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In the Union Budget 2023, the government has allocated a significant amount of funding for the healthcare sector, with a focus on creating a sound foundation for a robust healthcare system in the country. The budget emphasizes the importance of preventive healthcare and lays out a coherent plan for reducing the burden of diseases such as diabetes through smart public health management. The budget also seeks to promote the use of technology in the healthcare sector, including telemedicine and digital health solutions, to improve access to care for patients in remote or underserved areas.

The health sector has been allocated 89,155 crores in the Union Budget 2023-24, a 13% increase from 79,145 crores in 2022-23, with the government also announcing a mission to eliminate sickle cell anemia by 2047.

The government has also emphasized the importance of nutrition in the healthcare sector and has launched a new program called PM-Pranam to promote the use of millets, pulses, and oilseeds in the daily diet of the people. This program is aimed at improving the overall health and well-being of the population and reducing the burden of diseases such as diabetes, which has reached epidemic proportions in the country.

Overall, the Union Budget 2023 is a significant step forward for the healthcare sector in India. The increased funding, focus on preventive healthcare, investment in technology, and emphasis on nutrition are all important steps towards creating a stronger, more efficient, and more effective healthcare system in the country.

Some Statistical Views:

• The Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) was allocated INR 10,000 crore, a 43 percent increase over the previous year’s budget (INR 7,000 crore), to improve medical education infrastructure and establish AIIMS across the country.
• Human Resources for Health and Medical Education received INR 7,500 cr, a 56 percent increase over last year’s budget (INR 4,800 cr), to help bridge the country’s healthcare professional shortage.
• A budget of INR 72 crore has been allocated to strengthen the National Centre for Disease Control (NCDC) branches in order to improve disease surveillance of zoonotic diseases and other neglected tropical diseases.
• Allocation of INR 37,000 cr for National Health Mission (NHM), an increase of 1.2 percent compared to 2021-22.
• Ayushman Bharat-Pradhan Mantri Allocation The Jan Arogya Yojana (AB-PMJAY) budget is INR 6,412 cr, a 0.2 percent rise over last year’s budget (INR 6,400 cr); however, the revised estimate for 2021-22 is INR 3,199 cr, showcasing the requirement to further drive AB-PMJAY adoption. Giving a further boost to the efforts of the Ayushman Bharat Digital Mission (ABDM), and creating a more modern and inclusive Digital India, the allocation for ABDM was increased to INR 200 cr for developing the National Digital Health Ecosystem.
• To strengthen blood transfusion services, a new allocation of INR 404 cr was announced to develop hospital-based or stand-alone blood centers.
• Allocation of INR 5,156 cr outlay as part of the newly announced PM Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) in October 2021 to strengthen health infrastructure at mission mode approach and improve primary, secondary, and tertiary care services.
• Pradhan Mantri Garib Kalyan Package, launched in Oct 2021 to provide insurance to healthcare workers fighting COVID-19, was allocated INR 226 cr, a decrease of 72 percent (INR 813 cr in budget 2021-22).

What’s new?

The healthcare sector can benefit from a new budget compared to previous years’ budgets, as it can provide increased funding for various initiatives aimed at improving the quality and accessibility of care. Here are some of the key ways the healthcare sector can benefit from a new budget:

Modernization of Infrastructure: The budget can provide funding for the modernization of healthcare facilities and equipment. This can include upgrading electronic health records systems, improving technology and equipment in hospitals and clinics, and constructing new facilities. These investments in infrastructure can lead to more efficient and effective care delivery, which can cause improved patient outcomes and satisfaction.

Increased Access to Care: The budget can also provide funding for programs and initiatives aimed at increasing access to care for underserved populations. This can include providing funding for community health centers, expanding Medicaid coverage, and increasing funding for programs like telemedicine that can help reach patients in remote or rural areas.

Research and Development: The budget can also allocate funding for research and development in the healthcare sector. This can include funding for medical research, the development of new drugs and treatments, and the advancement of medical technology. This can lead to the creation of new and innovative ways to diagnose, treat, and prevent disease, and can cause improved health outcomes for patients. Budget 2022-23 assigned INR 3,201 cr to the Department of Health Research, a 20% increase over budget 2021-22 (INR 2,663 cr) and a 4.0 percent increase over expected expenses of INR 3,080 cr for 2021-22. A new allotment of INR 690 cr under PM-ABHIM is provided as part of this to ensure biosecurity preparedness, strengthen multi-sectoral pandemic research, and institutionalize the ‘One Health’ platform.

Workforce Development: The budget can also provide funding for workforce development programs aimed at training and educating healthcare professionals. This can include funding for training programs for nurses, doctors, and other healthcare workers, as well as programs aimed at increasing diversity in the healthcare workforce.

