Nirmala Sitharaman, the finance minister, will present the annual budget for 2023–2024 on February 1. This budget will be closely watched by the country's common citizens as well as the business sector. This is due to the fact that it will be the last full budget before the 2024 general elections.
What does the common Indian citizen hope to receive out of this budget? What does the business sector expect out of this budget? Will the government pursue a significant capex drive or will the budget be stuffed full of benefits and subsidies? As we attempt to present the Expectations of the Business and the Common Public from Budget 2023, let's find out.
On February 1, Finance Minister Nirmala Sitharaman will present the Union Budget. Sitharaman will present the Union Budget for the fifth time. The 2022 Finance Minister's speech presenting the budget was about 1.5 hours. Her 2021 budget speech, which lasted 2 hours and 40 minutes, was the longest in Indian history.
There are a number of important issues that are expected to receive the government's attention as we come closer to the Union Budget for FY 2023–2024. Economic growth and development will certainly be one of the areas of priority.
Before the upcoming Lok Sabha elections, which are planned for early 2024, the upcoming Union Budget would be the last full-year budget from the Modi government. Nirmala Sitharaman, the finance minister, is primarily expected to sustain future growth while controlling the fiscal deficit and inflation.
The salaried class in India hasn't typically had anything to celebrate in the recent budgets of 2020, save for a new optional tax system. Therefore, individual taxpayers anticipate the incoming budget to provide some substantial benefits. Notably, analysts believe that the Government should think about lifting the maximum tax rate threshold from Rs. 10 lakh to Rs. 20 lakh. Additionally, the top tax rate can be reduced from 30% to 25%, putting it on pace with corporate rates. Expectedly, this would increase the common public's purchasing power and thus enable the country's demand for goods and services to increase.
Banks have received a substantial capital infusion because they will be the main sources of funding for all sectors to pay for the government's massive capital expenditures. Therefore, the banking industry is not actively seeking assistance in the form of new funding. However, the industry is eagerly awaiting the government's plans for the privatization of public sector banks (PSBs). According to experts, the expedited privatization of PSBs will increase operational effectiveness and further increase financial inclusion in the country.
The government must make increasing financing to MSMEs and startups as well as simplifying taxation for them a high priority because 95% of India's businesses are micro-scale enterprises. The MSME sector, which has historically been the engine of the Indian economy, has entered the new year with hopes of reversing the slowdown that it has seen over the last two years and experiencing strong growth. The goal of the budget for 2023 should be to implement measures that would make it easier for MSMEs to run a business.
Additionally, there is a critical need for the implementation of policies that lower input costs, increase liquidity, and support financial inclusion by giving small businesses access to affordable financial products.
Help mechanisms such as startup-friendly policies to permit higher spending on innovation and tax relaxations should be established in order to further support small businesses and empower entrepreneurs.
Around the past year, there has been turbulence in equities markets all over the world. The Indian equities market has been an outlier, outperforming both established and emerging counterparts, even in the face of this uncertainty. The Budget can allow the Indian stock market's upward trend to continue, despite experts' concerns that high valuations may limit it in 2023.
How? Long-Term Capital Gains Tax (LTCG) removal, according to market analysts, might be the solution. Gains from stock market investments are currently taxed at 10% if held for a duration longer than a year. Participants in the stock market, however, want this tax eliminated. Notably, experts think that such a step would provide the markets with a considerable boost and boost participation even more.
After a long period of uncertainty, the real estate sector's future prospects suddenly appear promising, particularly for the residential real estate market. However, rising interest rates and soaring inflation have considerably reduced homebuyers' purchasing power. In order to counteract this, real estate industry professionals think that the tax-deductible limit for home loan interest payments can be raised from Rs 2 lakh to Rs 5 lakh. Additionally, according to experts, a separate Section 80 C alternative for principal repayment of housing loans can be introduced for Rs 4 lakh.
According to experts, these reforms could provide the Indian real estate market with a considerable boost in terms of demand.
After a few years, the automotive market is beginning to look positive, particularly given the expanding electric vehicle market, much like the real estate industry. The government, in the form of charging infrastructure, should continue to offer further incentives and support to the market for electric vehicles, according to experts. Additional consumer incentives will also encourage people to choose electric automobiles.
Despite a number of economic headwinds, the consumer durables and electronics sector saw strong growth in 2021 and 2022. However, in order to maintain this pace, the sector's stakeholders require further help from the government, which the upcoming Budget might offer.
The sector's top objective continues to be the rationalization of GST rates, and their main demand is the reduction of GST rates from 18% to 12%.
Additionally, the sector wants a change made to the nation's current tariff structure, which is hampering its ability to compete on the international market with nations like Vietnam, Thailand, and Mexico. Industry experts think that lowering the customs charge on supplies imported will boost operational effectiveness and further boost India's competitiveness.
The government's upcoming budget will be of utmost importance. The government will be balancing growth and economic responsibility as elections approach. In order to balance the two, a good budget will be necessary. Can the government accomplish it? We'll learn on February 1st.