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.

Mangroves are salt-tolerant plant communities found in tropical and subtropical intertidal regions. File
| Photo Credit: The Hindu

The story so far: The Union Budget for 2023-24 announced an initiative for mangrove plantation along the coastline and on salt pan lands, under MISHTI (Mangrove Initiative for Shoreline Habitats & Tangible Incomes).

How do mangroves help?

Mangroves are salt-tolerant plant communities found in tropical and subtropical intertidal regions. They are important refuges of coastal biodiversity and also act as bio-shields against extreme climatic events. With the threat of climate change and frequent tropical storms looming large, planting more mangroves is a welcome development for India which has a coastline of about 7,500 km.

Where do mangroves grow in India?

The ‘State of World Mangroves 2022’ report by the Global Mangrove Alliance puts the total mangrove cover of the world at 1,47,000 sq km (14.7 million hectares). India has about 4,992 sq km (0.49 million hectares) of mangroves, according to the Indian State of Forest Report (IFSR) 2021. Mangroves in India are distributed across nine States and three Union Territories with West Bengal having the highest mangrove cover of 2,114 sq km. The IFSR report also points out that there has been an increase in the mangrove cover from 4,046 sq km in 1987 to 4,992 sq km in 2021. However, like most other countries, in India too the mangrove ecosystem faces constant pressure due to increasing population in coastal areas and the rising demand for land, timber, fodder, fuel-wood and other non-wood forest products like fisheries. The tree species that form a mangrove forest or ecosystem are broadly classified as true mangroves and mangroves associates. True mangroves are the ones which display morphological adaptations for a high saline mangrove ecosystem such as pneumatophores, vivipary or crypto vivipary germination and salt-secreting cells. Botanists put the number of true mangrove species in India at about 42 and mangrove associates at 68. A stable and resilient mangrove ecosystem requires a number of species to exist side by side. Experts believe that trial and testing with field experience and monitoring for years may be required to create a new mangrove ecosystem along the coastline.

What is the ecosystem of these forests?

Mangrove forests are formed when there is intertidal flow and where adequate sediments are available for the trees to set down roots. Experts say aquaculture or fisheries along the coast obstructing tidal flow is one of the biggest threats to the mangrove ecosystem. In the Sundarbans, the largest mangrove forest in the country, several instances of clearing mangroves for fisheries have come to light. Along the country’s coastline, land reclamation for agriculture, aquaculture and industrial activities have occurred in areas which are under the Coastal Regulation Zone. Restoration of the land and allowing intertidal flow is crucial for plantation and survival of mangrove forests.

Which agency will be responsible for it?

The Budget states that MISHTI will be implemented through convergence between the MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme), CAMPA (Compensatory Afforestation Fund Management and Planning Authority) Fund and other sources. Organisations that have been involved in mangrove plantation say that the initiative requires extensive work with local communities. The survival rate of mangrove seed plantation is 50% and of saplings is about 60% and it takes three years for a new plant to stabilise. A contract-based one-time plantation under MGNREGS and CAMPA may not work unless the local communities take ownership of the forests. Discharge of untreated domestic and industrial effluents into the rivers impede the natural inter-tidal flow along the coast and the mixing of freshwater and saline water which help in gradual formation of the mangrove forest.

Why is it crucial for fighting climate change?

The ‘State of World Mangroves 2022’ points out that mangroves are estimated to hold up to four times the amount of carbon as some other ecosystems. “The loss of even 1% of remaining mangroves could lead to the loss of 0.23 gigatons of CO2 equivalent, equating to over 520 million barrels of oil,” the report states. An initiative like MISHTI is in line with India’s Nationally Determined Contributions announced by the Ministry of Environment, Forest and Climate Change to create an additional carbon sink of 2.5-3 billion tonnes of carbon dioxide (CO2) equivalent, through additional more forest and tree cover by 2030. India joined the Mangrove Alliance for Climate, at the 27th session of the Conference of the Parties in Egypt.

Union Finance Minister Nirmala Sitharaman leaves after briefing the Bharatiya Janata Party (BJP) MPs on the Union Budget 2023-24, at Parliament House, in New Delhi on Friday.
| Photo Credit: ANI

BJP MPs on Friday interacted with Union Finance Minister Nirmala Sitharaman on the merits and demerits of the new and old income tax regimes at a briefing here on the Union Budget, which was tabled in Parliament on Wednesday.

