner,” said Pronab Sen, an economist and
former chairman of the National Statistical Commission.
However, financing the fiscal deficit
could pose a challenge to the government,
according to N.R. Bhanumurthy, vicechancellor of BASE University.
“The continuation of the capex strategy
by the government, especially increasing
the share of capital expenditure in the
overall fiscal deficit, will help sustain the
economy’s recovery process. However,
financing the ₹17.8 trillion fiscal deficit is
going to be a huge challenge, especially
when at a macro level, the strategy seems
The budget makes the need once again to
ramp up the virtuous cycle of investment and
job creation. Capital investment is being
increased steeply for the third year in a row.
NIRMALA SITHARAMAN, Finance minister
TURN TO PAGE 26
60,773.44
ASHISH ASTHANA/MINT
1.00pm
Intraday high
SENSEX
60,001.17
Market opens
59,708.08
Market closes
60,292.51
12.27pm
Budget speech
ends
59,549.90
Previous close
60,072.11
60,160.04
11.34am
FM announces
capex of ₹10 tn
12.23pm
FM rolls out
income tax
benefits for the
middle-class
60,094.06
58,816.84
2.50pm
Rout in Adani
Group stocks
and weakness
in the financial
services sector
drags down
markets
(intraday low)
11.00am
Budget
speech begins
SARVESH KUMAR SHARMA/MINT
Adani Ent pulls FPO in surprise U-turn
Ram Sahgal & Satish John
MUMBAI
T
he board of Adani Enterprises Ltd scrapped its
₹20,000 crore follow-on
public offering (FPO), citing
investor protection concerns,
as a massive selloff in Adani
group stocks continued for a
fifth day after a scathing report
alleging accounting fraud and
stock manipulation was
released by a US short seller.
Billionaire Gautam Adani’s
flagship is now working on
returning the funds raised
from investors lying in an
escrow account.
“Given the unprecedented
situation and the current market volatility, the company
aims to protect the interest of
its investing community by
returning the FPO proceeds
and withdrawing the completed transaction,” Adani
Enterprises said in an
announcement to the stock
exchanges late Wednesday
evening.
The FPO subscription
closed successfully on Tuesday, said Gautam Adani, chairman of Adani Enterprises.
Market tremors
The rout in Adani Group stocks continued for a fifth day.
(In %)
-28.45
-19.69
-16.56
-10.00
ADANI
ENTERPRISES
ADANI
PORTS
AMBUJA
CEMENTS
ADANI
TOTAL GAS
-5.95
-5.78
-4.99
-4.98
ACC
ADANI
GREEN
ADANI
WILMAR
NDTV
PARAS JAIN/MINT
“Despite the volatility in the
stock over the last week, your
(investors) faith and belief in
the company, its business and
its management has been
extremely reassuring and
humbling..... However, today,
the market has been unprecedented, and our stock price
has fluctuated over the course
of the day. Given these
extraordinary circumstances,
the company’s board felt that
going ahead with the issue will
not be morally correct.”
The company’s withdrawal
comes on a day the shares of
Adani Enterprises plunged
nearly 29%, dealing a massive
blow to institutional investors
and family offices that rescued
the offer on the last day.
“Anchor and HNI investors,
who’ve pumped most of the
money into the FPO, have hell
to pay for, taking a 30% haircut
from Day 1 after the offer
closed,” a senior banker affiliated with a foreign bank said,
requesting anonymity. “The
only way to salvage the situation was by calling off the FPO.”
A senior fund manager
termed the withdrawal a “disaster”, indicating investors in
the offering had become
“uncomfortable” after the
steep price fall. It could also
impact the capital-raising ability of the group.
However, founder Gautam
Adani said, “This decision will
not have any impact on our
existing operations and future
plans. We will continue to focus
on long-term value creation, and
growth will be managed by
internal accruals. Once the market stabilizes, we will review our
capital market strategy.”
He added that the company
was working with the investment bankers to refund the
share subscription funds. “Our
balance sheet is very healthy
with strong cash flows and
secure assets, and we have an
impeccable track record of servicing our debt,” Adani added.
A day after some family offices were said to have helped
salvage the Adani Enterprises
FPO, investors dumped frontline group stocks on reports of
a Swiss bank refusing to accept
Adani Group bonds as collateral for margin loans in light of
Hindenburg Research’s allegations of corporate fraud,
which the group has contested.
TURN TO PAGE 26
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02
ThursDay, 2 February 2023
New Delhi
LIVEMINT.COM
Capex bet and a welfare miss:
Story of Budget in nine charts
TEAM PLAIN FACTS
In the last full-year Budget before the 2024 general elections, finance minister Nirmala Sitharaman delivered her shortest speech, hitting all the right notes. A massive boost to capital expenditure
and income tax relief to the common public formed the highlight. Yet, the Centre is confident of keeping its fiscal math on the path to consolidation. However, this tightrope walk is set to come at
the cost of welfare schemes. We dig deeper into the big Budget numbers that will help the government see the economy through a year that’s set to be challenging at a global level.
Hearty Capex
Other Matters
Chart 4
I
n 2023-24, which is likely to see a global growth slowdown, the Centre has
budgeted a record capital expenditure of ₹10 trillion, up nearly 37% from the
revised estimate of the ongoing year. Capex will thus make up 22% of the total
spending, the highest share in nearly two decades (see chart 1). Revenue spending
will rise just 1%.
A breakdown of capex numbers shows that the Centre plans to do the heavylifting in the big impetus. In 2022-23, the ₹1.5-trillion increase in capex was
heavily reliant on a component that would go to states. But this time, the Centre’s
own share in capex is set to rise to ₹8.6 trillion, from ₹6.4 trillion, and this
increase constitutes 80% of the total capex jump. The high capex is expected to
aid economic growth through a multiplier effect.
Meanwhile, changes in the tax structure will provide relief to the public,
meeting the long-pending expectations of the middle class. The government is
hoping to generate more revenues from goods and services tax (GST) collections,
with its growth pegged at 12% (see chart 2). If that happens, GST collections would
outpace the nominal GDP in 2023-24. Corporate and income tax collections are
pegged to grow 10.5%, same as the GDP.
With this, GST is once again expected to be the highest tax revenue source, at
3.2% of GDP, and corporate tax, which was once the leader, slightly lower at 3.1%.
Many experts have criticized the heavy reliance on GST as it puts undue burden
on the poor, while lower corporate taxes have failed to revive private
investments. The key question will be whether the tax relief is able to offset the
impact that the ₹35,000 crore foregone revenue will have on consumption.
Sticking to the fiscal consolidation path, the finance minister set the fiscal
deficit target at 5.9% of GDP for 2023-24 (see chart 3) and reiterated the goal to
bring it down to 4.5% of GDP by 2025-26. The government has set the ambitious
fiscal deficit aim by reprioritizing spending from revenue to capital, which
experts say is a better spending mix to support growth.
Transport gets massive boost; rural
development, agri left behind
F
Expenditure on major items (₹ trillion)
Interest payments
Major subsidies
FY22
FY23 (RE)
Defence
FY24 (BE)
Transport
Rural development
Agriculture and
allied activities
Education
Health
Social welfare
0
2
4
6
8
10
12
inally, moving beyond the headline figures, it’s the sharing of revenue that has
often been a point of contention between the Centre and the states. While the
tension may not be as palpable as it was two years ago when the pandemic hit
states’ earnings, the declining share of states in the Centre’s gross tax collections
could reignite the debate. The share of states is budgeted at 30.4% of the Centre’s
gross tax collections, the lowest in three years, and substantially lower than the 3537% between 2015-16 and 2018-19 (see chart 7).
This may not sit well with some states, especially those with Opposition-led
governments, which have been demanding a continuation of the GST compensation
guarantee for two more years. (The compensation, in lieu of the losses the states
expected due to the imposition of the new regime in 2017, came to an end last year.)
Giving disinvestment targets a miss again, despite the public listing of Life
Insurance Corp. of India in May, the government’s stake sale plans have been
revised downwards to ₹60,000 crore in 2022-23 from ₹65,000 crore pegged
earlier. The budgeted target for next year is ₹61,000 crore, which is 6% lower than
the last budget estimates (see chart 8). Despite the lower expectation, this would still
require some large disinvestments for the government to be able to meet the goal.
Lastly, a bit about the list of items where the Centre expects to have overshot its
budget in the ongoing year (see chart 9). (The year is expected to end with a total
expenditure of ₹41.9 trillion, compared with a budgeted ₹39.4 trillion.) The Centre
saw the maximum pressure from fertilizer subsidies as the Russia-Ukraine war
pushed up prices. The continuation of the free foodgrain programme also led to
higher food subsidy costs than budgeted. Apart from subsidies, the government has
also seen an overspend owing to a one-time grant to oil marketers towards meeting
under-recoveries in domestic LPG. Despite the additional spending, the Centre still
expects to meet its fiscal deficit target of 6.4% of GDP, thanks to higher-than-expected
tax collections as well as higher-than-expected GDP. All in all, resisting the populist
temptations, the budget prudently appears to be a determined push for growth.
Chart 5
Massive cut to MGNREGS allocation,
budgeted at six-year low
Chart 1
Aggressive increase in outlay takes capex's share in
spending to 19-year high
Revenue expenditure (as a % of total spending)
Capital expenditure (as a % of total spending)
States set to receive lower share from
Centre's tax kitty
Allocation to MGNREGS (in ₹ crore)
Centre's transfers to states
In grants
(% of total spending)
120,000
Total expenditure
(y-o-y growth in %)
(Right-hand scale)
(Left-hand scale)
Chart 7
35
100
84
30
100,000
80,000
80
78
60
25
20
60,000
40,000
15
40
20,000
8
10
7
0
20
22
16
0
1999-00
‘22-23 ‘23-24
NDA-I
UPA-I & II
(RE)
NDA-III
NDA-II
5
2014-15
2021-22 2022-23 2023-24
(RE)
(BE)
2014-15
2014-15
2015-16
2015-16
2016-17
2016-17
2017-18
2017-18
2018-19
2018-19
2019-20
2019-20
2020-21
2020-21
2021-22
2021-22
2022-23 (RE)
2022-23 (RE)
2023-24 (BE)
0
Chart 6
Centre bets on GST tax revenue, while corporate,
income tax take backseat again
Gender budget (in ₹ trillion)
As % of total expenditure
(Left-hand scale)
(Right-hand scale)
Nominal GDP
10.5
9.2
20
25
30.4
0
5
10
Actual
2012-13
5
2013-14
15
20
25
30
35
40
4
2014-15
Budget estimate
1.5
2015-16
3
9.6
15
Disinvestment receipts: budgeted vs actual (in crore)
6
2
10.5
10
Disinvestment target remains elusive,
continues to undershoot estimates
Gross tax revenue, 2023-24 budgeted estimates (₹ trillion)
10.5
5
Chart 8
2.5
Year-on-year change* (%)
2023-24 (BE)
18.7
0
Gender budget as a proportion of total
expenditure sees a decline
(BE)
Chart 2
12
As sharing of tax revenue
(as % of gross tax revenue)
1
9.0
2016-17
2
2017-18
0.5
5.9
10.5
0
3.4
1
2018-19
RE: Revised estimates; BE: Budget estimates.
2018-19
0
2019-20
Source: Budget documents, CMIE, Mint calculations
2020-21
2022-23 (RE) 2023-24 (BE)
2.4
GST
Corporation
tax
Income tax
Union excise
duties
Other heads
W
*as compared to 2022-23 (revised estimates)
Chart 3
Centre's debt as share of GDP set to rise
despite fiscal consolidation
Central govt debt as % of GDP
Fiscal deficit as % of GDP
2012-13*
2012-13
2013-14*
2013-14
2014-15
2014-15
2015-16
2015-16
2016-17
2016-17
2017-18
2017-18
2018-19
2018-19
2019-20
2019-20
2020-21
2020-21
2021-22
2021-22
2022-23 (RE)
2022-23 (RE)
50.6
2023-24 (BE)
0
20
40
2023-24 (BE)
60
5.9
0
2
4
6
8
10
*Central government debt data is provisional
RE: Revised estimates; BE: Budget estimates.
2021-22
Welfare Costs
Source: Budget documents, CMIE, Mint calculations
2022-23*
ill the generous capex be socially inclusive enough? Lacklustre allocations,
or even cuts, for some key welfare schemes and sectors could be a major miss
(see chart 4). In 2022-23, the government was conservative in its budget
revenue expenditure target but is now set to overshoot it by 8.3% mainly due to the
growing needs of the slow-recovering rural economy. But in 2023-24, any muchneeded boost was absent. The overall allocation for rural development is set to decline
2.1% from the revised estimates of 2022-23 to ₹2.4 trillion. (It has, however, seen an
increase of nearly 16% over the last budgeted numbers.) Outlays on the crucial rural
jobs scheme, the Mahatma Gandhi National Rural Employment Guarantee Scheme,
were at a six-year low, sharply down by nearly a third, or by ₹30,000 crore, compared
to the revised estimates for 2022-23 (see chart 5). The National Social Assistance
Programme, also a centrally sponsored scheme, remains unchanged in allocation.
The budget spending on sectors primarily benefiting weaker sections saw a
marginally slower hike—6.4% as compared to 6.9% in 2022-23. Agriculture and
related sectors lost focus, with the outlay down from ₹1.5 trillion to ₹1.4 trillion.
Meanwhile, following an increased outflow on account of higher payments towards
fertilizer and food subsidies compared to the initial budget, a substantial cut in the subsidy
bill also provides the leeway for capex investments. Altogether, the burden on major
subsidies eased by 28% from the revised estimates of 2022-23 to ₹3.7 trillion. Hence, the
share of the Centre’s subsidy bill in the revenue expenditure for 2023-24 has dropped to a
four-year low of 11.5%. The budget was a disappointment for women as the share of the
gender budget declined to 5% from 5.2% in the revised estimates of 2022-23 (see chart 6).
Overall, the Centre appears to have shunned populism while maintaining a conservative
approach. “The boost to capex has come partially at the cost of rural and welfare spending,”
said Ranjani Sinha, chief economist at CareEdge. “However, capex has been found to have
a strong multiplier effect on growth through jobs generation and indirect demand boost.”
2023-24 (BE)
0
50,000
100,000
150,000
200,000
250,000
*Revised estimates used instead of actuals.
Chart 9
Here are the areas where Centre is set to
overshoot its FY23 budget the most
Areas where the Centre will spend beyond budgeted (in crore)
Budgeted
Extra spending
Reason
Defence services
Higher revenue
spending on defence
Food storage and
warehousing
Higher food subsidy
requirement
Pensions
'One rank one
pension' scheme
Industries
Higher fertilizer
(urea) subsidy
Higher provision for rolling
stock and track renewals
Capital outlay
on Railways
One-time grant to oil
marketing central PSU firms
Petroleum
0
100,000
RE: Revised estimates; BE: Budget estimates.
200,000
300,000
400,000
Source: Budget documents, CMIE, Mint calculations
STORY AND DATA BY NITI KIRAN, PRAGYA SRIVASTAVA, MANJUL PAUL, NANDITA VENKATESAN & SHUJA ASRAR/MINT; GRAPHICS BY PARAS JAIN/MINT
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ThursDay, 2 February 2023
New Delhi
LIVEMINT.COM
03
Agriculture to zero emissions:
here’s the budget in 26 letters
The Budget is spending heavily to boost growth. The expectation is that people will spend too and spur consumption to accelerate economic growth
ASHISH ASTHANA/MINT
Sumant Banerji
suimant.banerji@livemint.com
AGRICULTURE
Farm issues always take up a significant part of any union budget and this year was no different. The big
talking point is the increase in the credit
target to ₹20 trillion. Another ₹2,200
crore has been set aside for a new clean
plant programme.
BATTERIES
The future of sustainability will
depend on batteries, and the
budget is mindful of that reality. A capacity of 4,000 MWh of battery energy storage systems is being supported with viability gap funding. A more immediate
impact will be felt by the country’s EV
industry, as the import duty on goods and
machinery used in the manufacture of
lithium-ion cells has been waived. This
should bring down the cost of EVs and
provide a further impetus to the sector.
CAPITAL EXPENDITURE
A sharp 33% increase in the capital
investment outlay to ₹10 trillion is
the big headline of finance minister Nirmala Sitharaman’s fifth budget. This is the
third year in a row that she has loosened
the purse strings. And while efforts have
been made to shore up private investments, it underlines the intent of the government to keep up capital expenditure.
DEFENCE
The armed forces did not find a
mention in the budget speech,
but at ₹5.44 trillion, the allocation for
defence (an increase of 1.5%) is at an alltime high. Almost a quarter of this has
been set aside for purchasing new weapons, aircraft, warships and other hardware. India’s tenuous relations with its
neighbours on both the eastern and western borders require the armed forces to be
prepared.
e-COURTS
Justice delayed is justice denied.
The budget has made an outlay
of ₹7,000 crore towards the third phase of
the e-courts project to try and alleviate the
burden on the justice system. The project
seeks to increase digitization in the Indian
judiciary while making it easier for citizens to seek legal redressal. In a country
where 85% of cases are pending in district
courts, this is a small price for a potentially
big reform.
FISCAL CONSOLIDATION
While it has all the makings of an
election budget, Sitharaman has
not been profligate and has stayed true to
the fiscal consolidation path. On the back
of a deficit of 6.4% for FY23, the target for
the next fiscal year has been set at 5.9%.
The finance minister exuded confidence
about taking it below 4.5% by FY26.
GREEN GROWTH
One of the seven priorities of
this budget is green growth, and
it figured the maximum number of times
in the budget speech. It is all encompassing, running the gamut from green fuel
and energy through farming and mobility
to buildings and green equipment. To
walk the talk, an outlay of ₹35,000 crore
for priority capital investments towards
energy transition and net zero objectives
has also been made. The message is clear
— the colour of money, going forward, will
be green.
HOUSING
One of the government’s flagship
schemes, which has seen a 66%
spike in allocation over the previous year
to ₹79,000 crore, is the PM Awas Yojana.
The scheme targets people at the bottom
of the pyramid with the aim of providing
them a roof over their heads. This targeted
incentive also doubles up as a growth
driver and employment generator by virtue of the demand it generates in the real
estate sector.
IMPORT DUTIES
There have been widespread
changes in import duties in the
budget. To improve tax administration
and reduce the compliance burden, the
overall number of slabs has been reduced
from 21 to 13. In cases like camera lens and
cells for lithium-ion batteries or TV panels, duties have been reduced to encourage domestic value addition.
JOBS
The budget lays more emphasis
on skill development and in
expanding new-age industries for job creation. The Pradhan Mantri Kaushal Vikas
Yojana 4.0 will seek to skill lakhs of youth
in the next three years, providing them
on-job training, industry partnerships,
Finance minister Nirmala Sitharaman’s 2023 Budget speech, which she described as “the first Budget in Amrit Kaal”, lasted 86 minutes and comprised 13,761 words. But what is interesting is that even a few words can tell the entire story.
and alignment of courses with the needs
of industry.Additionally, 30 skill India
international centres will be set up across
different states.
KYC
Know Your Customer (KYC)
has in a way become the
bedrock of India’s digital finance revolution. But for some time now, a need has
been felt for it to be simplified. The budget
has proposed a simplified KYC process
adopting a ‘risk-based’ rather than a ‘one
size fits all’ approach. This would technically make it easier and faster for individuals with a good credit rating to avail of
financial services.
LIBRARY
States will be encouraged to set
up physical libraries for children
and adolescents at the panchayat and
ward levels and provide infrastructure to
access National Digital Library resources.
Additionally, the National Book Trust,
Children’s Book Trust and other sources
will be encouraged to provide and replenish non-curricular titles in regional languages and English to these physical
libraries.
MILLETS
After yoga, India’s next big
export to the world could be
millets. The crop, which has numerous
health benefits, is grown in abundance in
the country. To make India a global hub,
the Indian Institute of Millet Research will
be supported as a centre of excellence for
best practices, research and technologies
at the international level.
NURSING
Globally, nurses were in the vanguard of the frontline warriors
battling the Covid pandemic. Recognising
their importance and in a bid to address
the shortage of nurses, the budget has
proposed the establishment of 157 new
nursing colleges in co-location with 157
existing medical colleges.
ONE-STOP SOLUTION
A one-stop solution to reconcile and update the identity
and address of individuals maintained by
various government agencies, regulators
and regulated entities will be established
using the DigiLocker service, with Aadhaar as the foundational identity.
PERSONAL INCOME TAX
After the status quo of the past six
years, personal income tax saw
widespread changes this year. Restricted
only to the new tax regime introduced in
2020, the slabs have been reduced to five
from six, with no tax for up to ₹3 lakh and
the maximum 30% bracket kicking in at
₹15 lakh.
QUALITY
In a bid to improve the quality
of bank governance and
enhance investor protection, the
finance minister announced that the
Banking Regulation Act, the Banking
Companies Act and the Reserve Bank of
India Act will be amended. For the securities market, Sebi will be empowered to
build the capacity of functionaries and
professionals.
RAILWAYS
Infrastructure development
has been the central pillar of
the government’s big bang spending, and
Indian Railways has been a primary beneficiary. For fiscal year 2024, the capital
outlay has gone up to an all-time high of
Rs 2.40 lakh crore, which is about 9 times
the outlay a decade ago, in 2013-14.
SAPTARISHI
Saptarishis are seven reverred
sages of ancient India who are
seen as guiding light for the human race.
FM Nirmala Sitharaman has chosen to
refer her seven budget priorities - Inclusive Development, Reaching the Last
Mile, infrastructure and Investment,
Unleashing the Potential, Green Growth,
Youth Power and Financial Sector, that
will guide the country to ‘Amrit Kal’ as
Saptarishis.
TOURISM
The budget has made a fresh
attempt to unlock the potential of
tourism in the country, targeting not
just international but domestic travellers as well. To begin with, it aims to
promote 50 destinations as a complete
package with upgraded standards of
physical and virtual connectivity, tourist guides and security, while making all
the relevant features of tourism available on an app.
UNITY MALL
The budget has introduced the
concept of a Unity Mall, encouraging states to set up such a mall in either
their capitals or a prominent tourism centre or their financial capitals. The goal will
be to promote their own ODOPs (one district, one product), GI products and other
handicraft products.
VISHWAS
The ease of doing business has
been a major focus area for the
government. Over 39,000 compliance
norms have been reduced and more than
3,400 legal provisions have been decriminalised so far. The Jan Vishwas Bill builds
on this by proposing to amend 42 Central
Acts.
WOMEN
A one-time new small savings scheme offering a fixed
7.5% return for two years, up to March
2025, has been launched for women.
The maximum deposit allowed will be
₹2 lakh. In addition, the 81 self-help
groups mobilised as part of the Deendayal Antyodaya Yojana National Rural
Livelihood Mission will be further
empowered through the formation of
large producer enterprises or collectives.
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X-FACTOR
Cutting direct taxes, especially personal income tax, appears to be the
Budget’s X-factor. The government claims
the move will leave a large sum of money in
the hands of the people, to boost consumption (the finance minister has said the cut in
direct tax rates would cost the exchequer as
much as ₹37,000 crore). A consumption
boost, in turn, will push up capacity utilisation across sectors, forcing companies to
expand. This will accelerate private capex,
which has long remained sluggish and is
just about showing signs of revival.
YOUTH
Harnessing the power of youth is
one of the seven priority areas of
the budget. From skill development to
accelerator funds for startups, a number of
schemes have been announced to harness
the potential of young people. Additionally,
to provide a stipend to 47 lakh youth in
three years, a Direct Benefit Transfer under
a pan-India National Apprenticeship Promotion Scheme is also being rolled out.
ZERO EMISSION
The ambition to become a
zero carbon-emitting country by 2070 is writ large in the budget.
Among the various schemes to decarbonise industry, the most prominent is the
₹19,700 crore National Green Hydrogen
Mission, which aims to reduce dependence on fossil fuel imports and make the
country assume technology and market
leadership in this sunrise sector.
04
ThuRsDay, 2 FebRuaRy 2023
New Delhi
LIVEMINT.COM
KEY STAT
CLEANER ENERGY PORTFOLIO
EXPENDITURE TOWARDS RENEWABLE ENERGY
WHY IT MATTERS
Ministry of new and renewable energy
As a developing economy keen to tread a fast-growth
path for decades to come, India needs to balance its
growing energy consumption with its climate-change
commitments—India has pledged net-zero emissions by
2070. That means reducing the relative share of fossil
fuels in its energy basket by increasing the share of
renewables.
(FAME-India)
Expenditure (in crore)
16,000
12,000
Green energy corridor
FAME-India: Scheme for Faster Adoption
and Manufacturing of (Hybrid and)
Electric Vehicle in India. Data is revised
estimates for 2022-23 and budget
estimates for 2023-24.
8,000
4,000
0
Source: Budget Documents
2014-15
2015-16
2016-17
2017-18
2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
BUDGET POINTERS
There’s a 78% increase in
allocation to a scheme that
promotes adoption of hybrid
and electric vehicles and 45%
increase to the ministry of new
and renewable energy.
It’s also infusing 37,828 crore in
two PSUs in this space, IREDA
and SECI, following 27,547 crore
in 2022-23.
30
X
THE MULTIPLE BY WHICH BUDGETARY
SUPPORT TO VARIOUS ORGANIZATIONS AND INITIATIVES IN RENEWABLE
ENERGY HAS INCREASED BETWEEN
2014-15 AND 2023-24.
Expanded DigiLocker to help fintechs cut costs, ease KYC process
Prasid Banerjee
prasid.b@htlive.com
NEW DELHI
T
he government said it
will expand the scope of
the digital document
repository, DigiLocker, by adding it to the host of public digital infrastructure (PDI) solutions available to fintech firms,
a move that will not only help
fintech firms cut costs and
enhance the ease of doing busi-
ness but will also simplify the
know-your-customer (KYC)
process.
“Fintech services in India
have been facilitated by our
digital public infrastructure
including Aadhaar, PM Jan
Dhan Yojana, Video KYC, India
Stack and UPI. To enable more
fintech innovative services, the
scope of documents available
in DigiLocker for individuals
will be expanded,” finance
minister Nirmala Sitharaman
said on Wednesday.
While it is unclear how the
government will allow fintechs
to tap into the DigiLocker,
experts expect application programming interfaces (APIs) to
be built, much like Aadhaar and
other solutions.
APIs allow different applications to interact with each
other. In the case of banking or
fintechs, APIs are integral for
KYC processes. A fintech app,
for instance, can ping the Aad-
haar network, which will elec- expert from a Big Four consulttronically confirm the
ancy said, requesting
anonymity. The
validity of a docuperson, however,
ment to complete
The
cautioned that
the KYC proproposals will
since Digicess.
enable more
Locker may
“They will
hold more than
have to create
fintech
just identity
APIs, which
innovative
documents of an
allow fintechs to
individual, framedirectly
tap
services
works will have to be
directly into docubuilt to ensure there is no
ments stored on DigiLocker,” a senior forensic unauthorized access, and regu-
lations in laws like the Digital
Personal Data Privacy (DPDP)
bill aren’t violated.
Anand Kumar Bajaj,
founder, MD and CEO of fintech firm PayNearby, pointed
out that fintechs currently partner with KYC service providers, who provide the technology required to verify documents online.
With DigiLocker being a
government-verified service
provider, it will simplify the
Angel tax may trim foreign
funding in Indian startups
platform instead of paying a
private service provider for the
technology, he explained.
“There are few challenges at
the moment, especially for verifying businesses with multiple
APIs, which can be made consistent. This will create standardization and make it more
like an AA (Account Aggregator) platform, where there is a
central server, and all outside
parties access that server for
verification,” he said.
To be sure, MeitY does certify KYC providers to allow
access to DigiLocker. Vivek
Belgavi, Partner, Fintech at
PwC, said that expanding the
scope of DigiLocker so that
people and small businesses
can store more documents
would simplify the entire KYC
process. He pointed out that
every fintech may not want to
create their own solution, and
will want certified tech providers to solve for it.
Large-screen TVs,
mobile phones may
become cheaper
Abhijit Ahaskar & Shouvik Das
which creates a value addition
of 7-8% of the total price of a
device. “The duty reduction (on
rices of mobile phones components) can increase the
and large-screen televi- value addition for manufactursions may become ers by more than double, on a
cheaper following a set of per-device basis. It can thus
measures in the Union budget easily be at least 15-16%, which
in a boost to the electronics and may make India a viable destiinformation technology sector. nation for electronics compoFinance minister Nirmala nent manufacturing.,” he said.
Sitharaman proposed to halve
Muralikrishnan B, president,
the customs duty on open cells Xiaomi India, said a duty cut on
from 5% to 2.5%, while com- select parts will help increase
pletely exempting duty on domestic value addition. “This
mobile phone camera lenses will have a positive impact on
from 2.5% and on specific the domestic component manchemicals such as pre-calcined ufacturing industry,” he added.
ferrite powder and palladium
However, not all agree that
tetra amine sulphate, on which phone prices will be cut. “These
the duty was 7.5%. Palladium is steps will have no significant
used in parts of connectors in impact on the final product price
printed circuit boards (PCBs), but are in the right direction. The
which is used in all electronics. cost impact on mobile phone’s
She also announced
Bill of Material (BoM)
plans to open three
will be 0.16% to
Centres of Excel0.19%,” said PanMeasures
aim
lence (CoEs) for
kaj Mohindroo,
to boost the
artificial intelchairman,
ligence (AI),
India Cellular
electronics and
100 5G labs in
and Electroninformation
engineering
ics Association
technology
institutions,
(ICEA).
and 30 Skill
Presenting
sectors
India Internathe
budget,
tional Centres for
Sitharaman also
coding, AI, robotics,
proposed the introducmechatronics, internet of things tion of a National Data Govern(IoT), 3D printing, and drones.
ance policy to make anonym“This is a welcome move, ized data accessible to startups
and we will pass this benefit to and researchers. Lack of access
customers. TV prices can come to quality non-personal data to
down up to ₹3,000 on larger train AI models is a key chalscreens (above 50-inch),” said lenge faced by startups workAvneet Singh Marwah, CEO ing on AI projects.
and founder, Super Plastronic
The adoption of AI with a data
Pvt. Ltd, a contract manufac- utilization strategy can add $500
turer of TVs. “This will signifi- billion to India’s GDP by 2025,
cantly boost the domestic tele- Nasscom said in June 2022
vision manufacturing industry report. “The proposed three
and help compete with global Centres of Excellence for AI is a
brands,” added Arjun Bajaj, decisive step towards promoting
director, Videotex Interna- AI and allied technologies in
tional, a contract TV maker. India,” said Ranjan Kumar, CEO
Industry experts said lower of Entropik, an AI startup. The
duty on components will also budget has also proposed to do
encourage component manu- away with the minimum threshfacturing in India. Vivek Tyagi, old of ₹10,000 for levying TDS
chairman, India Electronics on winnings from online gamand Semiconductor Associa- ing. TDS will be charged even if
tion (IESA) said so far the focus the winning is under ₹10,000.
abhijit.ahaskar@livemint.com
was on electronics assembly,
NEW DELHI
The impact could be hard as
startups raise bulk of capital
from foreign investors
P
Ranjani Raghavan
ranjani.raghavan@livemint.com
MUMBAI
I
ndian startups raising capital from foreign investors such as SoftBank, Sequoia
Capital, Prosus, Tiger Global, KKR and
Blackstone will now have to pay angel tax
in a move that could squeeze funding into
the sector facing a liquidity crunch and
prompt more startups to shift overseas.
Finance minister Nirmala Sitharaman said
in the budget speech
that non-residents will
KEY
now come under the
ANNOUNCEMENTS
purview of Section 56(2)
VII B, also known as
angel tax, which was
BUDGET INCREASES the
introduced in 2012 as an
period of incorporation to
anti-abuse measure
qualify for Inter-Ministerial
aimed at tax avoidance.
Board registration by 1 year
Alternative investto 1 April 2024.
ment funds registered
with the Securities and
RELIEF FOR startups to
Exchange Board of
carry forward losses on
India (Sebi) will conchange of shareholding to
tinue to be exempted
10 years of incorporation
from the tax. However,
(from 7 years currently).
foreign investors who
were earlier outside the
EXTENSION OF tax
tax’s purview have now
benefits to funds for IFSC,
been brought under the
GIFT City till 31 Mar 2025.
ambit of angel tax.
The step is likely to
REDUCED CUSTOMS duties
on components like camera impact startups as they
lenses used in mobile phone raise bulk of the capital
from foreign investors.
manufacturing, and open
In 2022, private equity
cell panels used in TVs.
and venture capital
30 NEW skilling centres and funding into India
totalled $54 billion,
three centres of excellence.
while it was close to $77
billion in 2021, a record year for Indian firms.
“Non-resident investors were never under
the scope of this tax,” Ritesh Kumar, Partner,
J Sagar & Associates, said. “We are all hoping
that this is a mistake,” he added.
Angel tax is applied if the share price that is
allotted to investors is at a premium to the fair
market value (FMV) of the share. In this case,
the difference is subjected to Section 56 (2)
India today boasts of over 100 unicorns, many of them working on cutting-edge technologies. And the number of recognized
startups in the country has jumped from 452 in 2016 to 84,012 in 2022—that makes India one of the largest startup ecosystems in the
world. Going ahead, they will play a critical role in India’s dreams of becoming a $5 trillion economy.
VII B. For instance, if the FMV (of a ₹1 face
value share) is ₹10 apiece, and if the startup
allots a share at a premium of ₹15, then the difference of ₹5 would be taxed as income at the
hand of the startup.
The impact is likely to be more severe for
early to growth stage startups – where the
divergence is higher between FMV and the
price of the share allotted. This divergence is
usually less stark in mature companies.
Kumar said the government’s decision “proposes to bring into the tax net any amount
received by a closely-held company (including start-ups unless they qualify as a venture
capital undertaking receiving investment
from venture capital fund) from a non-resident towards subscription of shares where
the consideration is higher than the fair mar-
ket value”. “This could compel more startups
to flip overseas, as foreign investors may not
want deal with additional tax liability by virtue of their investment in the startup,” said
Siddarth Pai, co-founder of VC firm 3one4
Capital. “The re-introduction is completely
counter-intuitive to the entire move of
reverse-flipping. This, in fact, will accelerate
flipping overseas,” Pai added.
BUDGET EMPOWERS INDIA’S NEXT GENERATION TO SUCCEED IN THE DIGITAL AGE
EXPERT
VIEW
B Y J U R AV E E N D R A N
Respond to this column at
feedback@livemint.com
T
he Union budget presented by finance minister Nirmala
Sitharaman is a well-crafted balance of economic growth and
fiscal discipline. The massive increase in the personal
income-tax rebate limit—from ₹5 lakh to 7 lakh—will substantially
boost consumption-led growth and act as an antidote to the subdued global economic environment. The capital investment outlay
has been increased substantially by 33% to ₹10 trillion. This, along
with the highest-ever allocation of ₹2.4 trillion to the Railways, will
crowd-in more private investment and boost the virtuous cycle of
investment and job creation.
The first budget of ‘Amrit Kaal’ (regarded as the best and most auspi- get estimate. The deficit is now projected to come down to 5.9% of GDP
cious time to begin any new task in Vedic astrology) takes a large step in FY24, which means India remains firmly on the glide path, leading
forward in building India @100 as a technology-driven and knowledge- to a 4% fiscal deficit in FY26. The focus on social welfare and a renewed
based economy. There are many announcements towards continued commitment to improving the ease of doing business will make India’s
formalization and digitalization of the economy, which bodes
growth more inclusive and forward-looking. The government
well for the digital future of India. The twin inter-disciplinhas proposed several initiatives aimed at improving the
ary missions of ‘Make AI in India’ and ‘Make AI work for
common person’s quality of life. In line with its commitThe
India’ are timely and will go a long way in establishing
ment towards affordable housing, the outlay for PM
government is
an effective AI ecosystem in India. PM Kaushal Vikas
Awas Yojana has been enhanced by 66%. By increasYojana 4.0 will now include skill-based new age
ing the quantum and quality of investment in social
taking the right
courses such as coding, AI, robotics, mechatronics,
safety net schemes, the budget aims to protect the
steps toward
and drones, which will prepare the next generation
most vulnerable segments of the population. Moresustainable
to succeed in a rapidly changing world.
over, the budget’s transparency will increase trust
The allocation of more funds towards infrastrucbetween
the government and the citizen.
growth
ture development will help attract more foreign investThe government’s sharp focus on education and skill
ment and create new job opportunities. On the other hand,
development will be instrumental in shaping the future of
the government’s emphasis on fiscal discipline will help create
India’s workforce. India has made significant strides in educaa stable and predictable investment environment. The budget takes tion and skill development in recent years. The National Education
a responsible approach to reducing government debt, and it is projec- Policy (NEP) 2020 lays the foundation for a comprehensive and incluted to lead to decreased government deficits over time. The revised sive education system, with a focus on revamping all aspects of the eduestimate for the fiscal deficit in FY23 is 6.4 %, which adheres to the bud- cation edifice of India. The gross enrolment ratio (GER) in schools and
gender parity improved in FY22, reversing a declining trend from FY17
to FY19. School dropout rates have steadily declined for both girls and
boys, attributed to schemes such as Samagra Shiksha, RTE Act, and PM
POSHAN. The education infrastructure has improved, including the
number of recognized schools, teachers’ availability, and basic facilities
such as toilets, drinking water, and hand-washing facilities. The budget
has proposed new initiatives such as teachers’ training through innovative methods and a new National Digital Library for children and
adolescents for device-agnostic accessibility in the spirit of NEP 2020.
