Finance Minister Nirmala Sitharaman holding the Budget Papers at the North Block in New Delhi on February 01, 2023.
| Photo Credit: R.V. Moorthy

Finance Minister Nirmala Sitharaman on February 1 raised the personal income tax rebate limit, doled out sops on small savings, and announced one of the biggest hikes in capital spending in the past decade as she did a tightrope walk in the Budget between staying fiscally prudent and meeting public expectations in the year before general elections.

Ms. Sitharaman’s fifth straight Budget comes at a time when the economy is slowing and there is a need for increased spending on social sectors as well as ramping up incentives for local manufacturing. The Modi government will seek third term next year and the BJP will face nine Assembly elections this year.

Announcing its last full budget before the 2024 elections, the NDA government focused on a slew of measures that expanded Capital Expenditure spending and tied in various priorities including Green Growth, Youth Power, and Inclusive Development. This was also accompanied by major tax announcements for the salaried class, with changes in tax slabs and a clear intention to shift to the new tax regime.

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Union Law Minister Kiren Rijiju said Phase III of eCourts Project will build on the gains made by the earlier two phases that proved crucial in the delivery of justice during the COVID-19 pandemic when courts were under lockdown protocol. File
| Photo Credit: PTI

Finance Minister Nirmala Sitharaman on Wednesday allocated ₹7,000 crore for the launch of Phase III of the eCourts Project that seeks efficient administration of justice.

Union Law Minister Kiren Rijiju, in a series of tweets, thanked Prime Minister Narendra Modi, the Finance Minister as well as Chief Justice of India D.Y. Chandrachud, who headed the eCommittee of the Supreme Court.

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“This will ensure “Ease of Justice” and further improves the justice delivery system that the Hon’ble PM @narendramodi ji has always envisioned,” Mr. Rijiju tweeted.

“I also compliment the Hon’ble Chief Justice of India, Dr D.Y. Chandrachud ji who as the Chairperson of the eCommittee of the Supreme Court of India has been instrumental in the success of the earlier phases of the eCourts Project and who personally supervised and mentored the formulation of the DPR [Detailed Project Report] of the Phase-III of the Project,” he added.

The Minister said Phase III of eCourts Project will build on the gains made by the earlier two phases that proved crucial in the delivery of justice during the COVID-19 pandemic when courts were under lockdown protocol.

“The project envisages various path breaking initiatives like: Digital & Paperless Courts that aim to bring court proceedings under a digital format in a court, thereby, limiting the use of paper and speeding up the disposal of cases, Online Court that focus on eliminating the presence of litigants or lawyers in the court, Expansion of scope of Virtual Courts beyond adjudication of Traffic Violations,” Mr. Rijiju said in the tweets.

The Minister noted that the use of Artificial Intelligence and Machine Learning would allow for data analysis to work towards reduction in pendency and understanding litigation patterns and forecasting future needs.

While 4,400 fully functional eSewa Kendras will provide assistance to all lawyers and litigants, live streaming of court hearings would allow for further transparency in judicial proceedings, he said.

Digitisation of all court records will further pave the way for a completely paperless environment in future. “An Online Dispute Resolution platform will encourage alternate dispute resolution and a robust video conferencing system will create seamless connectivity between the jails & courts, allowing for all bail appearances over VC,” Mr. Rijiju said.

“A National Digital Library for children and adolescents will be set up for facilitating the availability of quality books across geographies, languages, genres and levels, and device agnostic accessibility,” Finance Minister Nirmala Sitharaman said in the Budget speech. Photo: Special Arrangement

Union Finance Minister Nirmala Sitharaman proposed a national digital library for children and adolescents along with strengthening of the National Book Trust, for building a “culture of reading” and to make up for pandemic-time learning losses.

“A National Digital Library for children and adolescents will be set up for facilitating the availability of quality books across geographies, languages, genres and levels, and device agnostic accessibility,” Finance Minister Nirmala Sitharaman said in the Budget speech.

She said the States would also be encouraged to set up physical libraries at panchayat and ward levels, and provide infrastructure for accessing the National Digital Library resources.

The Minister added that the National Book Trust, Children’s Book Trust and other sources would be encouraged to provide and replenish non-curricular titles in regional languages as well as English, which could be used by the brick and mortar libraries set up by the States.

The latest Annual Status of Education Report 2022 conducted by NGO Pratham showed that children’s basic literacy following schools closures during COVID-19 had taken a big hit, with their reading ability as compared to numeracy skills worsening and dropping to pre-2012 levels.

The Minister also spoke of collaborating with NGOs that worked towards promoting literacy to achieve the objectives.

