Finance Minister Nirmala Sitharaman’s Budget 2023 has been dubbed as ‘Amrit Kaal’ as it has addressed the previous issues of high income-tax slabs. The new tax slabs and rebates have given the personal disposable income of the Indian middle-class a breather. The brand-new budget has systems in place to address and contain the ripple effects of a 6.8% inflation, which was announced by the RBI.
However, every industry has to shift gears to measure up with the GDP growth prediction of 6-6.8 percent for FY24. Here are the major guidelines that will help with the scenario:
Overarching Populist Decisions for Holistic Growth
• Capex aiding private sector, infrastructure: The government has raised capital expenditure to Rs 10 lakh crore, intensifying focus on infrastructural development and helping private sectors. The government is predicting a fiscal deficit of 5.9% of the GDP, below that of 6.4% in 2022-23. According to the Finance Minister, India will aim a fiscal deficit below 4.5% by FY2025-26. For that to happen, the gross market borrowings and net tax receipts have been estimated around Rs 15.4 lakh crore and Rs 23.3 lakh crore, respectively.
• Appealing tax slab: The default tax regime with a rebate below an annual income of Rs 7 lakh for salary earners has definitely appealing, although the tax payer is free to choose the old tax regime as well. Apart from this, increase in investment limits in Senior Citizen Saving Scheme, Postal Monthly Income Scheme, and the Deendayal Antyodaya Yojana National Rural Livelihood Mission signifies the government’s intension to help improve the living standards of women and the aged, in particular.
• Greater power to MSMEs: The MSME sector, holding a 30 percent GDP share, got a breakthrough credit guarantee scheme that will reduce credit cost by 1 percent. This is beside the extension of Emergency Credit Line Guarantee Scheme and credit of Rs 2 trillion benefitting the bustling Micro and Small Enterprises Sector. The five-pronged support system of financial aid, skill training, technology, paperless payments, and access to global markets through the Pradhan Mantri Vishwakarma Kaushal Samman has put artisans, craftsmen, and women on a growth pedestal.
• Growth-oriented agri-food: Pandemic-related SOPs for the agri-food sector will be phased out systemically in Amrit Kaal, as the PM – GKAY (Garib Kalyan Anna Yojana) will now include free rice and wheat supplies under National Food Securities Act. On this note, the government has decided to release 30 lakh tonnes of wheat from Food Corporation of India (FCI) stocks to check price.
Higher Personal Savings to Counter Dearer Silver
Gems and jewellery industry had mixed reactions to the Budget, which raised the silver dore price to the levels of gold and platinum, and reduced the custom duties on lab-grown diamond seeds.
Aditya Pethe, Director, WHP Jewellers, said, “The Union Budget was a populist one and it had a lot to offer to the general public. It has supported lab-grown diamonds, which will boost the country's export.” Suvankar Sen, MD & CEO, Senco Gold & Diamonds, maintained that “the impact of the Budget 2023 would be negligible for those who were making gold jewellery in India”.
Amit Pratihari, Vice President, De Beers Forevermark, hailed the overall positive sentiment of the Budget. “Under the new tax regime, the budget has made room for more disposable income, thus increasing the purchasing power of consumers. For natural diamonds, we’ve seen an encouraging trend over the past few months where consumers are purchasing items that hold meaning and value,” he maintained.
Vipul Shah, Chairman, GJEPC said, “Reduction of customs duty on LGD seeds to zero from 5 percent will ensure India’s end-to-end world leadership in rough to finished lab-grown diamond and jewellery manufacturing.”
However, Saiyam Mehra, Chairman, All India Gem and Jewellery Domestic Council (GJC), expressed disappointment over the raging issue of gold customs duty not being addressed this time. “The reduction in Gold Custom Duty in this Budget was our big expectation, as the current duty has severely hampered the industry, encouraged smuggling and grey market. The silver dore bars custom duty has been brought at par with gold and platinum that will will adversely affect the masses," he said.
