Pollticks
Finance Minister promises tax relief for the salaried middle class, schemes for
artisans and tribal groups, sops for women and MSMEs, and jobs for youth — in
an effort to soothe several vote banks before the 2024 Lok Sabha election
Summary:
India's Finance Minister, Nirmala Sitharaman, delivered the fifth Union Budget, which aimed to create a feel-good factor among specific segments of voters as the government prepares for the 2024 Lok Sabha election. The budget seeks to increase domestic consumption and private investments, while highlighting the government's achievements since 2014, such as the doubling of per capita income and the formalization of the economy. To help the salaried middle class, the tax-free limit under the new exemption-less income tax regime was raised to INR 7 lakh ($9,636) from INR 5 lakh ($6,743). The budget also launched new socio-economic development schemes to help vulnerable groups and the youth. Additionally, it plans to ramp up infrastructure capex to INR 10 lakh crore ($13.6 billion) to help revive private investments. Savings scheme for senior citizens and women was also doubled and a new one-time small savings scheme was announced for women with a 7.5% return.
Zero tax for annual income up to ₹7 lakh under new scheme
Summary:
The Indian government has announced a new tax regime which will see people earning up to INR 7 lakh ($9,700) annually exempt from paying income tax. Those opting for the new regime will still have the option to file under the old regime, which allows for tax exemptions and deductions on investments and expenses. The new regime will offer a standard deduction of INR 50,000, and will result in savings of INR 33,800 for those earning up to INR 7 lakh annually. The surcharge for individuals earning over INR 2 crore has also been cut from 37% to 25%.
Mobile phones, TVs to get cheaper; toys, bicycles, automobiles dearer
Summary:
The Union Budget in India has proposed changes to the Customs Duty regime to promote exports and boost domestic manufacturing and value addition. The finance minister aims to reduce the number of Basic Customs Duty (BCD) rates from 21 to 13 and simplify the tax structure with fewer tax rates to reduce compliance burden and improve tax administration. The changes will likely result in lower mobile phone prices and higher prices for toys, bicycles, certain automobiles and naphtha. The budget proposes to extend the duty exemption for the import of machinery and capital goods required for the manufacture of lithium-ion cells for EVs and to exempt denatured ethyl alcohol used in the chemical industry. The budget also reduced duty on inputs for domestic shrimp feed production.
Exemptions on high-value life insurance proceeds pruned
Summary:
The Union Budget 2023-24 proposes to limit the income tax exemption on high value life insurance policies. Only policies with an aggregate premium of up to INR 5 lakh ($6,900) will be exempt from taxation. The proposal is aimed at better targeting of tax concessions and exemptions and will not affect policies issued until March 31, 2023. This move follows a measure initiated in the Finance Act, 2021 regarding the proceeds of ULIP policies and is aimed at curbing the misuse of the exemption by high net worth individuals who invest in policies with large premium contributions.
Defence budget rises 13%; FY23 RE for pension rises
Summary:
The Union Budget of India has allocated INR 5.94 lakh crore ($8.03 billion) for defense, a 13% increase YoY. The non-salary revenue has risen by 44% to INR 90,000 crore in the Budget Estimates for 2023-24. The hike is due to the increased operational commitments and stocking up of spares and ammunition following the stand-off with China in 2020. The allocation will go towards sustaining weapon systems, procurement of critical ammunition and spares, hiring niche capabilities, stocking military reserves, and strengthening forward defenses. The capital budget of the Border Roads Organization has increased by 43% to INR 5,000 crore. The revised estimates for pensions in 2022-23 rose by INR 33,719 crore to INR 1,53,415 crore.
Higher fund flow for Jal Jeevan
Summary:
The Union government's Jal Jeevan Mission, which aims to provide piped water to every rural household in India by 2024, has received a 27% increase in funding, with ₹69,684 crore allocated, up from the expected ₹54,808 crore to be spent this financial year. The Swachh Bharat Mission-Rural, which aims to sustain open defecation-free status in India's villages, has received an increase in funding as well, with ₹77,000 crore allocated, up from the expected ₹60,000 crore by March 2023. According to a recent survey, 56% of the targeted 19.3 crore rural households have received tap water connections, with Tamil Nadu, Himachal Pradesh, Goa and Puducherry having over 80% of households with fully functional connections, while fewer than half of households in other states have such connections.
