Union Budget 2023 Expectations of the common man and the various sectors
The much-awaited week is near - FM Nirmala Sitharaman is all set to deliver the budget on February 1 2023. Like every year, much is expected from the budget - every sector would be looking at her as a Messiah and some perhaps as Santa Claus who would bring the goodies bag - a bit late.
Both individuals and businesses expect a lot from the budget for FY24, given that the elections are next year, and most experts believe that the government will focus on growth.
Budget in pre-election years
Before we see the expectations from this year's budget, let us see how budgets are set in pre-election years - the general trend. The brokerage firm, Goldman Sachs, has analysed the pre-election budgets for the past 15 years. Below is the summary of its report:
- The study reveals that in the pre-election budget, there is an increase in CAPEX allocation for infrastructure. The spending is on the construction of railways and roads. Also, there is a cut in defence spending.
- For example, in FY14 (pre-election year), CAPEX on defence declined from 44% (FY10 to FY13 average) to 43%, while infrastructure increased from 20% (FY10-13 average) to 23% of total capex.
- Also, an increased allocation toward rural welfare schemes or spending was seen, mainly in healthcare and education.
Budget expectations for 2023
Most of the deductions under Section 80C, HRA, and many others in the IT Act have remained the same for quite some time. For this reason, like every year, taxpayers hope that in this budget, the deduction limit will increase under some sections. The cost of goods (inflation) and medical premiums have increased, and most experts believe this gap can be filled by increasing the deduction limit under a different section. One of the major expectations of the taxpayers is to increase the deduction limit under Section 80C from Rs 1.5 lakh to Rs 2.5 lakh.
Micro, Small, and Medium Enterprises (MSME) expectation
MSMEs are drivers of India's economic growth strong. They account for approximately 30% of the nation's GDP. The government dreams of becoming a $5 trillion economy by 2025. To achieve it, MSMEs should be in focus in this year's budget.
The primary expectation of MSMEs is to get enhanced access to working capital. The budget should prioritize reforms that will improve the process of conducting business in this category. Along with this, there is a need to implement policies that will lower input costs, promote financial inclusion, and increase liquidity. The government should focus on building the right support infrastructure for the eCommerce sector to truly accelerate and help realize the vision of a digital India.
Farmers' (Agricultural Sector) expectation
Experts expect agrochemicals and fertilizers to see a substantial boost in their revenues from the current budget session. The budget should come with initiatives to improve crop realization and non-farm incomes. It will also entail additional budgetary allocations toward irrigation development facilities and crop insurance schemes. The new budget expectation is to focus on pre-sale and post-sale infrastructure. People expect to have facilities to continuously conduct quality checks and soil monitoring.
Expectations of the Real Estate Sector
Experts believe there is a need to bring real estate brokerage services on par with other service providers by lowering the GST rate to more tenable - 5%. The Real Estate sector is one of the largest contributors to India's GDP. The sector expects to be accorded an industry status - currently, it is considered an unorganized sector.
The developer community in India looks forward to governmental intervention in the project financing space. They expect the government (through RBI) to reduce the interest rate on project financing. Also, they expect the government to establish a real estate-focused governmental fund with flexible access to capital at a minimal interest rate.
Expectations of the Textile sector
The government needs to boost the textile sector. Workers and leaders expect the government to sign Free Trade Agreements (FTA) with multiple countries. The industry expects the government to fast-track the completion of the PM-MITRA (Mega Integrated Textile Region and Apparel) park scheme, which would significantly help boost the sector.
Cotton prices have been increasing for a year now. The government needs to take concrete steps to stabilize them by allocating adequate funds for achieving international status for Indian cotton.
Expectations of the Auto Sector
The industry expects to have more PLI-like incentives and benefits to smoothen the manufacturing process and promote newer innovations. The industry expects to hear more about PLI for green hydrogen electrolyzers so India can achieve its target of net-zero carbon emissions.
Healthcare sector expectations
The sector is eyeing more budgetary support from the government. The sector wants reforms in GST for the sector. They expect an increase in public sector allocations towards health infrastructure and insurance schemes. Also, the government needs to focus on encouraging homegrown innovations – both process and tech. It can help it achieve its universal health care mandate. It will require unlocking greater commercial investments to supplement public resources.
There is a lot on the government's plate. We know that whatever we have discussed as an expectation - everything will not be fulfilled. Despite this fact, the budget gives a lot of hope to people. Only time will tell which sectors get a boost and which will have to wait longer. We will get back to you with the comparison once the budget is out - expectation v/s reality.
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