PMVKS Scheme to Help Artisans, Women, and MSME
Leaders from across industries have welcomed the PM Vishwakarma Kaushal Samman, announced in the Budget that enables artisans and craftsmen to improve the quality, scale and reach of their products by integrating them with the MSME value chain.
“This will further include financial support, access to advanced skill training, knowledge of modern digital techniques, brand promotion, linkage with local and global markets, digital payments, and social security, thus benefiting the scheduled castes, scheduled tribes, OBCs, women and people belonging to the weaker sections,” said Dinesh Pratap Singh, Co-Founder, WoodenStreet.
Arvind Mediratta MD & CEO, METRO Cash & Carry India believes the medium to long-term perspective at the backdrop of a global inflationary market will help maintain fiscal discipline, leading to capacity building and accelerating India’s growth prospects. “The revamped credit guarantee for MSMEs and additional infusion of Rs 9,000 crore is great development for MSMEs that are still recovering from the impact of the pandemic,” he added.
"Additionally, the infusion amount in the corpus would further push the entrepreneurial spirit of the country," said Saahil Goel, Co-Founder & CEO, Shiprocket.
Increased CAPEX to Facilitate Startups, Logistics, E-Commerce
Amit Khatri, Co-Founder, Noise said the Budget’s measures such as extending the date of incorporation for income tax benefits and enabling startups to carry forward losses to 10 years, would be highly beneficial for all players. "In order to realize the vision of ‘making AI in India’ and ‘make AI work for India’, the three Centers of Excellence for Artificial Intelligence that is being set up, offer a massive opportunity for the technology industry and will further boost R&D capabilities of the country, enabling tech brands to strengthen their innovation efforts,” he said.
Ananth Narayanan, Founder, Mensa Brands added, “The government aims at reigning in fiscal discipline despite offering tax benefits to middle class."
According to Pradeep Bakshi, MD & CEO, Voltas Limited, the overall increase in capital expenditure will also influence consumer appliances and HVAC systems. “The focus on agriculture and horticulture storage will help in expanding the market, thereby increasing the demand for cold chain and commercial refrigeration. We also foresee the Budget spurring demand for construction equipment, considering significant investment in infrastructure projects such as railways, road, urban infrastructure, and power,” he said.
The infrastructural benefits will bring about a strong uptick in rural demand on the back of massive wave of digitization, maintained Angshu Mallick, MD & CEO, Adani Wilmar. “These initiatives will also empower the agricultural sector. Furthermore, decentralization in storage facilities will provide further assistance to ensure India’s surplus food produce is not wasted. The total CAPEX outlay will stimulate consumption, generate opportunities both in rural and urban employment, and jack up local production,” he said.
Increased Disposable Income to relieve Industries and End-users
Sanjay Vakharia, CEO, Spykar Lifestyle said the reduction in personal income tax slab and elimination of deductions would help in bringing in more spends with marginally higher dispensable incomes. “Currently we are facing tepid demand due to recessionary pressures; both overseas and in our country. We, therefore, welcome the Budget this year as it is focused on growth, economic progress, modernization and sustainability,” he added.
Suman Saha, CEO, Arrow said the prime focus of Budget 2023 was on economic growth, job creation, entrepreneurship and the reduction of fiscal deficit. "The proposed exemptions in personal income tax and incentives for skill development are expected to boost consumer sentiment, thereby generating demand and spurring consumption. This, coupled with the government’s focus on India’s green growth strategy, will catalyze our journey to become a more self-reliant nation." said Samir Kumaar Modi, Managing Director, Modi Enterprises.
Besides refraining from creating a deeper dent in mass spending capacity, the Budget has also deployed measures for ecological conservation, pointed out Nadir Godrej, Chairman and MD, Godrej Industries Ltd. “The Budget successfully combines conservation principles by way of the MISHTI mangrove plantation scheme with steps to speed up the transition to clean energy, underscored by a Rs 35,000 crore high-priority capital outlay aimed at helping the country meet its 2070 net-zero goal,” he maintained.