Union Budget 2023: Priorities in light of growing global unrest
An unstable time period typified by geopolitical upheaval, high inflation, and indications of a worldwide economic slump characterizes the presentation of the Union Budget for 2023–24. The 2023 Union Budget will be the final full-year budget from the PM Modi-led government before the upcoming Lok Sabha elections, which are anticipated to take place in early 2024.
Be it from businesses looking for more incentives, salaried workers hoping for lower taxes, or the general public experiencing the consequences of inflation and hoping for lower prices on essential items, expectations have already started to build ahead of the budget presentation on February 1, 2023.
According to the OECD’s Economic Outlook (November 2022), India’s GDP is expected to grow by 5.7% in FY23 amid sluggish global demand. The primary goals of Finance Minister Nirmala Sitharaman are to maintain the growth trajectory while reducing the fiscal deficit and inflation.
Pay attention to macroeconomic stability
A budget that highlights India’s macroeconomic stability would be ideal. It is predicted that the government may raise the income tax exemption threshold from the existing Rs 2.5 lakh to Rs 5 lakh in the future budget year 2023–24. If successful, this measure could enhance consumer spending by increasing disposable income.
The four new labour codes, which comprise the Code on Wages, Industrial Relations Code, Social Security Code, and Code for Occupational Safety, Health, and Working Conditions, are anticipated to replace the 29 existing labour laws. In the forthcoming budget, it is anticipated that the government would state its intention to implement these codes in FY 23–24.
In unorganized industries, roughly 93% of India’s labour is employed. The government will also be able to guarantee that everyone has access to the security offered by social security and minimum wage laws thanks to these codes.
Unfortunately, despite the fact that the New Labour Codes were approved by Parliament in 2020, some state governments have yet to implement them. State governments must take this action in order to implement these codes as soon as is practical.
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Putting health first
It is important to enhance the healthcare system in tier 2 and tier 3 cities, even though it is envisaged that the upcoming Union Budget would raise the cap on tax deductions for health insurance premiums and offer more incentives for R&D expenditure to help pharmaceutical enterprises.
Improved infrastructure
This lack of infrastructure was brutally exposed by the Covid-19 second wave. The government should expand funding for the construction of ports, motorways, airports, and other infrastructure. Modernization of several Indian ports is urgently required, combined with an increase in connectivity.
The government must open the dredging market at ports that can accommodate larger ships in order to preserve and improve draught depth. Many of these coastal ports have the potential to grow into important hubs for manufacturing and export while also bringing down the cost of trans-shipment.
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Required tax relief
The government may declare in the 2019 budget its intention to support the shipbuilding industry with monetary subsidies, lower taxes, as well as other incentives.
Even though India is the third-largest producer of renewable energy in the world, more needs to be done. installing solar power in
Despite significant government efforts, India has not attained the required momentum. Many countries have experimented with cutting-edge tax advantages in an effort to stimulate investment in solar panels.
The Turkish government granted tax deductions for taxpayers who sell excess electricity produced by installing rooftop solar power on the roofs or walls of buildings they own or have rented in 2018.
Sweden has raised the subsidy rate for the tax reduction for installing solar cells from 15% to 20% with effect as of January 1, 2023. The government should announce tax benefits for companies establishing solar panel plants and for individuals building solar rooftop electricity systems in order to meet the 2030 Solar Mission Target.
The finance minister’s strategy for boosting middle-class spending and launching programs that will promote sustained economic growth and successfully manage the fiscal deficit will be revealed in the budget, which will be of utmost importance.