By investing in cutting-edge digital public infrastructure, and nurturing an innovation-driven culture, India will be able to take full advantage of its demographic dividend and emerge as a major global player.
Overall, this budget enhances the strengths and addresses the
key challenges facing the Indian economy. By focusing on growth
with fiscal discipline, boosting consumption, promoting social
welfare, and improving the ease of doing business, the government
is taking the right steps towards sustainable and green growth.
This budget will greatly contribute to the realization of India’s
potential as a major player in the global economy and support sustainable and inclusive growth for all citizens.
Byju Raveendran is founder and CEO of Byju’s.
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ThuRsDay, 2 FebRuaRy 2023
New Delhi
LIVEMINT.COM
‘New tax regime gives
spending flexibility’
C
ongratulations on
your fifth consecutive
budget. You have
mentioned that these
five years have been
the toughest times our country
has faced but still we are right up
there as a bright star. In this budget, you have put more money in
the hands of employees, middle
class. But will the employers be
willing to pay them more? Have
you incentivized employers also
to give more money?
Finance Minister Nirmala
Sitharaman: First of all, when you
look at the economy, you can see that
it is showing very clear signs of robust
revival. When robust revival happens, and especially when you take
the example of the services sector, the
kind of attrition that sector is facing
but at the same time because they are
moving towards greater and greater
use of technology, sophisticated
technology, they are also seeking
people with such skills. To pay better
is also to pay better for people with
the required skills and that’s why the
government of India, has in this budget, through various different ways
underlined the importance of skilling, upskilling, skilling for industrial
revolution 4.0. In that we placed specific emphasis because skilling is one
thing, upskilling is there, but today
the world is moving towards great use
of Web 3. For that, if Industry 4.0 is
coming up, employers will also pay
more when you have people with the
right kind of appropriate skills. We
are spending that kind of money and
bringing in that kind of training for
people to be better paid.
So, the government is pushing it
from a different supply side readiness, obviously that will have to be
absorbed by the industry.
For the common people, the most
striking thing about the budget is
the new tax regime. What is the
rationale behind that?
FM: Whenever there is discussion
about Bharat’s (India) direct taxation,
it is usually on two issues – reduce tax
rates and secondly, don’t complicate
taxes so much, where you are reducing a certain tax and implementing a
surcharge on another, or you will get
exemption only when you take insurance. So due to such complications, if
the old regime seemed beneficial to
you, it would also appear to be complicated. For this reason, regarding
the old (tax) regime, many committees also reported that it needs to be
simplified. One of the key reasons for
tax evasion and avoidance is that
when the rate is high, people find
other ways to avoid it. If the rate is
reduced, people will be more willing
to pay up. Keeping all these factors in
mind, two years earlier, we had
brought in the second tax regime in
which the rate was low. But this time
we have reduced the rate in each tax
slab, and finally the surcharge which
has the highest tax rate in India, has
been reduced significantly. So whatever suggestions were made on
reducing rates and simplifying it,
everything has been incorporated in
05
EXPERT
VIEW
KUMAR MANGALAM BIRLA
Respond to this column at
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BUDGET PRESENTS
A COMPELLING
VISION & STRATEGY
T
the new regime. And we are creating
a default system, which means when
you log into your computer to file
taxes this is the form that will appear
first. This doesn’t mean you have to
compulsorily follow this. If you want
to follow the old regime, you can, but
take that decision thoughtfully.
Gradually, we are trying to attract
people from the exemption regime to
the new regime.
A lot of people are saying that in
the old regime, for long-term savings for their retirement, etc,
they could invest in PPF, NPS or
other 80C exemptions so that
they have some savings in the
future. But in the new regime,
these exemptions would not be
there. Why do you then think this
is a more lucrative option?
FM: We need to change this
thought process. When the rate is low,
and you are saving money, it is your
choice where you want to invest it. In
the old regime, the rate was high. In
the new regime, there is no pretension
that the rate is high but we are giving
you some exemptions. This regime is
simple. You are paying less, and with
the saved money you can invest anywhere, your child’s education, whatever you wish. I think the tax payer
knows how to spend his money.
The simplification of taxes is
obviously going to increase the
compliance and help in formalizing the economy because a lot
more people are willing to participate. Is the informal sector
merging into the formal sector on
a natural course or are you giving
some incentives to them to draw
them in and formalize them?
FM: We are trying to make sure that get there is something or the other for
people get into the formal sector their facilitation. Because our youth
because of the incentives we are giving is so innovative, startups have been
for digital payments also. When peo- rising in numbers, and there are more
ple put their account into the formal- than 80,000 startups today. Over 100
ized routine –for instance, one of the among them are already unicorns. In
announcements we made today for India, men or women, they should be
MSMEs and professionals, that if 95% encouraged through policy support
of your operations are formal, if it without any discretion.
In the same way, if SHGs can be
cheque based at least we are giving you
a higher level of showing your claims. united in large numbers into clusters,
We are promoting the informal sector and are supplied good quality raw
to gain from formalizing. The 59-min- material and help them in running in
a professional manner, with marute loan giving which happened
keting support etc,
through the digital
we believe that like
format where people
We are trying to make the startup revolucould convey to the
tion happened in
bank they want it,
sure that people get
and get an in-princiinto the formal sector such a short period,
the same can happen
ple loan in that time,
because of the
for women empowand after that without visiting the bank incentives we are giving erment and through
that we can do well in
you still get bank
for digital payments
both manufacturing
assistance. These are
Nirmala Sitharaman
and services.
ways in which we are
Union finance minister
If we talk about fisformalizing.
cal consolidation,
Today the country saw a very strong picture of globally, governments are spendwomen empowerment, when you ing for their people, but you are
went to meet the President. The talking about consolidating fiscal
budget also focuses on women deficit to 6.4% and talking about
empowerment which was the sticking to the gliding path to
praised by the Prime Minister. reach 5.9%. How are you managWhen through SHGs (self-help ing this fiscal consolidation? And
groups) you are trying to create a what is the signal you are sending
paradigm shift, bring in a new you global investors through this
culture, you also said that in budget?
FM: I keep talking about manageAmrit Kaal this would be a big
weapon to drive growth. How will ment of finance. It’s not just about
you tackle growth through allocating funds to different departments in the budget, but there are
women empowerment?
FM: Just as comparison, the Prime gaps in revenue raising that are not
Minister in 2016 brought in a policy being filled. On both sides, you need
for startups, after which in every bud- to fill up the revenue gaps, bring in
‘
efficiency, use technology to find out
if someone is not paying though he
can. Secondly, when you are giving
departments funds to spend, are they
being efficiently utilized? If the
money doesn’t reach to the bottom,
the whole motive that funds will help
in increasing demand, that’s not
achieved. I believe that if the finance
ministry pays attention to the budget
attention, it should pay thrice the
attention to implementation, plugging loopholes, stopping evasion,
stopping diversion of funds and taking action, throughout the year. The
finance ministry needs to work on
their toes to implement all of these.
The banking sector, for instance, during covid implemented the emergency credit guarantee scheme that
the government had announced. If
banks didn’t implement this efficiently, the purpose of the scheme
would have failed. Each sector within
the finance ministry, each department needs to deliver topnotch performance.
The fact that you have increased
public investment for three years
continuously, what was the
rationale behind that?
FM: The money that is spent
through public investment, in that
the returns are high. There is a multiplier effect on every paise (penny)
spent on infrastructure investment.
We firmly believe that this is route
which will uplift the economy. We
have been seeing this since covid, and
it has yielded positive results. If we
want to grow at that pace, then public
expenditure is the sure path to do so.
The full interview is available on
Doordarshan.
here are many stars aligning for India’s Amrit Kaal, including demography and the global realignment of supply
chains. The budget presents a compelling vision and strategy that further solidifies this conviction. While providing strong
impulses for near-term growth through a substantive jump in
capex and reduction in the tax burden on the middle class, it is
also cognizant of the technological mega-trends that India must
adapt as it charts its next phase of growth.
Digitization, innovation, sustainability, and emerging futuristic technologies are themes that run throughout the budget. For
example, to realize the vision of ‘Make AI in India and Make AI
work for India’, the government will set up three centres of excellence for artificial intelligence. These will help develop scalable
solutions in agriculture, health and sustainable cities.
The next phase of the skilling programme will focus on skills
like coding, AI, robotics, mechatronics, IoT, drones and 3D printing, ensuring we have enough skills to manage the transition.
Another important announcement pertains to the setting up of
100 labs for developing applications using 5G.
In digital governance and payments, India is already a global
leader. Several initiatives in this budget would further deepen
digitization. An open-source, open-standard digital public infrastructure for agriculture will make farmers more informed and
better connected to inputs and markets, and spur agri start-ups.
Startups and academia will get access to anonymized data
through the National Data Governance policy. Digilocker services and Aaadhar will be leveraged for easier maintenance of
individual records by various agencies. Businesses will experience more ease through a unified filing process, and because
of the expanded scope of the Digilocker. Digitization is also
being used for speedier administration
of justice through e-courts. The
remains enthusiasThe thrust on government
tically committed to digitiza‘green growth’
tion to improve the ease of living for citizens and the ease of
continues the
doing business for enterpolicy direction
prises.
The thrust on ‘green growth’
spelt out on
continues the government’s polglobal forums icy direction spelt out on international forums. A sizeable provision
has been made for capital investment
towards energy transition, the green hydrogen mission and viability gap funding for battery storage systems. The budget also
talks about a ‘green credit programme’, which will incentivize
companies that are taking initiatives towards sustainability. The
budget also recognizes the importance of urban infrastructure;
this will be critical as about 40% of Indians will be living in cities
by 2030. There are two significant initiatives on this front: the
Urban Infrastructure Development Bonds and initiatives to
improve the creditworthiness of cities for municipal bonds.
This was the first budget in India’s Amrit Kaal, and the
finance minister has deftly managed to address all stakeholders in an inclusive manner. It has a finely crafted mix of capacity-building initiatives and reliefs for many constituencies,
including women, artisans, tribals, youth and middle-class taxpayers. And yet, from a macroeconomic perspective, it is commendable that the finance minister has kept an eye on fiscal
prudence as well.
After a spike during the covid pandemic, the government
has navigated the fiscal deficit to more prudent levels, while
maintaining higher capex spending. It is reassuring to see that
this broad direction has continued. The improved quality of
government spending – wherein the government is doing the
heavy lifting for investment recovery – will spur growth in the
coming years. One hopes it would set in a virtuous cycle
between growth, tax buoyancy and fiscal consolidation, bringing the fiscal deficit under 4.5% of GDP in two years, as the FM
has targeted.
Overall, this budget fits the description of being a ‘blueprint for
India @100’. It addresses the needs of an economy that has just
emerged from the pandemic, and nurtures seeds of the transformations that will be imperative for emerging as a global power in
the coming decades.
Kumar Mangalam Birla is chairman of the Aditya Birla Group.
AI + artist + prompt engineer: A Defence gets ₹5.94 tn; ₹1.62 tn for modernization
note on the art in this edition
Rahul Singh
rahul.singh@hindustantimes.com
C
hatGPT, DALL-E and
Midjourney worm
their way into every
casual conversation we have
these days—and AI featured
prominently in finance minister Nirmala Sitharaman’s
2023 budget speech. So, it
seemed fitting that we had
decided to explore the possibilities that AI offered while
planning the imagery for our
Budget edition this year.
We worked with Madhav
Kohli, a 24-year-old freelance
multidisciplinary artist who
experiments with the mediums
of artificial intelligence, photo
manipulation and 3D modelling, to create AI renderings of
the professionals who read as
well as populate our pages. The
images you see on these pages
are the result of hours of work
and many variations.
While we were thrilled with
the realism of the images, we
also encountered the many
limitations of using AI art generators—from the practical and
the ethical to the experiential
and philosophical.
At the practical end, hands,
for instance, remain a challenge
for Midjourney as it routinely
generates five-fingered human
beings. It reminded us of being
back in art class where teachers—whether of figurative or
traditional forms—made us
sketch page after page of hands
to get them to “look real”.
And at the other end
are the biases that
are baked into
the AI, conscious as well
as causal prejudices that
show up—
Indians are
almost always
depicted
as
impoverished;
backgrounds tended to
be dystopian; women had
impossibly silken skin; men
looked somewhat careworn.
It’s startling to be confronted
with a detailed image of the
biased lenses through which
we are viewed, the prejudices
we hold, and the ease with
which we are training
machines into clones of our
close-minded selves.
We debated whether to use
them and then made a decision.
As with any new technology, the
challenges are many, but they
do have to be managed, if not
resolved, as AI art holds potential and artists across the world
are experimenting with it—just
like Mint has done.
Worldwide, AI art
generators are
embroiled in law
suits over possible copyright
infringement, and
there are certainly many
key regulatory
questions ahead
of us. India’s Intellectual Property laws will
need to be reformed as well as
the rights of (original) artists
strengthened.
It is clear that we will need
much of the “interdisciplinary
research and scalable problem
solutions” announced in the
Budget in order to “galvanize
an effective AI ecosystem and
nurture quality human resources in the field”.
I
ndia on Wednesday set
aside ₹5.94 trillion for
defence spending in this
year’s budget, including a
capital outlay of ₹1.62 trillion for the military’s modernization, with the allocation 13% higher than that in
last year’s budget estimates,
and about 2% more compared to that in the revised
estimates for 2022-23, documents showed.
The budget includes a revenue expenditure of ₹2.7 trillion and pension outlay of
₹1.38 trillion.
This year’s defence budget
accounts for 2% of the country’s projected gross domestic
product (GDP) for 2023-24.
It forms 13% of the total
government budget.
The enhanced allocation
comes at a time when India is
locked in a border row with
China and pursuing a raft of
modernization programmes
with a sharp focus on deploying locally produced weapons
and systems.
This year’s capital outlay is
about 6% higher than that in
last year’s budget estimates
and about 8% more compared
to that in the revised estimates for 2022-23.
The capital allocation will
power the purchase of fighter
aircraft, helicopters, warships, missiles and several
land systems, including tanks
and artillery guns.
“This expenditure will
close critical gaps in the combat capabilities and equip the
Forces in terms of ammunition, sustenance of weapons &
assets, military reserves etc,”
defence minister Rajnath
Singh wrote on Twitter.
The increase in outlay will
enable more local collaborations, critical technology
development and transfers as
well as development of skills
in the country, said Ashish
Saraf, country director, IndiaThales.
“This will further support
the government’s objective of
developing India as a global
manufacturing hub to aid
defence exports, and the
vision of ‘Aatmanirbhar Bharat’ (self-reliant India),” he
added.
However, some experts
believe the government could
have set aside more funds was largely on account of
under the capital head.
revised pensions under the
“We believe capex alloca- One Rank, One Pension
tion misses a commensurate (OROP) scheme for veterans.
reflection of the governIn December, the Union
ment’s impetus on defence Cabinet, headed by Prime
manufacturing,” said Gaurav Minister Narendra Modi,
Mehndiratta, head, aerospace approved the revision of
and defence, KPMG India.
pension of ex-servicemen
Revised estimates in the and family pensioners
budget documents show that under the scheme, with
the armed forces were unable more than 2.5 million
to spend ₹2,369 crore
defence pensioners
out of last year’s
to be paid arrears
capital outlay of
amounting to
The budget
₹1.52 trillion.
₹ 2 3 , 6 3 8
includes a
Last year,
crore.
the armed
T h e
revenue
forces spent
defence minexpenditure of
ister said the
a r o u n d
₹2.7 tn & pension government
₹21,000 crore
committed
on top of the
outlay of ₹1.38 towas
strengthening
previous year’s
tn
infrastructure in
budget allocation,
the border areas, particamid the lingering border row with China that saw ularly the northern borders
India make a raft of emer- with China.
“The capital budget of the
gency purchases and sharpen
its focus on building infra- Border Roads Organisation
(BRO) has increased by 43% to
structure in forward areas.
The defence ministry spent ₹5,000 crore in FY 2023-24
₹1.53 trillion on pensions last as against ₹3,500 crore in FY
year (revised estimates) com- 2022-23,” he said.
India allocated ₹5.25 trilpared to ₹1.19 trillion (budget
lion for military spending in
estimates).
The enhanced spending last year’s budget, ₹4.78
This PDF was uploade To Teligram channel_ LBS Newspaper platform (https://t.me/LBSNEWSPAPER) @LBSNEWSPAPER
trillion in 2021-22, and
₹4.71 trillion the year
before.
The payment received
from the Agniveer corpus
fund by Agniveers is proposed
to be exempt from taxes,
according to the budget documents.
“Deduction in the computation of total income is proposed to be allowed to the
Agniveer on the contribution
made by him or the central
government to his Seva Nidhi
account.”
The Agnipath model for
short-term induction of
soldiers into the three services is a major departure
from the military’s decades-old recruitment system that was discontinued
when the government
announced the new scheme
in 2022.
It seeks to recruit soldiers
for only four years, with a provision to retain 25% of them in
regular service.
Those released after four
years will get ₹11.71 lakh as
Seva Nidhi severance package, including ₹5.02 lakh
contributed by them during
their service.
06
ThuRsDay, 2 FebRuaRy 2023
New Delhi
MORE GOVERNMENT
SPENDING?
WHY IT MATTERS
Central government expenditure as a share of GDP
rose sharply during the pandemic years but has since
begun to decline. The challenge is to maintain quality
of spending in the last full budget before the 2024
elections. Overall investment had begun to recover
on the back of higher capex by the government—a
momentum the government needs to preserve.
LIVEMINT.COM
KEY STAT
BUDGET POINTERS
GOVERNMENT EXPENDITURE
Total government expenditure as % of GDP
20
Government spending data is
revised estimates for 2022-23 and
budget estimates for 2023-24. GDP
data for 2022-23 and 2023-24 are
based on government projections
in budget documents.
Source: Budget documents,
Economic Survey, Ministry of
Statistics and Programme
Implementation (MoSPI)
15
10
Fiscal deficit, which soared to
9.2% of GDP in 2020-21, is
budgeted to decline to 5.9% in
2023-24, still well above targeted
limits under law.
Revenue expenditure, net of
interest payments, is budgeted to
decline by 3.8% in 2023-24 versus
revised estimates of 2022-23.
5
0
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
10
TN
PROJECTED GOVERNMENT CAPEX
IN 2023-24. THE GROWTH IN
GOVERNMENT CAPITAL
EXPENDITURE HAS PROVIDED
IMPETUS TO OVERALL INVESTMENTS IN THE PAST FEW YEARS.
Budget to drive progress in green energy transition, say analysts
Ujjval Jauhari
ujjval.j@livemint.com
T
he budget announcements made by the
finance minister indicated the government’s sharp
focus on India’s green energy
transition, providing the necessary support and scale it needs,
analysts said.
The green transition is
needed to reduce India’s
dependence on fossil fuel
imports—currently, most of the
country’s crude oil requirements is met through imports.
The budget proposals are also
aimed at helping the country
meet its international commitment to achieve zero carbon
footprint by 2070.
A special focus on energy
transition, with a dedicated
corpus of ₹35,000 crore, prioritization of evacuation offtake
of 13 GW renewable energy
capacity being developed in
Ladakh and a dedicated corpus
of ₹19,700 crore for enhancing
green hydrogen production
targeted to reach 5 MT by 2030
were among the key proposals
to help India become a net zero
economy, said Sandeep Upadhyay, managing director, infrastructure advisor at Centrum
Capital.
Experts said the dedicated
corpus and support were
needed to make green hydrogen projects viable within a
stipulated timeline. There had gen production by 2030, they
been a number of consaid.
cerns and question
Experts gave the
marks that had
example of solar
The budget
been highprojects that saw
provides
lighted. Therevery high cost
capital
fore, these iniof production
tial stages supduring the iniinvestments
ported by the
tial phases
toward energy before solar
government for
setting up a corpower prices
transition
pus remain critical to
declined to ₹3-4 per
achieving the first mileunit over time.
stone of 5 MT of green hydroThe recent correction in
commodity and metal prices is
another positive since the drive
toward green hydrogen adoption remains dependent on a
significant decline in the price
of electrolyzers costs by 2030.
The dedicated corpus on prioritizing offtake of renewable
energy capacities being developed in Ladakh is also likely to
provide an impetus to green
energy, said analysts.
The inter-state transmission
system for evacuation and grid
Capex raised to ₹10 tn as
govt pushes for infra, jobs
integration of 13 GW renewable
energy from Ladakh is to be
constructed with an investment of ₹20,700 crore including central support of ₹8,300
crore.
In addition, certain more
announcements in power sector will benefit smart meter
manufacturers, said Rupesh
Sankhe, analyst at Elara Securities India Pvt Ltd.
The budget provides for
₹35,000 crore for priority capi-
tal investments toward energy
transition and net zero objectives. This is a huge allocation,
said analysts as Varatharajan S.
an analyst at Antique Stock
Broking.
Sanjay Moorjani, research
analyst, SAMCO Securities on
National Hydrogen Mission
said that Reliance Industries,
Tata Power, Adani group, L&T,
BPCL, HPCL and NTPC would
benefit from the green hydrogen mission.
The dextrous math
behind narrowing
fiscal deficit target
Dilasha Seth
major savings on subsidies of
almost ₹1.4 trillion. Further,
NREGA has been pruned to
New Delhi
save another ₹20,000 crore, he
inance minister Nirmala said.
“Budgeting is always a zeroSitharaman’s tightrope
walk in pegging the fiscal sum game and if taxes have not
deficit at 5.9% of GDP for been raised to garner revenue
2023-24 despite increased and expenses have increased, it
government spending was has to be through cutting other
described on Wednesday as a heads,” said Sabnavis.
The budget lowered the allopiece of “dextrous fiscal math”,
eased by lower allocations for cation to the Mahatma Gandhi
subsidies and rural jobs National Rural Employment
Guarantee
Program
schemes.
A sharp 28% reduction in (MGNREGP) scheme to
subsidy allocation in 2023-24 ₹60,000 crore, a 32% reduccompared with the revised esti- tion from ₹89,400 crore estimates for FY23 and a lower out- mated in the revised budget
lay on schemes such as the estimate for 2022-23.
The government estimated a
National Rural Employment
Generation programme could nominal GDP growth at 10.5%,
explain the math behind the which according to experts is
quite modest, and may provide
budget’s headline numbers.
a further cushion to
The subsidy outlay
rein in the fiscal
for fertilizers was
deficit ratio for
cut from ₹2.25
To
finance
FY24.
trillion
in
the fiscal deficit,
To finance
2022-23 to
the fiscal defi₹1.75 trillion, a
govt will borrow
cit
in
22% reduc₹15.43 tn from
2023-24, the
tion, while
Centre will
the markets in
that for food
borrow
a record
was cut 31%
2023-24
₹15.43 trillion
from ₹2.87 trilfrom the markets in
lion as per revised
2023-24, which is 3.2%
estimates to ₹1.97 trilhigher than current year’s budlion.
The petroleum subsidy saw a get estimate of ₹14.95 trillion.
The government has set a
75% reduction in allocation
from ₹9,170 crore to ₹6,913 disinvestment target at
crore. Overall, total subsidies, ₹51,000 crore for FY24, lower
which had spiked over the last than the previous financial
couple of years on account of year. “The fiscal deficit targeted
the pandemic and the geopoli- in the FY24 be is slightly higher
tical crisis due to the Ukraine than our projections, although
war, have seen a reduction in this is on account of the wel2023-24. While the pandemic come and unexpectedly strong
led to an increase in food subsi- jump in capex…However, the
dies over the last two years, the budgeted tax revenue growth
Ukraine war disrupted global may prove to be slightly optisupply chains causing a spike in mistic,” said Aditi Nayar, chief
economist, ICRA.
the fertilizer and energy bill.
The sharp fiscal consolida“The government has quite
dexterously managed the fiscal tion proposed for FY24 is
math by starting with the fiscal despite a multi-year high capideficit number and then work- tal expenditure allocation as a
ing on reallocating outlays,” share of total outlay at 22% estisaid Madan Sabnavis, chief mated for FY24 compared to
economist, Bank of Baroda. 19% in the previous year, while
Hence, while capex has revenue receipts are estimated
increased smartly, there are to grow by 12.39% in 2023-24.
dilasha.seth@livemint.com
FinMin proposed continuing
50-year interest-free loan to
state govts for one more year
F
Subhash Narayan & Saurav Anand
New Delhi
T
he government proposed a record
₹10 trillion in capital expenditure
for the next fiscal year as it continued its push for more roads, ports
and other critical infrastructure on
the back of a steep hike it said was set to create
more jobs and propel economic growth.
Finance minister Nirmala Sitharaman said
the planned capex was 33% more than the
₹7.5 trillion this fiscal.
“Capital investment
KEY
outlay is being
ANNOUNCEMENTS
increased steeply for the
third year in a row by
33% to ₹10 trillion,
CONTINUATION OF 50which would be 3.3% of
year interest free loan to
GDP. This will be almost
state govts for one more
three times the outlay in
year
2019-20. This substantial increase in recent
₹35,000 CRORE outlay for
years is central to the
energy security, energy
government’s efforts to
transition and net zero
enhance growth potenobjectives
tial and job creation,
crowd-in private investPM-PRANAM to be
ments, and provide a
launched to incentivize
cushion against global
states & UTs to promote
headwinds,” Sitharaalternative fertilizers
man said in her budget
GREEN CREDIT Programme speech on Wednesday.
“The year-on-year
to be notified under
increase of 33% is only
Environment (Protection)
marginally lower than
Act
last year’s 35% jump.
The ratio of capex-toONE-TIME NEW small
GDP, which rose to 2.7%
savings scheme, Mahila
Samman Savings Certificate in 2022/23, is estimated
at 3.3% in the new finanto be launched
cial year,” she added.
Mint reported in November that the budget would raise the Centre’s capex to ₹10 trillion to build critical infrastructure.
Capital spending by the government has
been on the rise for the past few years even as
private investment remained tepid during
the pandemic.
Although private investment gathered
some momentum in the fiscal first half, a fact
The economic philosophy of the Narendra Modi Government has been to accelerate economic growth through sustained investment
in infrastructure. India’s National Infrastructure Pipeline currently has 8,964 projects with a total investment of more than ₹108
trillion under different stages of implementation.
highlighted by the Economic Survey
2022-23 on Tuesday, a host of economists
suggested hiking government capital spending to help steer the economy through any
turbulence, including a feared global recession in 2023.
Sitharaman said 100 critical transport
infrastructure projects have been identified
for last- and first-mile connectivity for ports,
coal, steel, fertilizer and foodgrains sectors.
“They will be taken up on priority with an
investment of ₹75,000 crore, including
₹15,000 crore from private sources,“ she said.
Finance minister Sitharaman also noted
that investments in infrastructure have a
large multiplier impact on growth and
employment.
Sitharaman had increased capex by a
record 35.4% to ₹7.5 trillion in FY23 after it
grew 26% to ₹5.54 trillion in covid-hit FY
2022.
Before that capex in the revised estimates
for FY21 stood at ₹4.39 trillion in the first year
of the pandemic in FY21.
The current capex of ₹10 trillion is three
times the pre-covid levels of FY 2020.
subhash.narayan@livemint.com
NOTHING POPULIST ABOUT THIS BUDGET, WITH ITS FOCUS ON JOBS WITH GROWTH
.
EXPERT
VIEW
SUSHIL KUMAR MODI
Respond to this column at
feedback@livemint.com
T
here is nothing that you can call populist about this budget. For instance, the biggest takeaway of this budget is
the ₹10 trillion allocated for capital expenditure. This represents a steep increase (of 33% this year) for the third year in a
row and will create more jobs. So, the focus is on growth with
jobs. This includes ₹1.3 trillion which will be given to the states
as a 50-year interest-free loan that they will effectively spend as
a grant. If you see, the effective capital expenditure is ₹13.7 trillion. This also includes ₹2.4 trillion that has been provided for
the railways, which is nine times the outlay in 2013-14. In the
rural areas, the PM Awas Yojana’s allocation has been increased class, but these were long standing demands.
by 66% to over ₹79,000 crore. This will also help create employAnother thing to realize is that this is a futuristic budget. The
ment. So, the main focus of this budget is to create more jobs. government wants to make India a digital superpower. For artiWhen you spend ₹100 on revenue expenditure, it does not ficial intelligence, the government has allowed three centres of
add anything to the economy. But, if you spend ₹100 in
excellence to be created.
capital expenditure, it has a multiplier effect on the
The second important thing is the energy transition
economy. During the pandemic, some comto meet the global warming targets, ₹35,000 crore
The
PM
Awas
mented that the government was not giving cash
outlay for energy security, net zero objectives
Yojana’s
in the hands of the people. However, if you give
and for battery energy storage. So green growth
people cash in hand, they may not spend it. But
and the environment have been a focus.
allocation has
by creating jobs, in a way we are putting money
There have also been very important provibeen increased
in the hands of people. This is the more effecsions for farmers in this budget. The governby 66% to over
tive strategy and the focus on capital expendiment is promoting chemical fertiliser-free
ture allowed us to face global headwinds and
farming
and 10 million farmers will adopt natural
₹79,000 cr
become the world’s fastest growing large econfarming.
omy. The Modi government’s strategy is not to give
Further, ₹20 trillion will be provided as agricultural
doles but to empower the people.
credit. Primary agricultural cooperative societies will be
Further, the demand of the middle class for income tax rebate computerised in the next three years.
was a long pending one, for five or six years. Further, those in
There is also a shortage of nurses and paramedic staff in the
the new tax scheme will not pay any tax if they earn under ₹7 healthcare system, so 157 new nursing colleges are to be establakh a year. So, some concessions have been given to the middle lished.
There are also important schemes for senior citizens. The savings scheme is to be enhanced because of the ageing problem we
have started facing. For women, there will be a two-year period
where they can deposit an amount and receive 7.5% interest.
So, again, I will say that this budget will create more and more
jobs. India is the fastest growing economy in the world and this
budget has taken care of each and every sector of our society.
There will always be challenges like the Ukraine war that cannot be foreseen. As chief economic adviser V. Anantha Nageswaran put it, there are “known unknowns”.
For example, we have planned the budget keeping in mind
the price of oil as $100 dollars a barrel. But nobody knows about
the future. But taking into account all these things, they have
taken sufficient care.
We have been successful in handling crises like the covid-19
pandemic and the Ukraine war and have done much better than
other governments did during the 2008 financial crisis and
other crises.
(As told to Shashank Mattoo)
Sushil Kumar Modi is a Rajya Sabha MP, former deputy chief
minister of Bihar, and former finance minister of Bihar
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LIVEMINT.COM
GOOD GOVERNMENT
SPENDING
BUDGET POINTERS
CAPITAL EXPENDITURE BY GOVERNMENT
Capital expenditure (in ₹ trillion)
10.0
WHY IT MATTERS
Of India’s total gross domestic product (GDP), the
government’s contribution is 10-15%. It makes two
kinds of expenditure. One is to keep the ship going
like staff salaries and administration cost. The other,
more useful spending is ‘capital expenditure’, or
investments in building new assets like roads and
ports that have a multiplier effect for years to come.
5.9
2.0
2014-15
2.5
2.8
2.6
3.1
3.4
2015-16
2016-17
2017-18
2018-19
2019-20
7.3
4.3
2020-21
2021-22
Data is revised estimates for 2022-23 and budget estimates for 2023-24.
2022-23
2023-24
For the fourth straight year, capital
expenditure is poised for a healthy
increase of above 20%. Against
21% in 2022-23, the projected
increase in 2023-24 is 37%.
Of the budgeted capex of ₹10
trillion, 26% is designated for the
ministry of road transport and
highways, 24% for railways and
16% for defence.
Locally made green
trains to be rolled out
Under the ‘Amrit Bharat
Station’ scheme, the central
government plans to
redevelop about 1,275
stations across the country
T
FM seeks to win the masses
with pre-poll budget sops
New Delhi
T
he last full budget of the
government before the
2024 general elections
seeks to pack a strong dose of
welfare measures aimed at different sections of the society,
add jobs through capital
spending and woo the middle
class with income tax sops.
The Union budget for FY24
presented by finance minister
Nirmala Sitharaman emphasized building a “technologydriven and knowledge-based
economy with strong public
finances and a robust financial
sector” as India aspires to
become a developed economy
in the next quarter of a century.
Sitharaman spoke about
creating opportunities for the
youth, economic empowerment of women, offering a
strong impetus to growth and
job creation, and strengthening macroeconomic stability.
The priorities of the Modi exemption on leave encashadministration cover inclusive ment on retirement of nondevelopment, reaching the government salaried employlast mile, infrastrucutre and ees to ₹25 lakh, a scheme
investment, uneashing the meant to benefit the salaried
potential, green growth and class.
youth power.
Also aimed at improving the
Sitharaman scaled up the lives of people and giving a
target for farm credit by 11% to helping hand to small firm are
₹20 trillion for FY24
proposals to enhance
and raised the
urban infrastrucallocation for
in smaller
Union budget ture
PM
Awas
cities with an
emphasized
Yojana, the
annual allocahousing
tion
of
building a
scheme, by
₹10,000
“technology66%
to
crore,
a
driven
₹79,000 crore
revamped
in FY24.
credit guaraneconomy”
With developtee scheme for
ment as the key slosmall businesses
gan, the Modi governwith an outlay of ₹9,000
ment is betting on a massive crore, a new small savings
33% increase in capital scheme, Mahila Samman Savexpenditure to ₹10 trillion in ings Certificate for women and
the next financial year to con- girls and a new scheme for
tinue supporting economic development of primitive vulactivities and to crowd in pri- nerable tribal groups with a
vate investments.
budget outlay of ₹15,000 crore
The budget also proposed to over the next three years are.
raise the limit of ₹3 lakh for tax
gireesh.p@livemint.com
KEY STAT
27
%
INCREASE IN THE CENTRE’S
CAPITAL EXPENDITURE IN 2020-21,
THE YEAR WHEN COVID-19 WRECKED
GOVERNMENT FINANCES
Source: Budget documents
FY23.
The revenue from freight is expected to
rise to ₹1.79 trillion in the next fiscal from
₹1.65 trillion in FY23.
Addressing the media after the budget
presentation, union railway minister Ashwini Vaishnaw said: “We will be rolling out
2-3 Vande Bharat trains every week by the
end of 2023-24, which
will be used through the
country. The production
and design will of Vande
Bharat metro projects
will be completed in
OUTLAY FOR PM Awas
2023-24 and we hope to
Yojana is being
start rolling out these
enhanced by 66% to over
metro projects in
₹79,000 crore
2024-25.”
Vande Bharat trains
NEW INFRA finance
run at semi-high speeds
secretariat to enhance
of up to 180 km per hour
opportunities for private
investment in infrastructure on non-metro routes. For
metros, they are
expected to run at 120
AGRICULTURE
kmph.
ACCELERATOR fund to be
He said the production
set up to encourage agriof Vande Bharat trains
startups in rural areas
would be started in new
locations including SoniINDIAN INSTITUTE of
pat, Latoor and RaeMillet Research will be
bareli. At present, the
supported as a Centre of
production of Vande
Excellence
Bharat Express trains
takes place at Chennai’s
SUB-SCHEME OF PM
Integral Coach factory
Matsya Sampada Yojana
with targeted investment of (ICF).
Currently, there are
₹6,000 crore to be launched
eight Vande Bharat trains
and the government aims to operate least 75
such trains by August 2023.
In line with Centre’s energy transition
and net zero goals, Indian Railways plans to
design and manufacture India’s first hydrogen-fuelled train by the end of this year.
These trains will operate across heritage
and tourist circuits like the Kalka-Shimla
route, Vaishnaw said.
Vaishnaw said that in line with the govQuick acceleration, on-board infotainment, GPS-based passenger information systems, hyperloop technology that will make trains faster
ernment’s green energy mission, the railthan airplanes... India has been making plans for trains that are technologically more advanced and far faster than anything to which we
ways will install ultra-mega solar power
are accustomed. Execution of these plans will need significant capital, and this budget’s outlay is encouraging.
plants to cut the dependency on thermal
power. He said that 85% of railway electrification has been completed.
Further, under the ‘Amrit Bharat Station’
scheme, the central government plans to
redevelop about 1,275 stations across the
country including New Delhi Railway Station and the Chhatrapati Shivaji Terminus
in Mumbai. The scheme announced in
December last year envisages development
of stations on a continuous basis with a
long-term vision.
He also said that a corridor-based
approach would be taken up across the
country to develop railway infrastructure.