Improved Quality of Care: The budget can also provide funding for initiatives aimed at improving the quality of care delivered to patients. This can include funding for patient safety initiatives, programs aimed at reducing medical errors, and initiatives aimed at reducing healthcare-associated infections. These investments in quality improvement can lead to safer, more effective care, and can cause better health outcomes for patients.

Increased Investment in Public Health: The budget can also provide increased investment in public health initiatives, including funding for programs aimed at preventing the spread of infectious diseases, promoting healthy lifestyles, and addressing health disparities. This can help ensure that communities are better prepared to respond to public health emergencies, and can result in improved health outcomes for all populations.

Reduction in Healthcare Costs: The budget can also provide funding for initiatives aimed at reducing healthcare costs for patients, including programs aimed at reducing the cost of prescription drugs, improving the affordability of insurance coverage, and promoting the use of cost-effective treatments. These efforts can help reduce the financial burden on patients and can make healthcare more accessible to those who need it most.

In a nutshell, the new budget can provide a wide range of benefits for the healthcare sector, from increased funding for modernization and infrastructure improvements to increased access to care to improved quality of care, and reduced healthcare costs. By investing in the healthcare sector, governments can help ensure that patients receive the best possible care and that the healthcare system is prepared to meet the needs of communities now and in the future.

Implications for the sectors

• The announcement of the National Digital Health Ecosystem will result in the development of a solid basis for managing online registries of healthcare providers and facilities, unique health identities, and universal access to health facilities in the healthcare industry.
• While the government has expressed an interest in involving the private sector, clear guidance on how to incentivize the private sector in infrastructure development, medical education, and healthcare service delivery has not been considered. The increased allotment of 56% under PMSSY is expected to encourage the integration of district hospitals and medical colleges, as well as to improve the quality of medical education in the country.
• The implementation of the PM-ABHIM scheme launched in October 2021 with an outlay of INR 64,120 cr is a step in the right direction to boost healthcare infrastructure. However, going forward the success would lie in how the components under the scheme are implemented to build a resilient health system.
• Increased funding for the ‘One Health’ programme can aid in the design and implementation of multi-sectoral programmes, policies, legislation, and research aimed at various zoonotic diseases that have the potential to cross borders and cause infections in humans. With the increase in cases, the government should take stronger measures to strengthen the One Health resilience programme and strengthen surveillance by expanding the One Healthcare program to combat the transmission of emerging diseases.
• Launch of the ‘National tele-mental health program’ including 23 tele-mental health centers of excellence with the National Institute of Mental Health & Neurosciences (NIMHANS) being the nodal center and IIT Bangalore (IITB) being the technical support is a first step toward better access to mental health counseling.
• Parity sought to be brought between the two exemption regimes available to non-profit organizations including charitable hospitals under Section 10(23C) and 12AB.
• Rationalization of compliances for charitable hospitals including accumulation, payments to specified persons (related parties), return filing, and taxes on accreted income.
• Contributions by an employer-provided for medical treatment in relation to COVID-19 shall not be treated as perquisite in the hands of the employee.
• Contributions provided by employers/contributions up to INR 10,00,000 by other persons on the death of an employee due to COVID-19 shall not be taxable in the hands of the family members.

Where are we lacking?

While the Union Budget 2023 for the healthcare sector in India has several positive aspects, it also has some shortcomings that must be addressed in order to improve the quality and accessibility of care for all citizens. Some of these shortcomings include:

Insufficient funding: While the government has increased the allocation for the healthcare sector, some experts argue that the funding is still insufficient to meet the needs of the growing population and address the challenges faced by the healthcare system.

It is disappointing that India’s public healthcare spending only accounts for slightly more than 2% of the country’s GDP, which is inadequate. The expectation is that the upcoming budget will significantly increase the allocation for public health with the goal of reaching 2.5% of GDP by 2025, with an emphasis on primary healthcare to decrease the number of diseases in India.

The budget should also enhance the infrastructure in smaller cities and address the shortage of healthcare professionals. Currently, there are only 0.6 doctors and 0.9 hospital beds per 1,000 people, making it difficult to access quality and affordable healthcare. The budget should encourage cooperation between the government and private sector to enhance the quality of skilled healthcare professionals and create a plan to attract healthcare professionals to work in Tier 2 and 3 cities. Additionally, the budget should provide for increasing the number of doctors by implementing a system similar to the one used in foreign universities where the number of seats in medical colleges is doubled through fall/summer patterns.

Medicine-related Tourism: To fully realize the potential of medical tourism in India, additional government support is necessary to develop it as a structured sector. This can be achieved by creating healthcare zones that integrate hospitals, hotels, recreation, and fitness facilities, and by offering incentives such as tax exemptions for income from medical value travel (MVT) and streamlined visa processes for patients from important countries. This would support the government’s “Heal in India” initiative and could be addressed in the upcoming budget.

