Impact of Union Budget 2023 on Five Key Sectors
As the world grapples with headwinds and economic uncertainty, the Finance Minister of India, Nirmala Sitharaman, has come out with a Union Budget that promotes growth. From increased spending on the agriculture sector to extending tax benefits to startups, experts have received the measures announced positively. Here’s a snapshot of the impact we can expect on the critical sectors of India, namely the agriculture sector, automobiles, micro, small and medium enterprises, consumer durables and startups.
1. Agriculture Sector
The Union Budget 2023 has some substantial benefits for the agriculture sector. For starters, the agricultural credit, especially for dairy, fisheries, and animal husbandry, has been raised to Rs.20 trillion. The government will also empower 10 million farmers to switch to natural farming. PM PRANAM will encourage farmers across the country to use alternative fertilisers. Perhaps the most noteworthy announcement came in the “Agritech” sector, establishing the Agriculture Accelerator Fund to encourage agritech start-ups. The move will help farmers adapt to the digital world, enabling innovation and increased profitability.
2. Automobile Sector
Considered a “green Budget”, the Union Budget of 2023 ushers in an era of Electric Vehicles. Customs duty on import goods and machinery needed to make lithium-ion batteries for EVs have been removed. This is likely to reduce the cost of EVs manufactured in India. Moreover, a 33% increase in capital expenditure, setting up new airports, as well as new transport infrastructure projects are expected to drive growth for the automobile sector.
3. MSME Sector
Last year, the government proposed the MSME credit assurance scheme. The scheme will go into effect on April 1, 2023, with a corpus infusion of Rs. 9,000 crores, enabling an additional Rs. 2,00,000 crores in collateral-free guaranteed credit. It will also reduce credit costs by about 1%. In addition, MSMEs can get back about 95% of the forfeited amount from the government for any contract failures during the pandemic. This has brought quite some cheer to the MSME sector.
4. Consumer Durables
While there have not been any specific announcements for the consumer durables sector in the Union Budget 2023, the sector is still in good spirits. A reduction in the income tax slabs for individuals means that consumers will have more disposable income, which could be channelled into purchasing consumer durables.
In the latest Union Budget, the Finance Minister has announced a proposal to extend the period of incorporation of eligible startups by a year. In the previous Budget, the date announced was till March 31, 2023, which has now been extended to March 31, 2024. She also proposed extending the benefit of carrying forward losses on change of shareholding of startups from seven to ten years. While the startup sector was expecting a bigger push from the government, this is still in their favour. In addition, the Agriculture Accelerator Fund will give a much-needed push to the agritech startups in the country.
Overall, the Union Budget of 2023 had something for the most important sectors of the Indian economy. It is a win-win for households as well as the corporate sector.
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