EDITORIAL
A Budget that signals growth with stability
Summary:
India has recovered from the COVID-19 pandemic to reach its pre-pandemic income level, however its GDP is still 7% below the pre-pandemic trend. The economy needs to be fueled by increasing public investment, however inflation is still above the upper tolerance limit and the fiscal deficit (for both the Centre and States) is in the range of 9-10% of GDP, requiring continued fiscal consolidation. The government must balance the need for growth and fiscal stability, with interest payments accounting for 40% of the Centre's net revenues. The fiscal deficit has been kept to 6.4% of GDP in the current fiscal year, despite increased food and fertilizer subsidies, due to higher than expected tax revenues and increase in the nominal value of GDP. The budgeted capital expenditure is expected to increase from 2.7% of GDP to 3.3%, with a 37% increase in absolute terms, which should help revive the investment climate. The 6.5% growth rate for 2023-24 estimated in the Economic Survey may be achievable with the increase in infrastructure spending. The fiscal deficit is slated to decrease to 5.9% in 2023-24. The fiscal adjustment will mainly be achieved by containing revenue expenditure.
The growth deceleration problem cannot be skipped
Summary:
The budget for 2023-24 in India was recently presented, with the government boasting about India's success in overcoming the challenges brought by the COVID-19 pandemic through food distribution programs. The Finance Minister said that India is now on track to resume its growth trajectory from before the pandemic. However, the budget needs to be viewed in the context of the decade-long decline of the Indian economy, which has deindustrialized prematurely and become dependent on China imports. The government's initiatives to overcome these shortcomings, such as "Make in India" and "Aatmanirbhar Bharat Abhiyan," have not been further advanced by the budget, and the rising trade deficit with China suggests a growing dependence on imports.
A Budget without a vision for agriculture
Summary:
The recent Indian budget has failed to address the pressing problems in the country's agriculture sector, including the food and fertilizer crisis, falling real incomes for farmers, and the need for capital expenditure. The budget also cut food subsidies and fertilizer subsidies, which will increase the costs of cultivation for farmers, with no compensatory rise in output prices. The budgeted allocation for the Agriculture Infrastructure Fund was only ₹150 crore out of ₹500 crore in 2022-23, and the allocation for capital investment in crop husbandry, animal husbandry, dairy, and fisheries was only ₹119 crore out of the total ₹7.5 lakh crore capex. The budget also failed to take steps to raise net incomes from cultivation, and the promotion of "natural farming" is not scientifically validated and is likely to reduce crop yields.
Protection under Domestic Violence Act not available to male member, says Delhi HC
Summary:
The Delhi High Court has halted proceedings under the Protection of Women Against Domestic Violence Act in a case in which a husband is accusing his wife of adultery. The court found that the protection under the act is not available to the husband and issued a notice to him. The case was filed by the wife, who is being represented by advocate Ashima Mandla, who argues that the local court's decision has overridden the essential intent of the legislature to protect women's rights in a domestic relationship. The husband's complaint refers to an earlier order by the Karnataka High Court that held that a male can be an aggrieved party under the DV Act, but this was later revoked as "patently erroneous."
Russia gains in Donetsk campaign; Ukraine seeks fighter jets from allies.
Summary:
Russian forces are making progress in their push to take control of the Ukrainian province of Donetsk, focusing on the town of Bakhmut. Ukraine's President Zelensky's government is lobbying for its neighbors and Western allies to supply fighter jets, but the US and Britain have so far rejected the idea and instead, are continuing to provide military support to Ukraine. The West has refused to send weapons that could be used to attack deep into Russia for fear of starting a wider conflict, while Russia has denounced recent Western pledges of weapons as provocations. The US is preparing a $2.2 billion package of additional military assistance to Ukraine that is expected to include longer-range rockets and other munitions and weapons. Russian forces are using the same destructive tactics they used to capture Sievierodonetsk and Lysychansk in June and July to capture Bakhmut.