HIGHLIGHTS OF THE UNION BUDGET 2023-24
The Hon’ble Finance Minister, Smt. Nirmala Sitharaman announced the Union Budget 2023-24 on 01-02-2023 amidst great hope. The Budget 2023-24 focuses on promoting economic stability by providing ample opportunities for citizens to invest in certain sectors with a special aim at supporting micro, small and medium enterprises (MSMEs). Interestingly, this Budget of 2023-24 aims for empowerment of women and to do so, the Government is introducing schemes that will help enable the growth of self-help groups (SHGs), to achieve economic empowerment.
Though the Budget 2023-24 has dealt with direct and indirect taxes in depth. However, this Paper does not seek to update readers on tax and as such the same will be put in a separate article.
Some of the core areas that the Budget 2023-24 focuses on, are as follows:
(1) International Trade
(2) Revamping of Ease of Doing Business in India
(3) Reliefs to MSMEs
(4) Urban Infrastructure
(5) Green Energy
(6) Real Estate
- With reference to MSMEs, the Government has revamped credit guarantee from 01-04-2023 with an infusion of Rs. 9000 Crores in corpus. The Scheme would enable additional collateral-free guaranteed credit of Rs. 2 Lakh Crore.
- The Finance Minister gave certain reliefs to the MSME Sector by announcing in the Budget 2023-24 that 95% of the forfeited amount relating to performance security would be returned to MSMEs by the Government undertakings, if such MSMEs had been unable to execute contracts during the COVID period.
B) Clean Energy
- Impetus to green growth is one of the 7 priorities of the Budget 2023-24 in order to enable the country to reduce carbon intensity.
- A budget of Rs. 300 Billion has been allocated for capital outlay.
- Clean Energy is something, which India needs with desperation, has also been given a priority. There is an allocation of Rs. 35,000 Crores as priority capital for energy transition.
- There will be a National Green Hydrogen (NGH) Mission that will facilitate the transition of the economy to low carbon intensity and reduce dependence on fossil fuels imports. The said NGH Mission aims to increase India’s renewable energy capacity by an addition of 125 GW and galvanisation of funds of Rs. 8 Trillion. This Mission also seeks to promote 6 lakh full time jobs.
- In order to fight pollution, the Government seeks to set up an Energy Transition Advisory Committee that is an expert body which will suggest alternative fuel sources such as bio fuels, green hydrogen, solar, geothermal, nuclear, etc.
- In order to promote green energy, battery-energy and storage systems have been given importance.
- In order to promote these rapid changes, the Government has proposed changes in the Environment (Protection) Act 1986, the Energy Conservation (Amendment) Act 2022, etc.
C) Aviation and Highways
- Aviation and Highways is once again a priority. The Budget 2023-24 seeks to improve regional air connectivity through its flagship Scheme, UDAN (Ude Desh Ka Aam Nagrik) which aims at connecting by air Tier-2 and Tier-3 cities and for this, it is looking at adding 50 additional airports, helipads, etc. This Project has also been given adequate importance in the Budget.
- The National Highways Authority of India (NHAI) has been allocated an increased fund by nearly 14% from the previous year and stands at Rs. 1.62 Lakh Crore for 2023-24.
D) Ease of Doing Business in India
Understanding and appreciating the importance of Doing Business in India, the Budget 2023-24 once again focuses on certain changes:
- The Government has decided to bring a dispute resolution scheme called ‘Vivad Se Vishwas-2’ to settle commercial disputes.
- The PAN Card is to be used as a common identifier for Government agencies. Updating of identity is to be maintained by various agencies that are establishing a Digilocker and will make Aadhaar Card as the foundational identity.
- A Central Processing Centre is to be set up for quicker response to company’s filing forms, under the Companies Act 2013.
- All business establishments will have to have a PAN number that will be used as a common identifier for all digital systems.
