Union Budget 2023's Effect on Significant Sectors

By: ISL | 8 February, 2023

The Finance Minister has outlined a strategy to encourage India's overall development by providing financial stimulus for a number of industries. In the future, if you are an investor, look into these industries.

The Finance Minister presented the Union Budget to the parliament on February 1st, 2023. This year's budget was crucial for a number of reasons. This is the final comprehensive budget of the Modi 2.0 administration before the 2024 general election. It appears that FinMin provided a balanced budget with an emphasis on the expansion of important industries like agriculture, Fintech, etc. In this, we'll discuss the industries that the government gave a boost to in the 2023 budget in addition to fintech, energy, and agriculture.

Impact on the key industries

• Railways: The Indian Railways has gained the largest capex boost of 2.40 lakh crores (75% increase) compared to 1.40 lakh crore in the previous fiscal, making it a highly good budget.
• According to Sitharaman, that is nine times what was granted in 2013–14. The increase in capital expenditures will be a true game-changer, enabling the construction of new infrastructure, the modernization of stations, and improved passenger safety and security measures.
• 35 hydrogen-fueled trains, 4,500 newly built vehicle passenger coaches, 5,000 LHB coaches, 58,000 wagons, and the modernization of 1,275 railroad terminals are all included in the budget's anticipated capital expenditures.
• 100 crucial infrastructure projects will be carried out by the government to improve last- and first-mile connections and ensure the safe delivery of vital raw materials.
• Defense: The FinMin has suggested a cumulative expenditure of 5.94 lakh crore for the defense industry, an increase of 13% over the previous year. The government is currently concentrating on foreign defense technologies and equipment.
• From 2019–20, the capital allocation for infrastructure and modernization has grown by 57% to 1.62 lakh crore. While DRDO's budget grew by 9%, the Border Road Organization (BRO) projects received a 43% rise to 5000 crores.
• Tourist:Since the release of COVID, the tourism sector has significantly increased. In order to promote handicrafts and goods with Geographical Indication (GI) designation, the government has announced plans to create "unity malls" in the state capitals and fifty more tourist attractions.
• In her statement on the budget, Sitharaman indicated that tourism will shift into a mission mode. However, the sector's budgeted capex of ₹2,400 crores remained same from the previous year.
• Infrastructure: The industry's capital budget has increased by 33% to 10 lakh crore. A key factor in luring private capital to infrastructure projects will be the recently formed infrastructure finance secretariat.
• Retail Sector: The government has lowered import taxes on a number of products, including TV panels and certain components used in the production of mobile phones. A 20% increase from the previous budget, the government has restructured the MSME loan guarantee fund to $9000 crores.
• As a result, MSMEs will have access to an extra $2 lakh crore in collateral-free lending. The new credit guarantee program will go into effect on April 1, 2023.
• EV: The EV industry had high expectations for this year's budget after achieving a 200% growth rate the previous year. The Finance Minister emphasized the need of supporting green energy and electric cars in her budget statement.
• She offered extra incentives to encourage car scrappage and announced custom duty exemptions for lithium-ion batteries. To promote green mobility, capital items and machinery needed to make lithium-ion batteries are free from customs taxes.
• Education and skill enhancement: The education sector received a marginal increase of 8% in budget allocation for FY 23-24. The Finance Minister announced ₹1.12 lakh crore of funds for FY24 against ₹1.04 lakh crore last year.
• The capital allotment for the government’s largest educational scheme ‘Sarva Shiksha Abhiyan’ remained unchanged.
• Additionally, the government will recruit 38,800 teaching and support staff for the 740 Eklavya Model Residential Schools for educating tribal children in the next three years.