The corridors would include economic corRituraj Baruah
The hefty increase in allocation for the ridors specified for sectors like energy,
rituraj.baruah@livemint.com
railways comes with expectations of better cement, ports among others. A ‘Sagarmala’
New Delhi
returns on investment.
corridor will be set up to connect the ports
The operating ratio of Indian Railway for in the country.
he Centre unveiled plans to FY23—which shows the efficiency of a comThe government would also set up a ‘Janlocally design and manufacture pany’s management by comparing the total jati Gaurav Corridor’ connecting tribal
semi-high speed metro trains and operating expense with net sales—stood at areas of the country by rail. In a bid to
hydrogen-fuelled trains as it 98.22. In FY24, this is projected to rise to strengthen tourism, the minister said that
announced a record allocation of 98.45. The ratio is a key metric to assess the more circuits will be added to the series of
₹2.4 trillion for the railways in the budget. Indian Railway’s financial health as it comes trains like ‘Bharat Gaurav’.
“This highest ever outlay is about nine under pressure due to heavier capital
Speaking on the progress of the Mumbaitimes the outlay made in 2013-14,” finance expenditure.
Ahmedabad high-speed train project, he
The Centre has projected a passenger said the Maharashtra government has
minister Nirmala Sitharaman said. The allocation for the last budget stood at ₹1.59 tril- revenue of ₹70,000 crore in FY24 for cleared stuck approvals and that the project
lion.
Indian Railways, compared with ₹64,000 in would be expedited.
Gireesh Chandra Prasad &
Ravi Dutta Mishra
07
ThuRsDay, 2 FebRuaRy 2023
New Delhi
Many more PLIs in
the pipeline, says
Piyush Goyal
Ravi Dutta Mishra
rejig on certain items?
Generally this effort is to
promote domestic manufacNew Delhi
turing. For instance, a raw
he record capex push in material had a customs duty
the union budget will and an intermediate product
drive growth and create was coming in—from data
jobs, commerce minister Piy- when we see, it was coming in
ush Goyal said in a media through an FTA or some other
interaction, adding that route at zero duty. The Indian
“many” production linked domestic manufacturer is at a
incentives (PLIs) are in the disadvantage. So we’ve tried to
pipeline and they would be reduce the duty on the raw
announced after getting cabi- material also so that they get it
net approval on a regular basis. without duty and they can
compete in the market.
Edited excerpts:
What does the Budget do to The economic survey
pointed out that most of
spur growth?
Never before in the history our exports go to seven
of India has the country countries. How are we
focused on growth as much as going to expand that?
This is something that the
in the last three or four years—
the capex from the centre Prime Minister has focused on
going up to 3.3% of the GDP. In since 2014. He has been talka short span of four years, we ing to missions also. So in this
have demonstrated to the country for the first time, our
world that for us investment in missions have started handinfrastructure with its multifa- holding industry. There was a
ceted benefits is the way to time when our businessman
used to complain that
spur growth. If you
if I’m stuck in a
were to look at the
problem somemultiplier effect
Never
before
where, the
of every rupee
has the country
m i s s i o n
spent
on
doesn’t come
infrastrucfocused on
to my supture, various
growth as much
p o r t .
estimates
as in the last 3 to Whereas forsuggest it’s
eign missions
3.5x. So the
4 years
in India would
budget is masalways come with
sively focused on
industry delegation
growth, jobs, opportunities for our next generation. ..writing letters for their indusEconomic survey has try. The data you’ve spoken
flagged a slowdown next about us, focus more on merfiscal. Where do you think chandise exports. When you
the push for exports will add service exports then the
come from in this budget? dispersion becomes much bigClearly the international sit- ger. So out of the 200 counuation is challenging. Despite tries, the large countries are
that we continued to be at still only about 15-20. So there
about 8 or 9% growth in mer- is bound to be a concentration
chandise exports in the cur- of exports in a few countries.
rent year which is phenome- There has been a lot of buzz
nal, considering that the global about the PLI scheme’s
trade is growing barely 1%. We likely extension?
That fund has already been
continue to have a 20% growth
in services which is a big credit provided by the finance ministo our young boys and girls ter—₹2 trillion plus ₹76,000
and particularly our IT sector. crore for the semiconductor
It also reflects that tourism is industry. So as and when other
another area where govern- PLIs schemes get approved,
ments are giving rich divi- the cabinet is empowered to
dends. And you saw the focus approve it. It does not have to
on tourism being presented in go through a budgetary prothe budget today. Also 50 cess a second time. The actual
tourist spots are going to be scheme approvals is a cabinet
process and the guidelines is a
made truly world class.
What is the rationale ministerial process. Many
behind the custom duty [PLIs] are in the pipeline.
ravi.dutt@livemint.com
T
NEW SLOGANS BUT BUDGET ON SAME OLD TRACK
EXPERT
VIEW
T. M . T H O M A S I S A A C
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feedback@livemint.com
T
he union budget of 2023-24 was presented under
the long shadow of crisis in the Adani Empire, the
largest of the Indian conglomerates. Why should
this scam be brought up in a discussion of the budget? For
the simple reason that it is linked to an important policy
variable of the budget—the enhancement of the effective
capital expenditure from 3. 9% of GDP in 2022-23 to 4.54%
in FY24.
The rationale for raising the public capital expenditure
is that it would crowd in private investment. But the puzzle
is that despite higher government capital investment private investment is not forthcoming. The Gross Fixed Capital Formation (GFCF) to GDP in all years has been lower
than the ratio of 32.6 in 2013-14 at around 31.3 until covid
when it fell even more sharply.
The key question is, why is private sector investment not
crowding in? An exasperated finance minister was quoted
in Mint, “Since 2019, ...I have been hearing industry doesn’t
think [the environment] is conducive. All right, the tax rate
was brought down. Give PLI? We have given PLI. I want to
hear from India Inc.: what’s stopping you?”. Even the
present budget does not provide an answer. The answer
certainly is complex. Nevertheless, among other things, an
important element would be lack of fairness and transpar- nations and (is) position(ed) to ascend the pre-pandemic
ency. A public policy that is geared to the creation of a few growth path in FY23”.
The pre-pandemic growth path of the NDA governchampion investors leads to minimum government
becoming maximum government when it comes to certain ment is no record to be emulated. It was another manfavoured corporates. Such a situation is not one that would made “Hindenburg disaster”. Even more silly is the
enthuse the “animal spirits” of the investors, which Keynes assumption that the economy fully recovered from the
famously spoke about. What ever be the reason, the sub- pandemic in FY22. The per capita GDP would still be
dued investment given the level of technology, would below the pandemic level. The ratio of tax and non-tax revimply subdued growth. No amount of verbiage can white- enues to GDP in 2023-24 is virtually the same as in the prewash the fact that the Indian economy that was growing at vious year and the fiscal deficit has been brought down
marginally from 6.4% to 5.9%. Yet it was possible to
around 8.6% per annum since 2003-04 entered a
maintain the expenditure-GDP ratio because of
period of serious deceleration reaching 3.1% in
the expected increase in the higher receipts
the last quarter before the pandemic under
The outlay on
from the sale of public assets.
nine years of the Modi government.
The budget holds little relief for the
Though even the economic survey has
MGNREGS has
rural poor whose employment and
very carefully avoided it from the list of
fallen from
wages are fallen. The outlay on
shocks that adversely affected the Indian
MGNREGS has fallen from nearly
economy, it was the demonetisation that
nearly ₹90,000
₹90,000 cr in 2022-23 to ₹60,000 cr.
triggered the downward slip.
cr in 2022-23 to
National social assistance program has
Even after the downward slide began,
₹60,000 cr
been barely maintained at ₹9,650 cr, at
budget after budget of the NDA regime
the same level as 2022-23. The outlay on
pursued a foolish strategy of reducing the
the National Education Mission and Health
overall budgetary expenditure to GDP ratio from
Mission is lower from the BE of 2022-23 ₹76,700 cr by
14% in 2013-14 to 12.2% in 2018-19. Though not related to
the budget, the situation was confounded by the Reserve ₹1,000 cr. For the housing program, ₹90,000 cr was
Bank adopting a policy of increasing the real repro rate expended in 2021–22. In 2022-23 the expenditure is
even while inflation was coming down. These policies ₹70,000 cr and in the current year the allocation is
were reversed only with the pandemic. In the present bud- ₹79,590 cr.
This is the budget presented in the final year of the govget expenditure-to-GDP ratio is 15%, lower by 0.4 percenternment to usher in Amrit Kaal. Nine years’ record is
age points when compared to the previous year.
India’s economic deceleration was the result of multiple sought to be brushed under the carpet with promises for
policy failures, and the present budget does not seem to the future. However, the new slogans are on the same
have any new strategy to make up for the mistakes. The track as in the past.
T.M. Thomas Isaac is a former finance minister of Kerala.
budget assumes “a full recovery in FY22 ahead of many
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08
ThuRsDay, 2 FebRuaRy 2023
New Delhi
LIVEMINT.COM
KEY STAT
DOUBLE-ENGINE GROWTH
BUDGET POINTERS
TAX REVENUE TRANSFER TO STATES
In 2023-24, the share of central tax
revenues transferred to states is
projected to fall marginally to
30.4%, against 31.2% in 2022-23.
Share of central tax revenues transferred to states (in %)
37
WHY IT MATTERS
States too need to drive growth. A principal source of their
revenues is the share of central taxes transferred to them.
Since peaking in 2018-19, this has dropped by about 5
percentage points, though it’s offset by other central
transfers such as under centrally sponsored schemes. The
big event this year for states is the end of the GST
compensation cess, under which the Centre compensated
states for a fall in revenues due to the transition to GST.
33
28.1
29
30.4
25
2013-14
Data is revised estimates for 2022-23 and budget estimates for 2023-24.
2023-24
Source: Budget documents
States’ fiscal deficit, which
spiked during the pandemic year
2020-21 to 4.1% of GDP, declined
to 2.8% in 2021-22 due to higher
revenues. For 2022-23, this is
budgeted at 3.4%.
18.6
₹
TN
PROJECTED CENTRAL TRANSFER TO
STATES IN 2023-24, MAINLY AS SHARE OF
TAXES, GRANTS-IN-AID AND UNDER
CENTRALLY SPONSORED SCHEMES. THIS
IS UP 8.9% OVER 2022-23.
Financial sector regulators to review norms to ease compliance cost
Shayan Ghosh
shayan.g@livemint.com
MUMBAI
I
ndia’s financial sector regulators will review their
current guidelines in a
move aimed at simplifying
and reducing the cost of compliance for regulated entities,
finance minister Nirmala
Sitharaman said on Wednesday.
“For this, they will consider
suggestions from public and
regulated entities. Time limits
to decide the applications
under various regulations will
also be laid down,” Sitharaman said in her budget
speech. She said that public
consultations, as necessary
and feasible, will be included
in the process of regulationmaking.
That apart, in order to
improve governance and protect investors in the banking
sector, she proposed a clutch
of amendments to the Banking Regulation Act, the Banking Companies Act and the
Reserve Bank of India Act.
“Long term, a clear focus
has been articulated on
enhancing bank governance
and investor protection with
an announcement of amendments to the Banking Regulation Act, the Banking Companies Act, and the Reserve
Bank of India Act, which
should
s t r u c t u r a l l y the GIFT International Finanstrengthen the sector
cial Services Centre
(IFSC), the governand bolster stakement said it will
holder confiThe Centre
set up a single
dence,” said
will set up a
window IT sysKrishnan Sitasingle window
tem for regisraman, senior
tration and
director and
IT
system
for
approvals from
deputy chief
registration and International
ratings officer
Financial Serviat Crisil Ratings
approvals
ces Centres AuthorLtd.
ity (IFSCA), Special EcoThat apart, to
enhance business activities in nomic Zone (SEZ) authorities,
Goods and Services Tax Network (GSTN), Reserve Bank
of India (RBI), Securities and
Exchange Board of India
(Sebi) and Insurance Regulatory and Development
Authority of India (IRDAI). It
will also permit acquisition
financing by IFSC banking
units of foreign banks.
“The Union Budget clearly
emphasises the growth aspirations of our nation and the
vital role of GIFT City in
A mixed bag for banking
sector with more positives
India’s growth story. The policy support laid out by the
Union government will certainly act as a catalyst in expediting the growth of GIFT
City thus making it a vibrant
global financial hub for
domestic and international
entities,” said Tapan Ray,
managing director and group
chief executive, GIFT City.
“The far-reaching measures announced in the budget
will go a long way in strength-
ening the ease of doing business in IFSC at GIFT City. The
establishment of an EXIM
Bank subsidiary would
encourage emerging sectors
such as aircraft & ship financing activities in GIFT City,”
said Ray.
That apart, the government
will also amend the IFSCA Act
for statutory provisions for
arbitration, ancillary services,
and avoiding dual regulation
under SEZ Act.
MSMEs to reap gains
of revamped credit
guarantee scheme
Shayan Ghosh
The availability of ₹2 trillion
worth of credit to small businesses would aid the sector, just
MUMBAI
emerging from two years of
he government will pandemic-related stress. Along
introduce the revamped with retail borrowers, small
version of the Credit businesses were perhaps the
Guarantee Trust for Micro and worst hit during this period,
Small Enterprises (CGTMSE) crimping their ability to repay
scheme from 1 April, infusing existing debt. While the gov₹9,000 crore to aid collateral- ernment has in the past
free lending to small busi- announced measures like the
nesses, finance minister Nir- Emergency Credit Line Guarmala Sitharaman said on antee Scheme (ECLGS) during
covid-19, experts have been
Wednesday.
Launched in August 2000, seeking a revamp of the
the CGTMSE scheme provides CGTMSE scheme.
“The demand of NBFCs from
guarantees to help small businesses access loans. Guarantees the finance minister was to
provided by the scheme ranges advance hassle-free credit
from 75-85% of the loan. Such access and the government has
guarantee schemes are benefi- given a much-needed boost to
cial to banks as well as they do the MSME sector. An allocation
not have to set aside provisions of ₹9,000 crore for credit guarantee revamp scheme
for the guaranteed porstarting 1 April will
tion if it turns bad.
give a big relief to
A MSME secThe
revamp
is
MSMEs in the
tor expert said
likely to enable
current inflarequesting
tionary condianonymity
additional
tions,” said
that the infucollateral- free
Shachindra
sion of funds
Nath, vice
guaranteed
into
the
chairman
scheme would
credit of ₹2 tn m a n a g i and
ng
allow more leverdirector, UGRO
age and that is likely
Capital, a non-bank lenbeing termed as a
revamp, although more details der to small businesses.
According to Jiji Mammen,
might be soon available.
“I am happy to announce executive director and chief
that the revamped scheme will executive of microfinance
take effect from 1 April 2023 institutions’ industry body
through infusion of ₹9,000 Sa-Dhan, the budget has
crore in the corpus. This will addressed the need for credit to
enable additional collateral- the MSME sector by augmentfree guaranteed credit of ₹2 ing the credit guarantee fund.
Data from RBI showed that
trillion,” Sitharaman said in her
budget speech, adding the cost bank loans to MSMEs, under
of the credit will reduce by priority sector, stood at ₹19.12
about 100 basis points (bps) due trillion as on 30 December, up
11.6% from a year earlier. The
to the scheme.
Bankers said they would small business sector, with an
have to wait for the details of estimated workforce of 110 milthe revamp to assess the lion, has also gained imporimpact. “The exact detail of the tance owing to its status as one
scheme is awaited and hence of the largest employment prothe exact impact of the scheme viders. A report by consulting
can be evaluated once the fine firm KPMG and industry body
print has been studied,” said CII said in November that these
Manish Kothari, president and entities account for 30% of
head, commercial banking, India’s gross domestic product
and 45% of exports..
Kotak Mahindra Bank.
shayan.g@livemint.com
The rise in outlay for PMAY
by 66% is likely to boost
affordable housing loans
T
Gopika Gopakumar
gopika.g@htlive.com
MUMBAI
T
he budget has turned to be a mixed
bag for the banking sector at a time
when customer deposits have
lagged credit disbursal amid a drying up of surplus liquidity.
In terms of positive, bankers view finance
minister Nirmala Sitharaman’s announcement to raise the outlay for PM Awas Yojana
(PMAY) by 66% in the
budget as a big boost to
KEY
the affordable housing
ANNOUNCEMENTS
loan portfolio. The
scheme’s outlay has
been raised to ₹79,000
FINANCIAL SECTOR
crore, a sharp rise from
regulators will engage in a
the FY23 budget that
comprehensive review of
had allocated ₹48,000
current regulations
crore for the ‘Housing
for All’ initiative.
NATIONAL FINANCIAL
“With the announceInformation Registry to be
ment of enhanced capiset up to promote financial
tal expenditure by 33%
inclusion
and increment in the
outlay for PMAY by 66%
INTRODUCTION OF
to over ₹79,000 crore,
revamped credit guarantee
scheme for MSMEs, leading to the government has
provided much-needed
₹2 tn of collateral-free loans
support to the affordable housing sector. Also,
CENTRE TO continue fiscal
the relaxation in income
support for India’s digital
tax slabs provides addipublic infrastructure
tional
disposable
income in the hands of
KNOW YOUR customer
the common man which
process to be simplified
can directly lead to
adopting a ‘risk-based’
growth in the affordable
instead of ‘one size fits all’
homes segment,” said
approach
Sandeep
Menon,
founder, managing director and chief executive, Vastu Housing Finance. Also, starting an
Agriculture Accelerator Fund to encourage
innovative startups in rural areas would help
banks get more information on the farm sector. In addition, ₹20 trillion worth of targeted
agriculture credit from banking sector will
also see an improvement in credit pick up.
The budget also proposed to increase the
Bankers are a happy lot today. Non-performing assets of lenders have reduced significantly and India’s economy continues to be
resilient. This has led to an all-time high incremental credit growth. Bank loans to micro, small and medium enterprises, under priority
sector, stood at ₹19.12 trillion as of 30 December, up 11.6% year-on-year.
capital investment outlay by 33% to Rs 10 trillion. This is nearly three times the outlay in
2019-20. The decision to extend the 50-year
interest-free loan to state governments for
one more year to spur investment in infrastructure will also provide further push for
credit growth. “Investing outlay of capital
expenditure to 10 trillion would boost credit
offtake in both public and private sector,
positioning private sector infrastructure
investment to grow further. Strong bank balance sheets would enable funding capex and
consequent asset creation would help in our
path to a $7 trillion economy,” said Abizer
Diwanji, head-financial services, EY India.
That said, the move to start a one-time new
small savings scheme for women up to ₹2
lakh could intensify competition for deposits.
“The banking system could see more competition on deposits given the increase in
investment limits across various small saving
instruments amid an environment of high
credit growth. The improved attractiveness
of the new tax regime will reduce the demand
for tax-break induced investment products,”
said Karthik Srinivasan, group head - financial sector ratings, Icra.
Budget 2023 showcAses A vIsIon for IndIA And A plAn to propel BhArAt
EXPERT
VIEW
SHANTI EKAMBARAM
Respond to this column at
feedback@livemint.com
B
udget 2023 is a stellar effort that encapsulates an inclusive
growth agenda with an eye on the future. The twin focus on
higher capital expenditure for infrastructure development
and tax benefits to the middle class are going to drive growth and
consumption in the coming years. With an expected GDP growth
of 7% in FY23, the first budget in the ‘Amrit Kaal’ lays out the
growth story for the next year and beyond.
At the same time, the finance minister has made a remarkable
effort to stick to fiscal prudence and has indicated a glide path to
< 4.5% by FY25/26, much to the comfort of the markets. By achieving the private sector to take lead. With the railways getting its highestthe fiscal deficit at 6.4% of GDP for FY23 and keeping the market ever capital expenditure allocation of ₹2.4 trillion in FY24, India
borrowing at ₹15.43 trillion with a fiscal deficit estimate of 5.9% for wants to improve last-mile connectivity. With over 50 airports and
FY24, the budget has addressed one of the key concerns.
airdromes and renovation of existing aviation facilities, the growth
The vision to develop both India and Bharat through
juggernaut has been unleashed.
seven distinct focus areas – Saptarishi model - is proThe ₹10,000 crore Urban Infrastructure Developgressive and pragmatic and strategically focuses on
ment Fund – through priority sector lending shortAs
expected,
infrastructure investment, green growth, agriculfall – is another landmark that will transform the
the highlight of
ture development and modernization, youth skill
urban planning landscape, making the cities more
sustainable via efficient use of land, adequate
enhancement, financial literacy, and tourism.
the budget was
resources and transit-oriented development. The
As expected, the highlight of the budget was
the record
budget has also put much onus on the states to
the record capital expenditure allocation of ₹10
capex allocation utilize, create and perform when it comes to creattrillion that will act as an economic multiplier in
ing infrastructure assets.
sectors like transport and housing. There was a
of ₹10 tn
By simplifying direct taxes and making them
holistic approach to capital expenditure, given the
friendlier to taxpayers, the budget is also a boost to
balanced allocation to develop railways, roads, urban
urban consumption. While the finance minister hiked the
infrastructure, and power, which are predominantly
rebate limit to ₹7 lakh from ₹5 lakh, no bracket of taxpayer has been
dependent on public resources.
But by setting up the infrastructure finance secretariat to assist left out in the overhaul. Even the highest tax rate of 42.73% has
all stakeholders with more private investment in infrastructure, been reduced to a maximum of 39%, by revising the surcharge to
the government has actively encouraged the PPP model, inviting 25% from 37%. Though the revenue foregone is close to ₹35,000
crore, the finance minister is counting on the boost to the overall
consumption. Importantly, no change in the capital gains tax
regime affected much to the comfort of the markets.
The focus areas like green growth and tourism development are
going to create employment as well as attract investments. As per
the Prime Minister’s vision, India is moving forward firmly for the
‘Panchamrit’ and net-zero carbon emission by 2070 that would
ensure ‘green growth.’ As one could see it, the theme of green
growth will now pervade all economic activities, helping India
achieve its global promise of net zero and carbon reduction. It will
also create employment and entrepreneurship opportunities.
The Budget scores on all fronts as there are several announcements for women, senior citizens and tribals among others, sustaining the inclusion aspect. It has laid a viable platform for technology in even traditional sectors like agriculture, left enough in
the hands of consumers, strived hard to leverage internal strengths
like tourism and kept an eye on the global leader with massive
domestic capacity building and green focus.
This will certainly lead India to the path of becoming an economic superpower in the next decade.
Shanti Ekambaram is whole-time director of Kotak Mahindra Bank.
This PDF was uploade To Teligram channel_ LBS Newspaper platform (https://t.me/LBSNEWSPAPER) @LBSNEWSPAPER
ThuRsDay, 2 FebRuaRy 2023
New Delhi
LIVEMINT.COM
09
KEY STAT
FISCAL PRUDENCE
WHY IT MATTERS
BUDGET POINTERS
FISCAL DEFICIT
Fiscal deficit as % of GDP
10
Fiscal deficit defines the boundaries of how much
the government can spend beyond its means. To
revive and sustain growth momentum, this
government has committed to a path of big
spending, even if it means a little extra stretch in
borrowings. But if growth in tax collections flags, it
could send the fiscal deficit awry.
8
6
4.4
5.9
4
2
2013-14
Data is revised estimates for 2022-23 and budget estimates for 2023-24.
2023-24
Source: Budget documents
Surging tax revenues helped meet
the 2022-23 fiscal deficit target of
6.4% of GDP. The 2023-24 target is
5.9%. Slower growth in tax
revenues suggests tighter spending.
The government has said it intends
to work towards reverting to a
prudent fiscal deficit target of
below 4.5% by 2025-26.
path on fiscal consolidation, toward the
sub-4.5% fiscal deficit target by FY26, are positives. But, a sharp fall in certain index constituents soured the sentiment in the second
half,” he said.
The fiscal deficit has been pegged at 5.9% in
FY24 from 6.4% estimated in FY23.
Key broker associations such as ANMI had
requested, among others,
for exemption of shortKEY
term capital gains tax up to
ANNOUNCEMENTS
Rs 1 lakh as the tax arises
after securities transaction
tax is already paid by an
LONG-TERM capital gain
investor. But the budget
and short-term capital gain
didn’t offer any relief.
tax on equities remain
Given that there were
unchanged
no negative surprises, in
addition to the fiscal glide
LIMITING INCOME tax
path being maintained,
exemption from proceeds
markets raised a toast post
of life insurance policies
the Budget presentation.
with premium over ₹5 lakh
But the gains melted soon
after 1 pm as the Adani
CREDIT GUARANTEE
group stocks turned bearscheme for MSMEs to lower
ish for the fifth straight
credit cost for SME lenders
session. This had an
impact on PSU banking
TO BOOST urban
counters, which witnessed
infrastructure in tier-2 and
profit booking.
tier-3, an annual allocation
Nilesh Shah, MD, Kotak
of ₹10,000 crore was
AMC, who likened the
proposed
scale of the Budget to legendary
strongman
AN ALLOCATION of
“Bahubali,” said, “Growth
₹2.40 trillion set for the
will be supported not only
Indian Railways was the
from the multiplier effect
highest-ever
of the enhanced Infrastructure investment but also supportive
monetary policy. The budget could have
focused more on asset monetization but that
can be pursued otherwise also depending
upon market conditions.” He attributed the
post-Budget market reaction to “FPI outflows
due to India’s premium valuations. FPIs tactical flows are going into cheaper markets from
premium markets like India.”
To be sure, EMs have outperformed India
over the past three months, borne out by the
India’s stock markets had been rather resilient in 2022, despite withdrawals by foreign portfolio investors. 2023, thus far, has been volatile
gross returns of MSCI EM Index being a negaand investors lost ₹10.6 trillion between 23 January and 31 January, or ever since the Hindenburg report on Adani group roiled the markets.
tive 1.35% against minus 5.48% for MSCI India
While the markets initially cheered the budget, the gains were wiped out because of the rout in Adani stocks.
over a month through December-end.
Apart from Adani shares, the Nifty was
partly dragged down by life insurance companies such as HDFC Life and SBI Life, thanks to
maturity proceeds being taxed for policies
where aggregate premia is above ₹5 lakh. The
HDFC Life stock plunged 10.9% to ₹515.7
apiece while SBI Life plunged 9% to ₹1,109.4
and Bajaj Finserv shed 5.5% to ₹1,268.3.
“This move will remove the tax arbitrage
between insurance and mutual funds and
could be in favour of the latter,” said Rajesh
Baheti, MD, Crosseas Capital, one of the country’s largest proprietary traders. “The budget
has no negative surprises for the market but
Ram Sahgal
around 2% each, before turned their course on gains were erased because of the fall in Adani
ram.sahgal@livemint.com
heavy selling in Adani shares. Buying in the group frontline stocks and its cascading effect
MUMBAI
last half hour of trade helped the indices pare on PSU banks like heavyweight SBI.”
Ashish Kumar Chauhan, managing
losses before the Nifty closed down a fourth of
rout in frontline Adani group a percentage point at 17,616.3 and the Sensex director and chief executive officer of NSE,
said the budget would support growth and the
stocks spoilt the party for the closed up by as much at 59,708.08.
bulls who cheered the Budget,
The reason for the divergent closing Indian consumption story, keep us in good
but were forced to retreat in the between Nifty and Sensex is because both stead, given global headwinds in China and
second half of the trading session Adani Enterprises and Adani Ports are part of developed markets, and until the rest of the
world eases. “Before the budget was preon heavy selling in index counters like Adani the Nifty and not the Sensex.
Ports and Adani Enterprises, which slumped
“I’d give the Budget an eight out of 10,” said sented, investors were worried about a rise in
17-27%, and its cascading effect on banks such Nirmal Jain, founder and chairman of IIFL capital gains. No change there; has also creas SBI, which corrected almost 5%.
group. “The budgeted government capex of ated a positive reaction. Overall, this is a very
Both Sensex and Nifty gapped up at open- ₹10 trillion, which will have a multiplier effect positive budget for the markets, with someing and went on to hit intraday highs of on growth and jobs and following the glide thing for everyone,” he said.
Adani stocks upset
mkt’s budget party
Sensex and Nifty went on to
hit intraday highs of around
2% each, before changing
course on heavy selling
in Adani shares
A
32
THE NUMBER OF YEARS THAT
HAVE PASSED SINCE THE LAST
TIME INDIA’S FISCAL DEFICIT
EXCEEDED 6% FOR THREE
CONSECUTIVE YEARS.
Little cheer for fin
services; insurance
cos left high and dry
Bavadharini K.S. &
Vineetha Sampath
product in APE, our qualitative
understanding is that IPRU is a
relatively recent entrant in this
CHENNAI/BENGALURU
area and its share of this business would be relatively lower
or the financial services compared with other listed prisector, the Union budget vate sector life insurers,” said
2023 was a mixed bag. Shivaji Thapliyal, head of
Investors in stocks of banking research and lead analyst, Yes
and non-banking financial Securities.
firms heaved a sigh of relief as
That said, there are still some
the budget did not throw any grey areas that investors would
negative surprises. On the flip- seek clarity on. For instance, it
side, shares of insurance com- is not clear whether the entire
panies took a deep knock. proceeds will be taxed or only
Among the losers were HDFC the gains. “If the entire proLife Insurance Co. Ltd, ICICI ceeds is taxed, then it will be big
Prudential Life Insurance Co. negative as it will involve taxing
Ltd (IPRU) and SBI Life Insur- the principal as well, but if only
ance Co. Ltd whose stocks gains/ returns are taxed then
slumped by 8%-12% on impact should be manageable,”
Wednesday.
added the Jefferies report.
This steep reaction was not
A bright spot, however, is
without a reason.
that the maturity proceeds on
The government’s move to death of the policyholders, are
tax the maturity proceeds from still exempt. What’s more,
life insurance policies (exclud- given that the amendment is
ing unit linked insurance poli- effective on new policies from 1
cies (ULIPs) with aggregate April 2023, there is a likelihood
premium of over ₹5
of a surge in insurance
lakh has not sat
premiums in Febdown well with
ruary and March.
The
move
to
investors.
While this
tax the maturity
Recall that for
would augur
ULIPs, tax
well
for
proceeds from
exemption
Q4FY23
ULIPs has not
was removed
earnings of
gone down well
for policies
insurers, the
with annual
way ahead
with investors could
premium exceedbe chaling ₹2.5 lakh in
lenging. This is
FY21-22 budget.
because another presThe amendment dilutes the sure for insurance stocks is
attraction of top-selling prod- feared to emerge from the govucts – non-participating and ernment’s push towards the
participating versus banks, said new tax regime. This scheme
analysts at Jefferies India in a does not provide tax deducreport. These two products tions for premium paid as is the
form 30-60% of annualized case with the old tax regime. As
premium equivalent (APE) for such, insurance policy volumes
companies under the broking are estimated to take a beating.
firm’s coverage.
All in all, insurance stocks are
This means high-value sav- likely to be under pressure, at
ings products which drive busi- least in the near term.
ness of insurers would face the
Meanwhile, the governheat. For instance, HDFC Life ment’s massive capital expendhad about 33% of its total APE iture outlay of ₹10 trillion,
from non-participating policies would also benefit banks, said
in the nine-month period analysts. Secondly, the budget
ended December. The com- announcement with respect to
pany’s revenue is expected to withdrawal of tax exemption on
be adversely impacted to the life insurance proceeds from
extent of 10-12%, said Vibha policies with premium over ₹5
Padalkar, managing director & lakh is also a plus for this sector.
CEO, HDFC Life, in an inter- “This can narrow the tax arbiview with CNBC-TV.
trage between term deposits
On the other hand, “While with banks (on marginal rate of
IPRU does not explicitly pro- 25-30%) and insurance policies
vide the share of non-partici- (nil tax),” said Jefferies.
bavadharini.ks@livemint.com
pating savings guaranteed
F
SITHARAMAN UNVEILS INDIA’S FIRST GREEN BUDGET
Infrastructure sector takes the
cake, yet again, with capex bounty
Harsha Jethmalani
harsha.j@htlive.com
MUMBAI
A
higher-than-expected
budgetary capital
expenditure outlay was
more than welcome. After all,
the Centre’s capex spend has
been holding the fort as a
meaningful revival in private
capex is missing so far.
Finance minister Nirmala
Sitharaman proposed FY24
capex outlay at a whopping ₹10
trillion, up 33%, and 3.3% of the
GDP. This is the third straight
year of a rise in capex outlay.
“We were expecting a 30%
year-on-year increase in capex
outlay, so it has exceeded that.
The increased emphasis on
first and last mile connectivity,
green growth and urban infrastructure development bodes
well for the sector’s long-term
growth. Execution is the key
now,” said Suresh Subudhi,
global leader for infrastructure
practice at BCG.
The record proposed alloca-
tion of ₹2.4 trillion for the off effect, shares of select comIndian Railways was another panies in the cement and real
highlight. Further, in a bid to estate sectors also rose.
give urban infrastructure in
“Overall, the allocations
tier-2 and tier-3 cities a fillip made towards the railways and
and make cities more sustaina- roads segment in Budget 2023
ble, an annual allocation of were strong; however, alloca₹10,000 crore under the Urban tion to the defence sector came
Infrastructure Development as a negative surprise and could
Fund was proposed.
weigh on the stock, in
It should be
the near-term,”
noted
that
said
Nilesh
The Nifty
investments in
Bhaiya, conInfrastructure
the infrastrucsumer durature sector
bles & capital
index and BSE
tend to have a
goods analyst
Capital Goods
multiplier
at BNP Paribas
index rose about S e c u r i t i e s
impact on economic growth
India.
The
1% and 1.8%
and job creation
defence budget
across adjacent secwas increased to
tors. Among capital
₹5.94 trillion for FY24
goods stocks, sector bellwether from last year’s allocation of
Larsen & Toubro, ABB India, ₹5.25 trillion.
Thermax and Siemens are seen
While the Centre’s commitas potential beneficiaries. The ment to boost the infrastrucNifty Infrastructure index and ture sector does boost investhe S&P BSE Capital Goods tors’ confidence, an immediate
index rose around 1% and 1.8%, impact on the earnings outlook
during the day, respectively on of companies in these sectors is
Wednesday. In a positive rub- unlikely, he added.
EXPERT
VIEW
MANISHA GIROTRA
Respond to this column at
feedback@livemint.com
T
he finance minister presented a phenomenal
budget, which sets the Indian economy on the
right track for continued growth. Her speech
succinctly projects this year’s economic growth at 7%.
I believe the economy is on the right track despite challenges, both global and domestic. The Indian economy
has increased in size from the 10th to the fifth largest
during the past nine years.
The minister has chalked up seven priorities for this
budget - inclusive development, reaching the last mile,
infrastructure and investment, unleashing the potential, Green Growth, youth power and financial sector.
This is a step in the right direction which will help boost
the economy further. The government’s efforts
towards a better quality of living and a life of dignity
have paid off as the per capita income has more than
doubled to ₹1.97 lakh.
The finance minister’s budget speech also recognized key game changers like - digital public infrastructure, including Aadhaar, Co-Win and UPI, the
covid vaccination drive, which was carried out in
unparalleled scale and speed, a proactive role in frontier areas such as achieving the climate-related goals,
Mission LiFE and National Hydrogen Mission.
The recently launched National Green Hydrogen
What I find really interesting is that there is a new rig- Mission, with an outlay of ₹19,700 crore will facilitate
our to encourage agritech startups in rural areas. The the transition of the economy to low carbon intensity,
formation of the Agriculture Accelerator Fund will add reduce dependence on fossil fuel imports and make the
a significant boost to startups, which will bring innova- country assume technology and market leadership in
tive and affordable solutions for rural entrepreneurs.
this sunrise sector. The government has set an ambiIn my opinion, over the last nine years, the National tious target of reaching an annual production of 5
Rural Livelihood Mission has been a major success. It MMT by 2030.
has mobilized rural women. More than 8 million Self
In a bid to push energy transition and achieve netHelp Groups (SHGs) and the government will now ena- zero objectives and energy security, the government
ble these women to reach the next stage of ecohas provided ₹35,000 crore for priority capital
nomic empowerment through the formation
investments. Moreover, an investment of
of large producer enterprises or collec₹20,000 crore, including the central supThe Centre
tives, with each having several thousand
port of ₹8,300 crore has been proposed
members. These initiatives will help
for renewable energy evacuation and
has provided
the government to promote the ecogrid integration by laying interstate
₹35,000 crore
nomic empowerment of women in
transmission of 13GW of renewable
our country. Additionally, FM’s move
energy from Ladakh.
for priority
to fund railways is a very good way to
FM has proposed a slew of meascapital
gain the highest spike in statistical
ures to boost financial inclusion. The
investments
numbers for GDP and employment mulrevamped credit guarantee scheme for
tiplier. The 33% increase in the capex budMSMEs will take effect from 1 April 2023
get will have a multiplier effect.
with an infusion of ₹9,000 crore corpus. This
I strongly feel that this budget should be classified
will enable additional collateral-free guarantee credit
as the First Green Budget of India. To achieve a net zero of ₹2 trillion and reduce the cost of credit by 1%. The
emissions goal by 2070 under the Net Zero pledge, the increase in capital expenditure is expected to increase
finance minister has rolled out a comprehensive Green growth potential and job creation, crowd in private
Growth Strategy.
investments, and provide a cushion against global
India is set to achieve its aim of 40% installed electric headwinds.
capacity from non-fossil fuels ahead of 2030. The likely
I am of deep conviction that this budget is going to be
installed capacity from non-fossil fuels will be more remembered as a historical exercise when India takes a
than 500GW by 2030, resulting in a decline of the decisive step towards transforming itself to the goal of
average emission rate by around 29% compared to becoming a developed economy and global superpower.
