Union Budget - 2023-24

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Union Budget - 2023-24 February 01, 2023

Fiscal Prudence with focus on Rural and Infra

The most awaited number from the budget 2023 was the fiscal deficit number and the finance
minister stuck to the much anticipated figure of 5.9% for FY24. Deficit for FY23 is at 6.4%.
Announcements pertaining to state governments’ deficit have also been received positively by the
house. This budget has addressed the pain points of this economy which has been the rural space.
Infact, the finance minister categorically mentioned reviving the rural economy is the governments
‘priority number one’.

Infrastructure is the backbone of any economy and increase of allocation from Rs. 7.5 lakh Cr to
Rs. 10.0 lakh Cr in this budget is a big positive as well. There was a meaningful allocation of funds
towards tourism, agriculture and green growth. Amendments in Banking and RBI Act to empower
SEBI to protect and educate investors are important steps for the capital markets.

On taxation the balancing act in indirect taxes and relief to salaried individuals by making the new
tax regime more attractive was positive. Overall we believe that the finance ministry has done a
balancing act to tick most of the possible boxes without tinkering with fiscal deficit.

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Union Budget - 2023-24

Budget at a glance
Sr.N Particulars (Rs. in Cr) 2019-20 2020-21 2021-22 2022-23 2023-24
Actuals Actuals Actuals Actuals Estimates

1 Revenue Receipts 1684059 1633920 2169905 2348413 2632281

a Tax Revenue (net to centre) 1356902 1426287 1804793 2086662 2330631

b Non-Tax Revenue 327157 207633 365112 261751 301650

2 Capital Receipts 1002271 1875917 1623896 1838819 1870816

c Recovery of Loans 18316 19729 24737 23500 23000

d Other Receipts 50304 37897 14638 60000 61000

e Borrowings and Other Liabilities 933651 1818291 1584521 1755319 1786816

3 Total Receipts (1+2) 2686330 3509836 3793801 4187232 4503097

4 Total Expenditure 2686330 3509836 3793801 4187232 4503097

f On Revenue Account of which 2350604 3083519 3200926 3458959 3502136

g Interest Payments 612070 679869 805499 940651 1079971

Grants in Aid for Creation of

h 185641 230865 242646 325588 369988
Capital Assets

i On Capital Account 335726 426317 592874 728274 1000961

5 Effective Capital Expenditure - - 835520 1053862 1370949

6 Revenue Deficit 666545 1449599 1031021 1110546 869855

Revenue Deficit at % of GDP -3.3 -7.3 -4.4 -4.1 -2.9

7 Effective Revenue Deficit 480904 1218734 788375 784958 499867

Effective Revenue Deficit at % of

-2.4 -6.2 -3.3 -2.9 -1.7
GDP

8 Fiscal Deficit 933651 1818291 1584521 1755319 1786816

Fiscal Deficit as % of GDP -4.6 -9.2 -6.7 -6.4 -5.9

9 Primary Deficit 321581 1138422 779022 814668 706845

Primary Deficit as % of GDP -1.6 -5.8 -3.3 -3.0 -2.3

Source : Budget Documents

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Union Budget - 2023-24

Sectoral Impact

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Union Budget - 2023-24

Allocated Rs 2,200 Cr for Atma Nirbhar Clean Plant Program for

Horticulture crops

This would improve quality of crops, promote horticulture as well

as help in boosting farmer’s income

Agriculture credit target increased from Rs 18 lakh Cr to Rs 20 lakh

Cr, up by 11.1% with focus on animal husbandry, dairy and fisheries

This will help farmers improve income and agricultural output as

well as positive for FMCG stocks like HUL, Britannia and ITC
Agri/Rural
They proposed to launch a new sub-scheme of PM Matsya
Sampada Yojana with targeted investment of Rs 6,000 Cr

To promote fishing activities and improve value chain

Sugar Corporative can claim payments made to sugarcane farmers as expenditure if it was disallowed prior to A.Y.
2016-17 which is expected to provide relief of almost Rs 10,000 Cr

This is positive for Sugar manufacturers as they have been fighting a case with the IT department about the category
of payment made of farmers over and above the FRP

In continuation with on-going vehicle scrapping policy, the

government will allocate funds to 20 central governments as well
as support it in replacing old vehicles and ambulances

Positive for auto companies having presence in commercial

vehicle segment such as Ashok Leyland, M&M and Eicher Motors

Government continues its focus on green mobility with an

announcement of customs removal on capital goods and
machinery required in the manufacturing of Lithium-Ion cells
that are used in Electric Vehicles
Auto
This is expected to benefit Electric 2 wheeler players as well as
Exide, M&M, Ashok Leyland and Tata Motors

Plans are to establish 157 new nursing colleges, mission to

eliminate Anaemia and invest in research and development in
specific priority areas as well as ICRM labs to be made
available for research

This would aid in uplifting and up-skilling health and pharma

professionals

Healthcare

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Union Budget - 2023-24

Plans to simplify KYC process, solution like DigiLocker and Aadhar

for maintaining identity will be made available and using PAN as
an common identifier

