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India seeks to trim budget deficit, while offering tax cuts: highlights of the budget

Agencies Wednesday, February 1, 2023
India seeks to trim budget deficit, while offering tax cuts: highlights of the budget

The Indian government on Wednesday unveiled a 45 trillion rupees ($549.14 billion) spending budget for the next fiscal year starting April to boost economic growth, while aiming to lower fiscal deficit before elections due next year.

The aim is to have strong public finances and a robust financial sector for the benefit of all sections of society, Finance Minister Nirmala Sitharaman said.

Here are the highlights of the budget:

GDP GROWTH/DEFICIT

*Nominal GDP for 2023/24, which includes real GDP and inflation, estimated to grow 10.5% year-on-year to 301.75 trillion rupees ($3.69 trillion) in 2023/24

*India's federal government will target a fiscal deficit of 5.9% of GDP for 2023/24 compared to 6.4% for the current fiscal year

*Aims to achieve fiscal deficit of 4.5% of GDP by 2025/26

*India is expecting 6-6.8% economic growth in 2023/24, slightly lower than the 7% expected in the current fiscal year

SPENDING

* Total federal budget spending target raised 7.5% to 45.03 trillion rupees for 2023/24 vs revised 41.87 trillion rupees for current fiscal year

*Spending in real terms will rise less than 3% considering estimated around 5% retail inflation for next fiscal year.

*Capital spending seen to rise 33% to 10 trillion rupees for 2023/24

*Proposes to hike capital outlay for railways by 48% to 2.4 trillion rupees in 2023/24 from revised 1.62 trillion rupees in 2022/23

*Proposes to hike outlays for road transport by 24.4% to 2.7 trillion rupees in 2023/24 from revised 2.17 trillion rupees in 2022/23

* Total defence outlays raised to 5.94 trillion rupees vs revised 5.85 trillion rupees for 2022/23

SOCIAL SECTORS

* Education budget raised to 1.13 trillion rupees for 2023/24 vs 999 bln rupees in 2022/23

* Health budget raised to 889.5 bln rupees for 2023/24 vs 709.4 bln rupees in 2022/23

* Allocations for rural job guarantee programme cut to 600 bln rupees vs revised 894 bln rupees outlays for 2022/23

* Increases budget allocations to 790 billion rupees for affordable housing in 2023/24

* To provide 350 billion rupees for energy transition

RECEIPTS/GOVT BORROWING

* Total revenue receipts seen at 26.32 trillion rupees in 2023/24 vs revised 23.48 trillion rupees in 2022/23

* Total tax receipts seen up 12% to 23.3 trillion rupees in 2023/24 from revised 23.48 trillion rupees

* Govt targets gross borrowing of 15.43 trillion rupees in 2023/24

* Net market borrowings seen at 11.8 trillion rupees

* Pegs receipts from govt stake-sale in state-run companies at 510 billion rupees in 2023/24 vs revised 500 billion rupees in 2022/23

INDIVIDUAL TAX PROPOSALS

* Proposes to promote new income tax regime with higher threshold limit

* Proposes to cut highest surcharge rate to 25% from 37.5% under new income tax regime

* Proposes to raise rebate limit to 700,000 rupees under personal income taxes

TAX PROPOSALS FOR INDUSTRY

* To consider a cut in customs duty on lab-grown diamonds

* Propose higher import duties on silver dores

* To increase duties on items made from gold, platinum

* Customs duties on compounded rubber being raised.

* Custom duty exemption extended to EV batteries

($1 = 81.7620 Indian rupees)

($1 = 81.9460 Indian rupees)


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