Rama Krishna Sangem
Finance Minister Nirmala Sitharaman’s budget for 2023-24 is best called a please all and election oriented financial exercise that is intended to reap political dividends. The budget, last full fledged one before next year’s general elections to Lok Sabha left no burden on any section. But, showed sops on salaried middle class by raising Income Tax rates and exemptions.
Dressed in a red saree, FM Nirmala green lighted the hopes of tax payees of all classes. We should not forget that BJP’s core constituency is salaried middle class. The basic I-T limit is raised from Rs 2.5 lakh per year to Rs 3 lakh, while exemption rate hiked to Rs 7 lakh from the present Rs 5 lakh. The overall upper tax limit decreased from 42.5 per cent, one of highest in the world to 39 per cent.
Prime Minister Narendra Modi joined other BJP MPs in thumping desks as Nirmala announced her 5 direct tax sops. The BJP is going to face nine state assembly elections this year along with LS poll and some state assembly polls next summer. This budget is aimed at winning over the harassed middle class, who depend on their monthly salaries. Of course, some experts say, these sops are negligible if around 7 per cent inflation is taken into consideration.
More money into economy
FM Nirmala, in her 90 minute speech adopted two major methods to boost the economy. Her objective is to pump in more money into the economy. 1. Through leaving more money in the hands of salaried class – by relaxing I-T rates, 2, by increasing the capital expenditure or Capex – that is spending money on infrastructure creation. If I-T rates left around Rs 37,000 crore in the hands of the tax payees, Capex is hiked from Rs 7.5 lakh crore to Rs 10.50 lakh crore.
This money will anyway come back into markets and economy. So, even if the foreign portfolio investors (in market players) take out their money, in view of possible rate hikes by the US Federal Reserve, our stock markets will be stable. This will enhance the image of India at a time when G-20 summit takes place in New Delhi this September. Also it will validate the faith of experts as India the fastest growing economy in the world.
Ticks all boxes right
Nirmala Sitharman’s budget has ticked right all the boxes, as PM Modi seeks a third term as PM next year. Increased allocations or fresh provisions for different sectors like lab grown diamonds, semiconductors, electronics, green energies, or pharmaceuticals, fishermen, cooperatives, startups, or higher education, show this. Fiscal deficit is pegged at 6.4 per cent, which is far away from Nirmala’s target of bringing it down to 4.5 per cent by 2025.
The total size our our budget for 2023024 is Rs 45 lakh crore. Of this, Rs 23.50 lakh crore comes through all types of taxes, while Rs 15.50 lakh crore comes from market borrowings. So, the rests is fiscal deficit. How will we bridge this gap will decide the real allocations to different sectors. We still don’t know the actual target of disinvestment for this year. That is a politically sensitive issue.