Ease of doing business: To eliminate significant deterrence to investment and financing, the healthcare sector requires ease of doing business. The government must clarify the roles of state and federal governments on issues such as product enrollment and approval jurisdictions. The application request and tracking processes must also be streamlined.

To reduce the high cost of funding, the government may announce healthcare as a National Priority Sector, allowing banks to provide financing to private healthcare entities for longer periods of time at lower interest rates. To cut costs for both providers and patients, the government should reduce duty and cess on intensive care and life-saving facilities and drugs. Even though healthcare providers are not qualified for input tax credits, GST should be rationalized.

Limited focus on rural areas: Despite a focus on rural areas in the budget, some experts argue that more needs to be done to address the disparities in access to care between urban and rural areas, where many people still lack access to quality healthcare.

Lack of attention to mental health: Mental health is an important aspect of overall health and well-being, but it is often neglected in the healthcare sector. The budget could have provided more resources and attention to mental health services, which are in high demand but currently lacking in many parts of the country.

Challenges in implementing new initiatives: While the budget lays out several important initiatives for the healthcare sector, there are challenges associated with their implementation, including a lack of infrastructure, inadequate staffing, and limited resources. The government will need to address these challenges to ensure that the initiatives are successful and deliver the desired outcomes.

In conclusion, while the Union Budget 2023 for the healthcare sector in India has several positive aspects, it also has some shortcomings that must be addressed in order to improve the quality and accessibility of care for all citizens. The government must take steps to address these shortcomings and ensure that the funding is allocated in the most effective manner to meet the needs of the healthcare sector.

-TJEF Editor

Prachi

The Union Budget 2023, presented by the Honourable Finance Minister on February 1st, has created ripples across various sectors of the Indian economy. The automobile industry, in particular, has been keeping a close eye on the budget as it holds a crucial role in shaping the country’s growth and employment. In this article, we will delve into the impacts of the Union Budget 2023 on the automobile sector and analyse how it will shape the future of the industry.

The Expectation:

To start, we will evaluate the expectations of the automobile industry prior to the release of the budget. The automotive industry usually expects measures in the Union Budget to support the growth and development of the sector. This can include measures such as tax incentives for manufacturing and research and development, support for the adoption of electric vehicles, and infrastructure development to improve supply chain efficiency. Additionally, the industry may expect the government to address challenges such as increasing input costs, declining demand, and stricter emissions and safety regulations. Overall, the automotive industry would like the Union Budget to provide a conducive environment for the growth and development of the sector. A few expectations were,

Access to finance: The industry may expect measures to make financing easier and more accessible, such as lower interest rates, easier loan terms, and tax incentives for investment in activities such as manufacturing of batteries, flex-fuel engines, hybrid technology etc.

Promoting Trade: Revising the method for computing FOB pricing to consider factors like, size, volume, or energy efficiency of the products. Encourage the formation of additional free trade agreements to foster greater global trade and improve market access for businesses.

Vehicular Safety & Electronic Vehicle Loadout: Policy changes, infrastructure and R&D development to create a clear and comprehensive framework for the adoption of EV and other related infrastructure.

The Budget 2023:

The Union Budget 2023 included several announcements related to the automotive industry. In this budget, the government highlighted its plans to support the growth and development of a greener sector, with a focus on promoting electric vehicles, boosting local manufacturing, and improving infrastructure. The following are the key measures and initiatives announced in the budget that will impact the automotive industry.

Firstly, by raising the tax threshold, citizens will have more disposable income, potentially boosting demand in the automobile consumer product market, especially in the 2-wheeler and lower-end segments. This can indirectly spur demand and entice a large industry that contributes to 7.1% of the country’s GDP.

The recent reduction in customs duty on lithium-ion cells from 21% to 13% and the extension of subsidies on electric vehicle (EV) batteries for an additional year are expected to drive demand for EVs. Additionally, the government has pledged funds to close the viability gap for battery storage systems with a 4,000 MWh capacity. The government is encouraging the production and usage of alternative fuel vehicles, including EVs, with a focus on green mobility. For the fiscal year 24 the budgetary allotment for the FAME-2 scheme, which was initially announced with an INR 10,000 crore investment, has now been doubled. This change is likely to spur growth in the electric vehicle industry, encouraging manufacturers to expand their product offerings. Moreover, this opens the economy to foreign technology and positions India as a promising player in the global electric vehicle manufacturing and export market.

From an infrastructure standpoint, the government has identified numerous transport infrastructure projects aimed at improving last-mile connectivity for ports, coal, steel, fertilizer, and food grain sectors, with a total investment of INR 75,000 crores. This includes INR 15,000 crores from private sector investors. This would seek to trigger the demand for commercial vehicles and production vehicles such as tractors, carriers & machinery in both rural and semi-urban locations.

