Numerous arguments and discussions stirred up with the announcement of the Indian Union Budget for 2023. Some see it as a populist budget geared at winning the next election. While others see it as a growth-oriented budget with an emphasis on digital transformation and technology. Of course, the reality is somewhere in the middle.
Let’s take a closer look at the budget and see what it really means for regular citizens and the economy.
Personal Taxation: Old vs. New Regime
The personal tax brackets have been widened in this budget. Which is a clear indication of the government’s intention to transition to a new tax system. However, you should think carefully about whether or not the new tax system is the best option for you before jumping on the bandwagon.
It’s possible that you’d do better under the previous tax structure if you continued to claim the exemptions and deductions you’ve been using. But if your main source of income is a salary and you don’t qualify for many tax credits or deductions, the new tax system might be better.
Social Welfare: A Long-Term Focus
Spending on social services and social welfare is not an afterthought, contrary to popular belief. The emphasis on social services has been growing since fiscal year 2016, according to the Economic Survey published on January 31. From FY18 through FY20, social service spending made up roughly 25% of government spending; by FY23, that percentage had risen to 26.6%. (BE).
However, funding for health and education, two areas crucial to enhancing societal and economic conditions, is lower than it was last year. Budgetary allocations for healthcare have decreased to 1.97% from 2.2% a year ago, and educational funding has decreased to 2.5% from 2.6%.
Capital Expenditure: Driving Growth
The proposed budget would raise capital spending to Rs 10 lakh crore in fiscal 2024, a new all-time high. This budget is growth-oriented because higher capital spending is expected to increase employment and consumer spending. It is worth noting, however, that last year’s capital spending budget was even higher, up 35% from the year before.
Digital Transformation: The Future is Here
The budget allocates a disproportionate share of resources to digital disruption, technology, and innovation. There is a strong focus on technology since it is thought to be the key to boosting the economy and raising living standards in the country. By prioritising digitisation, the Indian government is sending a powerful message about the country’s economic and social future.
Comprehensive in scope, the Indian Union Budget 2023 strikes a good balance between economic growth and social welfare. Taxpayers need to read the fine print and weigh their alternatives in order to make the most prudent long-term financial decisions. The focus on digital transformation, technology, and innovation in the budget shows that the government wants India to be a technologically advanced and forward-thinking country.