2014-15.
Manisha Girotra is the CEO of Moelis India
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KEY STAT
BUDGET POINTERS
NO GOVERNMENT IN BUSINESS
STAKE SALES BY GOVERNMENT
WHY IT MATTERS
100,045
The prime minister said last year: “Government has
no business to be in business.” It’s not doing too
well either in delivering shareholder returns. In the
past 10 years, an index of PSUs has trailed the BSE
Sensex in a big way (compounded annual return of
3% versus 12%). And disinvestment even in
non-strategic sectors has receded from a
philosophy to an idea.
Disinvestment proceeds (in ₹ crore)
94,727
60,000
29,368
37,737
42,132
61,000
50,304
47,743
37,897
14,638
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
Data is revised estimates for 2022-23 and budget estimates for 2023-24.
2022-23
2023-24
Source: Budget documents
36
The 2022-23 disinvestment target
of ₹65,000 crore is expected to
fall short by ₹5,000 crore, and a
modest increase is projected for
2023-24.
To make strategic sales of PSU
banks more attractive, Budget
2023 allows carry forward of
accumulated losses by the
acquirer in the event of a merger.
NUMBER OF PSUS IN WHICH THE
GOVERNMENT SOLD STAKES, MAJORITY
AND MINORITY, IN 2017-18—THE ONLY
YEAR WHEN DISINVESTMENT PROCEEDS
CROSSED ₹1 TRILLION.
Cheer for EV battery makers as machinery imports to cost less
Alisha Sachdev
alisha.sachdev@livemint.com
New DelhI
T
he Union budget proposals to accelerate local
lithium-cell manufacturing will benefit infrastructure players and battery makers keen to develop a capitalintensive sector. India
currently imports most equipment required to make lithium-ion cells, the mineral itself
and ready-made cells.
The budget proposed to
exempt capital goods and
machinery used to manufacture lithium-ion cells for EV
batteries from customs duty, a
move which could slash capital
costs for those setting up large
factories to make advanced
chemistry cells (ACCs).
In her budget speech,
finance minister Sitharaman
also said the existing concessional rate of import duty on
lithium-ion cells will continue
for another year.
“The emphasis on increased
infrastructure spends and support for lithium-ion battery
manufacturing will be a great
multiplier for industry overall,” said Sudarshan Venu,
managing director of TVS
Motor Co., India’s secondlargest electric two-wheeler
maker.
Reliance New Energy, Suzuki Motor Co., Amara Raja
Batteries, Exide and Tata is at a critical juncture of transChemicals, apart from
lating the government’s
green
start-ups such as
growth policy
Ola Electric and
India relies
into actual initiLog9 Materials,
on other
atives. “The big
are working to
countries for
challenge is,
set up lithiumcapital costs for
ion cell plants.
equipment
key
setting up new
According to
to li-ion battery cell manufacturVijayanand
ing capacities is
Samudrala, presimaking
very high, as not
dent, new energy
many of these goods
business, Amara Raja
Batteries, the battery industry needed are available in the
country, and import costs are
very high. Exempting this
machinery from customs duty
had been a long-standing
industry ask and we are
extremely happy that the government understood the
capex burden on domestic
infra makers is significant and
took action,” Samudrala said.
Amara Raja is investing ₹
9,500 crore to build a 16 GWh
factory in Telangana over the
next 10 years. “The customs
India Inc welcomes focus
on capex, consumption
duty exemption should lower
our capex burden by 6-8% of
the total project cost,” Samudrala said.
India relies heavily on South
Korea, China and Japan for
equipment critical to the manufacture of lithium-ion cells.
Japan’s Suzuki Motor is in
the process of building a factory for EV batteries in Gujarat. The budget has made a
judicious and pointed intervention to encourage local
battery manufacturing, said
Rahul Bharti, executive
director, corporate affairs.
“Through the Toshiba-DensoSuzuki JV, we have India’s first
Lithium-ion cell manufacturing plant doing production
and export...Cell manufacturing needs precision equipment and very tight environment control. Easy import of
machinery and capital equipment will be helpful,” Bharti
said.
Duty sops to boost
manufacturing,
drive consumption
Swaraj Singh Dhanjal
spending across various sectors, especially with more disposable income in consumers’
MuMbaI
hands thanks to tax benefits.
“The newly announced
he Union budget pledged
strong support for reduction in basic customs
domestic manufacturing duty for several television
of electric vehicle batteries, component imports is a big
mobile phones and televisions, boost for the television induswith Union finance minister try. We welcome this budget
Nirmala Sitharaman cutting in its entirety and we are optibasic customs duty on several mistic of our future business
components and machinery plans in India,” he added.
The finance minister added
used in their manufacturing.
The budget extended cus- that she will reduce the numtoms duty exemption to ber of basic customs duty rates
imports of capital goods and on goods other than textiles
machinery used to make lithi- and agriculture, from 21 to 13.
“As a result, there are minor
um-ion cells for EV batteries.
In order to deepen domestic changes in the basic custom
value addition in mobile phone duties, cesses and surcharges
making, it also proposed to on some items including toys,
provide duty relief on import bicycles, automobiles and
of certain parts and inputs like naphtha. A simplified tax
structure with fewer
camera lens, and contax rates helps in
tinue the concesreducing comsional duty on
The
budget
pliance burden
lithium-ion
extended
and improvcells for for
ing
tax
another year.
customs duty
administraSimilarly,
exemption to
tion,” said
to promote
Sitharaman.
imports of
value addition
MSMEs and
in the manufaccapital goods industries
will
ture of televigain from the
sions, the budget
reduction in customs
proposed to reduce the
basic customs duty on parts of duties, said Amit Pamnani,
open cells of TV panels to 2.5%. chief investment officer, Swas“The budget proposed tika Investmart Ltd. “Sectors
alignments on duties applica- like metals, ship, seeds, chemible to imports to support the cals, crude, glycerine, mobile
Make in India and Atmanir- phones, camera lens, TV, toys,
bhar Bharat initiatives like bicycles, and automobiles will
customs duty relaxations on get direct augmentation in
camera lens, parts of camera profits,” Pamnani added.
The finance minister
modules, parts for manufacture of open cell of TV panel announced tax relief for many
and some others. It has also other sectors as well, including
prioritized green growth by exempting excise duty on
extending customs duty GST-paid compressed bio gas
exemptions on capital goods contained in blended comused in manufacturing of lithi- pressed natural gas.
To rectify inversion of duty
um-ion cells for batteries used
in EVs and denatured ethyl structure and encourage manalcohol,” said Santosh Dalvi, ufacturing of electric kitchen
partner and deputy head of chimneys, the basic customs
duty on electric kitchen chimindirect tax, KPMG in India.
Sunil Nayyar, managing ney has been increased from
director, Sony India said that 7.5% to 15%, and that on heat
the budget should propel coils for these is proposed to be
more demand and consumer reduced from 20% to 15%.
swaraj.d@htlive.com
The budget has been termed
as one with vision, structure,
and discipline
T
Priyanka Gawande
priyanka.gawande@livemint.com
MuMbaI
I
ndia Inc. on Wednesday welcomed a fiscally-balanced and tax-focused budget,
which finance minister Nirmala Sitharaman presented as the first in Amrit Kaal,
with the Indian economy looking to a
bright future.
In her last full budget before the 2024 general elections, the focus was on capex, manufacturing, tax regime
and infrastructure.
KEY
Essentially, the Centre
ANNOUNCEMENTS
outlined seven priority
areas—development,
infrastructure, investA NEW programme to
ment,
unleashing
promote innovation in
potential, green growth,
pharma through centres of
youth power and the
excellence
financial sector.
“M’bap’pe of a budINFRA FINANCE secretariat
to assist all stakeholders for get, not Messi at all. A
budget that puts India
more private investment
on the path to become
the world champion—
MORE THAN 39,000
all set to score goals on
compliances reduced and
infra development, conmore than 3,400 legal
sumption and inclusion.
provisions decriminalized
A big boost for domestic
manufacturing, job crePAN TO be common
ation and ease of doing
identifier for all digital
business,” said Harsh
systems of specified
Goenka, in a nod to the
government agencies
soccer star. The Centre
set aside ₹10 trillion for
RELIEF FOR MSMEs which
capital expenditure, up
failed to execute contracts
nearly 33% from the
during the covid pandemic:
previous year. The Rail95% of forfeited amount to
ways gets ₹2.40 trillion,
be returned by government
its highest ever, and
about nine times the outlay in 2013-14.
“I welcome the move to more productive
expenditure, budgeting capital spending of
₹10 lakh crore—a 33% increase over the previous year and the highest in the past two
decades as a share of GDP. At the same time,
the revision of income tax slabs under the
new tax regime should increase purchasing
power for many. Loan guarantees and other
India Inc expects the government to accelerate growth, improve the ease of doing business, put money in the hands of the consumer,
and focus on capital expenditure. The central government’s capex increased by 63.4% in the first eight months of 2022-23. It could
usher in a ‘multiplier effect’ on the economy.
assistance toward MSMEs, a focus on tourism, and measures announced for the care
economy will boost job creation. The budget
also remains committed to shared prosperity
by extending the free food scheme for one
more year,” said N. Chandrasekaran, chairman, Tata Sons.
Uday Kotak, MD & CEO, Kotak Mahindra
Bank said, “Budget with vision, structure, dis-
cipline. Immediate benefits to all individual
earners. Continues measured path of fiscal
consolidation. Sets foundation to increase
every India’s per capita income exponentially
from 1.97 lakh (2400$). True to its name: 1st
budget from Amrit Kaal.”
Under the new tax regime, the rebate limit
has been increased to ₹7 lakh from ₹ 5 lakh
earlier. Additionally, the number tax slabs
will be cut to 5 instead of 7 in the new regime.
Sajjan Jindal, chairman, JSW Group, said,
“A 40% increase in the income tax rebate limit
from 5 lakh to 7 lakh is a huge comfort that this
budget has given to our middle-income group
and is a great step to strengthen their finances.
More money in the pockets, more spending!
Overall, I believe it’s a great budget and will
complement India’s growth story.”
Budget wIll lay down a BlueprInt for IndIa@100
EXPERT
VIEW
ANISH SHAH
Respond to this column at
feedback@livemint.com
T
he finance minister should be commended for laying
down a comprehensive, inclusive, action-oriented and
progressive budget that presents a masterplan for a building healthy and strong economy and would act as a blueprint for
India@100. The budget includes seven priorities that are meant
to work in tandem and serve as the ‘Saptarishi’ guiding the
nation through Amrit Kaal, propelling towards a brighter future.
India made significant efforts to fuel the post-pandemic
recovery, despite a dismal external environment, geopolitical
tensions and subdued global demand, making it evident that
growth, innovation and infrastructure will remain the key focus dromes and advanced landing grounds that will be revived for
to ensure resilience.
improving regional connectivity. The highest ever outlay proOne of the top priorities in this year’s budget was infrastruc- vided for railways shows that it continues to be a focus area.
ture and investment. By increasing the capital investment outTo improve the ease of doing business in India, more than
lay by 33% to ₹10 trillion consecutively for the third
39,000 compliances have been reduced and more than
time, the government has made its priorities clear.
3,400 legal provisions have been decriminalized.
This would spur the investment cycle, aid growth
Further, the Jan Vishwas Bill will amend 42 CenThe
budget
and development, and boost job creation. At the
tral Acts which will further strengthen the trust
will rejuvenate
budgeted level of ₹10 trillion, the Centre’s
of the stakeholders in the government.
capex would be 3.3% of the GDP. Further, the
Lack of information on financial credentials
growth drivers,
states that will spend more on capex will be
and creditworthiness hinders lending. To overgive a push to
incentivized by 50-year interest-free loans.
come this, the government has proposed to set
production
The budget has also made provision for
up National Financial Information Registry.
₹35,000 crore towards energy transition and net
To protect MSMEs from the government concapacities
zero objectives.
tract failure during the covid-19, the government
The government has identified 100 projects for
has decided to refund 95% of the forfeited amount as
last and first mile connectivity for ports and other impora gesture for the immense contribution made by the small
tant sectors such as coal, steel, fertilizer and food grains. This entrepreneurs.
will give an impetus to exports in these sectors, increase effiThe budget lays a strong foundation for innovation, with cenciency and reduce the cost of doing business. The finance min- tres of excellence for artificial intelligence being one major
ister also proposed 50 additional airports, heliports, water aero- force. Another interesting proposal is on lab-grown diamonds,
a technology and innovation-driven emerging sector. With the
depletion in deposits of natural diamonds, this is a commendable step to seize the opportunity. Customs duty on seeds used
in lab-grown diamond manufacturing has also been reduced.
The government intends to encourage domestic production
of electronic vehicles, televisions, mobile phones, household
appliances, and specialty steel. Custom duty have been reduced
on key components to encourage domestic production of EV
batteries, mobile phone components such as cameras, components of TV panels, and steel for cargo to encourage domestic
production, while custom duty on electric chimney has been
increased to encourage domestic production.
The budget will rejuvenate the growth drivers, give a push to
production capacities, improve infrastructure and logistics,
reduce cost inefficiencies, boost exports and generate employment, amid mounting challenges posed by slowing global
growth. It will further provide a great opportunity to India to be
a part of the global value chains and emerge as a global manufacturing hub.
Anish Shah is senior vice president, Ficci & MD and CEO,
Mahindra & Mahindra Group
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KEY STAT
MAKE IN INDIA
BUDGET POINTERS
PLI SCHEME APPROVALS
Value (₹ cr)
WHY IT MATTERS
With global companies looking to restructure
their value chains after covid-19, the
production-linked incentive (PLI) scheme could
be a draw to have them invest in India. The
government has announced ₹1.97 trillion worth of
incentives under the scheme, across 14 sectors,
to be paid on incremental sales from products
manufactured in India.
40,951
Large scale electronics
manufacturing
25,938
Auto and auto
components
24,000
Solar PV
modules
18,420
Medical
devices
18,100
15,000
Electric-vehicle
Pharma
batteries
manufacturing
12,195
Telecom
equipment
10,683 7,325 6,940
Textiles
IT
hardware
Bulk
drugs
Government payouts under the PLI
scheme are just about beginning.
For 2022-23, against the budgeted
₹8,503 crore, the revised estimate is
₹4,820 crore.
With more payouts kicking in, the
provision for 2023-24 is ₹8,083 crore,
led by semiconductors and displays
(₹4,645 crore), food processing (₹1,530
crore) and pharma (₹1,200 crore).
Source: investindia.gov.in
“These proposals are definitely a step in
the direction to simplify compliances and
boost investor confidence,” said Karishma
Phatarphekar, partner at Deloitte India.
Sitharaman said financial sector regulators have been requested to carry out a comprehensive review of existing regulations,
such that regulations can be further simplified and the cost of compliance for companies reduced.
“For this, they will consider
suggestions from public and
KEY
regulated entities. Time limits
ANNOUNCEMENTS
to decide the applications
under various regulations will
also be laid down,” she added.
A VOLUNTARY settlement
However, Deloitte’s Phatarscheme for contractual
phekar pointed out that the
disputes with government,
budget had widened the tax
where arbitral award is
authorities’ power to withhold
under challenge
any refunds to a taxpayer. “This
would adversely affect honest
100 LABS to build
taxpayers who prefer to litigate
applications using 5G
after paying taxes instead of
services in engineering
preferring stays against
institutions
demand. The wait for refunds
increases manifold and will
DUTY RELIEF on import of
certain parts and inputs and cause them to approach already
over-burdened constitutional
continued concessional
courts. Giving powers to tax
duty on lithium-ion cells
authorities that can be potentially abused goes against the
CUT IN basic customs duty
government’s motto of ease of
on parts of open cells of TV
doing business,” she cautioned.
panels to 2.5%
This comes even as the government has attempted to
EXEMPTION FROM basic
customs duty to continue on reduce litigation by introducing the post of a Joint Commisinputs for CRGO steel,
ferrous scrap, nickel cathode sioner (Appeals) for deciding
appeals arising from orders
passed by officers below the rank of deputy
commissioner. “This would significantly
reduce the burden on the existing Commissioner (Appeals). This would lead to parallel
disposal of small appeals and reduce pending
litigation,” she noted.
For MSMEs, the government introduced
relief measures under Vivad Se Vishwas,
where in case of failure to execute contracts
Private investment, an important engine of growth, continues to remain sluggish despite the government’s repeated attempts to catalyse
given by government or government underit through large-scale spending. Will companies invest this year? Although the Economic Survey cited “an increasing trend in announced
takings during the covid-19 pandemic
projects and capex spending by the private players”, global headwinds this year could hold back companies from investing.
period, 95% of the forfeited amount relating
to bid or performance security will be
returned. Further, for settling contractual
disputes of the government and government
undertakings when the arbitral award is
under challenge in a court, a voluntary settlement scheme with standardized terms will
be introduced.
“This will be done by offering graded settlement terms depending on the pendency
level of the dispute,” the minister said.
There are other measures towards
increasing ease of doing business for investors and large corporations, especially those
Gulveen Aulakh & Shashank Mattoo
bill is expected to mitigate deeply ingrained in the International Financial Services CenNew DelhI
colonial hostility against India’s entrepre- tre, GIFT City. The government has proneurs. There is a clear push towards building posed to delegate powers under the SEZ Act
inance minister Nirmala Sitharaman a trust-based governance model,” said Rishi to International Financial Services Centres
emphasized on trust-based govern- Agrawal, CEO and co-founder of Teamlease Authority to avoid dual regulation and setting up a single window IT system for regisance in her budget speech, as she Regtech.
He added that extending the scope of Digi- tration and approval from IFSCA, SEZ
proposed to reduce 39,000 compliances and decriminalize 3,400 legal locker to include business entities is a wel- authorities, GSTN, RBI, SEBI and IRDAI.
The budget has also proposed the setting
provisions, aimed to enhance ease of doing come step towards digitizing compliance.
business for companies across the spectrum.
Among a series of measures, the finance up of an Exim Bank subsidiary for trade re-fi“For enhancing ease of doing business, minister said the Permanent Account Num- nancing for encouraging emerging sectors
more than 39,000 compliances have been ber (PAN) will be a common identifier for all such as aircraft and ship financing activities
reduced and more than 3,400 legal provi- digital systems of specified government and also setting up data embassies at GIFT
sions have been decriminalized. For further- agencies for business establishments City, which would facilitate digital continuing the trust-based governance, we have required to have a PAN. This will eliminate ity solutions for countries seeking such soluintroduced the Jan Vishwas Bill to amend 42 the need to have over 20 different enterprise tions. The proposal also includes amending
Central Acts. This budget proposes a series of identities in the current environment, reduc- IFSCA Act for statutory provisions for arbimeasures to unleash the potential of our ing inefficiency and duplication of effort. The tration, ancillary services, and avoiding dual
economy,” Sitharaman said in her budget provision will have legal mandate, effectively regulation under SEZ Act.
“The policy support laid out by the Union
fortifying the provision for businesses.
speech on Wednesday.
Industry experts welcomed the provisions
The government has also proposed to cre- government will certainly act as a catalyst in
to reduce compliances, particularly, the Jan ate a unified filing process, which will do expediting the growth of GIFT City, thus
Vishwas Bill, which they said would make away with the requirement of separate sub- making it a vibrant global financial hub for
ease of doing business a key economic lever, mission of same information to different domestic and international entities. The farwhile signalling a technology-led transition government agencies. The minister said that reaching measures announced in the budget
towards paperless compliance.
the filing of information or return in simpli- will go a long way in strengthening the ease
“While I eagerly await the fine print, con- fied forms on a common portal, will be of doing business in IFSC at GIFT City,” said
tinued focus on decriminalization of shared with other agencies as per filer’s Tapan Ray, MD and Group CEO, GIFT City.
gulveen.aulakh@livemint.com
employer compliance via the Jan Vishwas choice.
Tiresome rules out,
trust-based model in
FM proposes to reduce
39,000 compliances and to
decriminalize 3,400 legal
provisions, with an aim to
facilitate ease of doing biz
F
10.5
TN
TOTAL PRODUCTION TARGETED
UNDER PLI SCHEME, WITH 60% IN
EXPORTS. THE GOVERNMENT ALSO
HOPES TO GENERATE 200,000 DIRECT
JOBS AND 300,000 INDIRECT JOBS.
Tourist spots,
airports get a
major push
Anu Sharma
anu.sharma@livemint.com
New DelhI
T
he Union government will promote India’s
tourism industry on a mission mode in partnership with states and through public-private partnerships, finance minister Nirmala
Sitharaman said.
At least 50 tourist destinations will be selected
through a challenge mode, as well as on the basis
of physical connectivity, virtual connectivity, tourist guides, high standards for food streets, and
tourist security. Each of them will be developed as
a package. All relevant aspects of these spots will be
available on an app to enhance the tourist experience, in an integrated and innovative approach for
domestic as well as foreign travellers.
“The country offers immense attraction for
domestic as well as foreign tourists. There is a large
potential to be tapped in tourism. The sector holds
huge opportunities for jobs and entrepreneurship
for youth in particular,” Sitharaman said in her
budget speech.
Under the Vibrant Villages programme, tourism
infrastructure and amenities will be facilitated in
border villages, and states will be encouraged to
set up so-called unity malls in state capitals, most
prominent tourism centres or financial capitals to
promote and sell their ‘one district one product’
items, GI (geographical indication) products and
other handicraft products, Sitharaman said.
Under the Dekho Apna Desh initiative, citizens
will be encouraged to prefer domestic over international tourism, aided by sector-specific skilling
and entrepreneurship development.
The government has
identified 100 critical
transport infrastrucAt least 50
ture projects for last
tourist
and first mile condestinations will nectivity for ports,
coal, steel, fertilbe selected
izer, and food
through a
grains sectors,
Sitharaman said. It
challenge
has also decided to
revive 50 additional airports, heliports, water aerodromes, and advanced
landing grounds to improve regional connectivity.
As of November 2022, after four rounds of bidding under state-run regional connectivity
scheme Ude Desh ka Aam Naagrik (Udan), 453
routes have commenced, operationalizing 70 airports including two water aerodromes and nine
heliports.
“The Union Budget 2023-24 has reiterated its
focus on improving regional air connectivity, which
will boost domestic air travel. Further, the budget
provides a lot of thrust on the promotion of tourism
through the development of 50 tourist destinations
covering various aspects and further through the
development of theme-based local tourist spots,”
said Shamsher Dewan, senior vice president &
group head- corporate ratings at ICRA Ltd.
“While these initiatives will benefit domestic
travel in the long run, leisure vacations abroad can
get costly for Indian travelers with TCS (tax collection at source) for overseas tour packages increasing from 5% to 20%. Higher costs to Indian travelers because of an increase in tax can impact the
international travel demand which was slowly
gaining momentum,” Aloke Bajpai, group CEO &
co-founder, ixigo said.
Menwhile, drone companies are optimistic
about the opportunities from the Agriculture
Accelerator Fund announced in the Union budget.
It will aim to bring modern technologies to transform agricultural practices.
There is a big opportunity in collaborating with
agri start-ups to serve and show a real case of
drones in the agriculture industry,” said Kishan
Tiwari, co-founder and CEO, TSAW Drones.
THE FIRST BUDGET OF AMRIT KAAL HAS ITS HEART IN THE RIGHT PLACE
EXPERT
VIEW
A N I L AG A RWA L
Respond to this column at
feedback@livemint.com
I
t is the sign of a maturing economy and a visionary political
leadership that the Union Budget can simultaneously think
strategically for the long-term well-being of the country as well
as the short-term aspirations of different sections of its society.
Finance minister Nirmala Sitharaman’s fifth budget is a continued reflection of the unique leadership abilities of Prime Minister
Narendra Modi who has steered the economy steadily through
the covid pandemic and the war in Ukraine to emerge as the shining star of the global economy. As the world looks to India as the
next manufacturing hub as an alternative to China, this budget
is a step in the right direction.
world grapples with challenges on growth and inflation.
The immediate task before the PM and FM is to ensure that the
The focus on key emerging sectors must be complimented.
economic recovery sustains, not just for the next year or two but Two areas stand out: the emphasis on the digital economy and the
the next decade and more. The budget has done the right things green economy. In the former, the aspiration to Make AI in India
in that context. First, the government has increased its
and Make AI work for India are laudable. The setting up
capital expenditure by 33% which will build crucial
of three centres of excellence for Artificial Intelliinfrastructure, create jobs, bring in private investgence in premier educational institutions with
Overall,
the
ment and deliver a multiplier effect in terms of
industry as partners is a game-changing initiative.
budget provides
growth. Second, it has given relief to the middle
I am also excited about the proposed National
Digital Library for children and adolescents,
class via a rationalization of the income tax slabs.
plenty of reason
which will make available quality books in difThose at lower levels of income will be the bigto be optimistic
ferent genres and languages.
gest beneficiaries. They are also likely to spend
about India’s
The government’s commitment to energy
their additional income which will provide a big
transition
and the green economy is well known.
boost to growth and jobs. Third, the lifeline of our
future
Changes in the indirect taxes/duties structure to
economy, MSMEs have got due attention with a
facilitate a quicker transition, particularly in electric
revamped credit guarantee scheme that will allow more
vehicles, is a very positive move.
collateral-free loans and reduce the cost of capital as well.
The continued emphasis on the recently launched National
Fourth, the government has stuck to its fiscal consolidation
path projecting a 5.9% of GDP target for next year after meeting Green Hydrogen Mission could make India a world leader in this
the 6.4% target for the current year. This is a positive signal to space. It is good to see that the government is combining its cominvestors as India maintains macroeconomic stability while the mitment to address climate change with an effort to make doing
business easier and more attractive in associated technologies.
Perhaps the most exciting part of the budget for me was the
outlining of opportunities to unlock in our journey to Amrit Kaal
India@100. Right on top is the empowerment of women, the key
to our progress along with the empowerment of youth. The decision to help women scale up self help groups to producer organisations will promote entrepreneurship and raise the income of
women in our rural areas. The second is the focus on artisans and
craftspeople. If we link them to global markets and give them
access to latest technologies, as envisaged by the budget, huge
economic opportunities will come to this very deserving section
of society.
The third area of opportunity is tourism. It is my firm belief that
several regions of India can build a thriving and self-sufficient
economy with jobs and livelihood just through tourism.
Overall, the budget provides plenty of reason to be optimistic
about India’s future. The government has the right priorities.
And at a high level, it remains focused on ease of doing business
for entrepreneurs and ease of living for its citizens. The first budget of Amrit Kaal is a journey well begun.
Anil Agarwal is chairman of Vedanta Resources.
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LIVEMINT.COM
PURSUIT OF NEW GROWTH
By howindialives.com
DIVIDENDS
AND PROFITS
feedback@livemint.com
Amid global headwinds, Budget 2023 aims to
continue pulling levers that facilitate broader
growth. At the same time, it needs to spend
where it must and balance the books. Here’s
how the two sides of Budget 2023 are laid out.
91,000
ENERGY SERVICES
27,260
GROWTH PANGS
Tax revenues are based
on a nominal GDP growth
of 10.5% in 2023-24. The
knockdown effects of a
global slowdown could
derail this
assumption—and result
in lower revenues.
TRANSPORT
SERVICES
21,768
COMMUNICATION
SERVICES
2022-23: Change between 2022-23 RE and 2021-22 Actuals
2023-24: Change between 2023-24 BE and 2022-23 RE
INTEREST
RECEIPTS
89,469
NON-TAX REVENUES
24,820
301,650
Graphic by Paras Jain/Mint
2022-23: -28.3% ()
2023-24: 15.2% ()
(Figures in crore)
ALL OTHER SERVICES
GST
42,885
956,000
2022-23: 22.3% ()
2023-24: 12% ()
REVENUE RECEIPTS
2,632,281
INCOME TAX
900,575
2022-23: 8.2% ()
2023-24: 12.1% ()
2022-23: 17.1% ()
2023-24: 10.5% ()
TOTAL REC
EXPENDIT
₹ 4,503,0
2022-23: 10.4
2023-24: 7.5
CENTRE'S NET TAX REVENUES
2,330,631
2022-23: 15.6% ()
2023-24: 11.7% ()
CORPORATION TAX
922,675
2022-23: 17.3% ()
2023-24: 10.5% ()
STATE'S SHARE
-1,021,448
2022-23: 1.9% ()
2023-24: 11.5% ()
TAXES OF UNION TERRITORIES
8,408
CUSTOMS
CAPITAL RECEIPTS
233,100
1,870,816
STATE PROVIDENT
FUND (NET)
2022-23: 5.1% ()
2023-24: 11.0% ()
BASIC EXCISE
DUTIES
2022-23: 13.2% ()
2023-24: 1.7% ()
20,000
33,100
ROAD AND
OTHER EXCISE DUTIES
INFRASTRUCTURE
240,260
CESS
OTHER CESSES
20,540
45,100
OTHE
TO
DEP
TOTAL DEBT RECEIPTS
1,798,603
5
2022-23: 11.2% ()
2023-24: 2.3% ()
TOTAL NON-DEBT
RECEIPTS
84,000
NET MARKET LOANS
1,230,911
TOTAL DRAW DOWN
OF CASH BALANCE
2022-23: 46.8% ()
2023-24: 2.9% ()
MANAGING THE DEFICIT
Nominal growth of 15.4%
helped meet the 2022-23
fiscal deficit target of
6.4%. Lower growth is
forecast next year.
Further slippages could
up borrowings and set
back fiscal consolidation.
-11,787
E
L
SECURITIES
ISSUED AGAINST
SMALL SAVINGS
NET OTHER RECEIPTS
54,258
NET EXTERNAL
DEBT
SHORT TERM/T-BILL
BORROWINGS
22,118
50,000
471,317
RECOVERIES OF
LOANS AND
ADVANCES
2022-23: -20.4% ()
2023-24: 7.4% ()
23,000
OTHER CAPITAL
RECEIPTS
61,000
Some sub-entries don’t add up to larger
bubbles because of exclusion of smaller
items or reconciliation issues
TAX STREAMS
As per the budget estimates of 2023-24, the
highest share of government's tax revenue will
come from goods and services tax (GST). At
₹9.6 trillion, GST would cover over 28% of the
total tax revenue. The corporation tax, with
budget estimates of ₹9.2 trillion, would form
27.5% of the tax revenue. At ₹9 trillion, taxes
from income will be the third-biggest source
of tax revenue. Finance minister Nirmala
Sitharaman announced a series of changes to
the tax structure. Persons with income up to
₹7 lakh per annum will be exempted from
paying income tax under the new tax regime.
The government also reduced the tax exemption limit for people with income above ₹7
lakh to ₹3 lakh and reduced the tax slabs from
seven to five.
Shuja Asrar and Pragya Srivastava/Mint
How each ₹100 of Centre's tax collection will look like
0.27
Customs
Corporation tax
4
Others
Excise duty
As % of GDP
10.09
Corporation tax
27.45
sub-components of income tax
0.8 Others
1
Health and
2.5
education cess
Surcharge
3
6.94
2
(in )
GST
28.46
Income tax
26.8
22.5
Collections
Income tax
1
0
FY11
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24
(RE) (BE)
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LIVEMINT.COM
13
H AMID OLD CONTINUITY
ESTABLISHMENT
EXPENSES
2022-23: 9.2% ()
2023-24: 0%
301,027
FERTILIZER SHOCK
The fertilizer subsidy bill
doubled in 2022-23. For
2023-24, the projected
outgo is 22% lower, but
prolonging of the
Russia-Ukraine war could
keep fertilizer
prices—and the
government’s bill—high.
SALARIES AND
ALLOWANCES
WELFARE SUPPORT
The government has cut
outgo towards subsidized
food and rural
employment
guarantee—which helped
the poor during the covid
crisis—by about Rs 1.2
trillion. It may need to
provide more mid-year.
168,055
2022-23: 12.4% ()
2023-24: 5.2% ()
OTHER
ESTABLISHMENT
EXPENDITURE
132,972
SUPPORT TO
PUBLIC SECTOR
UNDERTAKINGS
RAILWAYS
523,632
CENTRE'S EXPENDITURE
240,000
AGRICULTURE
₹ 3,513,761
101,403
2022-23: 12.7% ()
2023-24: 7.0% ()
CEIPTS/
TURE
097 cr
CENTRAL SECTOR SCHEMES
1,467,880
FERTILIZERS
175,103
4% ()
5% ()
2022-23: 16.7% ()
2023-24: 4% ()
OTHER
DEPARTMENTS/
MINISTRIES
OTHER
EXPENDITURE FOR
DEPARTMENTS
253,424
FOOD AND
PUBLIC
DISTRIBUTION
SYSTEM
221,571
197,869
ROAD TRANSPORT
AND HIGHWAYS
OTHER CENTRAL EXPENDITURE
270,250
1,301,542
PETROLEUM AND
NATURAL GAS
2022-23: 12.5% ()
2023-24: 14.5% ()
TRANSFERS TO
STATES AND UTs
40,786
DEFENCECAPITAL OUTLAY
HOUSING AND
URBAN AFFAIRS
162,600
26,445
989,337
2022-23: 2.8% ()
2023-24: 9.4% ()
INTEREST PAYMENTS
1,079,971
OTHER
CENTRAL
SCHEMES
FINANCE
COMMISSION
TRANSFERS
ER TRANSFERS
O UTs AND
PARTMENTS
165,480
54,367
123,029
DEBT SERVICING
One-fourth of the
Centre’s expenses goes
towards interest
payments. Revenue
shortfalls and greater
spending imperatives will
pressure borrowings,
which are increasing in
absolute terms.
2022-23: 16.8% ()
2023-24: 14.8% ()
SWACHH BHARAT
MISSION
12,192
UMBRELLA
INTEGRATED CHILD
DEVELOPMENT
SERVICES
20,554
MGNREGA
60,000
OTHER TRANSFERS
CENTRALLY
SPONSORED SCHEMES
246,875
476,105
NATIONAL
EDUCATION MISSION
EXTERNAL
LOANS TO
STATES
24,550
PM GRAM
SADAK YOJANA
2022-23: -0.5% ()
2023-24: 5.4% ()
19,000
38,954
TRANSFER TO
STATES FOR
NATIONAL DISASTER
RESPONSE FORCE
10,928
SPECIAL
ASSISTANCE
TO STATES
PM AWAS YOJANA
79,590
COMPENSATION
TO STATES FOR GST
REVENUE LOSS
145,000
12,000
NATIONAL HEALTH
MISSION
36,786
TAX HANGOVER
1.45 trillion has been
provided to compensate
states for revenue loss
due to the shift to GST.
The original time frame
was five years, till June
2022, but some states
asked for an extension.
AMRUT AND SMART
CITIES MISSION
NATIONAL RURAL
DRINKING WATER MISSION
16,000
70,000
Source: Budget documents, Reserve
Bank of India
howindialives.com is a database and
search engine for public data
WELFARE SPENDS
FOOD SUBSIDY (IN TRILLION)
The Centre has slashed the food subsidy budget by 30% to ₹1.97 trillion in 2023-24. The allocation to food subsidy, which accounts for nearly 4.4% of
the total expenditure, will be the lowest in the last four years. In 2020-21, the food subsidy bill swelled to a massive ₹5.4 trillion after the government
cleared dues to the Food Corporation of India. Despite the cut, the food subsidy bill remains sharply higher than pre-covid period. The government
has also slashed allocation for its flagship rural job scheme, MGNREGS. It allocated ₹60,000 crore, which is 33% less than the revised estimate and
lowest in six years.
6
4
Shuja Asrar and Pragya Srivastava/Mint
How much government spends on key schemes out of ₹100
Food subsidy
5
MGNREGA
3
National Education Mission
National Health Mission
LPG subsidy
2
1
4.4
1.3
0.9
0.8
₹0.1
0
FY11
FY23 FY24
(RE) (BE)
Source: Budget documents
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KEY STAT
FARMER AND FOOD SECURITY
WHY IT MATTERS
Agriculture accounts for about 20% of India’s GDP, but
supports about 45% of India’s labour force. It is also
the ground to ensure food security for a population
that is expanding and whose consumption needs are
growing. Farmer incomes have been under stress, and
policy levers that can improve this are imperative.
BUDGET POINTERS
ALLOCATIONS TO AGRICULTURE AND ALLIED SECTORS
Amount (₹ crore)
160,000
144,214
120,000
80,000
40,000
0
17,788
2013-14
Data is revised estimates for 2022-23 and budget estimates for 2023-24.
2023-24
Source: Budget documents
PM-Kisan, which transfers ₹6,000
per year to each farmer household,
is now entering its fifth year. It
accounts for 42% of the allocation to
agriculture and allied services.
Expenditure in 2022-23 towards the
Pradhan Mantri Fasal Bima Yojana, a
crop insurance scheme, fell short
of budget estimates by 20% and was
9% lower than 2021-22 levels.
raised from ₹3,919 crore to ₹ 4,318 crore.
The budget for agriculture research was
raised from ₹8,514 crore in 2022-23 (BE) to
₹9,504 crore in 2023-24 (BE).
