Finance Minister Nirmala Sitharaman holding the Budget Papers on February 01, 2023.
| Photo Credit: The Hindu

The higher spending, tax cuts and supportive policies announced in India’s Budget for 2023-24 are expected to support sustained demand growth and improve the longer-term prospects for corporates, said Fitch Ratings.

“We believe the tax cuts will boost consumer sentiment and maintain consumption growth, amid expectations of slower economic growth after the financial year ending 31 March 2023 (FY23),” said the rating agency after India presented on February 1 its annual Budget for the next financial year.

The announced income tax cuts will benefit the disposable incomes of consumers of all income groups, it said.

The income tax rebate limit available for salaried and individual taxpayers under the new income tax regime, introduced in 2020, has been hiked to ₹7 lakh from the present ₹5 lakh.

Further, the rating agency said a larger budget allocated to infrastructure and the government’s good execution record over the last few years bodes well for sectors, such as cement, steel and construction.

For the record, the Budget document proposed to increase capital expenditure spending by 33% to ₹10 lakh crore, focusing on augmenting core infrastructure assets, including roads, railways, airports and logistics.

“The planned capex is more than double the spending in FY21 and more than thrice that in FY19, underscoring the government’s focus on boosting the country’s infrastructure,” it noted.

“Growth in demand from the infrastructure end-market – which constitutes between 25-30% of cement demand – will be positive as we view it as a more stable end-market than housing.”

Cement and steel demand will also benefit from the 66% increase in spending allocated to the government’s programme to provide subsidised loans for affordable housing under the Prime Minister Awas Yojana (PMAY) scheme. The outlay for PMAY has been enhanced by 66% to over Rs 79,000 crores, announced Finance Minister Nirmala Sitharaman while presenting the Union Budget 2023-24 in Parliament.

Rajasthan Chief Minister and senior Congress leader Ashok Gehlot
| Photo Credit: PTI

Rajasthan Chief Minister Ashok Gehlot on February 1 criticised the Union Budget for neglecting the important areas of education, health and social justice and reducing the allocation by 33% for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which had proved to be a lifeline for the poor during the COVID-19 pandemic.

Mr. Gehlot said the Budget was against the poor, landless farmers and common people.

“Only headline-making hollow announcements have been made in the Budget… The provision for agriculture and farmers’ welfare is 6%, or ₹7,500 crore, less than the previous year. Similarly, there is a reduction of 15%, or ₹23,000 crore, in the subsidy for urea,” Mr. Gehlot said while reacting to the Budget.

Also Read | Explained | The funding and demand for MGNREGA

The negligible increase in the budgetary allocations for education, health and women and child development had shown that these areas would remain neglected, Mr. Gehlot said. Besides, the life of the common man would become even more difficult in the absence of any policy statement for reducing inflation, he added, while pointing to the spiralling prices of essential commodities.

The senior Congress leader said the Budget was “very disappointing” for Rajasthan, as the demand for giving national status to the Eastern Rajasthan Canal Project (ERCP), which would benefit 13 districts through interlinking of three rivers, had not been accepted. The project was directly related to the development of the State, he said.

“The Narendra Modi government has sanctioned ₹5,300 crore as an additional assistance to Karnataka for the Upper Bhadra Project, keeping the elections in mind. This shows the Centre’s step-motherly treatment towards Rajasthan,” Mr. Gehlot said.

Mr. Gehlot said the people of Rajasthan would give a “befitting reply” for the treatment meted out to them at the appropriate time.