Carbon & Hydrogen Economy: The government has induced large sums to the tune of 19,700 crores (Hydrogen Mission) – 35,000 crores (Net Zero carbon initiatives) with a focus on clean energy transition and low carbon intensity. This seems highly attractive on paper It is difficult to say if India is on track with its carbon reduction goals as it depends on several factors. The implementation of these resources is key to achieving future carbon goals.

With regards to Fuel, emphasis was laid on ethanol blending. The blending of ethanol is touted to not only reduce environmental harm but also provide a source of additional income for sugar cane farmers. This initiative is a step towards India’s goal of achieving energy independence. Custom duty exemption on denatured ethyl alcohol will facilitate cleaner production and reduce the carbon footprint immensely.

The focus was also brought to the Scrappage policy, which was initiated in previous budgets (21-22). More funds were allocated along with support to the state government on such a policy. The Vehicle Scrappage Policy is aimed at replacing older, unfit vehicles on Indian roads with new, eco-friendly vehicles. The program’s primary objective is to phase out polluting vehicles and reduce the country’s carbon footprint.

However, there were a few perspectives that the budget may have adverse impacts on the automobile industry,

Room for Improvement:

The government has proposed raising taxes on completely built units (CBUs) from 60% to 70% and on semi-knocked-down units from 33% to 35%. (SKD). On one hand, this may increase the potential for “Make In India” but the luxury segment business end of the sector is the most hit.  Although car manufacturers are slowly switching production to local facilities, foreign production and imports may reduce leading to a decline in trade, which can either help the local automobile players or prove to be detrimental from a global standpoint for the Indian players within this space. Hybrid Vehicles which promote green mobility and offer optimal utilization of fuel as well as offering high mileage are considered as luxury goods and are taxed at a whopping 43% which contradicts the movement towards a greener future.

A uniform taxation policy was also in demand by the auto sector which didn’t meet expectations, as various hassles emerge having a dual-rate (18% & 28%) in the component market space. To avoid these taxes, spurious products flow into the industry with the intent to avoid such taxes.

A hike in basic customs duty on compounded rubber was also announced in the Union Budget, this increase could lead to a rise in the cost of production and affect price competitiveness. The basic customs duty rate on compounded rubber is being increased from 10% to ‘25% or Rs 30/kg whichever is lower.

The Verdict:

Overall, the 2023 budget is expected to provide a fillip to the automobile industry, particularly in the areas of electric vehicles and road infrastructure. With regard to the expectations of the Automobile industry, most needs have either been met or initiated where the pros outweigh the cons. This year’s budget focused on a greener future, inculcating schemes to promote cleaner energy, fuels and production. The beauty however lies in the execution and how each section of this budget is to be implemented accordingly. The focus also lied on making India more self-sufficient to lower our foreign dependency and create a trade surplus through exported to the globe.

-Editor

Aaron Cardozo

BACKDROP

The school- going population of India has suffered greatly as a result of the closure of schools because of lockdowns related to the pandemic in the last two years. Many kids have lost significant years of study, notably in government schools and rural India. The nation’s education sector is anticipating a new era after the pandemic caused significant disruption for over three years. The government’s main priorities include improving the digitalization of the education system and upskilling the youth.

MEASURES INTRODUCED

• In the Union Budget for 23–24, the education sector received its biggest ever allocation of INR 1.12 lakh crore ($ 13.66 billion). From INR 63,449 crore ($ 7.74 Bn) in 2022–2023 to INR 68,804 crore ($ 8.39 Bn) in 2023–24, funding for education has grown by 8%. Nirmala Sitharaman, the finance minister, declared numerous initiatives to close the growing educational gaps.
• The finance minister recognised the importance of developing robust educational delivery systems and excellent teacher preparation programmes. To achieve this, the government will redesign teacher training using cutting-edge pedagogy, curriculum change, ongoing professional development, dipstick surveys, and ICT adoption. The development of District Institutes of Education and Training as thriving centres of excellence is another goal.
• The budget also mentioned the establishment of a National Digital Library for children and teenagers. This library will be created to make high-quality literature accessible to all users regardless of technology and will be available in a variety of languages, genres, and levels. States will be urged to establish physical libraries at the ward and panchayat levels as well as to set up the necessary infrastructure for users to access the National Digital Library’s resources.
• The National Book Trust and Children’s Book Trust will be urged to give these physical libraries non-curricular books in regional languages and English in consideration of the learning loss brought on by the pandemic. This effort will also involve cooperation with non-governmental organisations (NGOs) that concentrate on literacy. In order to promote financial literacy, financial sector regulators and organisations will also be urged to supply these libraries with age-appropriate reading material.
• Over the next three years, the government will hire 38,800 teachers and support staff for the 740 Eklavya Model Residential Schools, which serve 3.5 lakh tribal students, in an effort to make education more accessible to the last mile.
• Three Artificial Intelligence Centres of Excellence (CoE) would be established in prestigious academic institutions to make the vision of “Make AI in India” and “Make AI work for India” a reality. Leading business actors will work together to develop cutting-edge solutions, undertake multidisciplinary research, and address scalability issues in agriculture & healthcare. This will give the necessary push to build an efficient ecosystem for AI while simultaneously fostering skilled labour in the industry.
• Setting up of National Technical Textiles Mission: The government has announced the setting up of a National Technical Textiles Mission to promote the technical textiles sector in the country.
• Expansion of Higher Education Financing Agency (HEFA): The government has announced the expansion of the Higher Education Financing Agency (HEFA), which will provide funding for the development of higher education institutions.