Members from both the Lok Sabha and the Rajya Sabha were present at the briefing on the Budget, the last full one before the 2024 Lok Sabha elections, and for which the BJP has drawn up a massive outreach programme explaining the main highlights.

“There was a power point presentation on the Budget and its highlights, but the Finance Minister went into great detail about the new and old income tax schemes, and the changed slabs. Tax issues always require this kind of explanations, they are never easy, and many MPs had queries on the relative merits and demerits,” said a BJP MP present at the meeting.

There were also questions on the slashing of allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) compared with the past few years. The Budget allocated ₹60,000 crore for the MGNREGS, which is 18% lower than the Budget Estimates of ₹73,000 crore for the current year, and 33% lower than the Revised Estimates of ₹89,000 crore for the scheme.

“On this, the Finance Minister said that the the hiked allocations for the Pradhan Mantri Awas Yojana, up 66% in this Budget, especially for tier two and three cities will make up for creation of similar employment. She said that during COVID-19 there were situations for increasing the allocations, and that the scheme is largely demand-driven,” the source said.

The capital expenditure detailed in the Budget was also gone into in detail, and flagged as something that the BJP MPs should speak about when talking about the Budget. The Mahila Samman Patra, a small savings instrument for women with interest rate up to 7.5% for deposits of up to ₹2 lakhs was also talked about.

The BJP kicked off its outreach programme on the Budget on Friday, with Chief Ministers of the States ruled by the party holding press conferences. As part of the programme, Union Ministers will also fan out to the State capitals to talk about the highlights of the Budget.

Midday Meal workers burn copies of Union Budget 2023-24 during their protest, in Kolkata, Thursday, Feb. 2, 2023.
| Photo Credit: PTI

The Samyukt Kisan Morcha (SKM), the umbrella organisation of more than 300 farmers’ outfits and the Right to Food Campaign, a platform for activists working on food and nutritional security, termed the Budget as an attack on farmers and the poor. They said in separate statements that the allocations for the agriculture sector and food subsidy had been reduced considerably in the Budget, presented in the Parliament on Wednesday.

The SKM, expressing shock and bewilderment at the Union Budget, said it had expected the Centre to appreciate the importance of the farm sector with the need to secure income and future of the rural farming community. “Instead, the Union Budget 2023 is the most anti-farmer Budget in the history of the nation,” they said.

The Budget was silent on doubling farmers’ income, the SKM said adding that the Centre “dishonestly stopped” giving data on the income of farmers and out of the targeted increase in the income of ₹13,000, only ₹4,400 had been achieved, that is only one-third of the target, the SKM said.

The grant for PM Kisan Samman Nidhi had been reduced, they said and alleged that the number of beneficiaries had been steadily declining and now the portal had stopped displaying real-time beneficiary data. “At a time of deep economic distress, this scheme gave some relief to farmers but now even that is being constricted,” the SKM said.

Social spending reduced

The Right to Food Campaign said it was shocked to see that the Budget reduced the government spending on the social sector to a huge extent. “The negative impact of the economic crisis that began even before the pandemic, has fallen disproportionately on those at the bottom of the pyramid,” the platform noted. The activists said with the discontinuation of the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) from January 1, 2023, the ration entitlement of the people was halved.

“Women and children of the country have once again been ignored even when they have been most affected by the pandemic and the continued economic severity. The allocations for Samarthya (including maternity entitlements), and PM POSHAN (mid-day meals) have reduced considerably this year as well,” they said.

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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An Agriculture Accelerator Fund will be set up to encourage agri-startups by young entrepreneurs in rural areas, said Finance Minister Nirmala Sitharaman, during the presentation of the Union budget 2023-24. The fund will aim at bringing innovative and affordable solutions for challenges faced by farmers. It will also bring in modern technologies to transform agricultural practices, and increase productivity and profitability.

Digital public infrastructure for agriculture will be built as an open-source, open-standard and interoperable platform for public good. This will enable inclusive, farmer-centric solutions through relevant information services for crop planning and health; improved access to farm inputs, credit, and insurance; help for crop estimation and market intelligence. It will support the growth of the agri-tech industry and start-ups operating in the space, according to the minister.

Shashi Kant Singh, Executive Director, Agri & Natural Resources, PwC India, said, the Union budget was incentivising a forward-looking vision for agriculture. “Focus on accelerator funds for agri-startups, higher agri-credit allocation, making India a global hub for millets, along with digital and functional rejuvenation of Primary Agricultural Credit Societies would have a long-lasting impact on the sector,’‘ Mr. Singh observed.