- In the wake of making amendments to Ease of Doing Business, the Government has proposed reduction of 39000 compliances and decriminalisation of several aspects of the business laws.
- Further, a Jan Vishwas Bill has been introduced that aims at amending 42 Central Acts.
- The Finance Minister has also announced multiple measures to enhance business activities in the GIFT City, India’s only approved International Financial Services Centre (IFSC) located in the capital city of Gandhinagar, State of Gujarat. (The IFSC in GIFT City seeks to bring back those financial services transactions that are currently carried on outside India by overseas financial institutions and overseas branches/ subsidiaries of Indian financial institutions to the Indian shores. Specifically, it seeks to bring them to a centre that has been designated for all practical purposes as a location having the same ecosystem advantage as their present offshore location, which is physically in India.)
- There has been a thrust on improvement of digital services in the country. 100 labs have been set up for developing 5G services. These labs will cover smart classrooms, precision farming and healthcare applications.
- Phase-3 of e-Courts Project has been launched with an outlay of Rs. 7000 Crores.
- The Government has given a special focus to special assistance for States for the purpose of capital investment. The Government’s investment in the Infrastructure Sector continues in the Scheme with an enhanced outlay of Rs. 1,300,000 Million in the form of an interest free loan for 50 years to assist stakes. It is hoped that this huge outlay will have a positive impact in the Infrastructure Sector at the regional level.
- A body called the International Financial Services Centre (IFSC) was established by the Ministry of Finance (MoF) to assist in removal of structural issues and for development and increase in investments in the Infrastructure Sector.
- The Finance Minister has confirmed that investment in Infrastructure such as Railways, Roads, Power, etc can be done by private players as well.
- The Government has announced a Harmonised Master List of Infrastructure which will guide all agencies to provide and support investment. The said Harmonised Master List will be reviewed by an Expert Committee for financing framework for such development.
- The Budget focuses on the importance of infrastructure development in Tier-2 and Tier-3 cities. As municipal corporations are not equipped to manage the infrastructural growth, the Union Budget 2023-24 is introducing municipal bonds by municipal corporations. These municipal bonds have already been issued in several states successfully.
- Certain changes have been introduced in the issuance of these municipal bonds to promote transparency.
- The Union Budget 2023-24 aims at establishing an Urban Infrastructure Development Fund (UIDF) with an annual corpus of Rs. 100 Billion, through the use of priority sector lending. The objective of this Fund is for development of infrastructure in Tier 2 and 3 cities.
F) Railways Sector
- The Finance Minister also announced the highest ever outlay of Rs. 2.4 Trillion for the Railway Sector.
- The said outlay is to expand the current capacity and for beautification of existing railway stations and completing 100% of the railway electrification.
G) Transport Sector
- 100 critical transport infrastructure projects for better connectivity for ports, coal, steel, fertiliser and food grains has been announced. These projects have been allotted an investment of Rs. 750 Billion which includes 150 Billion from private sources.
- The National Logistics Policy 2022 along with the aforesaid announcements has been made to ensure rapid and quick development of this Sector.
H) Real Estate Sector
- In the Real Estate Sector, the Government is encouraging green growth including green buildings.
- The Finance Minister has stated that such green growth efforts, would reduce carbon intensity. Additionally, it could also increase jobs.
The Budget certainly aims at growth and stability in the economy. Special impetus given to 7 core areas has been done with the purpose of improving urban infrastructure and jobs. India’s current battle with pollution in different forms and the urgency thereof is reflected in the Budget 2023-24 in the form of reformatory and progressive schemes that will encourage reduction of pollution. This can be seen in the Government’s encouragement in green energy and green buildings. The Finance Minister has also given importance of the development and rise of Tier-2 and 3 cities that will enable the general growth in the economy at all levels. Allocation of huge funds for certain preferred areas such as Infrastructure, Green Energy and Railways sets the momentum of the growth trajectory of the country in the coming Financial Year.
Sushila Ram Varma
The Indian Lawyer
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