Indian Budget 2023 : Key Points and Analysis

Budget 2023 was announced to the nation on 1st Feb, 2023. The market reaction to the same was literally epic. The markets firstly remained bullish and went ahead to 17800 and above. However by the end of day they had gone down to 17400 points and recovered back to 17600 and settled around that range. Hence the reaction of indices towards the budget was very volatile. On the other hand every sector had some or other outputs which caused the mighty volatility and it was also attached with the Adani Saga running with the research report and other banks responding to the same. 

Sector wise Budget Decisions

One of the most important segments for business in India is agriculture. The government has promised to set up accelerator funds for agriculture to boost the startups that are penetrating into the agro sector. The amount of credit disbursed for the agriculture sector will be increased to 20 Lakh Crore Rs. The Government plans to make the natural farming adaptation a phased process and within the next 3 years, 1 Crore + farmers will be included in this list. PACS would be established with an investment of more than 2500 Crore Rs and major focus will be laid on to promote the economic development for farmers.

Infrastructure

The infrastructure projects are majorly related to completion of the last mile connectivity for ports, food, fertiliser, steel and coal industry. This would involve an investment of nearly 75000 Crore Rs and an additional 15000 Crore Rs of private investment. For the railways expansion a 2.40 Lakh Crore Rs of fund has been given and this capital amount is more than 9 times the amount given in 2013-14 and also the highest ever capital outlay given till date. With such plans in place the government is also planning to build 50 more airports, aerodromes and Heliports.

Health Sector

With the lessons learned from COVID crisis, the government is keen on launching new R&D programs to get better medical devices under the centre of excellence dedicated multidisciplinary courses. For better research the facilities in ICMR Labs will be made available to public as well as private medical colleges. One major decision in the health segment is regarding the establishment of 157 nursing homes in the co0location of the existing 157 medical colleges. 

Consumer Durable

Multiple changes have been made in the tax rate of consumer durables. The basic customs duty of open cells on TV panels has been reduced to 2.5%.  Alongside this the rate on electric chimneys have been increased from 7.5% to 15%. The Heat coils will be facing a decreased tax rate from 20% to 15%. Lithium ion cells for batteries are once again put under the concessional duty bracket and relief is provided for import custom duty of camera lens.

Energy Sector

This year the government plans to launch the National Green Hydrogen Mission with an investment target of 19700 Crore Rs to reach a production capacity of 5 Million Metric Tons by 2030. Battery energy storage systems with a capacity of 4000 MWH will be supported with Viability Gap Funding. For the energy transition mission the government plans to invest 35000 Crore Rs. The government also plans to build the inter state transmission system for evacuation and grid integration from Ladakh with an investment of 20700 Crore Rs.

Automobile Industry

As the government is behind the mission of scrapping the old polluting engines from the Indian automobile segment, it plans to further expand its mission and provide more funding to scrap old polluting vehicles. The custom duty rate on imported rubber is increased from 10% to 25% or 30 Rs per kg whichever is lower. 

Chemical Sector

Basic custom duty updates have been made for multiple products. The exemption of the duties will be applied on Denatured ethyl alcohol. On the other hand the custom duty will be reduced from 5% to 2,5% for acid grade fluorspar. Also the duty on crude glycerin has also been reduced from 7.5% to 2.5%. GST will be exempted on compressed biogas for avoiding the cascading effect on taxes.

Metal Sector

Custom duty for CRGO Steel, Nickel Cathode and Ferrous Scrap would be in continuance as before. Also the concessional duties of 2.5% would be continued on copper scrap. Alongside this the custom duty on dore and bars of gold and platinum will be increased to enhance the duty differential. Import duty will also be increased on silver dore, platinum and gold bars. The custom duty would be reduced for seeds that are used to manufacture the Lab Grown Diamonds.

Other Changes

In the FMCG segment the National CalamIty Contingent Duty on cigarettes will be revised upwards to 16%. This is the reason why ITC fell more than 3% during the budget announcements. The Sugar cooperatives can claim payments of Financial year 2016-17 made to the farmers as expenses. This amount would provide a relief of close to 10000 Crore Rs to the co-operatives.