The Government’s commitment to setting up digital public infrastructure for agriculture would help the agritech startups to connect with more farmers and in turn enable them to realise better value for their produce, said Varun Khurana, Founder & CEO, Otipy, an e-commerce service allowing users to buy farm-fresh produce. “It is encouraging to see the government’s focus on agriculture, specifically setting up an agri accelerator fund for agri-startups. This will accelerate the pace of innovation in a sector which is India’s biggest, in the context of the employment generation,’‘ said Mr. Khurana.

Ketan Doshi, Senior Adviser, Transforming Agriculture for Small Farmers, The/Nudge Institute, a not-for-profit organisation, said the budget has been inclusive, especially since next year is the election year. “The Government seems to have the right intent to help farmers. Still, one has to see how these proposals are going to be implemented,’‘ he said.

The proposed Agriculture Accelerator Fund can provide a supportive environment that can help agritech startups grow faster by providing them with resources, exposure, and opportunities to succeed, said Anirudh A Damani, Managing Partner, Artha Venture Fund. “Through this effort, the government can give these startups more support ranging from seed funding and mentorship programmes to infrastructure subsidies and appropriate market access,’‘ he added.

Mayank Tiwari, Founder and CEO, Reshamandi, an ecosystem for natural fibre, said this initiative is a step towards turning agritech into a sunrise sector for investments. “This will further provide a much-needed boost in productivity, besides improving efficiency, and reducing crop failure, to farmers, and all other stakeholders in the supply chain, who will now gain access to new-age technology developed by agritech start-ups.’‘

The budget also proposed opening Centres of Excellence for Artificial Intelligence in top educational institutions to support the growth, and conduct interdisciplinary research. The centres will develop cutting-edge applications and scalable solutions in the areas of agriculture, health, and sustainable cities.

According to the Finance Minister, plans are also on to set up massive decentralised storage capacity to help farmers store their harvest, cut losses, and increase their incomes.

Illustration: Satheesh Vellinezhi

With the global economy adrift, Finance Minister Nirmala Sitharaman sought to carve out an ark for India in her fifth Union Budget by trying to nudge domestic consumption and reluctant private investments upwards, while also seeking to create a feel-good factor among specific segments of voters as the government gears up for the 2024 Lok Sabha polls.

The FM summed up the BJP-led government’s achievements since 2014 as “leaving no one behind”, taking just 200-odd words to outline the doubling of per capita income to ₹1.97 lakh, the increasing formalisation of the economy and the expansion of targeted benefits. She then used the rest of her Budget speech to soothe sections of society that may have felt a tad left behind over its nine-year-tenure.

To assuage the salaried middle class, deflated by a sustained streak of high inflation, the tax-free limit under the new exemption-less income tax regime was raised to ₹7 lakh from ₹5 lakh. The cap on non-government employees’ leave encashment at the time of retirement was raised to ₹25 lakh from ₹3 lakh.

Help for those left behind

The first Budget of the Amrit Kaal — the 25-year period leading to the centenary of Indian independence in 2047 — aimed to build on existing “inclusive development” efforts that assign overall priority for the underprivileged, the Minister said. She launched new socio-economic development schemes: the PM Particularly Vulnerable Tribal Groups Development Mission, and the PM Vishwakarma Kaushal Samman to support artisans from weaker sections and Scheduled Castes, Scheduled Tribes and Other Backward Classes.

Some measures were also announced to alleviate the lot of micro, small and medium enterprises that have faced successive shocks over the last few years, from demonetisation to the pandemic.

Poll-pleasing focus on jobs

While the Finance Minister addressed various sections’ aspirations through her less-than-90-minutes speech, the broader underlying message was aimed at India’s restive youth and their hopes of securing a job.

References to “job” creation in a Budget speech hit a six-year high, with the Minister flagging it seven times in different contexts, compared to just two mentions in the 2022-23 Budget speech and three references in the year before that.

Giving an impetus to growth and job creation, and creating opportunities, especially for the youth, she said, was a key focus of the government’s economic agenda to achieve its vision for the Amrit Kaal, which will culminate in 2047.

It is perhaps no coincidence that the last time job creation figured high (with six mentions) was when the late Arun Jaitley presented the Budget for 2018-19 — another Budget presented in the year before a general election.