EXPECTED EFFECTS

• Skill development: The allocation of funds for skill development programs is expected to improve the employability of the workforce, thereby increasing the productivity of the economy.
• Improving human capital: Investment in education is crucial for improving human capital, which is a key driver of economic growth. By investing in education, the government is laying the foundation for a more skilled and productive workforce, which will drive the economy forward in the long term.
• Attracting foreign investment: Improved education facilities and the availability of a skilled workforce are important factors for attracting foreign investment. The initiatives announced in the budget are expected to make India more attractive to foreign investors, which will boost economic growth.
• Encouraging entrepreneurship: The allocation of funds for entrepreneurship education is expected to encourage more people to start their own businesses, which will increase job creation and boost economic growth.
• Improving access to education: The allocation of funds for education infrastructure, such as the setting up of new schools and colleges, is expected to improve access to education, particularly in rural areas. This will improve the overall human capital in the country and contribute to the economic growth of the nation.
• A reduction in the overall cost that is currently passed on to schools and parents could result from the GST exemption on the supply of goods (including TVs and tablets for digital education, which are currently subject to a 28% GST) and services (used for teaching and learning applications and content, which are currently subject to an 18% GST). This will lower the cost of educational goods and services and encourage the adoption of NEP nationwide. Additionally, the GST exemption on textbook publishing will lower the cost of these publications for low-income parents. The production and delivery of tests and examination papers that are a requirement of school curriculum should likewise be free from GST for the same reason.

As the youth of India come of age in a world that is changing quickly and with new systems and challenges, closing the gaps in the education sector will be crucial. The country will be able to guarantee ongoing growth in education thanks to the initiatives indicated in the Budget 2023–24.

-Editor

Simran Soni

BACKDROP

The Circle of Life is consistently restored. The seasons shift. The sun rises and sets. Nature rejuvenates. The body recovers. The rims of the economy also rise after each downturn. Greater consumption is a result of having more disposable income. Private consumption growth is a factor in rising revenues and profits. More profitable businesses generate better tax revenues. Greater social welfare is made possible by fuller treasuries. This was explicitly acknowledged in the Budget, which also began the beneficial investment cycle, with its focus on heavy investment in technology and innovation in the primary sector of the country. The macropolitical environment in which the budget for 2023–24 was presented was difficult. Contrary to the previous two years, the increase in revenues brought on by high nominal GDP growth is unlikely to be duplicated; in addition, India’s real growth is projected to drop due to dark clouds brought on by a global downturn of recession & finally, general elections in 2024 means political compulsions. Even though India’s service sector accounts for the most amount of contribution in the GDP today, more than 70% of the rural households in India still depend on Agriculture as their primary source of income & livelihood. In the last six years, India’s agriculture sector has expanded at an average annual rate of 4.6%, in part due to favourable monsoon conditions. But in India, farming is still among the riskiest occupations. A farmer frequently prepares for subpar returns and middlemen. The budget for 2023–24 has a strong emphasis on long-term sustainable growth, which makes it encouraging for the farming community and the entire agriculture sector. This year’s budget makes a sincere effort to encourage innovation & technology in the sector to make it future ready. However, there are also concerns that wider allocations to farmers are being reduced by announcing new funds.

NEW MEASURES & THEIR EXPECTED EFFECTS

HITS:

• To support farmer-centric solutions, the digital public infrastructure for agriculture will be developed as an open-source public good. Farmers will benefit from better crop planning and easier access to credit and insurance services thanks to the proposed digital Agri-stack. The development of Agri-tech firms will also be assisted by the digital infrastructure.
• A fund to assist young entrepreneurs from rural areas in starting up agriculture businesses was also mentioned in the budget. “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, increase productivity and profitability,” the finance minister said in her speech.
• The accelerator fund will support budding entrepreneurs while providing creative and cost-effective solutions to issues facing farmers, particularly with regard to increasing profitability and gaining access to contemporary technology.
• For PM Kisan, which gives all farmers a yearly cash transfer of 6,000 in three instalments, the budget allotted 60,000 crore rupees.
• With funding of $2,200 crore, the budget committed to establishing the Atmanirbhar Clean Plant Program to increase the availability of high-value horticulture crops with disease-free, high-quality planting material.
• The Prime Minister’s Programme for Restoration, Awareness, Nourishment and Amelioration of Mother Earth (PM-PRANAM), a new initiative to encourage governments to promote alternative fertilisers and balanced usage of chemical fertilisers, was also announced in the budget. The Centre budgeted 1.31 trillion rupees for urea subsidies and an additional 44,000 crore for phosphatic and potassic fertilisers in 2023–24, which is a major decrease from last year when worldwide nutrient prices skyrocketed as a result of the conflict in Ukraine.
• The budget committed to supporting the Indian Institute of Millet Research in Hyderabad as a Centre of Excellence for exchanging best practises, research, and technology in an effort to establish India as a global centre for millets on an international scale. At least ten varieties of millets, which are more nutrient-dense than rice or wheat and climate-smart crops using less water and fertiliser, are grown in India, which is currently the world’s largest millet producer.
• The budget also upped the aim for disbursing agricultural credit from 18 trillion to 20 trillion from last year. Additionally, it pledged to create additional cooperatives in the dairy and fishery industries as well as decentralised storage facilities for farmers.
• A new sub-plan of the Prime Minister’s Matsya Sampada Yojana was also announced, with an investment of 6,000 crore, to help fishermen, seafood merchants, and microbusinesses increase the efficiency of their value chains and assist market growth.
• The budget targeted 10,000 bio-input resource centres to encourage ten million farmers to abandon chemical farming in order to promote greater use of natural farming practises. It also disclosed strategies for setting up a network of pesticide and micro-fertilizer producers throughout India.
• Expansion of Pradhan Mantri Fasal Bima Yojana (PMFBY): The PMFBY provides insurance coverage to farmers against crop losses due to natural calamities. The budget has announced an expansion of this scheme to cover all districts in the country.
• Development of Farmer Producers Organizations (FPOs): The government plans to set up 10,000 FPOs to help farmers achieve better prices for their produce.
• Implementation of e-NAM: The e-National Agricultural Market is an online platform for trading of agricultural products. The government has announced plans to integrate 585 agricultural markets with e-NAM to improve transparency and efficiency in the agricultural sector.
• Fertilizer subsidies would rise from Rs 105,222 crore in FY23 to Rs 2,25,000 crore, according to the budget. Companies like Gujarat Narmada Valley Fertilizers & Chemicals Limited, Rashtriya Chemical and Fertilizers, National Fertilizers, Madras Fertilizers, Chambal Fertilizers, and Deepak Fertilizers are anticipated to gain from this action.
• It is predicted that the budget recommendations may have some advantage for the tobacco firm, ITC. Chart patterns and reports suggest that ITC’s shares have performed well in the current market, which is another reason why the performance of its shares appears to be positive.

MISSES:

• The government had set an ambitious goal of doubling farmers’ income by 2022. There was no update on that promise. The Market Intervention Scheme and Price Assistance (MIS-PSS) and Pradhan Mantri Annadata Aay Sanrakshan Yojna (PM-AASHA), two significant programmes that guarantee the minimal support for price-based procurement activities in the nation, however, suffered a sharp reduction. Due to a nearly 100% reduction in funding—from Rs 1,500 crore to Rs 1 lakh—MIS-PSS was essentially neglected. Additionally, the PM-AASHA scheme had its budget cut from Rs 1 crore to Rs 1 lakh. The funding allotted for the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), a programme that offers economic incentives to landowner farmers, remained constant at Rs 60,000 crore.
• The department of agriculture and farmer’s welfare’s overall budget was reduced from 1.24 trillion in 2022–2023 to 1.15 trillion in 2023–2024. From 1.38 trillion in 2022–2023 to 1.31 trillion in 2023–2024, the entire budgetary allocation for agriculture, comprising the departments of research, animal husbandry, and fisheries, was reduced from ₹1.38 trillion in 2022-23 to ₹1.31 trillion in 2023-24. However, the budget for the fisheries sector was raised marginally from ₹2,118 crore (2022-23) to ₹2,248 crore, while the livestock budget was raised from ₹3,919 crore to ₹ 4,318 crore. The budget for agriculture research was raised from ₹8,514 crore in 2022-23 to ₹9,504 crore in 2023-24.
• Addressing the issue of low agricultural productivity: Despite the allocation of funds for infrastructure development, the budget did not address the root cause of low agricultural productivity, such as the lack of access to modern technology and low investment in research and development.
• Addressing the problem of low farmer income: While the budget has increased the allocation for agriculture credit, it did not address the broader issue of low farmer income, which is due to factors such as the lack of fair prices for their produce, high input costs, and the lack of access to market information.
• Lack of focus on sustainable agriculture: The budget did not provide any significant allocation for the promotion of sustainable agriculture practices, such as organic farming and water conservation, which are crucial for long-term food security and environmental protection.
• Lack of support for small and marginal farmers: The budget did not address the specific needs of small and marginal farmers, who often struggle to access credit and markets and are most vulnerable to the effects of climate change.