“It’s heartening to see the government
increase the budget for research but given
that livestock and fisheries are prime drivers
of farm sector growth, it is time they get their
due share,” said Avinash Kishore, fellow at
the Delhi office of the International Food
Policy Research Institute. “The
basic problem in agriculture is
the paucity of public capital
investments. Subsidies (including on fertilizers) have grown
phenomenally and the governNEW DIGITAL architecture
ment is spending a chunk of the
to enable farmer-centric
farm budget on cash transfer
solutions, including credit
schemes. It’s time to consider
and insurance services
whether these funds can be
used better,” Kishore added.
ACCELERATOR FUND for
The budget allocated
rural entrepreneurs to help
₹60,000 crore for PM Kisan
them set up agri startups
which provides all farmers with
an annual cash transfer of
ATMANIRBHAR CLEAN
₹6,000 in three instalments.
Plant Program to ensure
The budget promised to set
disease-free, quality
up an Atmanirbhar Clean Plant
planting material for crops
Program to boost availability of
disease-free, quality planting
PM-PRANAM to nudge
material for high value hortistates to promote
culture crops with a funding of
alternative nutrients and
₹2,200 crore. The budget also
balanced use of chemical
announced a new scheme
fertilizers
christened Prime Minister’s
Programme for Restoration,
TARGET TO push 10 million
Awareness, Nourishment and
farmers to shun chemical
farming by setting up 10,000 Amelioration of Mother Earth
(PM-PRANAM) to incentivize
bio-input resource centres
states to promote alternative
fertilizers and balanced use of chemical fertilizers. In 2023-24, the Centre budgeted
₹1.31 trillion for urea subsidy and another
₹44,000 crore for phosphatic and potassic
fertilizers, which is significantly lower than
last year when international nutrient prices
shot up following the Ukraine war.
Aiming to make India a global hub for milThe agriculture sector in India has grown at an average annual rate of 4.6% in the last six years, partly because of good monsoon. But
lets, the budget promised to support Hyderafarming still remains one of the riskiest professions in India. That’s what agricultural scientist M.S. Swaminathan believes. Often, a farmer
bad-based Indian Institute of Millet
braces up to poor returns and middlemen. The government, however, is trying to make farming sustainable.
Research as a Centre of Excellence for sharing best practices, research and technologies
at the international level. India is currently
the largest producer of millets growing at
least ten varieties which are more nutritious
than rice or wheat and are climate smart
crops requiring less of water and fertilizers.
In addition, the budget also increased the
agriculture credit disbursement target to
₹20 trillion from ₹18 trillion last year. It also
promised to set up decentralized storage
facilities for farmers and form more cooperatives in the fisheries and the dairy sectors.
It also announced a new sub-scheme of
Prime Minister’s Matsya Sampada Yojana
with an investment of ₹6,000 crore to enable
Sayantan Bera
ers with a range of customized services—on fishermen, fish vendors, and micro entersayantan.bera@livemint.com
what to plant, where to sell, plus information prises to improve value chain efficiencies
on market prices and credit linkages.
and support market expansion.
new digital infrastructure for
The digital initiatives will improve access
To facilitate higher adoption of natural
farmers and an accelerator fund to farm inputs and boost market intelligence, farming practices, the budget set a target to
to encourage startups were prompting growth of agri startups, said Kar- push ten million farmers to shun chemical
among the major announce- thik Jayaraman, co-founder and managing farming by setting up 10,000 bio-input
ments in the budget.
director of WayCool, a leading food and agri- resource centres. It also revealed plans to
The digital public infrastructure for agri- tech platform. “The accelerator fund will create a pan-India micro-fertilizer and pesticulture will be built as an open-source public encourage young entrepreneurs while cide manufacturing network.
good which will enable farmer-centric solu- bringing innovative and affordable solutions
Farmer organizations criticized the budtions. The proposed digital agri-stack will aid to address challenges faced by the farmers, get strongly.“This year’s budget reduced
farmers with better crop planning and help especially in terms of enhancing profitability allocation for agriculture sector including on
them access credit and insurance services. and access to modern technology,” he said. flagship schemes on crop insurance and PM
The digital infrastructure will also support
Despite the digital push, these new Kisan cash transfer scheme. The budget
the growth of agri-tech startups.
schemes did not see any budgetary alloca- speech did not even mention minimum supThe budget also announced an accelerator tion. Overall, the budget for the department port price while the documents showed that
fund for young entrepreneurs from rural of agriculture and farmer’s welfare was some of the previous price support schemes
areas to help them set up agriculture start- slashed from ₹1.24 trillion in 2022-23(budget (such as PM-AASHA) have been abolished,”
ups. “The fund will aim at bringing innova- estimate) to ₹1.15 trillion in 2023-24 (BE).
said Kiran Vissa, a farm activist, at a joint
tive and affordable solutions for challenges
The total budgetary allocation for agricul- press briefing by Jai Kisan Andolan and
faced by farmers. It will also bring in modern ture, including on the departments of Rythu Swaraj Vedika. “While allocation for
technologies to transform agricultural prac- research, animal husbandry and fisher- agriculture sector was slashed, new schemes
tices, increase productivity and profitabil- ies,was cut from ₹1.38 trillion in 2022-23 (BE) (on digital infrastructure and a startup accelity,” the finance minister said in her speech. to ₹1.31 trillion in 2023-24 (BE). However, the erator fund) were announced which does not
In 2021, the agriculture ministry had initi- budget for the fisheries sector was raised involve any budgetary expenditure. The
ated an agri-stack pilot project aiming to col- marginally from ₹2,118 crore (2022-23, BE) to budget seems to be prioritizing agri-busilect granular farm level data to provide grow- ₹2,248 crore, while the livestock budget was nesses over farmers,” Vissa added.
A digital push for agri
but with less funds
Overall, the budget for the
department of agriculture
and farmer’s welfare was cut
from ₹1.24 tn in 2022-23 to
₹1.15 tn in 2023-24
A
2.36
₹
TN
THE TOTAL AMOUNT THAT WOULD
HAVE BEEN TRANSFERRED TO FARMER
HOUSEHOLDS SINCE FEBRUARY 2019
UNDER PM-KISAN SCHEME.
Support for
major rural
schemes down
Sayantan Bera
sayantan.bera@livemint.com
T
he budget slashed funding under the flagship rural jobs scheme despite a prolonged
period of declining wages which affected
incomes and demand in rural India, especially for
non-farm households. The Mahatma Gandhi
National Rural Employment Guarantee Scheme
(MGNREGS) which entitles every rural family to
100 days of work in a year, saw its funding slashed
from ₹73,000 crore in 2022-23 (budget estimate,
or BE) to ₹60,000 crore in 2023-24 (BE), a reduction of 18%.
Further, the allocation under the jobs scheme is
33% lower than the revised estimates (RE) of
₹89,400 crore in 2023-24. Calculations by the
Peoples’ Action for Employment Guarantee, a
rights group, show that unpaid dues under the
scheme are currently at over ₹16,000 crore, which
means less than ₹50,000 crore will be available for
new work generation in the next financial year.
“MGNREGS and the food subsidy scheme was
instrumental in preventing the rural population
from being decimated during the covid pandemic.
The funding this year falls severely short of the
wage work being demanded in rural areas. Our
estimates show that ₹2.7 trillion is required to provide 100 days of work to each family which has
worked under the scheme this year,” said Nikhil
Dey, founder member of Mazdoor Kisan Shakti
Sangathan, a group which was instrumental in
India launching the scheme.
Among other major schemes of the rural development ministry, funding for the rural roads
scheme (Pradhan Mantri Gram Sadak Yojana) was
u n c h a n g e d a t
₹19,000 crore, but
allocation for the
Funding for
rural
housing
NRLM raised
scheme was raised
from ₹13,336 cr
from ₹48,422
crore
in 2022-23
in 2022-23 to
(RE) to ₹54,500
₹14,129 cr in
crore in 2023-24
(BE). “The National
2023-24
Rural Livelihood Mission (NRLM) has achieved
remarkable success by mobilizing rural women...
We will enable these groups to reach the next stage
of economic empowerment through formation of
large producer enterprises,” finance minister Nirmala Sitharaman said in her budget speech.
“Through supporting policies, they will be enabled to scale up their operations to serve large consumer markets as has been the case with several
startups growing into ‘unicorns’,” the FM said.
The budget raised funding for NRLM from
₹13,336 crore in 2022-23 to ₹14,129 crore in
2023-24. But funds for the rural development
department was slashed from ₹1.81 trillion in
2022-23 (RE) to ₹1.57 trillion in 2023-24 (BE),
largely on account of the drop in funding for the
rural jobs scheme. Funding for the National Drinking Water Mission was raised from ₹60,000 crore
in 2022-23 (BE) to ₹70,000 crore in 2023-24 (BE).
The scheme has set a target to provide safe drinking water tap connections to every rural family by
2024. Among social safety net schemes which are
a lifeline in rural India, funding for old-age pensions were unchanged at about ₹9,600 crore.
Funds for child nutrition schemes were raised
marginally, from ₹20,263 crore in 2022-23 (BE) to
₹20,554 crore in 2023-24 (BE).
“If we take the combined expenditure on five
major social sector schemes—child nutrition, midday meals, maternity benefits, rural jobs scheme
and old age pensions—we seem to be back to
square one after a period of two decades,” said
Reetika Khera, professor of economics at IIT,
Delhi. “The expenditure on these schemes fell
from over 0.9% of GDP in 2009-10 to less than
0.4% in this budget.”
GOVT IGNORES REALITY; PRESCRIPTIONS CONTRARY TO WHAT SITUATION DEMANDS
EXPERT
VIEW
HIMANSHU
Respond to this column at
feedback@livemint.com
O
f the five budgets that finance minister Nirmala Sitharaman has presented, this was the most difficult and crucial
one. Difficult, given that this was the last full-fledged budget before the general election and pre-election budgets come with
an expectation of being populist. But this was also the most important one given the state of the economy where the budget was more
than a financial accounting exercise. This budget was her last
opportunity to provide direction to the economy and layout the
roadmap of economic recovery.
There is now consensus that there is distress in the economy. This
is true for the urban areas with the middle classes most affected. But tion to ₹60,000 crore against actual disbursement of ₹66,825
the distress has been deep and long for the rural areas. All available crore in 2021-22. This has happened despite the employment surdata on farmers’ income and real wages in rural areas point towards veys reporting a rise in number of households in agriculture.
declining incomes in rural areas. The nature of the crisis also
While there is certainly a need to compensate the farmprovided an opportunity to correct the structural imbalers through cash-transfers, it does not offer any soluances that have plagued the economy not just during
tion to the real problem with farming. The sharp rise
Issues in
the pandemic but even before it. The slowdown in
in input costs of agriculture have eroded the profitagriculture
the economy after 2016-17 was clearly driven by
ability. These are likely to rise given the budget
declining demand in the economy, both consumpwhich reduces the fertilizer subsidy drastically by
remain
tion and investment. Reviving demand, in particu₹50,000 crore. Clearly, the cash transfer is
neglected as in
lar rural demand, given the large population share
unlikely to compensate for the rising input costs
non-agricultural
is Hobson’s choice in the present context.
but the least that the government was required to
The announcements in the budget not only
do was to raise the level of investment in the sector.
sectors
ignore the reality but even the prescriptions are conWhile the issues in agriculture remain neglected, even
trary to what the situation demands. This is true not just
the non-agricultural sector has been deprived of basic budfor agriculture but also for rural development which plays
getary allocations. While the government itself has acknowla critical role in generating employment and facilitating non-farm edged the stellar role of the National Rural Employment Guarantee
diversification. The budget for agriculture sector has declined by Scheme (NREGS) during the pandemic and even earlier, the scheme
₹8,500 crore. Most schemes have seen a decline in budget alloca- has seen a drastic reduction in budgetary allocation to only ₹60,000
tion. Even the flagship scheme of the government, Pradhan Mantri crore. The actual expenditure on NREGS in 2021-22 was ₹98.468 crore
Kisan Samman Nidhi (PM-Kisan) has seen a decline in the alloca- which declined to ₹89,400 crore in the revised estimates of 2022-23.
Given that NREGS wages have been revised upwards and are likely to
be revised upwards again in April, this is unlikely to be sufficient for
even half the work generated last year. The same is true for most of the
other schemes except for rural housing which has seen an increase. But
for the rest, the allocations remain same as revised or lower than the
budgeted expenditure of last year. The bare minimum of social pensions that the vulnerable has also remained the same despite the fact
that these were fixed more than 15 years back.
This budget was not a usual budget, and therefore, should not
be looked at in standard accounting framework. While there were
certainly expectations that the budget will at the least increase
expenditure in the rural economy, both for social security and
investment, the actual allocations are not even sufficient to protect
the already distressed income situation. The impact of the budgetary cuts are likely to go beyond the increase in distress and its
impact on lives and livelihood for majority of workers in rural areas.
The impact is likely to be severe for the sustainability of the economic recovery which is already fragile given the domestic and
international economic situation.
Himanshu is associate professor at Centre for Economic Studies&
Planning, School of Social Sciences, Jawaharlal Nehru University.
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KEY STAT
WELFARE CUSHION
BUDGET POINTERS
KEY UMBRELLA WELFARE SCHEMES
WHY IT MATTERS
Food subsidy through MGNREGS
PDS and NFSA
Key welfare and support schemes alleviate the
strain faced by less-privileged Indians. For millions
of Indians, these take the shape of three big
umbrellas, within limits: subsidized foodgrains,
distress employment on demand in rural areas and
free health treatment.
Ayushman Bharat (PM-JAY)
Expenditure (₹ trillion)
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24
0
1
2
3
Data is revised estimates for 2022-23 and budget estimates for 2023-24.
4
5
6
7
Source: Budget documents
The ambit of households eligible for
free foodgrains has been reduced from
covid times. As a result, the Centre’s
food subsidy bill will drop below
2 trillion for the first time in 4 years.
Allocations to rural employment
guarantee scheme MGNREGS has been
cut by 33%—the sharpest decline in the
scheme’s history.
256
%
THE YEAR-ON-YEAR INCREASE IN
SPENDING ON THESE THREE KEY
WELFARE SCHEMES DURING THE
FIRST PANDEMIC YEAR OF 2020-21.
Upskilling youth in AI, mechatronics, robotics key to job creation
Devina Sengupta
devina.sengupta@livemint.com
mumbai
T
he central government is
preparing a two-pronged
strategy, to upskill India’s
workforce in areas such as artificial intelligence and mechatronics, while encouraging private partnerships and adding
R&D centres to meet the skillset demand across sectors.
“There is a dire need to sati-
ate the technological needs of a
new India and the Union budget focuses on required upskilling of technology in terms of
setting up AI centres of excellence. This will ensure we are
poised to become the preferred
technology-led R&D hub for
the global conglomerates,” said
A.R. Ramesh, director of digital
business solution, professional
staffing, international engagement, Adecco.
Job creation was one of the
three agendas of the Budget for
FY24, besides strengthening
macro-economic stability as
well as opportunities for citizens, especially the youth.
On Wednesday, the finance
minister rolled out the Pradhan
Mantri Kaushal Vikas Yojana
4.0 aimed at skilling “lakhs of
youth in the next three years”,
which will facilitate on-the-job
training in coding, AI, robotics,
mechatronics, drones, Internet
of Things, 3D printing, and soft
skills. “To skill the youth for Chakraborty, the co-founder
international opportuand executive director
of TeamLease Sernities, 30 Skill India
vices. “However,
International
The govt
access to rural
Centres will be
will make
talent must be
set up across
provisions for
addressed as
States,” the FM
part of these
said.
100
R&D
labs
in
initiatives.”
The budget
engineering
In her budget
offers a strong
announcements
impetus to growth
colleges
the finance minister
and job creation and
said that under the ‘Make
promoting macro-economic stability, said Rituparna AI in India and ‘Make AI Work
for India’ campaigns, “three
centres of excellence for Artificial Intelligence” will be set up
in educational institutes, and
industry players and the institutes are expected to come up
with “scalable problem solutions in the areas of agriculture,
health, and sustainable cities”.
The Budget will make provisions for 100 labs across engineering colleges to build applications around 5G services to
further the roll out of 5G by tel-
Funds go to medtech R&D in
push for healthcare exports
ecom companies. The labs will
add to “employment potential”
in areas like smart classrooms,
precision farming, intelligent
transport systems, and health
care applications, she added.
Demand for jobs will come
from emerging segments such
as whitespace spectrum, virtual
network operations, network
security, IoT in big data, cybersecurity, 5G and cloud. “There
was demand for 1.3 million talent in FY23 which is growing.
New use-cases including cloud
computing, robots, and the IoT
are also seeing a sharp rise in
hiring. We believe the budget
initiatives will be beneficial to
close India’s growing demandsupply gap of technical talent
and workforce,” Arvind Bali,
chief executive officer, Telecom Sector Skill Council, said.
“There is also a large potential to be tapped in tourism that
has opportunities in entrepreneurship,” said the FM.
Govt aims to make
good learning loss
during pandemic
Fareeha Iftikhar
havoc on students across all age
groups following the closure of
educational institutions. The
New Delhi
Annual Status of Education
he central government Report said the basic reading
will re-envision teachers’ ability of children dropped to
training, and build insti- pre-2012 levels in most states
tutes of excellence across dis- and across genders.
The government, which had
tricts, as well as set up a national
digital library to ensure school- announced the setting up of a
going children and the youth national digital university in its
get easy access to quality books last Budget, said it will be operacross subjects to overcome the ational by June or July.
States will be urged to set up
learning losses suffered during
physical libraries at panchayat
the covid-19 pandemic.
The Budget for FY24 has set levels to provide infrastructure
aside ₹1.12 trillion for the edu- for accessing the national digication sector, the highest ever, tal library resources, Sitharaup 8.2% compared to the bud- man said. National Book Trust,
get allocations for FY23. While Children’s Book Trust, as well
₹68,804.85 crore is allocated to as other sources will be encourschools, ₹44,094.62 crore will aged to give books and study
materials in regional languages
be for higher education.
While for FY23, the budget and in English to these libraries
to help build a culture
allocation was at ₹1.04
of reading among
trillion, the revised
the youth. Physiestimates were at
The
budget
cal libraries will
₹99,881 crore.
set aside ₹1.12 tn
help make up
This year’s
for the learnallocation is a
for education,
ing loss due to
13% increase
around 8.2%
covid, Sitharthan
the
aman said.
more than
revised esti“
Collaboramates.
last year
tions with NGOs
Dharmendra
working in the field
Pradhan, union eduof literacy will be encourcation minister, lauded
the finance minister’s efforts aged to promote financial literand said the budget was inclu- acy. Financial sector regulators
sive, people-centric and and organisations will be
growth-stimulating, especially encouraged to provide age-apfor the education sector. “With propriate reading material to
a boost to education, research libraries,” she added.
The teachers’ training proand development, skill development, digital infrastructure, gramme will be re-envisioned
green growth, entrepreneur- through innovative pedagogy,
ship, and job creation, the Bud- continuous professional develget draws a meticulous blue- opment, and curriculum transprint for India@100 and lays a action. “District institutes of
solid foundation for transform- education and training will be
ing India into a technology- developed as vibrant institutes
driven knowledge-based econ- of excellence for this purpose.”
The FM said 100 laboratories
omy,” Pradhan added.
“The national digital library will be set up across engineerfor children and adolescents ing institution campuses. “To
will be set up to facilitate availa- realise the new range of opporbility of quality books across tunities, business models and
geographies, languages, gen- employment potential, the labs
res, and levels,” FM Nirmala will cover application for smart
Sitharan said. The library will classrooms, precision farming,
intelligent transport systems
be device agnostic.
The pandemic had wreaked and healthcare applications.”
fareeha.iftikhar@htdigital.in
Allocation for the ministry of
health and family welfare for
FY24 is at ₹86,175 crore
T
Priyanka Sharma
priyanka.sharma@livemint.com
New Delhi
F
inance minister Nirmala Sitharaman
on Wednesday announced a slew of
measures for the health and pharmaceuticals industry, including greater
push for research and innovation to
boost the medtech sector as well as seeking to
eradicate Sickle Cell Anaemia “in a mission
mode” by 2047. The budgetary allocation for
the ministry of health
and family welfare for
KEY
FY24 is at ₹86,175, comANNOUNCEMENTS
pared to ₹76,370 crore
for 2022-23.
The vision for a Amrit
157 NURSING colleges to
Kaal budget comprises
be established and will be
better access to healthco-located with existing
care services, artificial
medical colleges
intelligence (AI)-based
solutions driven by mass
A MISSION to eliminate
Sickle Cell Anaemia by 2047 adoption of digital technology. The Centre has
will be launched
allocated ₹3,160 crore to
Department of PharmaSELECT ICMR labs will be
made available for research ceuticals for FY24, up by
₹892 crore compared to
by medical colleges and
an estimated ₹2,268.54
private sector R&D teams
crore in 2022-23 for the
RESEARCH AND innovation department. “A new
programme to promote
in pharmaceutical sector
research and innovation
will be encouraged through
in pharmaceuticals will
centers of excellence
be taken up through
centres of excellence.
MULTIDISCIPLINARY
We shall also encourage
MEDICAL devices courses
the industry to invest in
planned to ensure a skilled
research and developmanpower for futuristic
ment in specific priority
medical technologies
areas,” said Sitharaman.
The FM said facilities in select ICMR Labs
will be available for research by the faculty of
public and private medical colleges, as well as
private sector R&D teams to encourage collaborative research and innovation. That
apart, dedicated multidisciplinary courses for
medical devices will be supported by existing
institutions to ensure availability of skilled
manpower for futuristic technologies, high-
At 1.8 doctors per 1,000 people, India has far less doctors than countries such as Australia or Italy. Nonetheless, the government’s
expenditure on health is on the rise. Central and state governments’ budgeted expenditure on the health sector is expected at 2.1% of
GDP in 2022-23, up from 1.6% in 2020-21.
end manufacturing and research, she added.
Industry experts said the moves will help
promote the pharma and medical devices
sectors and create a favourable environment
for businesses. India imports ₹63,000 crore
worth of medical devices every year, and the
Centre aims to increase India’s share in global
manufacturing of such devices. “ICMR labs
will be made available to the corporate and
manufacturing sectors for developing medtech products, which will benefit medtech
startups that may not have adequate resources to set up their own labs. Multi-dimensional medical devices segment courses will
create talent for the sector that faces a dearth
of qualified manpower,” said Jatin Mahajan,
secretary, Association of Diagnostic Manufacturers of India, and MD, J Mitra & Co.
“The FM has laid the foundation to spur
inclusive growth, generate employment and
accelerate India’s role in the global economy
despite headwinds. The focus on pharma
R&D and innovation is a step in the right
direction as it can enable India become the
worlds’ R&D and bio-manufacturing hub,”
said Kiran Mazumdar- Shaw, chairperson,
Biocon & Biocon Biologics.
INDIA WELL-POISED TO BECOME A GLOBAL HUB FOR NURTURING NURSING STAFF
EXPERT
VIEW
S U N E E TA R E D DY
Respond to this column at
feedback@livemint.com
T
he Circle of Life is continuously replenished. Seasons
change. The sun rises and sets. Nature rejuvenates. The body
heals. In similar fashion, the spokes of the economy rise after
every fall. Higher disposable income leads to more consumption.
Growth in private consumption contributes to higher revenues
and greater profits. Higher profitability contributes to better tax
revenues. Fuller coffers facilitate greater social welfare. The Budget fully embraced this, and triggered the virtuous cycle of investment. Its focus on inclusiveness, spurring public consumption and
augmenting investment in infrastructure to harvest the multiplier
effects triggered instant market exuberance.
fundamental objectives: (i) improving the health of the population;
The fact that we have moved from the 10th largest economy to the (ii) responding to people’s needs; and (iii) providing financial profifth largest, aspiring to become the third largest, is remarkable. The tection against costs due to illness.
current year’s economic growth is estimated at 7%, the highest gloThe budget has offered measures that address these key goals.
bally, despite the slowdown caused by the pandemic and
On the healthcare front, the ministry’s mission to make
the war. Growth estimates for next year, at 6-6.8% are
India a hub for nurturing nursing staff is very welcome.
also very healthy. Thanks to the broad-based recovThe world over, there is a need for trained nursing
The
budget
ery across sectors, the economy is well-positioned
staff and high-quality, low-cost, medical devices.
addresses the
to ascend the pre-pandemic growth path in 2023.
India has the potential to cater to both requireFor any economy that operates in an uncertain
ments. The establishment and co-location of 157
need to focus
global environment, the most prudent measures
new nursing colleges with medical colleges set up
on soft assets—
are to encourage capital expenditure, boost consince 2014 will have threefold benefits—offering
jobs, youth,
sumption demand and crowd-in private investeducation and training, employment opportuniment. The FM has rightly focussed on all three
ties
and filling the supply gaps.
skilling
aspects to provide an impetus to the economy.
The chief economic advisor’s statement that digital
Capital expenditure on infrastructure development has
public infrastructure can contribute up to 100 basis
been hiked by 33% to ₹10 trillion for 2023-24. The newly estabpoints to gross domestic product growth is of specific interlished infrastructure secretariat will assist in attracting private invest- est to us in healthcare. We hope to collaborate with the governments. In addition to tangible assets, the budget addresses the need ment to unlock the potential in the digital health ecosystem space.
to focus on soft assets—jobs, youth, skilling and future-ready skill sets.
We believe that the government’s intention to spend on healthWhen it comes to healthcare, every economy should have three care will continue, increasing the percent of GDP (states and Cen-
tre combined) spending on healthcare from the current 2.1% to
2.5%. This will help the country achieve the UN Sustainable Development Goals by 2030.
We are excited about the potential to develop artificial intelligence in the area of healthcare. This, along with opening up possibilities for partnership in R&D and clinical trials, will help find
path-breaking solutions that reimagine healthcare delivery in the
future. Our larger goal of keeping the people of India healthy will
be strengthened by this initiative.
This was a green budget, and a seed was sown to drive environmentally-sensitive approaches and behaviours—be it in energy,
mobility or construction.
Most importantly, the budget has given relief to our salaried
class —they will benefit greatly as they will have more cash in hand
to spend and to save.
Confidence is contagious. The budget was an expression of confidence—of the resilience in our system and outlook for growth.
Having weathered the storms of the pandemic better than most
countries, India is definitely well-poised to take on the opportunities of the future.
Suneeta Reddy is the managing director of AHEL .
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New Delhi
LIVEMINT.COM
KEY STAT
BUDGET POINTERS
33.7
TAX BOUNCE
GROSS TAX REVENUES
WHY IT MATTERS
Change in gross tax revenues (in %)
Gross tax revenues is the Centre’s collections
from all taxes, direct and indirect. The subsuming
of several indirect Central and state taxes into the
goods and services tax (GST) in July 2017 gave this
figure a bump, though the Centre has to share
this with states. Tax collections are a good pulse
of how the economy is doing and of the fiscal
room the government has to spend.
12.3
2019-20
10.4
0.8
2020-21
2021-22
2022-23
2023-24
-3.4
Data is revised estimates for 2022-23 and budget estimates for 2023-24.
Source: Budget documents
2022-23 is the second straight year
that gross tax collections will grow
by above 10%, though 2021-22
was from the low base of a
covid-affected year.
The 2023-24 growth projection
(10.4%) is lower than the 2022-23
figure (12.3%). Smaller increases are
projected for GST, corporation tax
and income tax.
from the current ₹2.5 lakh to ₹3 lakh. The
number of slabs has been reduced from six to
five – the existent 25% tax slab has been done
away with. So, for example, those with a taxable income of over ₹12.5 lakh to ₹15 lakh fell
within the 25% tax slab (pre-budget new tax
regime). Now, those with a taxable income of
over ₹12 lakh to ₹15 lakh will fall under the
20% tax slab. Nothing has
changed for those in the
KEY
old tax regime.
ANNOUNCEMENTS
Currently, those with
an annual income of ₹5
lakh do not pay any
STANDARD DEDUCTION
income tax either under
of ₹50,000 introduced for
the old or the new tax
the salaried individuals
regime. This is after takunder the new tax regime
ing into account the
SURCHARGE OF 25% (down rebate of ₹12,500 under
Section 87A of the
from 37%) for those with an
Income Tax Act.
annual income of over ₹5
Now, a rebate of
crore
₹25,000 will apply to
those with income not
BASIC INCOME tax
exemption limit raised from exceeding ₹7 lakh under
the new tax regime. “Perthe current ₹2.5 lakh to
sons in the new tax
₹3 lakh
regime, with income up to
₹7 lakh will not have to
TAX RATES rejigged - lower
pay any tax,” said Nirmala
than before for many
Sitharaman in her budget
taxpayers
speech.
Extending the ₹50,000
NUMBER OF tax slabs has
standard deduction benebeen reduced from six to
fit to the salaried under
five – the existent 25% tax
the new tax regime is
slab has been done away
another big positive. Curwith
rently, salaried individuals (those with income from salary and pension) get standard deduction under the old
tax regime but not the new regime.
In a big relief to those in the higher income
tax brackets, the highest surcharge rate of
37% (applicable to those with an income of
over ₹5 crore) has been cut to 25% under the
new tax regime. This will bring down the
highest tax rate under the new regime to 39%
from 42.74%.
And finally, the new income tax regime is
Many individual taxpayers would cheer this year’s budget. Tax rates have been reduced; rebate enhanced; standard deduction increased
set to become the default regime from finan—all under the new income tax regime. A person earning ₹9 lakh annually will save 25% on income tax outgo, the finance minister said.
cial year 2023-24. You can, however, opt for
This implies a possible boost to India’s consumption story.
the old regime if you so want. Currently, the
old regime is the default choice for a taxpayer
and you can shift to the new regime by opting
for it.
With all these changes, someone who is
not utilizing several of the tax exemptions
and deductions available under the old tax
regime can consider shifting to the new tax
regime. Though the benefit (in the form of
lower tax outgo) of moving to the new tax
regime gets better for those with very high
income levels (over ₹5 crore).
Here are a few points to note before you
make the shift. One, even if you shift to the
Maulik M
and reducing the highest surcharge rate—all new regime (and will no longer enjoy any
maulik.madhu@livemint.com
under the new tax regime, the needle has deductions except for the standard deduction), you will still have to continue with
definitely moved in favour of this regime.
The new tax regime for individuals and some of your investments. For instance, you
he finance minister went all out to
woo taxpayers into the fold of the Hindu undivided families, or HUFs, brought cannot discontinue your investments in
concessional tax regime, popu- via Section 115BAC of the Income Tax Act public provident fund and the national penlarly known as the new tax regime. was aimed at bringing in a lower rate and a sion system as it could result in penalty and
Not many taxpayers have simpler tax system from 1 April 2020. Tax- freezing of account. Two, for those lacking in
shifted to the new concessional tax regime payers could choose between the new and investment discipline, moving to the new tax
since its introduction in budget 2020. Most the old regime. Opting for the new regime regime will leave them with no incentive to
individuals have continued with the old tax meant taxpayers would be charged slightly continue with some of these investments,
lower tax rates but would have to forgo most and insurance policies. On the other hand,
regime.
With budget 2023 unveiling multiple big deductions and exemptions available to those with cash flow issues may be able to
enjoy the benefit of relatively lower tax rates
changes— by introducing standard deduc- them under the old regime.
Under the new tax regime, the basic without having to invest for tax-saving purtion of ₹50,000, raising the basic tax exemption limit to ₹3 lakh, tweaking the tax rates income tax exemption limit has been raised poses.
New tax regime is
very attractive now
This is especially so for
high-income individuals
who don’t utilize most
exemptions and deductions
of the old regime
T
Foreign travel, overseas
investment to get costlier
Shipra Singh & Neil Borate
shipra.singh@livemint.com
B
udget 2023 has proposed
a hike in tax collected at
source (TCS) on remittances
other than foreign education.
Previously, the TCS was
pegged at 5% on such remittances above ₹7 lakh. However, the 2023 budget has proposed to do away with both the
minimum threshold and the
lower 5% rate. The budget has
proposed a 20% TCS rate.
If the budget proposals are
passed in their current form,
Indian tourists and individuals
who invest globally are likely
to face a surge in upfront costs
for their activities. To be sure,
extra TCS collected at such
points can be reclaimed while
filing income tax returns.
“Though travellers can get
TCS credit reimbursed, the
hike in TCS rate will increase
their immediate cash requirement. This may encourage
them to look at online travel
agents for international trips ”
said Nishant Pitti, CEO and funds to a relative or self for
co-founder, EaseMyTrip.
gifts, buying of property, givIndians remitted $19.6 bil- ing loans, buying equities, etc.
lion in 2021-22, according to Maybe, the government has
data from the Reserve Bank of removed the ₹7 lakh limit and
India. LRS remittances wit- introduced 20% TCS to disnessed a strong trend in courage making payments
2022-23 as well. LRS is short outside India thereby reducing the forex reserve
for Liberalized Remitoutlay. This could
tance Scheme.
be because we
In November
Indians
are left with
2022, forex
remitted $19.6
only nine
worth almost
$2 billion was
months of
billion in 2021-22,
remitted outf o r e x
according to
side Indian
reserves,” he
data from the
under LRS.
added.
“Effective 1
Adil Shetty,
RBI
October 2020,
CEO, Bankbazaar
the tax collection at
took a similar view.
source is applicable on
“With the changes,
all LRS transactions, including international tour packages
international debit card trans- would become more expenactions. TCS will be applicable sive as the associated tax on it
whenever the payment is has gone up steeply. Other
made through debit cards, activities such as purchase of
credit cards and travel cards,” real estate in another country,
said Maneet Pal Singh, Part- investing in stocks, mutual
ner, I.P. Pasricha & Co.
funds, private equity, treasury
“Transactions covered bonds, etc., may also become
under LRS include transfer of expensive,” he said.
-3.4
%
GROWTH IN THE CENTRE’S GROSS TAX
REVENUES IN 2019-20, THE SECOND
FULL YEAR OF GST.
Why you should
invest in small
savings schemes
Navneet Dubey
teed returns at a certain interest rate every month can open
an account in the MIS scheme.
If you open an MIS account
he budget gave a big
push to small savings in the post office, you cannot
schemes: The finance withdraw from the scheme for
minister proposed to double a minimum of 1 year from the
the deposit limits for Senior date of deposit. Suppose the
Citizen Savings Scheme account is closed after one
(SCSS) and Monthly Income year and before three years
Account Scheme (MIS) and from the date of opening the
also introduced a new small account, the post office will
savings scheme—Mahila Sam- deduct an amount equal to 2%
from the principal.
man Savings Certificate.
However, if an account is
The maximum deposit limit
for SCSS has been raised from closed after three years and
₹15 lakh to ₹30 lakh. And that before five years of the date of
for MIS has been increased opening the account, the post
from ₹4.5 lakh to ₹9 lakh for a office will deduct an amount
single account and from ₹9 equal to 1% of the principal.
In the case of the SCSS
lakh to ₹15 lakh for a joint
scheme, the account can be
account.
For the quarter ending 31 prematurely closed any time.
March, the government is If it is closed before one year of
offering 8% interest on the opening the account, no interSCSS scheme. The interest is est will be paid to the investor.
paid quarterly under this So, if any interest is paid in the
scheme. However, in the case account prior to this, it will be
of MIS, the government is recovered from the principal.
If the account is closed
offering 7.1% interest
before two years,
per annum, and
an amount equal
this interest is
Maximum
to 1.5% will be
paid monthly.
deposit limit for
deducted
Adhil Shetty,
from the
CEO of BankSCSS has been
principal. If
bazaar.com,
raised from
the account is
said the move
closed after
₹15 lakh to
will help sentwo
years but
ior citizens
₹30 lakh
before five years,
build a strong
an amount equal to
retirement corpus.
1% will be deducted from
SCSS comes with a
lock-in period of five years. An the principal amount.
The budget also proposed a
investment of ₹30 lakh at 8%
interest will fetch ₹60,000 new small savings scheme,
every quarter. The govern- Mahila Samman Bachat Patra,
ment has increased the maxi- for the benefit of women. It
mum deposit limit for MIS will be made available for two
from ₹4.5 lakh to ₹9 lakh for a years, up to March 2025.
The scheme will offer a
single account and ₹9 lakh to
₹15 lakh for a joint account. So, deposit facility of up to ₹2 lakh
by putting in ₹15 lakh in the in the name of women or girls
MIS, investors can get a for a tenor of 2 years at a fixed
monthly income of₹8,875 at interest rate of 7.5% and will
the current 7.1% interest rate. have a partial withdrawal
Any individual who is 60 option.
Shetty said, “The return rate
years of age or above on the
opening date of an account or is similar to that of a bank fixed
anyone who is 55 years of age deposit rate. The partial withand less than 60 years and has drawal facility makes liquidity
retired under Superannuation convenient. With the bank
or VRS can open an SCSS savings rate still giving low
account. One can open the returns, a 7.5% rate of return is
SCSS account individually or a good rate to lock in at this
jointly with their spouse. point. An investment of ₹2
Investment under SCSS quali- lakh for two years at 7.5%
fies for the benefit of section interest will give you a return
80C of the Act. Similarly, adult of ₹30,000-32,000, dependindividuals who want to earn a ing on how the interest gets
regular income with guaran- calculated.”
navneet.d@livemint.com
T
OF A NEW TAX REGIME AND FISCAL PRUDENCE
EXPERT
VIEW
SONU IYER
Respond to this column at
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T
he overarching theme of Budget 2023 is the
vision of Amrit Kaal steered by seven priorities
(aptly termed as ‘Saptarishi’) such as inclusive
development, green growth, youth power, infrastructure and investment.