Capex plans depend on States

Polls apart, the Budget’s grand plan to ramp up infrastructure capex to ₹10 lakh crore in the hope that it gives greater traction to a revival in private investments will hinge on the States — which have been offered ₹1.3 lakh crore in the form of 50-year interest-free loans — doing their bit, and Indian industry being bold enough to take risks during a tumultuous, unpredictable period also marked by rising interest rates.

The deposit limit on savings schemes for senior citizens was doubled to ₹30 lakh and a new one-time small savings scheme was also announced for women to invest upto ₹2 lakh with 7.5% returns assured for two years.

An uptick in small savings collections will also help the government fund its fiscal deficit target of 5.9% of GDP in the coming year (from the 6.4% estimated in 2022-23), with net market borrowings pegged at ₹11.8 lakh crore, Ms. Sitharaman said.

While the Economic Survey projected a 6.5% growth for the year ahead, the Budget estimates a nominal GDP growth of 10.5% for its revenue calculations. Finance Secretary T.V. Somanathan explained that this could be derived from any combination of real growth and inflation, and was not a yardstick for hopes about either.

Uttar Pradesh Chief Minister Yogi Adityanath. File
| Photo Credit: PTI

The Union Budget on Wednesday evoked mixed reactions in Uttar Pradesh.

Chief Minister Yogi Adityanath hailed the Budget and described it as a Budget for ‘New India’ which aims to serve 130 crore people of the country. The Opposition parties criticised the Budget and said it would benefit only a ‘few rich people’ and would further increase inflation and unemployment.

Watch | Budget 2023: What’s cheaper and what’s costlier?

“The Budget will fulfil the expectations and aspirations of all sections of society, it talks about the vision for New India, the country’s prosperity and aims to serve 130 crore Indians,” Mr. Adityanath said in a tweet.

The Chief Minister added that the Budget will prove to be a milestone in the direction of making India an economic superpower and fulfilling the resolution of ‘developed India’ presented during the Amrit Mahotsava.

He also congratulated the Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman for the Budget.

Reaction of the Opposition parties

Meanwhile, the Opposition Samajwadi Party (SP) chief Akhilesh Yadav alleged the Budget gave despair instead of hope and alleged it will further increase unemployment and inflation in the country. “The Bharatiya Janata Party’s (BJP) Budget will further increase inflation and unemployment. It does not give asha (hope) but gives nirasha (dispair) to farmers, youth, women, labourers, professionals and the business class. This Budget is for the benefit of a few rich people,” said Mr. Yadav.

Bahujan Samaj Party (BSP) chief and four-time Uttar Pradesh Chief Minister Mayawati also targeted the Budget and alleged that the incorrect thinking of the government had the biggest impact on the lives of crores of poor people.

“This year’s Budget is also not much different. Government does not points out the shortcomings of last year and instead makes new promises, the reality is the lives of more than 100 crore people are at stake as it was before. People live by hope, but why false hope?,” she said in a tweet. She urged the government to pay heed towards self-reliance.

“Narrow policies… have the biggest impact on the lives of crores of poor farmers and other hardworking people who are attached to rural India which is called real India. Government must pay attention to their self-respect and self-reliance so that the pockets of the common man are filled,” added Ms. Mayawati.

Finance Minister Nirmala Sitharaman on Wednesday, February 1, presented the last full budget of the Narendra Modi government before the 2024 general elections. The Minister announced a range of new initiatives, revised income tax slabs and customs duty, and sops for agriculture and energy transition.

The Union Budget 2023-24 document also listed the new allocations for core welfare schemes that drive socio-economic development. Here’s a roundup of how the budgetary allocations for some of the key schemes have changed-

MGNREGS: The government slashed the budget for its flagship rural employment scheme, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) by nearly 32% compared to the ₹89,400 revised estimate for the scheme in the current year.

Also read | Explained | The funding and demand for MGNREGA

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was passed in 2005 and aimed at enhancing the livelihood security of households in rural areas. Under it, the MGNREGS is a demand-driven scheme that guarantees 100 days of unskilled work per year for every rural household that wants it, covering all districts in the country except those with a 100% urban population.