While the initiatives announced in the budget are expected to improve the agricultural sector in India, the above-mentioned issues, if left unaddressed, could limit the long-term impact of these initiatives. Overall, there were some hits & some misses in the budget pertaining to the agriculture sector. Nonetheless, despite the decrease in the amount of allocation to the sector, the areas of focus can be a game changer with the right kind of execution.

-Editor

Simran Soni

Scenario Till Now

The Indian economy has faced difficulties in the last three years due to various global events such as the Covid-19 pandemic, the Russian invasion of Ukraine, and the US central bank’s restrictive monetary policy. These events had a ripple effect on the world economy and India was not immune. The informal sector of India, which is substantial in size, was greatly affected by Covid, causing widespread job and income losses. To support food security and fertilizer subsidies, the government increased its spending, leading to a rise in the fiscal deficit. There were rising rates in US which led to capital outflow and also Indian rupee depreciated by 11 per cent.

As in December 2022, the country’s economy is in a much better shape. India is currently the fastest growing big economy in the world. This year, it’s expected that the country’s economy will grow by 7%, which is about 3% more than any other big economy. Next year, India is still expected to be the fastest growing big economy. This growth has resulted in more tax money coming in than expected, and the banking sector is doing well with low bad loans. Also, 17% growth in credit is a good sign.

Expectations from the budget

In India, despite being managed, the fiscal and current account deficits remain substantial. Maintaining financial stability will require reducing these deficits. The government is expected to meet its budgeted fiscal deficit target of 6.4% of GDP due to robust tax collections and a projected nominal GDP growth of 15.1%. However, this favorable situation may not continue in the future. In light of these challenges, it is crucial for the Finance Minister to maintain a fiscal deficit target of 5.8% for the fiscal year 2024 to ensure financial stability through fiscal discipline.

Budget 2023-2024

The recent Union Budget presented by India’s Finance Minister Nirmala Sitharaman has set a target of reducing the fiscal deficit to 5.9% of GDP, a lower figure compared to the 6.4% budgeted for 2022-23 and the 6.7% of 2021-22. The budget aims to stimulate economic growth through an increase in capital spending, which has been boosted by 33% to ₹10 lakh crore ($122 Billion) and accounts for 3.3% of GDP. The overall budget size for 2023-24 stands at ₹45 lakh crores ($550 Billion), up from the previous year’s ₹41 lakh crores ($500 Billion). The fiscal deficit is the difference between the government’s expenditure and revenues when the former is higher.

The BE for revenue expenditure for FY24 is Rs 35 trillion as against the FY23 RE of Rs 34.59 trillion and BE of Rs 31.9 trillion. This means that most of the increase in expenditure for the next year is in capital expenditure.

To further support states with capital investments, the government has extended 50-year, interest-free loans with an allocation of ₹1.3 lakh crores for 2023-24. Due to the Covid-19 pandemic, the fiscal deficit limits set under the FRBM Act were suspended, but the government now has more flexibility due to the merging of the Pradhan Mantri Garib Kalyan Anna Yojana and the National Food Securities Act, leading to a decrease in the food and fertilizer subsidy bill. The budget also takes advantage of the current low oil prices, cheaper fertilizers, and softer food and commodity prices. Two years of the pandemic and a year of supply-chain disruption due to war in Europe required flexibility.

While the increased capital expenditure and support for states is a positive signal for investment activity, the government’s ability to reach its target of reducing the fiscal deficit will depend on various factors such as the success of its revenue-generating measures, the global economic conditions, and the effectiveness of its expenditure control measures. The government’s goal of reducing the fiscal deficit to 4.5% by 2025-26 is challenging, but achievable if its policies are implemented effectively.

A Partner at Deloitte India, stated that the Budget has effectively addressed both market expectations and practical considerations. It strikes a balance between fiscal consolidation and investing in capital creation. The projected fiscal deficit of 5.9% of GDP, along with a cautious growth in tax revenue, appears achievable and is in line with market expectations.

To finance the fiscal deficit in 2023-24, the government plans to borrow money from the market through dated securities. This is estimated to be 11.8 lakh crore. The remaining balance will be financed through small savings and other sources, with a gross market borrowing estimated at 15.4 lakh crore. According to Aditi Nayar, Chief Economist at ICRA, the fiscal deficit for the fiscal year 2023 was maintained at 6.4% of GDP, as expected. Despite an increase, the nominal GDP was able to absorb the overshoot. However, the fiscal deficit and borrowing estimates for the fiscal year 2024 are higher than predicted due to a noticeable increase in capital expenditure.