The finance minister remained steadfast on the
path of stability, simplification and rationalization of
tax provisions.
The budget has proposed major changes to the
concessional tax regime (lower tax rates without most
deductions/ exemptions) that is aimed at attracting
taxpayers to switch over to the new concessional tax
regime (CTR).
While it is well known that the old tax regime failed
to elicit the expected response, the tide could well
turn as the following changes proposed to the new
CTR could make it attractive to a large number of taxpayers. The limit of taxable income for claiming
rebate will be increased from ₹5 lakh to ₹7 lakh. Individuals with taxable income of up to 7 lakh will pay no
income tax under the CTR. Slab rates have been widened with lower tax rates. The basic exemption limit
is proposed to be increased from ₹2.5 lakh to ₹3 lakh.
The budget has also proposed the introduction of
The limit of tax exemption on leave encashment at
standard deduction of ₹50,000 under CTR, which the time of retirement of non-government salaried
was not allowed earlier. We will therefore see many employees is proposed to be increased from ₹3 lakh
more salaried income earners make the switch to to ₹25 lakh. Tax deducted at source (TDS) on withCTR.
drawal of money from provident fund for individuals
The surcharge on taxable income of ₹5 crore or not having a PAN is reduced from maximum marginal
more is proposed to be reduced from 37% to 25% rate of tax to 20%. The threshold for applying preunder CTR. This change directly impacts the high net sumptive tax rate for persons carrying out specified
worth individuals as it will bring down the highest professions is proposed to be increased from ₹50 lakh
income tax rate from 42.744% to 39% under CTR.
to ₹75 lakh, subject to the condition that cash receipts
CTR has been made as the default tax regime.
are up to 5% of total gross receipts. Similarly, the
However, taxpayers will still have the
threshold for small business is proposed to
option to choose the old tax regime. The
be increased from ₹2 crore to ₹3 crore.
Proposed
changes to CTR are in the right direcThe government has proposed an
tion and will pave the way for a uniincrease
in the rate of Tax Collected at
changes to the
fied tax regime.
Source (TCS) on certain foreign
new tax regime
Some other notable changes from
remittances. Currently, the rate of
personal tax/ finance standpoint are
TCS for foreign remittances for eduare aimed at
as follows. Proceeds from insurance
cation is 0.5% and for medical treatattracting
policies wherein the premium
ment, the rate is 5% for remittances in
taxpayers
exceeds ₹5 lakh in a year will now be
excess of ₹7 lakh. There is no change in
taxable, except in case of the death of the
these rates. However, for foreign remitinsured. This will apply for policies issued on
tances for all other purposes under the Libor after 1 April 2023.
eralised Remittance Scheme and purchase of overThe exemption for investment in residential house seas tour package, it is proposed to increase the rate
property are proposed to be capped at ₹10 crore to of TCS from 5% to 20% without any threshold limit for
restrict the unlimited deduction being claimed in TCS to kick in. This amendment is proposed to take
such high value transactions. Interest on housing loan effect from 1 July 2023.
claimed as a tax deduction will no longer be permitted
Kudos to the finance minister for staying firm on
to be added to the cost of acquisition/ improvement the path of fiscal prudence, yet bringing some cheer
of house property when computing capital gains on to the taxpayers.
sale of the house property. This move will plug a loopSonu Iyer is partner & leader - India Region, People
hole which earlier allowed benefit of double deduc- Advisory Services, EY. The views expressed here are pertion to a taxpayer.
sonal.
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17
ThuRsDay, 2 FebRuaRy 2023
New Delhi
LIVEMINT.COM
KEY STAT
EXPANDING THE TAX BASE
NUMBER OF GST ASSESSEES
WHY IT MATTERS
Aug 2017
In order to maintain capital spending at a high
level, the government needs revenues, which
mainly come from tax collections. The nationwide
goods and services tax (GST) was intended to
streamline indirect taxes, bring more parts of the
economic chain into its fold—and, thus, boost
indirect tax collections.
BUDGET POINTERS
Registered taxpayers under GST (in million)
Migrated
New
Apr 2018
Apr 2019
Apr 2020
Apr 2021
Apr 2022
0
5
10
15
Collections from GST are
projected to increase 12% in
2023-24, on the back of a
robust 22% increase in 2022-23.
THE MULTIPLE BY WHICH THE NUMBER
OF NEW REGISTERED TAXPAYERS
UNDER GST ROSE BETWEEN AUGUST
2017 AND APRIL 2022—FROM 1.7
MILLION TO 8.8 MILLION.
Source: GST System Statistics, Central Board of Indirect Taxes and Customs
exemption on capital gains from the sale of
a residential property and any other capital
asset respectively.
The conditions are that the capital asset
sold should have been held for more than
three years and the proceeds are used to
purchase any residential property in India
within a specified time period. These sections were introduced to give a leg-up to the
house-building activity in India.
Budget 2023 imposed a limit
of ₹10 crore on the maximum
KEY
exemption that an individual
ANNOUNCEMENTS
can get from the above-said
sections.
“It has been observed that
HIGHEST SURCHARGE rate
slashed to 25% from 37% for claims of huge deductions by
high-net-worth assessees are
those paying taxes under
being made under these provithe new tax regime
sions, by purchasing very
expensive residential houses.
AS A result, the highest
It is defeating the very purpose
marginal tax rate has fallen
of these sections,” said the
from 42.7% to 39%
finance minister.
Consequently, the cap of
EXEMPTION UNDER
₹10 crore will also be made
section 54 and 54F capped
applicable for deposits in the
at ₹10 crore
Capital Gains Account
Scheme, which allows individSALE OF market-linked
debentures to be treated as uals to park their capital gains
in a separate account until it is
short-term capital gain
reinvested.
taxed at the applicable slab
According to Kasturirangan,
rates
capping of deduction amount
will only impact a fraction of
REMOVAL OF exemption
for insurance policies (other taxpayers who are very
than a unit-linked insurance wealthy with very high capital
gains.
policy) with premium more
These amendments will take
than ₹5 lakh per annum
effect from the assessment
year 2024-25
Market-linked debentures (MLDs)—
structured products that invest in both
fixed-income and derivative instruments—
that come with a minimum investment
amount of ₹10 lakh gained traction among
high-net-worth individuals in the last many
years.
Listed MLDs are taxed at 10% after a oneIndia’s capital gains tax regime is complex. There are different rates and different threshold periods for different asset classes. In the runyear holding period, similar to equity.
up to the budget, there was an expectation that the government will bring about uniformity in holding period and rates between different
Budget 2023 highlighted that these secuasset classes. They were disappointed.
rities are in the nature of derivatives which
are normally taxed at applicable rates. To
plug the loophole, the finance minister proposed that the sale or redemption, or
maturity of these securities will be treated
as short-term capital gains and will be taxed
at the applicable individual slab rates.
This proposal, which will be applicable
from AY 2024-25, impacts HNIs who are
investing in MLDs, solely for tax benefits.
Further, the budget also removed the
exemption available under section 10 (10D)
on income from insurance policies (other
than a unit-linked insurance policy) with a
premium of more than ₹5 lakh a year.
Satya Sontanam & Navneet Dubey
Currently, the maturity amount received
has been slashed to 25%, but only to those in
satya.sontanam@livemint.com
the new tax regime. “Highest surcharge from the life insurance policy is tax-exempt
shall be 25% for income above ₹2 crore. This where the premium is less than 10% of the
n a major relief to high-net-worth indi- would reduce the maximum rate (for those sum assured.
However, the government observed that
viduals, finance minister Nirmala with income more than ₹5 crore) from
Sitharaman announced a reduction in about 42.7% to about 39%,” said Nirmala the welfare objective of insuring the indithe highest surcharge rate from 37% to Sitharaman in her fifth Budget speech since viduals’ life was misused, and large sums
were received by HNIs. Therefore, to curb
25%, for those paying taxes under the 2019.
new tax regime.
Note that, there is no difference in the tax the misuse now, if the aggregate annual
Having said that, there are a few other rate for those in the income tax slab of ₹2 premium paid on life insurance policies
budget proposals that took away invest- crore to ₹5 crore. They will continue to be goes beyond ₹5 lakh, the proceeds will no
ment-linked benefits, to an extent, from taxed at 39% (30% tax + 25% surcharge+4% longer be exempted under the Act.
This is to align with the provisions applirich individuals. These include the removal cess).
of exempt status for insurance policies with
“It is a nudge by the government to make cable to ULIPs, or unit linked insurance pola premium of more than ₹5 lakh per annum, high networth individuals, or HNIs, adopt icies. The Finance Act 2021 retained the
a cap on the deduction limit for capital gains the new tax regime, which is clearly more exemption for ULIP income only for those
that are reinvested in a residential property, beneficial for them,” said Saraswathi Kas- policies with a total premium amount of less
than ₹2.5 lakh per annum.
and taxing gains from market-linked turirangan, partner at Deloitte India.
Note that these provisions will not be
debentures at individual slab rates.
For example, the difference in the tax liaAt present, the surcharge—the tax on tax bility of an individual with an income of ₹10 applicable for amounts received on the
—for those with income exceeding ₹5 crore, crore between the old and new tax regime unfortunate death of the insured. These
is as high as 37% of the tax amount under would be a staggering ₹₹36.6 lakh, which is high-premium insurance policies have
both the old and new tax regimes. This essentially due to the lower surcharge rate been focused mainly on HNIs, who will now
be impacted by the budget proposal.
pushes the highest marginal tax rate in the latter regime.
Unlike ULIPs, where the Act was effective
(including surcharge) to 42.74%, which is
These provisions are applicable from the
from the budget date (1 February 2021), the
the highest tax rate levied in the last three financial year starting 2023-24.
decades.
The existing provisions of section 54 and new provision for traditional insurance
In Budget 2023, the surcharge rate of 37% section 54F of the Income-tax, 1961 allow plans is effective from 1 April 2023.
What this Budget has
on offer for HNIs
The reduction in surcharge
rate from 37% to 25%, is a
nudge by the government
to make HNIs adopt the
new tax regime
I
5.2
X
2022-23 is the first year since
the launch of GST in July 2017
that collections under this
head topped budget
estimates, by 9.5%.
Get a hike in
presumptive
tax limits now
Jash Kriplani
jash.kriplani@livemint.com
F
inance minister Nirmala Sitharaman has
increased the threshold limits for availing
presumptive taxation, a move that will benefit
numerous small businesses and professionals.
“Micro enterprises with turnover of up to ₹2
crore and certain professionals with turnover of up
to ₹50 lakh can avail the benefit of presumptive
taxation. I propose to provide enhanced limits of
₹3 crore and ₹75 lakh, respectively, to the tax payers whose cash receipts are no more than 5%,” the
finance minister said in her budget speech.
“The presumptive tax regime is a simplified way
for filing tax returns for smaller businesses and
professionals. The concept of presumptive taxation is ‘what you declare in the returns is treated as
your income’. It takes away the burden on the taxpayer to declare business-related expenditure, etc.
This will ease compliance burden for lot of small
businesses and professionals,” said Aditya Sesh,
founder and managing director, Basiz Fund Services.
Presumptive taxation for businesses is covered
under section 44AD of the Income Tax Act. As of
now, businesses which have a revenue of up to ₹3
crore can avail the benefit of presumptive taxation,
as long as not more than 5% of this revenue is in
cash receipts.
For example, a businessman who has a revenue
of ₹3 crore (the maximum limit) and meets the eligibility criteria of presumptive tax is liable to pay
tax on only 8% of the revenue, or ₹24 lakh.
Similarly, professionals earning up to ₹75 lakh
in a financial year will now be eligible for presumptive taxation, as long as
their cash receipts are
within the 5% cap of
Professionals
turnover.
earning ₹75 lakh overall
For example,
per year will
let’s consider a
lawyer
earning ₹75
qualify for
lakh in a financial
presumptive
year from his practice; he will be liable
taxation
to pay tax on 50% of his
gross receipts or ₹37.5 lakh.
Not just an individual, but partnership firms and
hindu undivided family (HUF) can also avail the
presumptive tax mechanism. It excludes limited
liability partnerships (LLPs).
“The 5% cash limit ensures that there is more
transparency. Allowing more businesses to use
presumptive tax mechanism will improve the ease
of doing business for smaller enterprises,” says
Ashok Shah, founding partner of NA Shah Associates.
“The enhancement of presumptive tax limits
will reduce the compliance burden for small businesses and prompt them to avail of this option.
Small business owners don’t need to maintain separate bank account statements, separate cash files,
sales files or audit books to fulfil the compliance
requirements. If they meet the enhanced eligibility criteria, they can simply go through the presumptive tax mechanism,” said CA Abhishek Soni,
co-founder of Tax2win.
Under presumptive taxation, small businesses
and professionals are exempted from maintaining
their books of accounts or getting audits done.
Otherwise, businesses are required to maintain
books of accounts as per the IT Act.
While the move will benefit more businesses
and professionals, there is a cooling-off period of
five years if they opt out of the scheme midway. So,
if you were to opt for the scheme in FY24, FY25
and FY26 but not in FY27, then you can’t avail presumptive taxation for five years from FY28-FY32.
It is also important to remember that once you
opt for presumptive taxation, you cannot claim tax
deductions that are otherwise available to a regular
taxpayer.
INDIA OFFERS A SECULAR GROWTH STORY TO INTERNATIONAL INVESTORS
EXPERT
VIEW
NIMESH SHAH
Respond to this column at
feedback@livemint.com
W
ith the government attempting to achieve a balance
between fiscal priorities, minimum populist initiatives, and capex drive, the FY24 budget has been in line
with expectations. Prior to the budget, we were seeking for a
growth-oriented expenditure that could support maintaining the
growth momentum, which this budget has succeeded in doing.
The government’s macroeconomic policies have been excellent
thus far. The fact that India had lower inflation in 2022 than even
the USA and as a result was in a strong macroeconomic position
is proof of this. Further strengthening India’s macroeconomic
position is the decline in crude oil prices and the near-peaking
As a fund house, during the course of this year, we have been
of the global interest rate cycle. The actions implemented in tax advising investors to invest systematically in equities, follow asset
administration that have boosted direct tax revenue and goods allocation plans and invest in debt mutual funds. The governand service tax, or GST, collection are yet another significant ment has taken a number of actions over the last three years that
advantage. This has been extremely beneficial to the
have helped level the playing field for debt investments.
economy and improved income collection. India
Due to this, investing in debt mutual funds over the
continues to be one of the most structural markets
long term has become quite alluring.
The
economy
in the world because of all these initiatives. As a
Given that equity markets are not cheap, it may
will continue to
result, India offers a secular growth story that is
be preferable for an investor considering a lump
unique among emerging and developed econosum investment to choose offers from the asset
expand with
mies to international investors.
allocation-oriented or hybrid category, such as
monetary policy
So far, the government’s actions have supthe multi-asset or balanced advantage category.
being supportive We believe macro investing will be vital over the
ported growth momentum while concentrating
on reducing the fiscal deficit. Giving help to the
next 10 years, making products like business cycle
of growth
middle classes at the same time is probably going to
funds essential. On a valuation perspective, large caps
result in a continuation of the growth in a positive way.
are better positioned in terms of market capitalization
The Indian equity markets have underperformed the
than midcaps, and midcaps are better positioned than smallother markets in recent months. If Indian equities continue to caps. The potential volatility in these areas can be taken advantage
underperform for a few more months, they will be valuation wise of by investing in aggressive categories like mid cap, flexi cap,
well-positioned for the long term and offer a promising long- value, special situation, or small cap if one is using a systematic
term investment opportunity.
investment plan (SIP) and has a 3-5-year investment horizon.
Currently, the 1-2-year portion of the curve, which is the
shorter end, looks fairly priced. The Reserve Bank of India (RBI)
is now content with inflation hovering around 6% unlike previously when RBI’s monetary policy actions were focused on 4%
inflation. With an additional 25 bps rate hike, at a repo rate of
6.5% and average inflation of 6%, we don’t believe that rates are
restrictive enough to cause an economic slowdown. In fact, the
economy will continue to expand with overall monetary policy
being supportive of growth.
In light of that, we believe the RBI will not reduce rates any time
soon and so adding duration through the long end of the curve
may not be fruitful. Given this scenario, we prefer investments
with a shorter duration as there is no additional yield available on
the longer-duration assets. The other category an investor may
consider is the dynamic bond fund category. A savvy investor may
consider adding credit to the portfolio in a staggered manner.
In conclusion, the budget is pragmatist and growth-oriented,
helping India maintain its position as one of the world’s fastestgrowing economies.
Nimesh Shah is managing director & CEO at ICICI Prudential
AMC.
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18
ThursDay, 2 February 2023
New Delhi
LIVEMINT.COM
KEY STAT
SECURING BORDERS
4.10
DEFENCE SPENDING
WHY IT MATTERS
Defence expenditure (in ₹ trillion)
Even as India pursues growth, it needs to protect
its borders with China and Pakistan, which
continue to simmer. The share of defence in total
Central expenditure has declined from about 13%
in 2012-13 to 9.8% in 2022-23. At the same time, a
greater focus on capital investments is needed to
modernize the defence infrastructure.
2.03
2013-14
2.19
2014-15
2.26
2015-16
2.52
2016-17
2.91
2.77
2017-18
2018-19
2019-20
2020-21
2021-22
Data is revised estimates for 2022-23 and budget estimates for 2023-24.
2
A 5.7% increase in total defence
expenditure is projected for 2023-24
(against 11.7% in 2022-23) and 8.4% in
capital expenditure for the sector
(8.7% in 2022-23).
3.67
3.40
3.19
BUDGET POINTERS
4.33
2022-23
Of the total capital expenditure of
10 trillion the government expects
to make in 2023-24, about 16% is
earmarked for the defence sector.
2023-24
THE NUMBER OF YEARS IN THE PAST
DECADE WHEN THE YEAR-ON-YEAR
INCREASE IN DEFENCE EXPENDITURE HAS TOPPED 10%— IN 2016-17
AND IN 2022-23.
Source: Budget documents
AGRICULTURE/FERTILIZER
DEFENCE
POWER AND GREEN ENERGY
PROPOSALS: Allocation for MNREGA was
reduced by 33%, while food processing got
a big boost with budgetary allocation for
FY24 at ₹3,285 crore from ₹1,900 crore in
FY23 (RE). The budget also announced a
slew of initiatives such an Agriculture
Accelerator Fund; intervention in crop
value chains for cotton and horticulture
crops, and digital public infrastructure for
agriculture to improve market linkages.
Agriculture credit is set to increase by 8%
from FY23 levels. Animal husbandry and
fisheries will get 39% and 38% more funds,
respectively.
PROPOSALS: Capital expenditure for
the defence sector has been increased
by 8% to an all-time high of ₹1.62 trillion.
PROPOSALS: A 19% and 35% increase in
budget for power and renewable energy
sectors, respectively; viability gap funding
for 4 Gwh of battery storage projects;
government support of ₹8,000 crore for
the 20,000-crore, 13-GW transmission
project in Ladakh; revamped distribution
sector scheme allocation doubled to
₹12,000 crore; National Green Hydrogen
Mission gets ₹300 crore. GEC and RDSS
projects funding doubled to ₹500 crore
and ₹12,000 crore, respectively.
IMPACT: CRISIL MI&A Research estimates
that more than two-thirds of the total
budgeted outlay will be reserved for
domestic procurement, based on past
trends. Among the services, the year-onyear growth for the Army is 14%, followed
by the Navy (11%) and the Air Force (6%) on
a high base. The Air Force accounts for the
largest share of funds with 36%, followed
by the Navy at 33%, and the Army 23%.
1,089 defence items have been placed
under an import embargo, applicable over
the next five years, which will support the
development of a local defence manufacturing ecosystem, and boost exports.
IMPACT: The budget for 2023-24 focuses
on long-term sustainable growth, and that
makes it a bit positive for the farm community and the overall agriculture sector.
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
UPL Ltd
740.20
-2.25
22.25
28.99
10.04
PI Industries Ltd
3,031.00
1.07
30.03
43.28
Coromandel International Ltd
902.00
0.84
61.47
Sumitomo Chemicals India Ltd
458.50
0.89
DFPCL*
630.10
-2.72
IMPACT: The moves will boost green
energy initiatives and improve distribution. Though the ₹300-cr for green hydrogen mission is lower than the committed
₹19,700 cr, the ₹30,000 crore energy
transition fund to OMCs will aid capex.
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
Bharat Electronics Ltd
94.95
6.75
34.21
52.49
32.50
Bharat Dynamics Ltd
909.6
-3.84
100.48
44.63
13.46
Bharat Forge Ltd
866.85
-0.95
24.51
30.63
36.62
Solar Industries
3,965.00
55.62
222.51
9.13
Hindustan Aeronautics Ltd
2,363.60
Company
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
20.97
Adani Green Energy Ltd
1,153.35
-5.78
35.08
13.79
196.00
418.7
22.43
Adani Transmission Ltd
1,730.25
-2.46
15.47
-44.61
117.45
31.93
-26.94
28.07
NTPC Ltd
170.00
-0.67
40.23
3.77
8.70
-0.98
97.3
102.33
41.77
Power Grid Corp. of India Ltd
216.60
0.12
7.68
-20.52
9.59
-7.40
22.31
76.80
18.04
Tata Power Co. Ltd
205.85
-3.31
43.04
98.60
19.80
*Deepak Fertilizers and Petrochemicals Corp. Ltd
STEEL AND METALS
BFSI
MSME
PROPOSALS: Budgeted capex for 11 core
infrastructure ministries set to rise 24% to
₹8.74 trillion compared to FY23(RE)
PROPOSALS: Credit Guarantee Scheme
(CGS) will be revamped for MSMEs via a
₹9,000-crore infusion; digital infrastructure for agriculture, risk-based KYC, onestop solution for identity and address
updating via DigiLocker; and agriculturecredit target will be at ₹20 trillion, with a
focus on animal husbandry, dairy, fisheries
PROPOSALS: Deductions for expenditure
can be availed only when payments are
made to MSMEs; turnover limit under
presumptive taxation for micro entities
raised to ₹3 crore; credit guarantee
scheme raised by 20% to ₹9,000 crore.
IMPACT:The 24% rise in budgeted capital
expenditure will raise steel demand in
FY24. The budget outlay towards rolling
stock for railways is set to rise over 150%
from the budgeted estimates of FY23 to
₹37,581 crore for FY24, and encourage flat
steel demand, which accounts for 46% of
overall demand. Similarly, the rise in
outlay for the ministry of road transport
and highways, and the mass rapid transit
system by 25% and 40%, respectively, will
propel demand for long steel. Thus, steel
demand from the infrastructure sector,
which accounts for 25-30% of overall steel
demand, will rise 12-14% in FY24.
IMPACT: To support timely payments, the
central government will be allowing
expense deduction only when payments
are being made to MSMEs. Assuming a
₹3-crore turnover, 7.5% EBITDA margin and
digital transactions (6% presumptive rate),
the hike in the presumptive taxation limit
would reduce taxable income by about
20%. DigiLocker for MSMEs, and PAN as a
common identifier, will further enhance
their prospects for securing loans from
financiers, including banks.
IMPACT:The CGS revamp will encourage
growth of MSME credit, which has risen at
a CAGR of 15% over the past two financial
years. The digital ecosystem will aid institutions to make informed credit decisions
and faster KYC. Higher capex outlay, and
disposable income of individuals will
support credit growth. Agriculture credit
growth target is set at 8% based on last
year’s budget target of ₹18.6 trillion.
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
Company
Closing
price
(in ₹)
Change
(in %)
NII
growth
(in %)
Net
profit
growth
(in %)
Priceto-book
ratio
JSW Steel Ltd
729.80
1.83
30.30
P/L
Tata Steel Ltd
122.05
2.01
8.44
Hindalco Industries Ltd
467.80
-0.16
Steel Authority of India Ltd
88.95
Vedanta Ltd
327.85
12.74
HDFC Bank
1,627.05
1.47
17.22
21.66
-55.44
9.49
ICICI Bank
846.65
1.80
23.10
28.27
1.93
9.20
State Bank of India
527.10
-4.80
-1.82
5.91
-94.23
7.66
HDFC Ltd
2,662.00
-1.43
28.09
-29.53
8.35
Life Insurance Corp. of India
598.80
P/L: profit to loss .
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
2.81
Gensol Engineering Ltd
950.00
-1.23
441.18
465.52
NA
41.80
2.62
KMEW Ltd*
1,189.95
-2.22
540.45
469.16
NA
13.79
35.69
1.44
Rhetan TMT Ltd
398.95
-4.99
4.99
58.43
NA
1.44
-9.99
15.17
3.40
Raghuvansh Agrofarms Ltd
365.00
-1.62
-35.59
377.08
NA
-8.38
23.57
994.22
14.86
Prevest Denpro Ltd
335.00
-2.62
36.87
31.03
NA
NII: net interest income. For LIC, sales growth and price-to-earnings ratio have been used.
NA: not available. *Knowledge Marine and Engineering Works Ltd
CEMENT
REAL ESTATE
TELECOM/IT
PROPOSALS: Budgeted capex for 11 core
infrastructure ministries set to rise 24% to
₹8.74 trillion against fiscal 2023RE
Outlay for PMAY, both
urban and rural, to rise a modest 3% compared to FY23 (RE) to ₹79,000 crore.
IMPACT: Capex is set to rise 24% in fiscal
2024, which will boost demand for the
cement industry. The rise will be sharp in
cement-heavy roads and affordable
housing (PMAY-G) sectors, for which
budgeted outlay increased 25% and 12.5%,
against FY23 (RE) to ₹2.6 trillion and ₹0.54
trillion, respectively. The fiscal deficit cap
for states has been fixed at 3.5% of GSDP
versus 3.4% for FY23 (BE). This will lead to
increased impetus from states on infrastructure in a pre-election year. Demand
from infra and affordable housing is set to
see another year of 10-12% growth in the
upcoming fiscal year.
Of the total sanctioned amount
of ₹2.02 trillion for PMAY Urban, ₹1.36
trillion has been spent as of January 2023.
So, nearly ₹65,000 crore is available for
spending till fiscal 2025. To this, ₹25,000
crore has been added for fiscal 2024. On
the other hand, of the ₹2.39 trillion sanctioned for PMAY Rural, ₹2.03 trillion has
been spent as of January. The budgeted
outlay of ₹50,000 crore in fiscal 2024 is
sufficient to address the funding gap.
Continued emphasis on housing and an
increase in income tax threshold for
individuals will provide impetus to the
low-cost housing segment.
PROPOSALS: The budget proposes 100
labs to develop applications for 5G services; focus on data embassies and digital
public infrastructure for agriculture, and
payment platforms
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
UltraTech Cement Ltd
7,128.80
0.56
21.85
-22.42
Ambuja Cements Ltd
334.60
-16.56
8.44
Shree Cement Ltd
23,800.50
0.39
ACC Ltd
1,844.40
Dalmia Bharat Ltd
1,767.75
IMPACT: Setting up of 100 research and
development labs for developing products based on 5G tech will accelerate
deployment across key sectors, such as
education, farming, transport and healthcare, as well as ensure quicker revenue
realisation by the industry. A national data
governance policy along with a risk-based
e-KYC process will facilitate the delivery
of digital services, generating opportunities for domestic service providers. Data
embassies will attract greater investments
in the data centre ecosystem.
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
27.09
DLF Ltd
348.90
-2.10
4.71
32.20
30.99
Tata Consultancy Services Ltd
3,407.65
1.50
17.11
6.85
25.58
-22.65
22.22
Godrej Properties Ltd
1,152.00
-2.48
90.16
90.47
39.35
Infosys Ltd
1,549.45
1.06
23.50
7.21
22.54
20.61
-61.19
34.87
Oberoi Realty Ltd
820.85
-0.05
54.23
107.85
17.57
Bharti Airtel Ltd
768.15
-0.27
22.02
164.70
28.21
-6.34
8.62
-44.91
17.24
The Phoenix Mills Ltd
1,366.75
-0.05
117.64
2,584.80
28.02
Vodafone Idea Ltd
6.70
-5.23
13.35
Loss
NA
-0.03
21.29
-48.18
29.24
Prestige Estates Projects Ltd
410.85
-2.18
26.47
178.49
24.83
Wipro Ltd
402.55
0.94
16.21
-15.40
16.60
Loss means losses in both the periods. NA: not available.
Sales growth and net profit growth have been calculated for the first half of 2022-23 over the first half of 2021-22. Price-to-earnings ratios and price-to-book ratios are the estimates for 2023-24.
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Source: CRISIL,CAPITALINE, Bloomberg, BSE,
LIVEMINT.COM
KEY STAT
BUDGET POINTERS
DATA AS EVIDENCE
KEY ALLOCATIONS TO MOSPI
WHY IT MATTERS
(In ₹ crore)
Census surveys and statistics
Investment in planning and statistics contributes
to contextual and accurate data collection. This, in
turn, should form the basis of the knowledge
governments use to develop various schemes and
benefits. The decennial Census did not happen in
2021, as scheduled. Even key sample surveys have
seen a pullback.
Capacity development
MoSPI: Ministry of Statistics and
Programme Implementation.
Data is revised estimates for
2022-23 and budget estimates
for 2023-24.
2019-20
2020-21
2021-22
2022-23
2023-24
Source: Budget documents
0
500
1,000
1,500
2,000
15
Allocation to core survey and
statistics under MoSPI, which had
stagnated, has been hiked 26% over
2022-23.
The pending Census looks unlikely this
fiscal too. Of the ₹3,433 crore allocated
in 2022-23 to the home ministry
principally for Census 2021, only ₹504
crore was spent. In 2023-24, ₹1,504
crore has been allotted.
NUMBER OF DECENNIAL
CENSUSES—THE MOST EXHAUSTIVE
DATA COLLECTION EXERCISE ON
INDIANS—THAT HAPPENED ON
SCHEDULE, BEGINNING 1872. THE
CHAIN WAS BROKEN IN 2021.
FMCG
PHARMA AND HEALTHCARE
ROADS
PROPOSALS: There are no major direct
proposals for the sector, but the government has announced the setting up of an
agriculture accelerator fund; increase
decentralised storage capacity; and
increase focus on encouraging organic
farming. NCCD on specified cigarettes
have been revised upwards by 16%.
PROPOSALS: Budgetary allocation has
been increased on healthcare by 12.6%,
compared to FY23 (RE); promotion of
research and development in pharma and
medical devices; setting up nursing colleges and courses on medical devices
PROPOSALS: Gross budgetary support
for the ministry of road transport and
highways increased by 25% to ₹2.59 trillion
for FY24 from ₹2.06 trillion in FY23 (RE);
allocation to NHAI increased by 15% to
₹1.62 trillion in for the next fiscal, nil borrowing programme for NHAI to continue;
the monetisation proceeds from roads
expected at ₹35,000 crore; higher by 250%
from FY23 (RE)
IMPACT: With the roll out of the programmes to promote R&D in pharmaceuticals through centres of excellence, and
making select ICMR lab facilities across
India available for private sector are
progressive steps towards improving
public-private partnerships, and overall
thrust on R&D. Setting up nursing colleges
and introducing courses on medical devices will increase availability of skilled
manpower—a positive given the severe
shortage of skilled manpower in India.
IMPACT: The agriculture accelerator fund
and increasing storage capacities will bring
in modern technologies to transform
agricultural practices, boost production
and supply chain efficiencies. Since NCCD
is a small percent of the tax structure for
cigarettes, 16% hike will not have a material
impact on cigarette sales. Rise in disposable income due to savings in personal
taxation may spur consumer spending.
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
Hindustan Unilever Ltd
2,571.05
-0.25
17.79
17.95
Nestle India Ltd
19,105.00
0.47
12.70
Britannia Industries Ltd
4,369.30
1.19
Dabur India Ltd
562.00
Godrej Consumer Products Ltd
926.65
IMPACT: The Centre significantly
increased allocation to the roads sector to
meet the completion targets for Bharatmala and NIP. NHAI achieved its ₹10,000
asset monetisation target for FY23 (RE).
With a target at ₹35,000 crore for FY24,
the target seems ambitious despite strong
appetite for operational road assets.
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
52.02
Sun Pharma*
1,016.90
-1.75
11.58
23.83
-2.70
54.34
Divi’s Laboratories Ltd
3,355.85
1.16
4.08
15.72
7.36
49.03
Cipla Ltd
1,032.05
1.48
0.78
7.00
-1.20
44.18
Dr Reddy’s Laboratories Ltd
4,350.50
1.52
7.53
-21.13
42.88
Apollo Hospitals Enterprise Ltd
4,270.00
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
24.87
Dilip Buildcon Ltd
209.65
-1.96
17.67
Loss
7.40
2.75
35.80
IRB Infra*
281.30
-1.68
5.71
292.70
21.16
1.10
3.45
21.69
NBCC (India) Ltd
35.75
-2.46
16.22
-17.31
17.83
0.61
7.85
67.36
17.14
Rites Ltd
341.00
-5.46
12.81
12.03
12.53
0.34
7.61
-29.30
45.65
Ircon International Ltd
57.70
-4.23
59.11
48.30
8.68
*Sun Pharmaceuticals Industries Ltd
*IRB Infrastructure Developers Ltd. Loss means losses in both the periods.
PORTS AND SHIPPING
SUGAR
AUTOMOBILE
PROPOSALS: Identification of 100 critical
transport infrastructure projects for lastand first-mile connectivity for ports, coal,
steel, fertilizer, and food grain sectors, to
be taken up on priority with an investment
of ₹75,000 crore, including ₹15,000 crore
from private sector; promotion of coastal
shipping for both passenger and freight
segments, through the PPP mode with
viability gap funding.
PROPOSALS: Exemption on BCD levied
on denatured ethyl alcohol imports; new
co-operatives to start manufacturing by 31
April can be taxed at 15%; sugar co-operatives permitted to claim payments made
to farmers prior to AY17 as expenditure;
measures to promote use of biogas
PROPOSALS: Sharp increase in capex
outlay; identification of critical transport
projects for first- and last-mile connectivity; relaxation in personal income tax
rates; and thrust on green energy.
IMPACT: A sharp 33% increase in capital
outlay, increasing commitments on infrastructure projects and relaxation in personal tax rates are key positives. Thrust on
green energy projects continues with
specific budgetary allocation for old
vehicle scrappage, energy transition, and
viability-gap funding for battery storage
solutions. Customs duty exemption on
import of capital assets for manufacturing
lithium-ion cells for battery packs will
facilitate the development of the EV
ecosystem and aid faster penetration.
IMPACT: In line with the commitment for
blending 20% ethanol with petrol by 2025,
the BCD exemption will allow need-based
imports. The budget announcements
regarding taxation pertain to cooperatives
are not likely to have any impact on the
private sector. Measures to promote the
offtake of biogas would create additional
revenue streams for sugar mills, which may
use press mud, and other by-products, for
generation of biogas.
IMPACT: The proposals are positive for
the sector as they will increase the share
of coastal shipping in multi-modal transportation mix, thus improving capacity
utilization of ports. Furthermore, support
for last-mile and first-mile connectivity at
ports will also help in easing congestion
and improving efficiency.
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
Gujarat Pipavav Port Ltd
91.75
-2.29
22.88
67.89
Adani Ports and SEZ*
492.15
-19.69
15.30
Cochin Shipyard Ltd
483.60
-5.44
Gateway Distriparks Ltd
62.95
Mazagon Dock Shipbuilders Ltd
743.80
Company
19
ThursDay, 2 February 2023
New Delhi
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
14.23
Balrampur Chini Mills
369.50
-2.17
-6.84
P/L
11.53
Maruti Suzuki India Ltd
8,761.05
-1.46
49.13
227.34
23.57
27.94
15.35
TEIL*
271.15
-4.93
22.15
687.04
12.92
Mahindra and Mahindra Ltd
1,352.20
-1.91
43.41
111.19
19.30
9.60
-3.11
12.96
Dhampur Sugar Mills Ltd
216.10
-3.91
42.36
-9.66
8.51
Tata Motors Ltd
446.65
-1.22
19.13
Loss
15.52
-2.40
5.64
28.87
13.68
Shree Renuka Sugars Ltd
49.65
-3.87
84.38
Loss
137.57
Bajaj Auto Ltd
3,808.25
-0.28
13.32
-10.19
16.45
-6.22
41.24
236.63
14.65
EID-Parry (India) Ltd
541.45
-0.21
63.01
37.51
18.18
Eicher Motors Ltd
3,300.00
1.03
62.99
107.68
25.14
P/L: profit to loss; Loss means losses in both the periods. *Triveni Engineering and Industries Ltd
*Adani Ports and Special Economic Zone Ltd
Loss means losses in both the periods.