She said that financial sector regulators and organisations would also be encouraged to provide age-appropriate reading material for the libraries to inculcate financial literacy.

Budgetary allocation

As far as the budgetary allocation for the Ministry of Education was concerned, it had seen a total increase of 8.2% from ₹1,04,277 crore to ₹1,12,898 crore, out of which school education saw a rise in allocation of 8.4% and higher education a rise of 7.9%.

The increase in Budget for school education was almost entirely due to the PM SHRI scheme which received ₹4,000 crore. The scheme was announced in September 2022 to turn 14,500 existing schools into model schools for the implementation of the National Education Policy, 2022. The scheme has a total project cost of ₹27, 360 crore for five years between 2022 to 2023 and 2026 to 2027, with the Centre’s share at ₹18,128 crore. Schools would be selected only if their State government agreed to implement the NEP “in entirety with the Centre laying down commitments”. Last fiscal, the scheme received ₹1,800 crore.

Another notable hike under school education was for Kendriya Vidyalaya Sangathan where the allocation went up from ₹7,650 crore to ₹8,363 crore— an increase of 9%.

The PM POSHAN scheme, earlier known as the Mid-Day meals scheme, increased by 13.35% from ₹10,233 crore to ₹11,600 crore, which was however, lower than the revised estimate of the last fiscal of ₹12,800 crore. The scheme provides one hot-cooked meal to children in pre-primary or Bal Vatikas up to Grade 8.

The Samagra Shiksha scheme, which covers pre-primary to higher secondary grades, saw a negligible increase of 0.18% at ₹37,453 crore as it continued to be dogged by under-utilisation of funds allocation. Though it was granted ₹37,383 crore in last year’s budget, under the revised budget the amount fell to ₹ 32,151— or 14% of the funds remaining unutilised.

Under higher education, the allocation for the University Grants Commission went from ₹4,900 crore to ₹5,360 crore. The support for the Central Universities increased by ₹2,262 crore at ₹11,252 crore, and IITs rose by ₹1,246 crore to a total of ₹8,791 crore. Grants to the National Institute of Technology and the Indian Institutes of Engineering Science and Technology received an increased grant by ₹585 crore.

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Image for representational purpose only.
| Photo Credit: The Hindu

The Union Budget 2023-24 has proposed to limit the income tax exemption on the proceeds of high value life insurance policies.

Mooted as part of an emphasis on better targeting of tax concessions and exemptions, the proposal means that only income from life insurance policies with an aggregate premium up to ₹5 lakh will be exempt from taxation.

Also Read | Budget 2023 | How is money allocated and where does it come from?

“It is proposed to provide that where aggregate of premium for life insurance policies [other than ULIP] issued on or after April 1, 2023 is above ₹5 lakh, income from only those policies with aggregate premium up to ₹5 lakh shall be exempt,” the Budget documents said. The proposal will not affect the tax exemption provided to the amount received on the death of the insured person, nor will it affect insurance policies issued till March 31, 2023.

This income will be taxable under the head “income from other sources”. Deduction will be allowed for the premium paid, if such premium has not been claimed as deduction earlier. There will not be any change in taxation for polices issued before April 1, 2023.Preventing misuse by the rich.

The proposal follows a measure initiated in the Finance Act, 2021 pertaining to the proceeds of ULIP policies, where the premium paid, for any year, exceeded ₹2.5 lakh. Both the previous and present moves are aimed at curbing misuse of the exemption by high net worth individuals, who invest in policies having large premium contributions and then claim exemption on the sum received under such policies.

The latest proposal, coupled with the income tax benefits that were announced in the Budget for those under the new tax regime, seems to have affected investor sentiments in life insurance stocks, with the shares of LIC, HDFC and SBILife taking a hit on Wednesday.

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Tribal women walk to their villages in Chhattisgarh. Image for representation only
| Photo Credit: AP

Finance Minister Nirmala Sitharaman on Wednesday announced the Pradhan Mantri-PVTG Development Mission to focus on improving the overall socio-economic conditions of 75 Particularly Vulnerable Tribal Groups across the country, who live in around 31,000 villages of India’s 18 States and one Union Territory. The announcement was made during the presentation of the Union Budget for 2022-23.

Ms. Sitharaman said that the Union government was putting forward an expenditure outlay of ₹15,000 crore, making this amount available over the next three years for the implementation of this mission. 

“This will saturate PVTG families and habitations with basic facilities such as safe housing, clean drinking water and sanitation, improved access to education, health and nutrition, road and telecom connectivity, and sustainable livelihood opportunities,” the Finance Minister said, adding that the amount being set aside for this will be spent under the Development Action Plan for the Scheduled Tribes. 