Food Subsidies: The Centre has allocated a little above ₹2 lakh crore for the food subsidy under the National Food Security Act (NFSA)- this includes funds for the Food Corporation of India, funds for decentralised procurement of grains by State agencies, and other logistical costs. Starting from January 1, 2023, the Centre had decided to provide 5 kg of free foodgrains per month to the 81.35 crore beneficiaries of the NFSA for one year starting from January 2023, rather than charging them a subsidised amount of ₹3 a kg of rice, ₹2 a kg of wheat and ₹1 a kg of coarse cereal as is usually done.

It was announced in December that the government was terminating the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), which had provided an additional 5 kg of free grains every month to NFSA beneficiaries after being launched as an emergency measure in response to the COVID-19 pandemic in April 2020 and received multiple extensions since. In a normal year, without COVID disruptions, the Centre’s food subsidy bill on account of the NFSA amounted to around ₹2 lakh crore, similar to the newly-announced allocation, but the PMGKAY had effectively doubled that sum for the past two years.

Jal Jeevan Mission: The Centre increased its budgetary allocation for the Jal Jeevan Mission (JJM) or the National Rural Drinking Water Mission by about 27% to ₹70,000 crore from the current year’s revised estimates of ₹55,000. The Jal Jeevan Mission aims to provide safe and adequate drinking water through individual household tap connections by 2024 to all households in rural India.

The Jal Shakti Ministry tweeted last week that the government had provided 11 crore rural households with a tap water connection under the JJM scheme. Data from the Ministry’s dashboard suggest that 56% of the targeted 19.3 crore households had been covered.

The scheme has a total financial outlay of about ₹3.60 lakh crore, with the Centre funding 50% of the cost with States and Union Territories, except for Union Territories without a legislature, where it foots the entire bill, and northeastern and Himalayan States and Union Territories with legislatures, where it funds 90% of the bill.

Ayushman Bharat-PMJAY: The budget for the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PMJAY) — the national public health insurance fund, saw an increase of about 12% at ₹7,200 crore compared to the ₹6,000 crore revised estimates for the current year.

The Ayushman Bharat PM-JAY is a health insurance scheme launched in 2018, aiming to provide a health cover of Rs. 5 lakh per family per year for secondary and tertiary care hospitalization. It aims to over 10.74 crore poor and vulnerable families (or 50 crore beneficiaries) from the bottom 40% of the Indian population. Union Health Minister Mansukh Mandaviya had said in December 2022, that 4.5 crore people had so far been empanelled under the scheme.

PM-Kisan: The allocation for the Prime Minister’s Kisan Samman Nidhi (PM-KISAN) scheme was the lowest in five years and remained the same as the revised estimates for the current year at ₹60,000 crore. PM-Kisan is a flagship Central scheme launched in 2019 for cash transfers ₹6,000 per year to eligible farmer families in three instalments of ₹2,000 each.

Finance Minister Nirmala Sitharaman informed while presenting the Union Budget on Wednesday that the government has made cash transfers totalling ₹2.2 lakh crore to around 11 crore farmers under the PM-Kisan scheme.

PM-POSHAN: The government has allocated a budget of ₹11,600 crore to the Pradhan Mantri Poshan Shakti Nirman, or the rebranded version of the mid-day meal scheme for 2023-24. This is down 9.37% from the current year’s revised estimates of ₹12,800.

In 2021, while renaming the mid-day meal scheme to give hot cooked meals to 11.8 crore government school students from Class 1 to 8, the Centre had also decided to extend the scheme to 24 lakh children studying in balvatikas, the pre-primary section of government schools from 2022-23.

National Education Mission: A total of ₹38,965 crore was allocated to the National Education Mission for 2023-24, up 19.44% from the ₹32,612 crore revised estimates for the current year. The Mission is the umbrella scheme integrating major education-related schemes so education can be provided holistically and without segmentation from pre-primary to class 12. It includes the Sarva Shiksha Abhiyan under the Right to Education and schemes for secondary and higher education as well those for teacher training and adult education.

PMAY: The Centre allocated ₹79,590 crore to the Pradhan Mantri Awas Yojana (PMAY), up 3.19% from the current year’s revised estimates and 66% from the budget estimates. The PMAY aims at constructing houses in both urban and rural areas. PMAY-Gramin (rural) was initiated in November 2016 with a target of completing 2.7 crore houses and PMAY-Urban was initiated in June 2015 with a target of constructing 1.2 crore homes.

National Social Assistance Program: The budget allotted ₹9,636 to the National Social Assistance Program (NSAP), which provides monthly pension assistance to the elderly, widows, and persons with disabilities.