HOTELS
AVIATION AND LOGISTICS
CAPITAL GOODS
PROPOSALS: Focus on improving infrastructure including last-mile and rural;
50 more airports and heliports to be
revived for improving regional air connectivity; promotion of theme-based tourist
circuits, improving tourist security, creation of a tourism app, and enhancing
ease-of-doing business, apart from skill
development have been proposed.
PROPOSALS: Setting up 50 additional
airports, heliports, water aerodromes, and
advance landing grounds for improving
regional air connectivity; thrust on promoting tourism through development of
associated infrastructure; focus on firstand last-mile connectivity through 100
transport infra projects, with a capital
outlay of ₹75,000 crore.
PROPOSALS: The budget proposed an
overall capex of ₹13.7 trillion; allocated
₹2.4 trillion for the Railways, and ₹35,000
crore towards energy transition. It also
made allocations for inter-state transmission system from Ladakh, reforms-linked
distribution scheme, KUSUM and steps to
promote usage of biogas and biomassbased energy
IMPACT: The measures announced in the
budget are likely to boost demand for
tourism in the medium term, which in turn
will raise demand for the hotels sector. The
improvement in tourist security, availability of adequate information and skill
development will enhance tourist experience. Ease-of-doing business will lead to a
pickup in launch of new hotel properties.
IMPACT: Improvement in regional air
connectivity will boost domestic aviation
sector. Furthermore, promotion of tourism through development of tourist destinations will spur both domestic and international air travel. Thrust on first- and lastmile connectivity will provide the necessary boost to the logistics sector by ensuring seamless movement of goods.
IMPACT: The continued thrust on capital
expenditure is likely to boost the order
books of capital goods companies, including EPC contractors. Higher allocations for
reforms-linked, result-oriented capex
scheme; allocation of ₹35,000 crore
towards energy transition, as well as for
ISTS from Ladakh, will also support growth
prospects of the capital goods sector.
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
Indian Hotels Co. Ltd
326.60
8.67
132.89
L/P
EIH Ltd
174.65
7.48
143.95
Chalet Hotels Ltd
354.20
0.43
Lemon Tree Hotels Ltd
80.80
Mahindra Holidays*
262.85
39.94
InterGlobe Aviation Ltd
2,075.25
-2.33
194.27
Loss
18.59
L/P
40.07
Delhivery Ltd
304.95
1.14
25.80
Loss
NA
155.55
L/P
33.28
Blue Dart Express Ltd
6,130.10
-2.69
31.60
74.38
30.26
5.76
179.58
L/P
39.16
Allcargo Logistics Ltd
416.00
-0.73
30.24
38.00
2.50
31.17
88.07
35.48
SpiceJet Ltd
35.25
-0.56
78.80
Loss
*Mahindra Holidays and Resorts India Ltd. L/P: loss to profit.
Loss means losses in both the periods. NA: not available.
Company
Closing
price
(in ₹)
Change
(in %)
Sales
growth
(in %)
Net
profit
growth
(in %)
Price-toearnings
ratio
Siemens Ltd
2,953.95
0.84
26.92
106.41
50.10
75.60
-3.69
22.83
Loss
32.66
Thermax Ltd
1,962.00
1.93
47.91
29.00
38.18
12.77
ABB India Ltd
2,794.90
-1.12
14.30
-8.60
54.93
6.81
Larsen and Toubro Ltd
2,144.55
0.92
22.63
31.30
22.06
Bharat Heavy Electricals Ltd
Loss means losses in both the periods.
Sales growth and net profit growth have been calculated for the first half of 2022-23 over the first half of 2021-22. Price-to-earnings ratios and price-to-book ratios are the estimates for 2023-24.
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.
Source: ICRA , CAPITALINE, Bloomberg, BSE,
20
ThuRsDay, 2 FebRuaRy 2023
New Delhi
LIVEMINT.COM
KEY STAT
SELL TO THE WORLD
WHY IT MATTERS
Producing more is one thing. To sell more, India needs to
look outside. With the global economy seeing a possible
slowdown due to rising interest rates, expanding exports
in the coming months will be a challenge. Meanwhile, for
April-December 2022, the y-o-y growth in imports (20%)
topped that in exports (14%), increasing the trade deficit.
The latest figures, for December 2022, show exports
falling 5.3% over a year ago.
BUDGET POINTERS
INDIA'S TRADE DEFICIT
Trade deficit from goods and services ($ bn)
160
118
120
126
80
40
0
2013-14
Note: Trade deficit is the amount by which imports exceed exports. Data for 2022-23 for first nine months.
2022-23
Source: Reserve Bank of India, Department of Commerce
Budget 2023 aims to simplify the
customs duty structure, reducing
the number of rates from 21 to 13.
It also provides customs duty relief
or reductions to some sectors like
mobile phones, TV manufacturing
and lab-grown diamonds to enable
them to import essential inputs at
lower costs.
41
%
THE LIKELY Y-O-Y INCREASE IN TRADE
DEFICIT (IN SERVICES AND GOODS) IN
DOLLAR TERMS FOR 2022-23 IF THE
CURRENT PACE OF GROWTH IN
EXPORTS AND IMPORTS CONTINUES.
Higher excise duty to marginally increase cigarette prices in FY24
Suneera Tandon
suneera.t@htlive.com
NEW DELHI
C
ome 1 April, smoking
will not just be injurious
to your health, but will
also burn a hole in your pocket.
With finance minister Nirmala
Sitaraman’s proposal to raise
the National Calamity Contingent Duty (NCCD) on cigarettes, the prices are likely to go
up by 1-3%, said analysts.
In her budget speech, the FM
proposed to increase the NCCD
on certain categories of cigarettes by about 16%, after
almost three years.
NCCD is an excise duty levied on certain manufactured
goods at specific rates in addition to other duties of excise
chargeable on the goods under
the Central Excise Act, 1944.
To be sure, NCCD on cigarettes and other tobacco products was last increased in the
Union Budget for FY21, when
the duty on the lowest length
segment was raised from ₹90
per thousand sticks to ₹200,
and from ₹235 per thousand
sticks to ₹735 for the longest
segment.
However, analysts tracking
the sector, said the proposed
increase this time is likely to
have negligible impact on cigarette prices.
Shares of ITC Ltd, the largest
cigarette company in India,
ended 2.61% up on the BSE on tations, and we expect legal cigWednesday, after diparette players to gain
share from the illeping 6% intraday.
gal ones. It also
“A 16% hike in
Cigarette
lends visibility to
NCCD on cigacompanies
higher volume
rettes for FY24
will need
growth
in
is a step in the
FY24. Cigarette
right direction
to
raise
the
companies will
as this will lead
prices
need to increase
to a nominal tax
prices by 2-3%—
increase, bringing
by 2–3%
not a big ask since
stability in taxation.
legal cigarette prices have
This increase is lower
than the Street’s and our expec- not risen a lot over the past two
years,” said Abneesh Roy, executive director, institutional
equities, Nuvama Wealth Management.
According to Roy, legal cigarette firms have gained market
share from illegal players, given
no tax hikes for two consecutive years. Given the nominal
overall tax hike in the budget
for 2023-24, we expect this
momentum to sustain, he said.
The industry has been of the
view that high taxes on ciga-
Will the Budget boost
household consumption?
rettes lead to higher sales of
illegal cigarette packs.
With the rise in tax, companies could pass on small price
hikes to consumers. “Net tax on
cigarettes would increase by
0.07 a stick to 0.12 a stick,
which would require a 1-3%
price hike for cigarettes in different categories. The increase
in taxes is not very high and
would be easily passed on by a
small increase (1-3%) in prices,”
said analysts at ICICI Securities.
Jefferies analysts said the
over 2% effective tax hike on
cigarettes is a key positive for
ITC Ltd, considering the company’s strong pricing power.
Tobacco and tobacco products contribute nearly ₹53,000
crore to the tax revenues of the
central government annually.
Formal sector companies that
sell legal tobacco products contribute a very high proportion
of tax revenues, but account for
only 8% of consumption.
Tourism operators
upset over cuts in
publicity funding
Varuni Khosla
ment said, but did not divulge
give any further details.
According to industry insidNEW DELHI
ers, the Centre has missed the
udgetary allocation for opportunity to back the Indian
the tourism sector for tourism industry, considering
2023-24 have failed to that many countries like China
boost sentiments of the hospi- are still reeling under a covid
tality industry, including tour scare, resulting in lower footfall
operators. The Centre’s deci- of foreign tourists. “Internasion to cut the outlay for over- tional travellers cannot visit
seas promotional activity, such China, and India should have
as Incredible India campaign, taken steps to use that opportuby over 50%, came under criti- nity. Instead, we are going to
miss out since we have slashed
cism by industry executives.
In fact, government funding our overseas tourism promofor overseas tourism promo- tion budget by more than half.
tions has been declining over The tourism budget depends
the years, from ₹524 crore in on this one-line item. This year
2021-22 to ₹341 crore in FY23 could have been a great opporand ₹167 crore for FY24. How- tunity for a tourism boom for
ever, a large sum of money has India,” said Dipak Deva, manbeen allocated for developing aging director, Travel Corp. of
pilgrimage destinations, up India Ltd.
Deva said he was
66% from ₹150 crore in
expecting at least
FY23, to ₹250
₹750 crore for the
crore in FY24.
Swadesh
industry with a
However,
Darshan has
majority being
overall allocaspent on digitions for tourbagged almost
tal mediums,
ism sector
half of the
travel shows
remains flat at
and marketing
tourism
₹2,400 crore,
tourism
destinacompared to the
budget
tions.“With such a
FY23 outlay. That
small allocation, we
said, so far in FY23
can’t have a big bang
only ₹1,343 crore was
spent for promoting tourism, impact on tourism. I don’t think
and only ₹60 crore out of the we can go back to $30 billion
₹341 crore was spent on over- forex earnings that we had in
seas promotions. An equivalent FY21,” Deva added.
The Incredible India camamount was spent on domestic
campaigns, instead of the allo- paign which started in 2002 to
promote tourism has been offcated ₹75 crore.
More than 50% of the tour- line since 2020. A huge blow
ism budget has been allocated was also dealt to tour operators
to Swadesh Darshan scheme, who help tourists plan internawhich was launched in 2014-15 tional holidays. Tax collected at
for integrated development of source (TCS) for Indians plantheme-based circuits, as sus- ning international holidays
tainable and responsible tour- through local travel operators
ism destinations within India. has been increased fourfold
So far, 76 projects have been from 5% to 20%.
Subhash Goyal, chairperson
sanctioned under the scheme
across 13 circuits. The govern- of the Confederation of Tourment said it will develop 50 ism Professionals, said the tax
new tourist sites ensuring high rate hike will hit businesses. “It
standard of food, streets, secu- will result in Indian travellers
opting for international webrity and other amenities.
Destinations will be devel- sites instead of domestic servioped both for foreign as well as ces to buy packages for overdomestic tourists, the govern- seas travel ,” said Goyal.
varuni.k@livemint.com
In rural markets, consumers
have been shying away from
discretionary spending
B
Suneera Tandon & Alisha Sachdev
NEW DELHI
B
udget announcements could spur
domestic demand for small appliances, packaged goods, as well as
small cars and two-wheelers, but
will do little to shore up demand
in rural India, industry experts and analysts
said about the government’s last full-budget
before the general elections in 2024.
High inflation has long been plaguing the
Indian household consumption, especially in
KEY
rural markets, wherein
ANNOUNCEMENTS
consumers are trying to
focus on daily expenses
while shying away from
₹2TN to supply free food
discretionary spending.
grain to all Antyodaya and
While commodity
priority households for the
inflation has softened of
next year under PMGKAY.
late, cost of raw materials such as cereals, milk,
NATIONAL CALAMITY
and pulses is still up
Contingent Duty on
25-40% over last year.
cigarettes revised upwards
Overall, firms were
by about 16%.
forced to pass on the
price hikes to consumOVERSEAS PROMOTIONS
ers, which in turn, hurt
budget slashed by 51%.
demand.Consequently, while sale of
INCREASE IN TCS from 5passenger vehicles was
20% for those who buy
at record highs in 2022,
foreign tour packages from
demand for entry-level
India.
cars was on a decline.
“The adjustment in
ALLOCATION FOR Tourism
personal income tax
remains same at ₹2400 cr.
rates will not have too
much effect on demand
50 TOURIST destinations
for cars. (The additional
will be selected through
saving) is not such a
challenge mode.
large amount. People
have other uses for money, especially when
they have been cutting down on necessities.
The extra money in hand will not give them
extra purchasing power. Benefit for people in
the ₹15-lakh category is not significant. The
impact of negative income growth and inflation has to be taken care of,” R.C. Bhargava,
chairman, Maruti Suzuki, said.The budget
will promote investment and growth, Bhar-
The Reserve Bank of India’s bi-monthly consumer confidence surveys show that consumer confidence is improving from the lows of
May 2021—the second wave of the covid-19 pandemic. While pent-up demand is now driving purchases of both goods and services,
the question is if this momentum would sustain.
gava said. “We see some small demand coming from them scrapping of old government
vehicles, but if the government can allocate
some funds for replacing private cars, it will
aid demand even more,” he added.
Two-wheeler demand could see a boost
with lower-income groups benefitting from
the income tax cuts. However, the government’s decision to cut spending on rural
schemes could effectively lead to lower
cash-in-hand for rural consumers who form
a large majority of two-wheeler buyers.
“The budget proposals around capital
expenditure, agri-credit, infra development
credit, and lower tax slabs will result in
higher disposable income and help the
growth of the auto sector,” Pawan Munjal,
chairman and CEO, Hero MotoCorp, said.
“The budget is progressive with a focus on
growth, infrastructure investment and the
agrarian economy,” said Kamal Nandi, business head & executive vice president, Godrej
Appliances. Large appliance sales remained
muted last year. “Along with cooling commodity costs, it could reverse the trend this
year,” Nandi said.
suneera.t@htlive.com
CATERING TO GROWTH, BOOSTING CONSUMPTION AND DIGITAL INDIA DREAM
EXPERT
VIEW
Sau G ata G u p ta
Respond to this column at
feedback@livemint.com
S
ince 2020, there has been a significant amount of uncertainty across the world from covid-19, and its various variants, to the Russia-Ukraine war, as well as the cost-of-living
crisis across the world. In the face of these global challenges,
India has come out strong. However, FY24 is shaping into a seminal year for the country’s economy as we move to the next phase
of growth. The Union Budget, therefore, has the all-important
task of furthering India’s growth story, while making the country
more resilient for the years to come.
The question is, did this budget meet this ask?
In my mind, The finance minister’s fifth Union Budget hits the spur growth in retail and fast-moving consumer goods sectors.
mark perfectly, by addressing some critical points to uptick credit
A budget championing India’s growing infrastructure
growth, boost consumption and growth, focus on infrastructure
To paraphrase finance minister Nirmala Sitharaman, this
development and furthering the vision of digital India, along with Union Budget is a blueprint for India@100. Infrastructure develsome key incentives for the agricultural and educational
opment and growth are going to be seminal for that ‘India
sectors. Overall, I believe the budget has several
@ 100’ vision. In my opinion, this budget has
inclusive measures and policies that balance conaddressed this by focusing on the key areas that will
This
budget
aid India’s growth. First, the impressive capital
sumer needs.
also will
outlay of ₹2.40 trillion for the Indian Railways,
Empowering a consumer-led economy
along with the added investments towards 100
Clearly, one of the biggest takeaways from the
help sustain
critical infrastructure projects for key industries
Budget for FY24 has been the revision of the tax
the momentum
including transport, steel and coal, etc, will defislabs in the new tax regime. Extending the tax
of ‘Make in
nitely help bolster the infrastructure of the counexemption to individuals who have an annual
try.
In my opinion, this will help India become
income below ₹7 lakh, provides more money in
India’
more future forward, and create more jobs, espethe hands of consumers, thereby helping stimulate
cially when the significant boost in capex is almost 33%.
consumption sentiment and drive growth.
Dialling up digital and entrepreneurial spirit
A higher consumption sentiment will in turn lead to
What stood out for me is how, with this budget, the finance
heightened spending behaviour across urban dna rural households. At the same time, revised tax slabs will incentivise Indians minister has touched upon areas such as artificial intelligence
to move to the new regime, as it helps them save more over the and technology in a very comprehensive manner. This Budget
long term. This, I believe, will begin revitalising the economy and has provided a focus on the development of India’s AI, technolog-
ical and digital strengths, with an acute focus on spurring the
entrepreneurial spirit within the country. This will help the next
generation of Indians prepare for the future, while also creating
more jobs and holistically propelling India further on the global
stage. This budget will also help sustain the momentum of ‘Make
in India’, especially in the area of electronic gadgets and other
adjacent categories.
The added benefits for startups operating in the agricultural sector, has been another key standout point. I see this as the beginning
of the next phase of the Indian agricultural journey— where the
youth will bring modern, sustainable and more profitable farming
practices and technologies to the forefront of the industry.
With such key measures, I believe, that this Budget has accomplished the most important task of all — taking that crucial step
forward to grow and strengthen the Indian economy. The Union
Budget FY24 can lead India towards great heights, by furthering
our infrastructure, spurring consumption and creating more jobs
across sectors. Overall, this Budget, with the right execution, has
the potential to be a game-changer for the Indian economy for
the next 25 years.
Saugata Gupta is MD & CEO, Marico Limited
This PDF was uploade To Teligram channel_ LBS Newspaper platform (https://t.me/LBSNEWSPAPER) @LBSNEWSPAPER
ThursDay, 2 February 2023
New Delhi
LIVEMINT.COM
21
JUBILANT FOODWORKS LIMITED
CIN: L74899UP1995PLC043677
Regd. Office : Plot No. 1A, Sector – 16A, Noida – 201301 (U.P.)
Corporate Office – 15 Floor, Tower-E, Skymark One, Plot No. H-10/A, Sector 98, Noida, Uttar Pradesh 201301
Contact No: +91-120-6927500; +91-120-6935400, E-mail: investor@jublfood.com, Website: www.jubilantfoodworks.com
th
STATEMENT OF STANDALONE AND CONSOLIDATED UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31ST DECEMBER, 2022
(Figures-INR in Lakhs, Unless Otherwise Stated)
Sr.
No.
1
2
3
4
5
6
7
8
PARTICULARS
Total Income from Operations (net)
Net Profit for the period/ year (before Tax, Exceptional
and / or Extraordinary items)
Net Profit for the period/year before Tax
(after Exceptional and / or Extraordinary items)
(Refer Note 3)
Net Profit for the period/ year after Tax
(after Exceptional and / or Extraordinary items)
Total Comprehensive Income for the period/ year
[comprising Profit for the period after Tax and Other
Comprehensive Income after Tax]
Equity Share Capital
Reserves excluding Revaluation Reserve as at Balance
Sheet date
Earnings per share (after exceptional items)
(of INR. 2/- each) (Refer Note 4)
a) Basic (in INR.)
b) Diluted (in INR.)
STANDALONE RESULTS
For the quarter ended
For the nine months ended For the year
ended
st
th
st
31 Dec
30 Sep
31 Dec
31st Dec
31st Dec
31st March
2022
2022
2021
2022
2021
2022
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Audited
CONSOLIDATED RESULTS
For the quarter ended
For the nine months ended For the year
ended
st
th
st
31 Dec
30 Sep
31 Dec
31st Dec
31st Dec
31st March
2022
2022
2021
2022
2021
2022
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Audited
131,664.43
11,942.45
128,677.18
16,192.59
119,350.43
18,312.21
384,368.11
44,551.52
317,321.33
43,533.27
433,109.98
58,928.04
133,181.47
11,146.46
130,148.92
17,450.18
121,077.37
17,917.37
388,839.99
43,531.82
322,014.83
43,651.69
439,612.29
57,058.58
11,942.45
16,192.59
18,302.53
41,887.62
42,839.98
58,195.50
11,146.46
17,450.18
17,907.69
43,531.82
42,958.40
56,326.04
8,857.45
11,916.57
13,732.79
30,869.75
32,140.95
43,752.21
8,036.39
13,152.98
13,319.54
32,448.00
32,208.09
41,808.83
4,087.20
12,568.34
24,186.31
21,245.78
62,334.29
68,052.36
1,728.53
15,885.54
23,971.94
23,343.32
61,708.50
62,929.66
13,196.90
13,196.90
13,196.90
13,196.90
13,196.90
13,196.90
13,196.90
13,196.90
13,196.90
13,196.90
13,196.90
13,196.90
197,153.12
1.34
1.34
1.81
1.81
2.08
2.08
4.68
4.68
Notes :
1. These unaudited financial results have been prepared in accordance with the recognition and measurement principles as laid
down in the Indian Accounting Standards (referred to as“Ind AS”) prescribed under Section 133 of the Companies Act, 2013 read
with Companies (Indian Accounting Standards) Rules as amended from time to time, to the extent applicable. The above
unaudited standalone and consolidated financial results were reviewed by the Audit Committee and approved by the Board of
st
Directors of the Company at their meetings held on 01 February, 2023. The statutory auditor’s report on review of interim
st
standalone and consolidated unaudited financial results for the quarter and nine months ended 31 December, 2022 is being
filed with the BSE Limited and National Stock Exchange of India Limited.
2. The Company’s business activity falls within a single business segment i.e. Food and Beverages in terms of Ind AS 108 on
Segment Reporting.
3. The Company has investment in its wholly owned subsidiary viz Jubilant FoodWorks Lanka (Private) Limited (JFLPL) having
operations in Sri Lanka. Considering significant changes in economic environment of Sri Lanka resulting into rising inflation,
depletion of forex reserves, depreciation of currency, and other economic and political uncertainties, the management had
th
recorded an impairment charge of INR 2,663.90 lakhs in the quarter ended 30 June, 2022 which is shown under exceptional
items in the nine months period ended 31st December, 2022.
4.87
4.87
6.63
6.63
181,299.93
1.22
1.22
1.99
1.99
2.03
2.03
4.92
4.92
4.90
4.90
6.37
6.37
Exceptional items in the quarter and nine months period ended 31st December, 2021 and in the year ended 31st March, 2022
include costs incurred by the Company to support its employees, associates and their dependents during COVID-19 pandemic.
These includes assistance to families of deceased employees and associates, vaccination of employees, associates and their
dependents, quarantine facilities for COVID-19 impacted employees and associates, etc.
th
4. During the quarter ended 30 June, 2022, the equity shares of the Company were split/ sub-divided such that each equity share
having face value of INR 10/- (Rupees Ten only) fully paid-up, was sub-divided into five (5) equity shares having face value of
th
INR 2/- (Rupees Two only) each, fully paid-up with effect from 20 April, 2022 (Record Date). The Earnings Per Share (EPS)
numbers of the quarter and nine months ended 31st December, 2021 and of the year ended 31st March, 2022 presented above
have been restated to give effect of the share split.
5. The above is an extract of detailed format of unaudited financial results for the quarter and nine months ended 31st December, 2022
filed with the Stock Exchanges under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015. The full format of the unaudited financial results are available on the Stock Exchanges websites (www.bseindia.com
and www.nseindia.com) and on Company’s website (www.jubilantfoodworks.com).
Place: Noida
st
Date: 1 February, 2023
This PDF was uploade To Teligram channel_ LBS Newspaper platform (https://t.me/LBSNEWSPAPER) @LBSNEWSPAPER
For and on behalf of the Board of Directors of
JUBILANT FOODWORKS LIMITED
Sd/HARI S. BHARTIA
CO-CHAIRMAN & DIRECTOR
DIN No. 00010499
22
ThurSDay, 2 February 2023
New Delhi
LIVEMINT.COM
OUR VIEW
THEIR VIEW
PTI
Sitharaman’s budget does well to
strike the Pareto efficiency mark
It pleases economists, bankers, corporates and individuals without leaving other classes worse off
able to take a more nuanced view on the
repo rate, as inflation is projected to
come down next year.
Corporates have always been asking
for higher capital expenditure by the
government. This argument is strong. If
the government expands its capital
expenditure, then it will crowd-in
private investment. This theory sounds
good, though has not worked in the past
as corporates invest when there is profit
to be made, while the government does
so because it must do so as no one else is
doing it. The capex target of ₹10 trillion
for 2023-24 is substantial, and, as states
normally put in an equivalent amount,
it should help move the needle. The
focus is on roads and railways, which
have the strongest linkages with other
sectors of the economy.
Individuals too would take comfort
from some of the provisions made in
the budget. Benefits for women and
senior folks are welcome, as it protects
them from the high inflation experienced in the last three years. Individual
tax slabs have been changed, too, provided one goes for the new scheme. We
can’t be sure how many would opt for it,
as the response earlier was not too good.
But to the extent that people do opt for
it, there would be savings made that
would either protect against past inflation or add to consumption.
The Union budget has been a bit
conservative when it comes to pro-poor
schemes. The outlay for the Pradhan
Mantri Kisan Samman Nidhi scheme,
for example, has been maintained at
₹60,000 crore, and there has clearly
been no pitch to increase it. Similarly,
the food subsidy bill will be coming
down this year by almost ₹90,000 crore
as there has been a merger of the free
food scheme with the public distribution system, while the National Rural
Employment Guarantee scheme has a
lower outlay. Therefore, it can be said
that the budget has also been in ‘withdrawal of accommodation’ mode, since
the worst is behind us, as the Economic
Survey has argued. This has actually
MADAN SABNAVIS
is chief economist, Bank of Baroda, and
author of ‘Lockdown or Economic
Destruction?’
Maximum government
may well be here to stay
The budget’s huge outlays will stretch our pandemic fiscal expansion into next year’s election
season. Given the risks of a sustained big-state policy, put it down to a political preference
T
he hypothesis that politics invariably gets in the way of economics as
national elections approach was put
to a special test by the Union Budget
for 2023-24, presented in Parliament by India’s finance minister
Nirmala Sitharaman. It was billed as our first
‘Amrit Kaal’ budget, but its context had two big
pattern-breakers. Unlike the usual half-decade
cycle of a Lok Sabha term, with sarkari largesse
kept for the final year, a pandemic had forced an
early fiscal expansion that satisfied the original
purpose of deficit spending—as a tool of economic revival and not a revdi dispenser—but
also reduced space for the Centre to go on a
pre-poll spree (without being reckless). This
constraint, however, was accompanied by a
political rarity: the Bharatiya Janata Party’s
confidence in securing a third mandate on a trot
in 2024. Together, these argued for the economy’s long-term interests to be held above the
electoral fray. While this called for a markedly
better balanced budget for post-pandemic
stability, what we got was a cursory nod, with
the state playing allocator-in-chief of capital.
Covid had pushed the Centre’s fiscal deficit to
9.2% of GDP in 2020-21. Although our annual
gap between inflows and outgoes—likely to be
6.4% this year on an enlarged base after two lost
years—is projected half a point lower at 5.9% of
GDP for 2023-24, it still indicates an expense
bloat. The state admittedly does have a worthy
role in public welfare, climate action and other
fields. Its proliferation of programmes, however, is not just populist, but given to grandeur
in its role as an incubator of enterprise. Its infra
splurge as an investor of last resort is set to take
another leap. Its outlay on capital expenditure
has been upped by a third to ₹10 trillion, or 3.3%
of GDP. It is expected to boost growth, multiply
incomes, perk up consumption, rouse ‘animal
spirits’, ‘crowd in’ private investment and yield
a revenue upsurge that’ll help tighten the fisc
to 4.5% of GDP by 2025-26. This is plausible,
granted, and it sure beats the profligacy of leaky
outlays, but the pullback of this path is so slow
that it transforms our covid-rescue plan into
policy as usual. This plainly reveals a political
preference, not just in how it privileges statist
projects—industrial incentives included—over
market orientation, but also how it downplays
the patchy results so far of our crowd-in game.
It’s an inclination that will pose risks as we go
along. True, government debt is off its 90%-ofGDP pandemic peak, but our payback burden is
a drag on fiscal efficacy, even as today’s uneven
demand scenario masks price pressures that
could flare up to make credit dearer and crowd
out the efficiency of private enterprise.
A loose fisc for too long can cause instability,
as we saw about a decade ago. The Narendra
Modi administration that took charge in 2014
had pitched for “minimum government”, with
fiscal excesses to be minimized. Of course, it is
within its rights to revise its strategy in favour
of central plans. Growth does need some props,
after all, and state-driven value generation has
always had its advocates. Whether it’s our best
way ahead is the question we must confront.
And what about India’s fiscal responsibility law;
is it still relevant? It has not been scrapped,
but its escape hatch was exercised yet again:
“The fiscal policy stance has been to make the
domestic economy more resilient to exogenous
shocks and to mitigate the risks of global economic downturn.” Suitably reworded, though,
a stance like this can be taken anytime—come
health crisis or high voter visibility.
E
conomists always try to balance
their view with hits and misses
while analysing the budget. When
one looks at the one presented for
2023-24, it literally fits the bill of being
a Pareto optimal budget, a state when
no one really is worse off but some sections are better placed. This budget has
pleased the sensibilities of all classes.
Let us see how this has been done.
Economists will be happy that the
fiscal deficit is on a path of prudence.
The ratio is to come down from 6.4% of
gross domestic product (GDP) to 5.9%,
which means that the 4.5% mark is not
really far away, and if conditions across
the world remain stable, it could be
achieved by 2025-26, as is currently
being targeted by the government.
Bankers will be pleased that while the
deficit is at ₹17.86 trillion, the Centre’s
net market borrowing planned is at ₹11.8
trillion, which is similar to 2022-23’s.
This means that there will be no extra
pressure on liquidity in the market,
given that presently there is some strain
in the system. This has assuaged the
bond market, as seen in yields coming
down, albeit marginally, after these
numbers were announced. This number will also provide comfort to the
Reserve Bank of India (RBI), which
comes up with its monetary policy next
week. In fact, if takeaways of the latest
Economic Survey are combined with the
fiscal math of the budget, RBI will be
New Delhi, Mumbai, Bangalore, Kolkata, Chennai, Ahmedabad, Hyderabad, Chandigarh*, Pune*
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Monday, February 4, 2013
Vol.7
No.30
`3.00 in Delhi­NCR/`4.00 outside Delhi­NCR
24 PAGES
Mint50: Best
funds to bring home >14
MINT MONEY:
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intellectual property? >6
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apply for banking licences >5
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conversion >24
EXCLUSIVE PARTNER
SENSEX 19,781.19 ®
NIFTY 5,998.90 ®
ETIHAD DEAL
Jet won’t cede
management
control: Goyal
Aviation ministry
official says the two
companies will apply
for FIPB approval in
maybe one week
B Y T ARUN S HUKLA
P .R . S ANJAI
·························
&
NEW DELHI/MUMBAI
J
et Airways (India) Ltd,
which is in advanced talks
with Etihad Airways PJSC
to sell a 24% stake, will not
cede management control to
the United Arab Emirates firm,
Jet Airways chairman Naresh
Goyal has clarified.
Etihad, with its investment
into the nation’s second-largest airline, will secure a seat on
the board of Jet Airways and
have a say in the induction of
some key executives, subject to
regulatory and security approvals, consultancy Centre
for Asia Pacific Aviation said in
a Thursday report.
As a result, Goyal will relinquish full control and move to
a shared management structure, the 31 January report
said.
“No. Don’t worry,” Goyal
said on Friday after a meeting
with aviation ministry officials
in New Delhi when he was
queried on the matter.
Goyal met ministry officials
with Etihad chief executive officer James Hogan and other
executives. Nikos Kardasis,
chief executive officer of Jet
Airways, was not present.
The stake sale seems to be a
done deal, an aviation ministry
official said after the Friday
meeting.
“Goyal introduced Etihad as
its new partner,” the official
said, requesting anonymity.
“They will move very fast on
applying to FIPB (Foreign Investment Promotion Board)
now, maybe in one week.”
The Indian government in
Mint is also available for R7 with
Hindustan Times in Delhi-NCR only
September allowed foreign airlines to buy up to 49% stake in
a domestic airline firm. Jet and
Etihad has been in talks since
then but a deal is yet to be announced.
Jet’s share prices has risen
80% to `622.65 since 1 October, outpacing the benchmark
Sensex’s 5.43% gain in that period.
The delay is likely because of
accounting complexities and
complying with legal and financial procedures, another
ministry official said. He too
declined to be named.
Goyal-owned Tailwinds Pvt.
Ltd controls 80% of Jet Airways
but is an overseas corporate
body. Jet Airways is, therefore,
already more than 49% controlled by a foreign holding
company, but has been granted a special exemption by the
government.
Jet Airways is working on a
deal structure that will avoid
all possible tax implications,
according to an executive
working with a consulting firm
who is aware of the development.
“Goyal would transfer his
shares from the overseas corporate body Tailwinds to his
individual name,” he said on
condition
of
anonymity.
“There will not be any tax implications as there is no sale in
this case. Earlier, OCB was
owned by Goyal, now the same
Goyal will own shares in his
name.”
In the Friday meeting, executives of Jet Airways and Etihad wanted to know about the
tax implications when the
share sale takes place, a third
ministry official said, who declined to be named.
“The question is how to do
it. They are still exploring what
is the best way. New shares
may not invite taxes, in my understanding,” the official said,
referring to Jet Airways.
British telecom services provider Vodafone had been
slapped with an income-tax
demand notice of `11,200
crore by Indian authorities on
its 2007 acquisition of Hong
Kong-based Hutchison Whampoa’s stake in its Indian telecom business. Finance minister P. Chidambaram has said
he is looking into resolving the
tax problems involved in the
telecom deal.
If new shares are issued to
Etihad, it could dilute promoter Goyal’s stake.
“The top team from Etihad
Airways was here to seek the
comfort from Indian government before signing a term
sheet with Jet Airways,” the
TURN TO PAGE 3®
DOLLAR `53.19 ®
EURO `72.42 ®
THE TOP ORDER
Glenn Maxwell of Australia was the biggest
surprise at the IPL 6 auction after he was
bought by Mumbai Indians for $1 million. The
auction was otherwise muted as only 37 out
of 108 players were picked up by teams.
The seven most expensive players
at the auction:
See Page 4
Cost in $
IPL team
Glenn
Maxwell
(Australia)
QUICK EDIT
B Y A MI S HAH &
V YAS M OHAN
·························
inally, the
recommendations of
the justice J.S. Verma
panel on sexual crimes
have now legal force. On
Sunday, President Pranab
Mukherjee signed an
ordinance amending the
criminal law dealing with
such matters.
What the government
and the judiciary need to
do is to ensure that
frivolous procedural
requirements are not used
to derail cases involving
sexual crimes. No number
of “fast-track” courts can
check this menace if legal
roadblocks are used to the
detriment of the victims.
The government’s
response, especially the
ordinance, has come in
for criticism from
women’s groups. The
charge being that not all
recommendations of the
Verma panel have been
accepted. Not all is lost
for, after all, the
ordinance has to be
brought before
Parliament sooner or
later. Surely, changes,
amendments and
enhancements to the law
can be carried out at that
stage.
H
Mumbai Indians
Ajantha Mendis
Kane Richardson
Thisara Perera
(Sri Lanka)
(Australia)
(Sri Lanka)
$700,000
$675,000
Pune Warriors
Pune Warriors
Sunrisers Hyderabad
Abhishek Nayar
Sachithra Senanayake
Chris Morris
(India)
(Sri Lanka)
(South Africa)
$675,000
$625,000
$625,000
Pune Warriors
Kolkata Knight Riders
Chennai Super Kings
Source: Mint research
AHMED RAZA KHAN/MINT
OIL $116.76 ®
Q3 numbers
indicate earnings
may have
bottomed out
MUMBAI
$1,000,000
$725,000
GOLD 30,235 ®
as the downward trend in
corporate earning ended?
Some fund managers think so,
and an analysis of the results
of 958 companies seems to
suggest they may be right.
Indian firms reported their
fastest quarterly profit growth
in almost three years in the
December quarter, prompting
investors to forecast that earnings have bottomed out and
are likely to rebound in the
three months to 31 March.
Of the 958 companies that
have reported earnings for the
quarter ended 31 December
so far, net profit has gained
56.9% from a year earlier, the
most in 11 quarters, as companies benefited from lower input costs. Net sales for these
companies rose 14.8% in the
same period.
“Results have been fairly satisfactory and we expect an upward revision in earnings going forward,” said Gopal
Agrawal, chief investment officer of Mirae Asset Global Investments (India) Pvt. Ltd.
“Going by the trend, one can
say the earnings cycle has bottomed out.”
enabled the government to reallocate
funds to capital expenditure.
Are there any question marks here?
The budget’s disinvestment plan could
merit some discussion. The global environment will be uncertain in 2023. One
is not sure of how foreign investors
would behave and whether Indian stock
markets would continue to show buoyancy. Under these conditions, expecting to raise ₹61,000 crore from sell-offs
can be a challenge. The government has
been optimistic of doing ₹60,000 crore
in 2022-23 too, which means that there
will have to be some big-ticket sales
over the two months till March-end for
around ₹29,000 crore.
The other question is on tax buoyancy. It has been assumed that taxes will
grow by 12% compared to around 15.9%
this year. Normally, this growth rate
traces that of GDP. There was unusual
buoyancy in tax collections in 2022-23
due to high inflation and pent-up
demand. But can this be repeated, given
that GDP growth will be 10.5% and
pent-up demand could fade?