The detailed Budget statement for FY 2023-24 showed that the Ministry of Tribal Affairs has been allocated a total of Rs 12,461.88 crore, out of which the Ministry’s scheme for the Development of PVTGs, has been allocated ₹256.14 crore. 

Senior officials in the Tribal Affairs ministry told The Hindu that its own scheme for the development of PVTGs, is just a small component of the PM-PVTG Mission. “But like the FM said, the goals are to build roads, telecom connectivity, water and sanitation. The monies for these efforts will go into the Scheduled Tribe Component (STC) of these respective ministries from where it will be allocated for the development of these groups,” he explained. 

Among the ministries that are expected to be roped in to implement the PM-PVTG Mission are the Rural Development Ministry, through which housing component and road connectivity will be implemented; the Water Resources Ministry, under whose Jal Jeevan Mission clean drinking water connections will be taken care of; the Education Ministry, which will take care of building schools and hostels; and the Health Ministry, which will look at filling gaps in healthcare for PVTGs. 

In addition to this, the Women and Child Development Ministry is also going to be roped in to get Anganwadi workers on ground to work towards sensitisation of PVTGs and ensuring they are able to sign up for government benefits. 

One senior official of the Tribal Affairs Ministry said, “In most of these 31,000 villages, the need for infrastructure development is the most urgent.”

The Ministry of Tribal Affairs’ Development Scheme for PVTGs, running since 2008, has already been providing for livelihood, employment opportunities, education, health, provision of safe drinking water, land distribution, land development, social security, housing and habitat, connectivity (road and telecommunication), supply of electricity, irrigation, urban development, etc.

However, the expenditure reports show that spending under this scheme has declined significantly in the last five years since 2018-19, when ₹250 crore was spent on it. The following year, it dropped to ₹249.99 crore, dipping further to Rs 140 crore in 2020-21, rising slightly to ₹160 crore in 2021-22 and then going back down to ₹124.79 crore in 2022-23. 

Ministry officials said that the reason for this dip in spending was initially the Covid-19 pandemic, “but more so because the money we were sanctioning to states were not being spent properly, lying in their treasuries”.

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Union Finance Minister Nirmala Sitharaman presents the Union Budget 2023-24
| Photo Credit: PTI

The government plans to borrow a record ₹15.4 lakh crore from dated securities in FY24 to meet its expenditure requirement to prop up the economy.

This is higher than the total borrowing of ₹14.21 lakh crore for the current financial year ending March 31, 2023.

Also Read | Budget 2023 | How is money allocated and where does it come from?

Finance Minister Nirmala Sitharaman while presenting the Budget on February 1 said the net market borrowings from dated securities are estimated at ₹11.8 lakh crore to finance the fiscal deficit in 2023-24.

“The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at ₹15.4 lakh crore,” she said.

The government has raised ₹12.93 lakh crore till January 27, which is 91% of the overall borrowing target of ₹14.21 lakh crore estimated for 2022-23.

The indebtedness of the Centre and State governments together is equal to 83% of the annual gross domestic product (GDP).

The Finance Minister retained the fiscal deficit target at 6.4% despite an increase in the subsidy bill.

“Coming to 2023-24, the total receipts other than borrowings and the total expenditure are estimated at ₹27.2 lakh crore and ₹45 lakh crore, respectively. The net tax receipts are estimated at ₹23.3 lakh crore,” she said.

She pegged the fiscal deficit at 5.9% of GDP for FY24.

“In my Budget Speech for 2021-22, I had announced that we plan to continue the path of fiscal consolidation, reaching a fiscal deficit below 4.5% by 2025-26 with a fairly steady decline over the period. We have adhered to this path, and I reiterate my intention to bring the fiscal deficit below 4.5% of GDP by 2025-26,” she said.

Also Read | Budget likely to cap fiscal deficit at 5.8% for FY24; Centre’s borrowings to rise

Ms. Sitharaman had pegged gross market borrowing through dated securities for 2022-23 at ₹14,95,000 crore.

However, the government in September 2022 decided to cut the gross borrowing to ₹14.21 lakh crore during FY23. The gross borrowing for 2021-22 was ₹12,05,500 crore.

With regard to the net borrowing, the government estimated a record ₹11.6 lakh crore raising from the market in 2022-23.

This was nearly ₹2 lakh crore higher than the current year’s Budget estimate of ₹9.7 lakh crore.

The total market borrowings of the government for 2022-23 are estimated at ₹11,58,719 crore, according to the previous Budget document.

The revised estimates for the same for 2021-22 are ₹8,75,771 crore against the Budget estimates of ₹9,67,708 crore.

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