Union Budget 2023 - Live Updates & News


FM Nirmala Sitharaman presents Union Budget 2023

On February 1 (Wednesday) at 11 a.m., Union Finance Minister Nirmala Sitharaman will present the Union Budget for the fiscal year 2023–24 to parliament. Stay tuned for updates as they unfold in real-time.

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Key Budget Highlights

Personal Income Tax New Slabs

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Union Budget 2023:

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Frequently Asked Questions

The Union Budget can be seen as maintaining an account of the government's finances for the fiscal year. In India, the fiscal year runs from 1st April to 31st March. Union Budget puts all the expenditure projections on one side and the income projections on the other side. Then based on the gap, the budget decides on its outlay plans, borrowing plans, etc. Union Budget 2023 will be presented on 01-Feb by Finance Minister Nirmala Sitharaman.

Here is how the Union Budget plays a key role: Firstly, it enables the efficient allocation of resources in the interests of the Indian economy. After all, the government needs to ensure that welfare spending is productive. Secondly, it tries to reduce the levels of unemployment and poverty by announcing schemes for job creation and income like infrastructure schemes, MGNREGA, etc. Thirdly, Union Budget tries to reduce disparities between wealth and income; this is accomplished by adjusting direct tax rates and structures so that the wealthy pay a higher rate of tax (or surcharge) than those with lower income. Finally, the Union Budget attempts to control inflation, promote economic growth, and ensure that prices do not pinch households. Popular measures include fair price shops, food buffer allocation, etc.

The Union Budget of India is also popularly referred to as the Annual Financial Statement in Article 112 of the Indian Constitution. The Union Budget is the annual budget of the Republic of India, so we are talking about the central budget and not about state budgets here. This budget is presented each year on the first working day of February by the Finance Minister of India in Parliament. The FM team prepares the Union Budget. The core team members who have worked on preparing Union Budget 2023 comprises TV Somanathan (Finance Secretary), Ajay Seth (Economic Affairs Secretary), Tuhin Kant Pandey (Secretary, DIPAM), Sanjay Malhotra (Revenue Secretary), Vivek Joshi (Secretary – DFS) and V Anantha Nageswaran (Chief Economic Advisor).

In general, the government presents three types of budgets. The first is the Balanced Budget in which the estimated expenditures are roughly equal to the expected revenue for the fiscal year; this is based on the principle of 'cutting your coat according to the cloth' so that your expenses do not exceed your revenues. The second type of budget is the Surplus Budget, where the revenue receipts exceed anticipated expenses in a fiscal year. This budget is uncommon and is only used when inflation is out of control. The third one and the most common is Deficit Budget. Because the expenditures exceed the revenues, the difference must be borrowed. Most developing economies have deficit budgets, and the Union Budget 2023 is likely to follow be no different.

The Union Budget is divided into two parts: revenue budget and capital budget. The revenue budget focuses on routine and regular flows, whereas the capital budget focuses on flows that lead to capital inflows and outflows. The revenue budget includes both revenue receipts and revenue expenses. Revenue receipts can be either taxed or non-taxed. Revenue expenditure refers to the expenses incurred in the day-to-day operations of the government and the various services provided to citizens. These include salaries, wages, maintenance costs, and so on. A revenue deficit exists when revenue expenditure exceeds revenue receipts. The capital budget includes the government of India's capital receipts and capital payments. Loans from the general public, loans from foreign governments, and loans from the RBI are all major sources of capital. Capital expenditure refers to investments in machinery, equipment, buildings, health care, education, and so on. A fiscal deficit occurs when the government's total revenues exceed the government's total expenditures.

The Revenue Budget comprises the government's revenue receipts and revenue expenditure.

Under revenue receipts, the key component is tax revenues which include income tax, GST, corporate tax, customs duty, etc. Then there is non-tax revenue in the form of interest, dividends from PSUs profits from subsidiaries, fees, fines, penalties, etc. While revenue expenditure refers to the regular expenses incurred for the government's routine & smooth operation as well as the range of services provided to the public. These include salaries, maintenance, wages, etc. In the event that the revenue expenditure is more than revenue receipts, the government is said to be running a revenue deficit.

The capital budget focuses on capital flows. The capital budget includes long-term components such as capital expenditures or outflows and capital receipts or inflows. Loans from citizens through bonds, loans from the RBI, sovereign loans from foreign governments, loans from foreign markets, and so on are some of the major sources of government capital receipts. Capital expenditure includes costs for the development and upkeep of equipment, machinery, health facilities, buildings, education, etc. Generally, capital expenditure is considered GDP accretive, especially in setting up hospitals and schools, which has long-term positive implications. A fiscal deficit occurs when the government's expenditure exceeds its total revenue collection.

In the earlier response on the capital budget, we have seen that fiscal deficit arises when the total revenues are not enough to cover the total expenditure. Fiscal deficit refers to the scenario where the government expenditure is more than the revenues in a particular financial year. This difference is the fiscal deficit; it is generally calculated in absolute terms and also as a percentage of India’s GDP or gross domestic product. When we say that India’s fiscal deficit is 6.8%, we are referring to the fiscal deficit as a share of GDP. It should be noted that the revenue figure includes only taxes and other revenues and does not include money borrowed to make up the shortfall. The fiscal deficit is the amount of money that the government must borrow to close the budget gap. Not all fiscal deficits are bad. For example, if the fiscal deficit has increased because the government is investing in the construction of highways, ports, roads, airports then it can be valuable in the long run.

GDP, or Gross Domestic Product, is the monetary value of all final goods and services produced in a country over a given time period (normally one quarter or one year). GDP, as a result, totals all output generated within India's borders. GDP includes not only market-based production of goods and services, but also non-market production such as defence, education,and public health. GDP only includes domestic output. GDP does have some shortcomings. For example, the contribution of housewives is not normally captured in GDP because it is not taxed. To clarify, GDP is generated when a lady bakes a cake and sells it to a cake shop. If she bakes the cake for her children, however, it is not GDP. Similarly, volunteer work is not accounted for in GDP. In India, the most commonly used GDP measure is real GDP, which is the nominal value of GDP adjusted for inflation. The general rule is to use real GDP growth as a benchmark.

The fiscal policy encompasses taxation, subsidies, and public spending in general. It is the use of government spending, subsidies, and taxation to influence the economy in particular. During the COVID pandemic, millions of people were forced to leave their jobs and return to their villages, putting a tremendous strain on the economy. The Indian government developed special programmes to provide food and employment for such displaced families. This prevented people from going hungry, and it is one of the best examples of fiscal policy being used productively.

Fiscal expansion is when governments resort to large-scale spending, either to ensure universal income or to simply boost growth through the trickle-down effect. A contractionary fiscal policy, on the other hand, aims to reduce fiscal spending. Counter-cyclical fiscal policy is central to modern theory. This refers to the use of fiscal policy to mitigate the negative effects of the economy. 

A direct tax can be defined as a tax that is paid directly by an individual or organization to the imposing entity (generally the government). Eg: Direct taxes include income tax, property tax, wealth tax gift tax, and corporate taxes.

Indirect taxes, on the other hand, are taxes that can be passed on to another entity or individual. Eg: Indirect taxes include VAT, GST, central excise, and customs duty.

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