The Union Budget 2023 has satisfactorily concentrated on the all-inclusive growth of the economy with distinct weight on infrastructure, MSME financing requirements, and affordable housing. The gush in capex spending, if attained, will guarantee a noteworthy multiplier result on the whole medium-term growth predictions of the economy. The government attained its fiscal deficit aim of 6.4 per cent of GDP, although its revenue expenditure increased more than budgeted. The increase was offset by higher revenue and borrowings.
The budget when divided into three spheres of Agriculture, Manufacturing, and Services sector, can be understood that it has done highest for Agriculture and least for the Services sector and particularly for the financial segment, as the budget’s fondness towards the New Income Tax regime will lessen inducement to invest in financial products comprising Mutual Funds’ ELSS, insurance premium, etc. Also, the decade-old housing industry incentives for interest payments will be the least favourite option.
This budget, hence, has rephrased the guidelines for savings in India, which will encourage expenditures rather than incentivize savings. But the savings from the new tax system, the government must be expecting, will be utilized to finance investments and even spending. That is the conditional consumption boost being provided in the budget. For that, the government is estimating that it may have to forego direct tax revenue of 37000 crore rupees. However, the amount of revenue not sufficient to give a major boost to consumption. This is quite insignificant compared to the volume of GDP. It is a political masterstroke to give all tax benefits only to new tax regime. It is open secret now that old tax regime would be phased out.