A Partner at Deloitte India, stated that the Budget has effectively addressed both market expectations and practical considerations. It strikes a balance between fiscal consolidation and investing in capital creation. The projected fiscal deficit of 5.9% of GDP, along with a cautious growth in tax revenue, appears achievable and is in line with market expectations. In simpler terms, the budget outlines the government’s plans to make sure its income covers its expenses and reduce the amount of money it has to borrow. The government aims to reduce the amount it spends compared to the amount it earns and is making steady progress towards its goal of reducing the fiscal deficit to 4.5% of GDP by 2025-26. To finance any remaining expenses, the government plans to borrow money from the market and from small savings. The budget has sparked a feeling of optimism, as the Indian economy is projected to grow by 7% during the fiscal year 2023, while many other economies around the world are facing a recession.

References

https://economictimes.indiatimes.com/news/economy/policy/budget-2023-24-sitharaman-sticks-to-the-fiscal-glide-path-lowers-deficit-target-to-5-9/articleshow/97516389.cms

https://www.business-standard.com/budget/article/union-budget-2023-fm-sticks-to-fiscal-plan-targets-5-9-deficit-in-fy24-123020100602_1.html

https://www.investindia.gov.in/team-india-blogs/budget-2023-post-pandemic-fiscal-deficit-recovery

https://unacademy.com/content/railway-exam/study-material/economics/fiscal-deficit-of-india/

-TJEF Editor

Bhagavath

1st February is the date that sets the milestone for the rest year. This is extremely important as companies in various sectors get a plan as to how to proceed with the year’s operations. Infrastructure the backbone of the country is also heavily dependent on what decisions are taken by the Finance Ministry regarding the sector.

This year there have been a lot of introductions of new measures taken for the infrastructure sector.  

Namely,

• The infrastructure development fund is increased by 33% to ₹10 lakh crore.
• Capital Expenditure for Railways has been set at a record high of ₹2.4lakh crore
• An Urban Infrastructure Development Fund will be set up by the government which will have a yearly allocation of ₹10,000 crores
• Pradhan Mantri Awas Yojana for Affordable Housing has got its outlay raised by 66% to ₹79,000 crores
• 50 new airports and heliports are going to be constructed.
• Investment of ₹75,000 crores, including ₹15,000 crores from private sources, for one hundred critical transport infrastructure projects, for last and first-mile connectivity for ports, coal, steel, fertilizer, and food grains sectors.
• New Infrastructure Finance Secretariat is established to enhance opportunities for private investment in infrastructure.

Let us analyze the benefits and disadvantages that the increased capex on infrastructure brings.

On the face of it, the increased capex should be a welcome move. The biggest advantage that it gives is the multiplier effect, the concept of macroeconomics that is quintessential for the GDP. Any government spending especially infrastructure would be a stimulus to a stagnant GDP. Moreover, if we were to see the equity market before the Budget and after, the share prices of companies such as ACC, and Adani Ports were trading at a high. This indicated market sentiment toward the announcements. This infusion will also cause job opportunities to rise as well.

Other than the direct capital investments, there is also a provision made for the creation of capital assets through Grants-in-Aid to states. The effective capital expenditure of the Centre is budgeted at ₹13.7 lakh crore, which will be 4.5 percent of GDP. The Finance Minister also proposed to continue the 50-year interest-free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of ₹1.3 lakh crore.

Another benefit is that tour and travel industry, and hospitality industry which was getting back up gradually from Covid-19 will get a much-needed boost, thanks to the new airports and heliports being built. Inter-connectivity between states will also benefit through this measure.

But the most important factor that needs to be taken into consideration is the real estate industry. While affordable housing has become one of the important pillars of the budget, we must also take into consideration the tax implications. Buying houses will become cheaper, but if citizens follow the new tax regime, then having income to buy these houses might become dicey. The Centre needs to take a step back and evaluate how their new regime that emulates the West could affect the positive changes brought about in the infrastructure sector.

Our exports and imports are also going to undergo a change thanks to the ₹75000 crores infusion into quintessential sectors such as ports, coal, steel, fertilizer, and food grain. Part of this is going to be funded by companies that already exist in these spaces.

While all of the measures that have been announced is beneficial we should remember that infrastructure projects have long gestation periods. If the country does not have any projects to take off in the beginning of the financial year, then it would cause the capex to be unused and redundant. The multiplier effect that would be a benefit, would exaggerate the economic cycles rather than soothing it. Furthermore, many of the infrastructure projects have a precedence where they are a stimulus when spent on regional economic development. According to certain studies when stimulus spending is done on infrastructure, there is mostly influence from political and electoral considerations.

Thus we need to be wary of these announcements that have been made and ask the necessary questions?

• While infra capex has been increased, where specifically is it going to be spent?
• What are the projects that would be undertaken and by whom?
• How is the distribution of the capex going to be done?

While the budget is just an indicator of what is to come, we need to wait patiently for further clarifications on these subjects and not make any hasty decisions and considerations.

-TJEF Editor

Denver Roberts