Development of Scheduled Tribes and Scheduled Castes: The budget allocated ₹4,295 crore and ₹9,409 crore to the umbrella programs for the development of Scheduled Tribe and Scheduled Caste communities respectively. While the ST development allocation saw a nearly 10% increase, the SC programme funding rose by close to 22%, compared to the current year’s revised estimates.

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Maharashtra Deputy Chief Minister Devendra Fadnavis watches the live telecast of Union Budget 2023-24 presented by Finance Minister Nirmala Sitharaman on February 01, 2023. Photo: Twitter/@Dev_Fadnavis

Stating that the Budget presented by Union Finance Minister Nirmala Sitharaman would give a massive boost for Maharashtra’s sugarcane industry, Deputy Chief Minister and State Finance Minister Devendra Fadnavis on Wednesday lauded the Modi government’s decision to waive off the income tax on the fair and remunerative price (FRP) for sugarcane payment prior to 2016.

Mr. Fadnavis told reporters in Mumbai that that the BJP government at the Centre under Prime Minister Narendra Modi had succeeded in giving sugarcane sector in the country, and particularly in Maharashtra, its biggest advantage in years by waiving off the tax on FRP.

Explained | Budget 2023: How is money allocated and where does it come from?

“Sugarcane farmers will greatly benefit by this move and get better rates henceforward…

“Earlier, the Modi government had waived off tax on FRP after 2016. Now, with the exemption of tax before 2016, sugarcane factories in Maharashtra will be saved from having to pay tax on FRP [before 2016] which collectively adds up to ₹10,000 crore,” Mr. Fadnavis said.

In a veiled jibe at previous governments in Maharashtra (Congress-Nationalist Congress Party and the Maha Vikas Aghadi under Uddhav Thackeray), Mr. Fadnavis said that for the last 20 years, State governments had been trying to get the Centre to waive off the tax on FRP without success.

The move is expected to help the ruling BJP in the State consolidate its position in the ‘sugar heartland’ of western Maharashtra, traditionally the bastion of the Sharad Pawar-led NCP and the Congress.

The NCP particularly has looked on with apprehension ever since the formation of a separate cooperation Ministry under Amit Shah by Prime Minister Modi in July 2021.

NCP president Sharad Pawar has been stressing that the Central government could not meddle in the functioning of Maharashtra’s cooperative sector as all the cooperative societies in the State were governed by the Maharashtra State Cooperative Act and that only the State, and not the Central government, had the right to frame policies and enforce them in the sector.  The formation of the Cooperation Ministry under Mr. Shah has sparked speculation that the BJP’s real motive was to break the NCP’s stranglehold over Maharashtra’s cooperative sector, thereby attenuating the party’s political hold in the State, particularly the sugar heartland of western Maharashtra. 

Meanwhile, praising the Budget, Mr. Fadnavis said the focus on the agriculture sector was not merely limited to doling out subsidies to farmers but concentrated on aspects like building digital infrastructure, technology infusion and integrating with the market.

“The country is to be developed as a ‘global millets hub’ as announced in the Budget…Every section will benefit from it — be it the middle class, small industries, farmers, youth. The investment in infrastructure at ₹10 lakh crore is unprecedented along with the ₹2.30 lakh crore investment in the railways sector,” he said.

NCP leader Ajit Pawar, who is also Leader of Opposition in the Legislative Assembly, lashed out at the Budget, dubbing it as ‘election-oriented gimmickry’, Maharashtra Congress president Nana Patole said there was “nothing concrete” in it “beyond catchy slogans and rhetoric.”

“The Union Finance Minister did not utter a single word on the burning issue of inflation, unemployment, problems faced by the farmers, minimum support price for agricultural produce or rising fuel prices. There was no concession in the interest rate of crop loans nor did the government announce any increase in the minimum base price, nor was the GST on fertiliser and seeds reduced. Nor did the Finance Minister give any formula to double the income of the farmers,” said Mr. Patole.

Swabhimani Shetkari Sanghatana president Raju Shetti likewise called the budget “a litany of hollow promises” with nothing concrete for farmers.

“The Budget’s emphasis on organic farming, and the development of the country into a ‘millets hub’ sounds good on paper. But has the government provided any infrastructure for these experiments and have they made a proper study over their large-scale feasibility in India,” asked Mr. Shetti.