Therefore, the revenue side may offer
some cause for apprehension. But the
budget balances things and makes
money work better by reallocating
expenditure in favour of capital expenditure so that growth processes can be
furthered. Budgets always work on
assumptions of growth which can never
be predicted in advance. Also, there are
always possibilities of things going offtrack, like a war or any other disturbance, which would require the budget
to be revisited. Here the supplementary
demand for grants plays a role where
additional allocations can be made.
The budget for 2023-24 scores well
on almost all these points, which is
commendable. More so because there
were expectations that in a pre-election
year, there could be a proclivity to get a
bit loose on expenditure in pursuit of
‘populism’. Instead, the government
has steered past this cliché, stuck to a
path of prudence and also turned
growth-oriented.
A tougher
law, finally
F
TURN TO PAGE 3®
Cattle cloning:
Part science,
part art. No
sex please
B Y J ACOB P . K OSHY
jacob.k@livemint.com
·························
KARNAL, HARYANA
S
ex is an expensive waste of
time at the National Dairy
Research Institute. None in the
herds of virile buffalo and
well-hoofed cows, several of
whom have close genetic links
with prime Dutch and Swiss
cattle, have been born of socalled natural service, as the
sexual act is quaintly described by stoic scientists.
“Natural service is too costly
and quite unsuitable for our
purposes,” said senior scientist
Prabhat Palta, “which is ultimately to improve the quality
of our cattle”.
Since 1990, when researchers at the institute produced
Pratham, the first buffalo to be
born anywhere in the world
through in-vitro fertilization,
researchers have slowly progressed to producing, in 2009,
Samrupa, the first cloned Indian
animal,
followed
by
Shresth, a cloned bull, and
cloned cows such as Garima in
2010.
The second version of Garima successfully gave birth to a
The first budget of
Amrit Kaal will build a
strong foundation for
building a developed India.
This budget will fulfil
dreams of aspirational
society including poor
people, middle-class
people, farmers.
N A R E N D R A MOD I
TURN TO PAGE 2®
MY VIEW | MUSING MACRO
It’s more pragmatic than populist in the final analysis
AJIT RANADE
T
is a Pune-based economist
here were several factors weighing on
expectations from the Union Budget
for 2023-24. The big one was that this
was going to be the last opportunity to
present a full budget plan before the
national elections of 2024. So, was it going to
be full-throttle populist? Or is 15 months
before elections too early to spend political
and fiscal capital? Thankfully, the budget is
far from populist. The fiscal deficit, targeted
below 6% of GDP, is quite realistic. Although
it could have been stretched some more,
since the fiscal situation is dire. The government debt to GDP ratio is above 85%, and
gross borrowings of ₹15 trillion (i.e. more
than 40% of tax revenues) will take that
mountain even higher. This will keep interest rates higher, the pain of which is felt most
by the biggest borrower in the system, which
is the central government. So fiscal consolidation is an imperative and a perennial
missed opportunity. Another thing to
remember in a year when inflation is still
raging is that you can’t use excess spending
to fight inflation. It acts counter to what the
monetary policy folks are trying to do. Given
all these constraints, the budget has done a
reasonably good balancing act.
The second macro backdrop to this budget
is the global recessionary situation. Most
developed economies will have zero or negative growth this year. How then to respond
and make India more resilient? Here too, the
budget has provided incentives to exports,
incentivized capital inflows and reduced tariffs somewhat to correct inverted duty anomalies. The emphasis is on strengthening
domestic consumption spending. Investment spending too could be crowded in by
higher public spending. As such, capacity
utilization numbers look good enough for an
upswing in private capex to begin.
The third backdrop is India’s widening
income and wealth inequality. We don’t
need an Oxfam report to confirm this continuing trend. The K-shaped recovery is in
its third year, with consumer expenditure at
the top-end booming, while lower income
deciles face stagnation. Mercedes clocked
41% growth, but two-wheeler sales have
been declining for three years in a row, although this year saw some rebound. Airline
travel is booming, and so are five-star hotel
services. But that cannot hide our rising
unemployment and the pain of inflation.
Inequality is like pollution. It is inevitable in
a market-oriented capitalist economy. But
beyond some reasonable level, it becomes
detrimental to economic growth, as it deters
investors and adds to social instability. So
there was an imperative for the budget to
enhance social security.
On this point, the budget
has disappointed. The allocation for the national
rural employment guarantee (a proxy for unemployment insurance) has been
drastically reduced. So has
the allocation for national
health and education missions. The latter is perhaps
because these two are
squarely in the states’
domain and more action
could be expected in state
budgets. The Union government’s strategy seems focused on spending on public goods that indirectly benefit
the poor, rather than give outsight doles. Of
course, the finance minister reminded us
about impressive achievements in financial
inclusion via no-frill bank accounts, subsidized cooking-gas cylinders, toilets and such
like. Even the dramatic expansion in the
Centre’s low-cost housing scheme is in that
direction, and it has the additional advantage of being asset-creating public expenditure. In that spirit, the increase in capital
outlay, especially on roads and railways, is
quite welcome. It constitutes one-fourth of
the budget, the highest
share so far. The budget has
also substantially increased
credit flow to agriculture,
which too will lead to more
capital formation.
For the income taxpayer,
there was good news in an
increase in the threshold
below which there is zero
tax liability. Since high
inflation in the past three
years has eaten away real
purchasing power, it was
expected that tax slabs,
which are nominal, would
be revised. But raising the minimum level to
₹7 lakh, which is 350% of the per capita
income of the country (as mentioned by the
FM herself) makes India an outlier. None of
the G20 countries offers income taxpayers
such a generous exemption. The Economic
Survey a few years ago had pointed out that
It’s reasonably
successful in the
near impossible
task of squaring
the circle to
meet divergent
expectations
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India has only seven taxpayers for every 100
voters. This is a sharp contrast to developed
nations, especially Scandinavian countries,
where the ratio is nearly even. So widening
the tax base is an absolute imperative, something that every budget seems to ignore.
Indeed, the share of indirect taxes in total
tax collections is placed at 55% now, and has
been rising. This is regressive and cannot be
justified by indirect taxes like GST being
easy to administer and collect. The Centre’s
share of GST is now at nearly ₹10 trillion, in
addition to still-high excise duties on petrol
and diesel.
All of this is extra and disproportionately
burdensome for the poor. The budget is not
populist, but is certainly expansionist. In
that respect, it will create inflationary pressures, which again hurt the poor more. If this
budget’s nominal growth target of 10.5% is
achieved but inflation continues to rage at
6%, then real growth will be too tepid to
make a dent on unemployment and income
growth of the lower deciles. It is here that the
budget could have done more.
But ultimately the budget is an impossibly
difficult balancing act, which tries to please
all and often contradictory constituencies,
sort of trying to square a circle. In that, it has
been reasonably successful.
ThursDay, 2 February 2023
New DelhI
LIVEMINT.COM
MY VIEW | ThE LAsT WORD
23
GUEST VIEW
The Union budget for 2023-24 is
rather well placed on fiscal math
India’s latest budget succeeds
in hitting all the right notes
It does well on promoting growth without rocking the macro boat
Total public debt will at most reach 86.9% of GDP by 31 March after three high-spend years and onshoring of off-budget items
PTI
SONAL VARMA
is chief economist, India and Asia ex-Japan,
at Nomura
INDIRA RAJARAMAN
is an economist
T
A
ll credit goes to Finance Minister
Nirmala Sitharaman and her team
for extraordinary fiscal performance
over three years of relentless pressure from the pandemic followed by
the Ukraine war. During these three
years, past off-budget borrowings were on-shored
at the Centre, and two-thirds of the population
saw their entitlement under the Food Security Act
doubled in quantum, at zero incremental cost over
28 months in all. The doubling stands withdrawn
as of January 2023, but the original quantum will
be zero priced until December 2023.
During the current fiscal year closing on 31
March 2023, the Central fiscal deficit has held at
6.4% as budgeted, despite additional expenditure
of ₹2 trillion on food and fertilizer subsidies. It
helped that (nominal) GDP for the current year—at
₹273.08 trillion by the first advance estimate
(FAE)—was higher by ₹15 trillion than the ₹258
million projected in Union Budget 2022.
To get the consolidated government deficit
(Centre plus states) in 2022-23, we have to add on
the states’ aggregate fiscal deficit, on which there
is some uncertainty. States had a statutory fiscal
deficit cap of 3.5% of GDP in aggregate, with an
extra 0.5% conditional on power sector reforms
so onerous that only 60% of them at most were
likely to achieve it. Later in the year, states were
allowed additional borrowing to pay their dues to
pension funds for employees on the New Pension
Scheme. Altogether these make for an outer limit
on states’ aggregate fiscal deficit at 4% of GDP. A
long-term zero interest loan from the Centre to
states of ₹1 trillion was additional, but will get netted out when aggregated with the Centre’s numbers. But states faced two negative whammies.
The Central ministry of finance ordered their offbudget borrowings in past years (estimated at ₹6
trillion in aggregate) to be brought on-budget in a
staggered manner between this and the next
three fiscal years. States’ market borrowing
would have been reduced to accommodate this
on-shoring within their permissible fiscal deficit,
but they seem to have been cautious about utilizing even such market borrowing entitlement as
they had. This is perplexing especially in view of a
second whammy, of having been commanded to
pay off current dues and past arrears to power
sector utilities (this is independent of the power
sector reforms needed to qualify for the additional borrowing entitlement).
For now, the outer limit on the aggregate fiscal
deficit across the Centre and states is 10.4 % for
2022-23, which means the year closes (after adjusting the 2021-22 closing debt to the current year’s
GDP) with a public debt level at 86.9 % of GDP at
most. This is with external debt valued at current
exchange rates, which is the right way to go; there
is a parallel lower figure with external debt valued
at historical exchange rates, which the International Monetary Fund (IMF) seems to be using. The
percentages for 2022-23 are subject to change
when GDP is revised at end-February and endMay, when the third and fourth quarter GDP data
for the current fiscal year come in.
For the forthcoming 2023-24, the Centre’s fiscal
deficit is budgeted at 5.9% of GDP. States will have
a statutory cap of 3% on their deficit with an extra
0.5% conditional on power sector reforms, yielding an outer fiscal deficit limit of 9.4% across the
Centre and states.
The Union budget has projected nominal GDP
growth of 10.5 %. But the Economic Survey projects
real growth for next year at 6.5 %, implying a budgetary expectation of less than 4% inflation. More
realistically, nominal growth next year will be
closer to 12 %. In that case, public debt will hold at
the present year’s closing level, at around 87%,
assuming that the real growth expectations of the
Economic Survey are realised.
Growth, growth, growth. That is the need of the
hour. The biggest growth booster, of course, is the
eye-popping budgetary outlay of ₹10 trillion on
infrastructure expenditure. Within this, the
provision for 50-year interest-free bullet loans to
states for capital expenditure has been raised to
₹1.3 trillion next year. However, revised estimates
show that the total budgeted ₹1 trillion in the current year will be utilized only to the extent of
₹76,000 crore. The reason may well be that only
80% of the total was freely disbursed in accordance
with states’ tax shares as set by the Fifteenth
Finance Commission. This corresponds closely to
the revised estimate of offtake under the scheme.
The remainder of the budgetary provision was
splintered into small pieces with usage restrictions
accessible on a first-come first-served basis.
The same splintering afflicts the ₹1.3 trillion
budgeted for the next year as well. Conditionalities
and usage restrictions delay fund flow and impose
onerous reporting and inspection burdens on
both the disbursing Central department and the
reporting state government department. The
initial punch of the scheme, begun in the pandemic year 2020-21 to increase states’ appetite for
capital expenditure, and in particular for the completion of incomplete projects, has been lost, I fear.
But the freely disbursable component is welcome,
and will hopefully do its bit for spatially dispersed
growth across the country.
he budget for 2023-24 was presented
against a challenging macro-political
backdrop. Unlike the previous two
years, the boost to revenues from elevated
nominal GDP growth is unlikely to be
repeated; dark clouds owing to a global
slowdown mean India’s real growth is likely
to slow; and general elections in 2024
meant political compulsions.
In the event, the budget scores high on
multiple parameters: it has steered clear of
pre-election populism, played the right
counter-cyclical role and continued fiscal
consolidation, all the while staying the
course on medium-term reforms.
With elections coming up, the overall
focus in the budget towards the common
man, the farmer and the middle-income
class is not surprising, but there is no outright populism.
The changes in personal income tax rates
to incentivize more households to shift to
the new tax regime is a sound idea, although
we doubt this will boost household consumption. Consumption is driven by many
factors, but job and income certainty are
paramount. A cut in taxes ends up being
saved when uncertainty is high, something
we expect in the coming year.
For agriculture, the budget has presented
excellent ideas to boost productivity by
using digital public infrastructure and setting up an accelerator fund for startups,
instead of doling out freebies.
A big surprise has been the substantial
ramping up of capital expenditure to 3.3% of
GDP in 2023-24, from an already elevated
2.7% in 2022-23, and a step up from an average of 1.7% during the four years through
March 2020. This suggests the government
does not believe there is a durable pickup in
private capital expenditure yet.
We agree with this assessment. Yes, corporate and bank balance sheets are
stronger, but weak global demand will
lower capacity utilization rates and delay
any pickup in private investments until
there is more certainty. Hence, we believe
higher public capital expenditure is
unlikely to crowd out private investment, as
some fear, and will instead play a countercyclical role and build the infrastructure
India needs. The creation of jobs is tied
closely to the investment cycle picking up.
The broader budgetary push for infrastructure, agriculture, manufacturing, supporting MSMEs and tax rationalization are
consistent with the direction chosen over
the last several budgets. Importantly, the
budget also aims for India to achieve green
growth by reducing dependence on fossil
fuel imports, with more investments in an
Some budget assumptions could fall short
in case economic growth slows
PTI
energy transition and through the country’s
green credit programme.
In the near-term, the assumptions underlying the 5.9%-of-GDP fiscal deficit target
for 2023-24 will get challenged as the year
progresses. The budget has assumed nominal GDP growth of 10.5% in 2023-24,
whereas we see real GDP growth at around
5.1% and nominal GDP growth at around
8.5-9.0%. The reason is simple. Industrial
production and export growth are already
on a downtrend, and as the US and European economies slide into recession this
year, exports will slump further. The share
of India’s exports to the US and Europe
combined at 35.5% of total exports is much
higher than to China (5.8%), which limits
direct spillovers from China’s reopening.
Weak exports will likely mean weak private investment—hence a public capex
push is a good idea—and the impact of policy rate hikes on discretionary demand is yet
to be fully felt. Tax buoyancy is closely
linked to nominal growth and the phase of
business cycle. So, if demand moderates, as
we expect, then both nominal GDP growth
and tax revenue growth will undershoot.
The assumption on revenue expenditure
growth of only 1.2% also appears low, considering the bulk of this spending is sticky.
The available cushion from lower food and
fertilizer subsidies has already been incorporated in the budget estimates, which
means the risk of total expenditure ending
up higher than currently assumed. Other
assumptions on disinvestment and non-tax
revenues appear realistic, but the risks are
skewed towards a higher fiscal deficit.
The government can still meet its 5.9%
fiscal deficit target by cutting back on capital expenditure. But if growth slows, there
could be a stark trade-off between growth
and fiscal consolidation. We see these challenges in 2023-24’s second half, but managing market borrowing should not be hard.
Higher deposit rates and slower nominal
growth would mean that the incremental
credit-deposit ratio will start to moderate.
India’s monetary policy hiking cycle is also
in its final leg, and a more favourable interest rate outlook should increase demand for
bonds from banks and other investors.
Overall, it’s a growth-oriented budget
aimed at ensuring India’s economic resilience over the long-term—all without
rocking the macro boat.
MY VIEW | CAfE ECONOMICs
Sitharaman has managed to pull off a balancing act
NIRANJAN RAJADHYAKSHA
N
is CEO and senior fellow at
Artha India Research Advisors,
and a member of the academic
advisory board of the Meghnad
Desai Academy of Economics.
irmala Sitharaman has presented the
last full budget of the second Narendra Modi government. The finance
minister had a tricky balancing act between
stabilizing public finances and supporting
India’s economic recovery, with risks from
tilting too far on either side.
Two underlying themes deserve attention. First, there is continuity. The budget
strategy continues to focus on gradually
bringing down the fiscal deficit while pivoting towards more capital spending. Second,
the political economy of the budget is
directed towards middle India, especially
small enterprises as well as the lower deciles
of the salaried class that have had a relatively
bad run in recent years.
The finance minister has met the fiscal
deficit target set last year, despite a large
increase in the subsidy bill. This was possible
because net taxes to the Union government
this financial year will be around ₹1.52 trillion more than what was estimated in February 2022. The ability to stick to the deficit
target adds to the growing credibility of
Indian fiscal policy since 2019, perhaps one
reason why the bond market held its ground
despite the record borrowing needed to
fund the fiscal gap. However, the Reserve
Bank of India may have to occasionally step
in over the next financial year to buy government bonds as part of its open market operations, thus easing liquidity when it is trying
to tighten monetary policy.
I had argued in an earlier column that the
time is not ripe for a sharp fiscal correction,
given an anticipated domestic slowdown in
the year ahead as well as the dark clouds over
the global economy. The government will
have to support aggregate demand as consumer demand weakens, business spending
on new equipment is still not robust, and
export markets are fragile. The decision to
cut the fiscal deficit by a modest half percentage point of gross domestic product
(GDP) is thus a reasonable one.
Unbundling the fiscal correction provides
some useful insights. The Modi government
has decided to increase its own capital
spending by ₹2.82 trillion. Tax cuts aimed at
the middle class will also mean a revenue
loss of around ₹35,000 crore. These will
largely be covered by a ₹2.4 trillion reduction in spending on subsidies. The recent
restructuring of the food subsidy as well as
an anticipated fall in fertilizer subsidy
because of lower global crude oil prices—
which together add up to budgeted savings
of 0.8% of GDP in 2023-24—will hopefully
create adequate financial space for the government to reduce its fiscal deficit by 0.5
percentage points while
increasing spending in
select areas.
The eventual goal of fiscal policy over the rest of
the decade should be to
stabilize the ratio of public
debt to GDP, which had
shot up to record levels
because of the pandemic
shock. The burden is evident. Interest payments on
the stock of public debt
issued by the Union government now soak up
nearly half its net tax collections, leaving less money for public
goods, defence, infrastructure and welfare
programmes.
As nominal GDP normalizes, and perhaps
even slips back into single digits, the government deficit after taking interest payments
out of the picture—aka the primary deficit—
will have to play a more important role to
stabilize public finances. The primary deficit
target for 2023-24 of 2.3% of GDP, down
from 3% of GDP in 2022-23, is thus a step in
the right direction. In plain English, the government will have to remain more focused
on setting its financial house in order as the
opportunity for inflating
away the burden of past
debt narrows.
The new budget has
been presented in the last
stretch leading up to general elections that are
scheduled in the first half of
2024. The Modi government has held its nerve by
not going on a directionless
spending spree, though the
bond market will be on
alert in case there are any
pre-election
fiscal
announcements outside
the budget.
The clear attempt to support micro, small
and medium enterprises (MSMEs) is interesting, through credit guarantees, relief
from security deposits forfeited for failing to
execute contracts during the pandemic and
an overall attempt to ease their regulatory
The budget
does well to
stabilize public
finances
without letting
the economic
recovery suffer
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burden. Small enterprises have been particularly hurt by successive shocks such as
demonetization, the messy introduction of
the goods and services tax (GST) and then
the pandemic.
The other constituency that has been
given relief is the salaried class, which has
been hit by a double whammy of weak wage
growth in the midst of a profit-led economic
recovery and high inflation. The nudge to
citizens to opt for lower tax rates without any
exemptions will hopefully work this time
around. The amount of revenue forgone is
small, however. So, it will not do much to
move the fiscal needle. The broader goal of
Indian tax policy should be to collect more
direct taxes while bringing down rates of
indirect taxation, especially GST. Thankfully, there was no move to increase import
tariffs to deal with the wide trade deficit, an
implicit recognition of the fact that high
import taxes are a barrier to higher exports
in a world of global supply chains.
The past three years saw two exogenous
shocks—the pandemic followed by the war
in Ukraine. The Indian fiscal response has
been better calibrated than in many other
major economies, and the government
seems committed to staying on the same
path. That is welcome.
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ThursDay, 2 February 2023
New Delhi
LIVEMINT.COM
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GOVERNMENT OF INDIA
PRESENTS
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MSME
CONCLAVE 2023
Jointly organised by MSME-DFO
8th Feb 2023 | Delhi
MSME is the cornerstone of the Indian economy and an
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Going forward, GoI reform measures are fast-tracking the
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25
26
ThursDay, 2 February 2023
New Delhi
Adani dollar
bonds could
face further
pressure
LIVEMINT.COM
Govt takes ‘pragmatic’ view
on disinvestment targets
Gopika Gopakumar
gopika.g@htlive.com
A
dani group’s overseas
bonds could face a bigger rout as rating agencies examine the companies’
debt risk and banks take a relook at providing leverage
against these bonds.
The yields on Adani Green
Energy’s dollar bonds maturing in 2024 for instance spiked
to 24% on Wednesday from
7.3% on 24 January, since the
US-based
Hindenburg
Research alleged that the
group used a web of firms in
tax havens to overstate revenue and stock prices.
Credit Suisse is the first
bank to pull the trigger as it
stopped accepting bonds of
Adani group as collateral
against the leverage to its private banking clients, according to a Bloomberg report. The
Swiss lender’s private banking
arm assigned a zero-lending
value for notes sold by Adani
Ports and Special Economic
Zone, Adani Green Energy
and Adani Electricity Mumbai
Ltd.,said the report.
Fund managers believe that
this move may cause other
banks to follow suit, reducing
the leverage against these
bonds. In contrast, Credit
Suisse’s in-house brokerage
upgraded Adani Ports & SEZ to
outperform from neutral,
based on attractive valuation.
“When there is a leverage
reduction, there is a margin
call immediately and those
investors will have to top-up
the margin and make up for
the difference. or they will
have to sell the bonds. When
one large house like Credit
Suisse reduces the leverage on
these bonds, there will be
some ripple effect and several
other banks could reduce the
leverage from 70-80% to
30-40%,” said Bala Swaminathan, CEO and founder,
SAIML.
“The market is pricing the
Adani bonds at 30% YTM,
that’s the risk premium they
have built in,” he said.
The govt has shelved disinvestment of BPCL, which was expected to bring in ₹50k-60k crore
Gulveen Aulakh
gulveen.aulakh@livemint.com
T
he government has set a
lower disinvestment target
for FY24 at ₹51,000 crore as
compared with the previous
financial year, while also
lowering the revised estimates from
FY23 to ₹50,000 crore from the earlier target of ₹65,000 crore, according
to the budget documents issued on
Wednesday.
“Disinvestment is based on market
conditions and other factors, therefore a practical and prudent target has
been kept,” Tuhin Kanta Pandey, secretary, department of investment and
public asset management (DIPAM)
said during the finance minister’s
press conference on Wednesday, after
the union budget presentation.
He had told Mint in a recent interview that disinvestment should be
looked at from the point of view of
reforms and employment creation
instead of only capital generation.
“It should be looked at from the
point of view of reforms. If you have to
keep your fiscal deficit in control and
still be able to put capex and social sec- The government has outlined plans to sell its shares in IDBI Bank, Shipping Corporation of India, BEML and Container
MINT
tor expenditure, you’ve got to be rais- Corporation of India through strategic sales where it will also transfer management control.
ing money apart from revenue. So,
non-tax revenue is important, and had collected ₹31,106 crore as of 1 Feb- among a slew of other stake sales. The advanced stages, and the proceeds
then disinvestment is miscellaneous ruary, the majority of which had come government aims to invite financial may come in this fiscal year itself.
capital receipts. But generating from the public listing of Life Insur- bids for the stake sale in IDBI Bank, However, the overall proceeds are
resources is a small part of the story; ance Corporation of India which sold which will spill over to FY24 even as it unlikely to meet the target set for
proceeds with the disinvestment fol- FY23.
it’s how productivity enhancement 3.5% stake for ₹20,516 crore.
The government has shelved
takes place in the economy,” he
the strategic disinvestment of
said last month.
LOWERING EXPECTATIONS
Bharat Petroleum Corp. Ltd,
Mint reported on 10 November
DISINVESTMENT of which was expected to bring in
THE govt seeks to
PLANS are to go for
that the government plans to go GOVT has achieved
Pawan Hans is also
sell its shares in IDBI
a realistic target in
of its
₹50,000-60,000 crore. The disfor a realistic disinvestment target 48%
hanging fire after
Bank, SCI, BEML and
FY24, lower than
disinvestment target
investment of Central Electronics
in FY24, lower than FY23, since it of ₹65,000 crore in
litigation against
Container
FY23, following
Ltd has also been scrapped, Mint
had missed targets set for prior FY23 as of 18 Jan
winning bidder
Corporation of India
missed targets
reported earlier.
financial years.
The disinvestment of Pawan
The most recent was the ₹1.75
The government has achieved 48% lowing the demerger of non-core Hans is also hanging fire following lititrillion target for FY22 which was
gation against the winning bidder.
revised downwards to ₹78,000 crore of its disinvestment target of ₹65,000 assets of Shipping Corp. and BEML.
According to the budget docuIn addition, the government will
in the revised estimates in the union crore of FY23 as of 18 January, the economic survey tabled in Parliament on seek expressions of interest for Con- ments, capital receipts from monetibudget last year.
cor following engagements with zation and other transactions outside
The actual proceeds for FY22 were Tuesday showed.
The government has outlined plans investors in recent road shows. But of disinvestment have been pegged at
a dismal ₹13,627 crore, primarily
owing to the disruptions caused by to sell its shares in IDBI Bank, Ship- this, too, may take a more concrete ₹10,000 crore for FY24 and the
revised target for FY23 has been
ping Corporation of India, BEML and shape only in FY24.
covid-19 pandemic.
Disinvestments through strategic increased to ₹10,000 crore as well,
According to details from the Container Corporation of India
department of investment and public through strategic sales where it will sales of HLL Lifecare Ltd and Projects compared to actual proceeds of ₹1,011
asset management, the government also transfer management control, and Development India Ltd are in crore in FY22.
Other banks continue to lend against Adani debt.
MINT
Credit Suisse wealth
unit halts margin
loans on Adani debt
Bloomberg
banks kept the level
unchanged as of now, with one
of those offering lending of
redit Suisse Group AG between 75% and 80% for
has stopped accepting Adani Ports and Special Ecobonds of Gautam nomic Zone dollar bonds,
Adani’s group of companies as according to the people. A
collateral for margin loans to its potential trigger for lowering
private banking clients, a sign could be any rating downthat scrutiny of the Indian grade, one of the people said.
tycoon’s finances is growing Bank of Singapore—the priafter allegations of fraud by vate banking unit of Overseashort seller Hindenburg Chinese Banking Corp., SingResearch.
apore’s second-largest lenThe Swiss lender’s private der—is continuing to offer
banking arm has assigned a margin loans for up to 70% of
zero lending value for notes the value of Adani dollar
sold by Adani
bonds, some of
Ports and Special
the people said.
When a private
Economic Zone, bank cuts lending
“In determinAdani Green
ing the LTV that is
value to zero,
Energy and Adani
given to the client,
clients have to
Electricity Mumtop up with cash we take into conbai Ltd, according
sideration various
or another form parameters such
to people familiar
of collateral
with the matter,
as the rating of the
who asked not to
bond, duration
be identified disand concentracussing private information. It tion as well as the prevailing
had previously offered a lend- market conditions (price,
ing value of about 75% for the liquidity, volatility),” said AlexAdani Ports notes, one of the andre Lotfi, Bank of Singapeople said.
pore’s chief risk officer.
When a private bank cuts
The corporate empire of
lending value to zero, clients Adani, Asia’s richest man, was
typically have to top up with thrown into turmoil after Hincash or another form of collat- denburg Research alleged in a
eral and if they fail to do so, report that the group used a
their securities can be liqui- web of firms in tax havens to
dated.
overstate revenue and stock
A Credit Suisse spokes- prices. Bonds of the group
woman didn’t immediately plumbed record lows after the
comment. A representative at allegations, though they’ve
Adani Group said it has no rela- since recouped some losses
tionship with Credit Suisse’s after Adani Enterprises Ltd.
private bank.
completed a $2.5 billion share
Other banks continue to sale with support from existing
lend against Adani debt. At shareholders and institutional
least two European private investors.
feedback@livemint.com
C
In surprise U-turn, FM strikes balance between prioritizing growth, fiscal prudence
Adani Enterprises
withdraws FPO
FROM PAGE 1
FROM PAGE 1
Stocks such as Adani Ports,
which hit a 52-week low of
₹459.50, Adani Enterprises,
Ambuja Cements, ACC and
Adani Total Gas plumbed,
erasing a combined ₹1.84 trillion worth of investor wealth
in group stocks on Wednesday. The damage over the past
five days to the group’s market
cap has been to the tune of
₹7.56 trillion, and after
Wednesday’s rout cost Adani Group founder
founder Gautam Adani ceding Gautam Adani.
AP
the richest Indian title to RIL
chairman Mukesh Ambani.
Ports, Adani Enterprises, ACC
Adani slipped to the world’s and Ambuja Cements are con15th richest person on the For- cerned about the fallout from
bes Billionaire list, having seen the Hindenburg report, which
his net worth erode by $14 bil- has resulted in their rushing
lion to $74.7 billion. Adani for the exit all at once,” said
Ports plunged by 19.2% to one of the fund managers cited
₹495.15, Ambuja Cements fell above. Unlike stocks traded
by 16.7% to ₹334.10, ACC only on the cash market, those
declined by 6.19% to ₹1,846.45 traded on both cash and derivand Adani Total Gas by 10% to atives segments—Adani Ports,
₹1,897.40.
Adani EnterAdani Enter- The damage over prises, ACC and
prises was the top
A m b u j a
the past five
traded stock on
Cements—don’t
days to the
NSE at ₹3,436
have any price
group’s market
crore, followed
circuits, which
cap has been to
by
Ambuja
means their prithe tune of
Cements and
ces can swing
₹7.56 trillion
Adani Ports being
more wildly.
the third- and
The promoter
fourth mostpledge in Adani
traded stocks by value at Ports, for instance, stands at
₹2,775 crore and ₹2,536 crore, 19.25% after a further 3.25%
respectively.
was pledged on 27 January and
The rout in the frontline 31 January.
Adani stocks had a cascading
The increase in shorting
effect on PSU bank stocks like increased to the extent that
State Bank of India, Bank of Ambuja Cements F&O conBaroda and Punjab National tracts remain banned for tradBank, which slipped 5-8%.
ing in the segment as it crossed
The outlook for the Group an exchange threshold in
stocks remained gloomy even terms of the number of outafter Wednesday’s rout.
standing shares being held by
“The investors in Adani clients.
to be more towards consumption-driven and less towards
savings-driven kind of policy,”
Bhanumurthy said, adding
that it could put some pressure
on the banking sector.
Growth projections for
India have been cut both by
Indian and global agencies.
According to the IMF’s
World Economic Outlook
update, growth in India is set
to slow from 6.8% in 2022 to
6.1% in 2023 before rebounding to 6.8% in 2024.
The World Bank has estimated that India’s economic
growth will slow to 6.6% in the
financial year (April to March)
2023-24 from an expected
6.9% in the current fiscal.
Compared with four priority areas identified in the budget last year, the finance minister outlined seven for
2023-24, calling those the
“Saptrishi”, which include
inclusive development, reaching the last mile, infrastructure
and investment, financial sector, youth power, green
growth, and unleashing the
economy.
To promote self-reliance
and encourage domestic manufacturing, Sitharaman corrected the inverted duty structure on major items by reducing import duties on raw
materials.
It includes duty reduction
on camera lenses for mobile
phones and an extension of
concessional duty on lithiumion cells for batteries for
another year.
Sitharaman also extended
the customs duty exemption
on importing capital goods
and machinery required to
manufacture lithium-ion cells
for batteries used in electric
vehicles.
The budget introduced
steps to cut compliances and
promote ease of doing busi-
Finance minister Nirmala Sitharaman and other members of the finance ministry leave the ministry
building to present the budget in Parliament in New Delhi on Wednesday.
BLOOMBERG
ness to support small businesses.
It included an additional
infusion of ₹9,000 crore in the
Credit Guarantee scheme
from 1 April 2023, with a
reduction in the cost of the
guarantee by 1%. Providing
relief to MSMEs, Sitharaman
announced that in cases of failure by them to execute contracts during the covid period,
95% of the forfeited amount
relating to bid or performance
security would be returned to
them by government and government undertakings.
In what may increase the
disposable income of individuals to support consumption,
the finance minister increased
the slab, up to which no
income tax is payable to ₹7
lakh from ₹5 lakh a year from
2023-24 under the new
income tax regime, which will
be the default now. The new
income tax regime introduced
in 2020-21 does not allow for
any deductions related to
insurance and investments.
She also hiked the minimum
threshold under the old
income tax regime to ₹3 lakh tively to the budget, with
from ₹2.5 lakh. In a relief to Sensex ending 158 points
high earners, the budget also higher on Wednesday, even as
proposed to cut the highest insurance stocks ended lower
surcharge rate of 37% to 25% in with the finance minister prothe new tax regime, which posing to limit tax exemptions
covers those earning ₹5 crore for insurance proceeds in the
and above.
budget.
“After a long time, personal
While the budget aspires to
income tax has been given a ease systems further and
improve complisubstantial
ance while pushchange which
Sitharaman
ing investments
will benefit the
corrected the
and raising conmiddle class. The
inverted duty
new tax regime is structure on major sumption, an S&P
“attractive as it
items by reducing Global Purchasing Manager’s
gives a greater
import duties on Index for manurebate and eases
raw materials
facturing
compliance. It
released
on
also provides for
Wednesday
simplified and
smaller slabs,” the finance showed moderation in numminister said during a post- bers to a three-month low in
January to 55.4 from 57.8 in
budget press conference.
She added that there was a December as output and sales
need to make the new tax growth slackened.
regime attractive to make
The 33% increase in capital
more taxpayers shift to it but expenditure outlay in FY24 to
added that the older tax calcu- ₹10 trillion captured the govlation system based on exemp- ernment’s emphasis on
tions would continue for those growth and job creation, as
private spending remained
who still prefer it.
The markets reacted posi- lacklustre. The government’s
capital expenditure acts as a
growth multiplier. The budget
also proposed ₹1.3 trillion of
50-year interest-free infrastructure loans to the states
from ₹1 trillion allocated last
year. The capex allocation at
3.3% of GDP is almost three
times the outlay in 2019-20.
“Investments in infrastructure and productive capacity
have a large multiplier impact
on growth and employment.
After the subdued period of
the pandemic, private investments are growing again. The
budget takes the lead once
again to ramp up the virtuous
cycle of investment and job
creation… This substantial
increase in recent years is central to the government’s efforts
to enhance growth potential
and job creation, crowd-in private investments, and provide
a cushion against global headwinds,” said Sitharaman in the
budget speech.
The budget extended the
highest ever outlay for the
Railways, at ₹2.40 trillion,
about nine times the outlay
made in 2013-14. The allocation under PM Awas Yojana
was also increased by 66% to
over ₹79,000 crore. The
Union budget also announced
50 new airports and helipads
while focusing on infrastructure development with higher
allocations for key sectors.
“Fiscal consolidation has
not been kept on the back
burner. We have attended to it.
We are respecting the glide
path we gave to ourselves two
budgets ago,” Sitharaman said.
Global rating agencies
lauded the balance in the budget. Christian de Guzman, senior vice-president of Moody’s
Investors Service, said that the
narrower deficit forecast in the
Union budget underscores the
government’s commitment to
longer-term fiscal sustainability and supports the economy
amid high inflation and a chal-
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lenging global environment.
“Although changes to the tax
regime will forego some tax
revenue, the budget predicts
largely buoyant revenue on
the back of strong nominal
GDP growth and gains from
the tax administration. This
will help to mitigate pressures
on debt affordability from
increasing debt servicing costs
associated with rising interest
rates,” Guzman said.
The budget also saw a
renewed push to digitization,
including the setting up of a
National Financial Registry to
enhance data availability for
robust credit assessment and
the rolling out of a National
Data Governance Policy to
encourage R&D by using the
Aadhaar and Digi Locker platforms to simplify individual
address reconciliation and
verification across all regulators.
The agriculture sector,
which is estimated to grow by
3.5% in 2022-23, saw a push in
the budget with an increase in
outlay in the form of an 11%
hike in agriculture credit target to ₹20 trillion for the next
fiscal year with a focus on animal husbandry, dairy and fisheries. It also saw the
announcement of new
schemes, including the “Aatmanirbhar Clean Plant Programme” to boost the availability of disease-free, quality
planting material for highvalue horticultural crops with
an outlay of ₹2,200 crore and a
scheme for fishers called Pradhan Mantri Matsya Sampada
Yojana, with a targeted investment of ₹6,000 crore.
The budget has tried to
please all constituencies while
trying not to look expansionary. However, the real test of
the proposals could be seen in
the coming months when the
ruling dispensation would
taste the voter power during
elections.
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