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Union Budget 2023: Discovering opportunities for equitable economic growth and inclusivity

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Union Budget 2023: Discovering opportunities for equitable economic growth and inclusivity

The Union Budget 2023-2024 has made some laudable moves toward increasing personal finance and financial literacy and it will contribute considerably to the nation's overall development and progress

Aakriti Saini and Prashant Barthwal Last Updated:February 28, 2023 15:16:30 IST Union Budget 2023: Discovering opportunities for equitable economic growth and inclusivity

Union Finance Minister Nirmala Sitharaman

While presenting the budget, Finance Minister Nirmala Sitharaman refers to it as the first-ever budget of Amritkaal, which targets every possible prospect of bringing more options to bridge the gap between the policies and individuals. India’s economy is one of the world’s fastest-growing. Financial investments drive economic growth. Capital investments increase operational efficiency, market share, and revenue, boosting Gross Domestic Product (hereafter GDP). The finance minister deserves praise for sticking to budgetary consolidation and trying to satisfy all parties. The Union Budget 2023-2024 will boost the Indian economy, particularly personal finance, with its forward-thinking approach.

Economic inclusivity refers to giving marginalised groups the means and resources to control and improve their financial situation while uplifting their status. Gradually, it means bridging the gap and inequalities between rich and poor. Recent statistics show India is plagued by inflation and unemployment, which have been the highest in recent years. The average unemployment rate in the last 12 months has been 7.4 per cent. The budget talked about increasing capital spending, one of the biggest ever grows and accounts for 3.3 per cent of the GDP. The notion behind such an increase is to create job opportunities by investing in the nation’s infrastructural development

On the other hand, the fiscal deficit was estimated at 6.4 per cent of GDP in 2022-23. The government has targeted to bring it down to 5.9 per cent in 2023-24 and further to 4.5 per cent in 2025-26. The roadmap to achieve this target is to reduce expenditure and increase government revenue. The brunt of this is seen in various schemes and subsidies; for example, MNREGA (The Mahatma Gandhi National Rural Employment Guarantee Act) has been reduced to 1.3 per cent of the total government expenditure in the current year.

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Capital expenditure (hereafter CapEx.) is vital in fiscal investments. It buys, upgrades, or improves fixed firm assets, including buildings, offices, and equipment. CapEx differs from operating expenses. The finance minister correctly increased capital expenditure for infrastructure development by 33 per cent to Rs 10 lakh crore in the Union Budget 2023. Thus, government capital spending is estimated at Rs 13.7 lakh crore, 4.5 per cent of GDP. This Budget session includes reforms to encourage venture capitalists, retail investors, and angel investors to invest. Financial investors earning over Rs 5 crore per year pay 42.74 per cent in taxes, which has been cut to encourage significant investments. The effective tax rate was cut from 42.7 per cent to 39 per cent to benefit wealthy taxpayers. This might help investors save at least Rs 10 lakh and those with incomes exceeding Rs 5 crore even more. Significant investments can boost economic growth. The government has provided vital rebates to domestic and foreign investors interested in entering India’s capital investment markets.

Further to the women and child development ministry’s welfare heads, social security and welfare funds have seen a steady decline from ₹3437 crores in 2022-23 to ₹1429 crore. The new savings scheme for women and the higher deposit limit for seniors will boost financial inclusion and give these groups additional opportunities to save and safeguard their economic destinies. The lower tax burden on high-income persons will also promote business and job growth. 

The ‘Mahila Samman Savings Certificate’ (MSSC) for women is another step toward financial empowerment, and the increased deposit limit for elderly citizens under the ‘Senior Citizens Savings Certificate’ (SCSS) and Post Office MIS plan will boost their savings returns. Reducing the surcharge on those earning over Rs 5 crore will cut the effective tax rate and boost economic growth. Under inclusive development, the aspirational district model for the growth of backward districts has been successful, which has given a much-needed impetus to the government in identifying 500 more such blocks. The new tax regime’s expansion of tax slabs, women’s savings plan, and senior citizen deposit limit rise are all positive moves toward encouraging personal consumption and tax savings in the economy. The plan to exclude only policies with aggregate premiums up to Rs 5 lakh may have a temporary impact. Still, it eventually aligns life insurance tax benefits with the goal of financial security. This will encourage a more informed and responsible attitude to personal finance, which is crucial for economic stability and progress.

Micro, small, and medium firms advance India’s economy. Youth employment in such areas boosts the country’s economy. Medium- and small-sized businesses attract many capital investors. The current fiscal budget includes industry-beneficial rules. The Union Budget revamped the MSMEs loan guarantee plan. The Rs 9,000 crore corpus infusion made the new programme effective on 1 April, 2023. This allows Rs 2 lakh crore collateral-free guaranteed credit. As a result, credit costs will drop by roughly 1 per cent. The finance minister has announced several diligent measures with a clear focus on the seven ‘SAPTARISHI’ principles that must be achieved during ‘Amrit Kaal’: inclusive development, reaching the last mile, increased focus on infrastructure and investment, unleashing the financial industry’s potential, green growth, youth power, and financial sector progress. Conclusively, the Union Budget 2023-2024 has made some laudable moves toward increasing personal finance and financial literacy, and it will contribute considerably to the nation’s overall development and progress that is both sustainable and inclusive.

Aakriti Saini is assistant professor, Department of Commerce and Prashant Barthwal is assistant professor, Department of Political Science, Sri Aurobindo College, University of Delhi. Views expressed are personal.

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