This will enhance digital infrastructure, thereby increasing

credibility in the banking ecosystem

Infusion for Rs 9,000 Cr in revamping of credit guarantee scheme

for MSMEs and also reducing cost of credit by 1%

This is positive for MSMEs sector that will have access to much
needed credit for growth. Positive for PSU banks like SBI

BFSI Improvement and enhancement of banking governance and

investors protection, amendments have been proposed in
Banking Regulation, Companies Act and the RBI Act

This is positive for the banking sector as it will enhance the trust in
the system and help financial literacy

Government plans to a) offer deposit facility upto Rs 2 lakhs for women/girls for tenor of 2 years at 7.5% interest p.a.
b) enhancement deposit limit from Rs 15 lakhs to Rs 30 lakhs for senior citizen saving scheme c) enhance deposit
limit for monthly income account scheme from Rs 4.5 lakh to Rs 9 lakh for single account and from Rs 9 lakhs to
Rs 15 lakhs for joint account

This is positive for welfare of women, girls and senior citizens as it will provide financial security
Income from insurance policies above Rs 5 lakhs will be taxable except ULIPs if the policy is issued after 1st April 2023.
Income from policies below Rs 5 lakhs remains unchanged
This is negative for the Insurance sector as traditional insurance plans such as endowment plans and money back
plans will become less attractive to policyholders

Financial outlay of Rs 2,932 Cr for interest equalization of 3% for all manufacturer exporters of MSME sector w.e.f.
Oct-21 and 2% for manufacture exporters of specified tariff lines for the purpose of providing globally competitive
credit

This will be beneficial for MSME exporting output globally

Plans to develop digital infrastructure and skills enhancement for

youth by providing on-job training, industry partnership for
teaching new age skills for lakhs of youth within 3 years under
Pradhan Mantri Kaushal Vikas Yojana 4.0

This is positive for IT companies and up-skilling of human capital

Granting of R&D to one of the IIT for 5 years for developing lab
grown diamonds
IT/Gems/Jewellery
To encourage employment, indigenous production of LGD seeds
and to reduce import dependency. Positive for companies like
Titan

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Union Budget - 2023-24

Capital Exp. increased by 33% to Rs 10 lakh Cr (3.3% of GDP)

Positive for the infrastructure sector as well as allied sectors such

as Cement, Real-Estate, Paints, FMCG & FMEG. Stocks such as
UltraTech, Asian Paints, HUL, Polycab and Crompton will
benefit

Allocated Rs 79,000 Cr (up by 66% YoY) towards PM Awas Yojana

To promote housing for all and it would be positive for sectors

such as Cement, Real-Estate, Paints, FMCG & FMEG. Stocks such Infrastructure
as UltraTech, Asian Paints, HUL, Polycab and Crompton will
benefit

Plans to extend a 50 year interest free loan to the state government for one more year with an outlay of Rs 1.3 lakh Cr

Encourage the state government to undertake capex activities and improve infrastructure. Will benefit infrastructure
and capital goods companies

Invest Rs 75,000 Cr for 100 critical transport infrastructure projects, for last and first mile connectivity

Positive for logistics companies and also this would boost topline growth of ports, coal, steel and fertilizer companies

Government will establish an Urban Infrastructure Development Fund (UIDF) with an allocation of Rs 10,000 Cr p.a.

This would improve urban infrastructure in tier-2/3 cities

Increase in Capex of Railways and Defence sector

Capital expenditure allocated for Railways is Rs 2.40 lakh Cr

Allocation of Rs 5.94 lakh Cr for Defence, up by 13% from Rs 5.25

lakh Cr. Out of total allocation, Rs 1.62 lakh Cr has been set aside
for purchasing new weapons, aircraft, etc. and Rs 2.7 lakh Cr has
been made for expenses including payment of salaries and
maintenance of establishments
Railway/Defence

Allocation of Rs 35,000 Cr towards energy transition and net zero

objectives as well as Rs 19,700 Cr for National Green Hydrogen
Mission with a target of annual production of 5 MMT by 2030

Investment of Rs 20,700 Cr towards grid integration of 13 GW

renewable energy from Ladakh

Positive for the power and renewables sector and this a step
towards a carbon free economy by 2070 Renewables

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Union Budget - 2023-24

Expenditure of ~Rs 2 Lakh Cr has been allocated under PM Garib

Kalyan Anna Yojana, a scheme to supply free food grain to all
Antyodaya and priority households for the next one year

Expected to benefit 80 Cr poor people

Government plans to set-up a national Digital library and

physical libraries in states across languages, genres and levels,
etc and also has plans to collaborate with NGOs
Other Welfare Scheme
This would help in promoting literacy amongst children

Outlay of Rs 7,000 Cr for e-Courts project

This will promote efficient administration of justice

Allocated Rs 15000 Cr for next 3 year towards Pradhan Mantri PVTG Development Mission

To improve socio-economic conditions of the particularly vulnerable tribal groups

Allocation of Rs 5,300 Cr given to Upper Bhadra Project in the drought prone central region of Karnataka

Would bring in relief for people affected with drought

Tax Benefits

 Increase rebate limit to Rs 7 lakh from Rs 5 Lakh in the new tax regime. Thus, persons in the new tax regime, with
an income up to Rs 7 lakh will not have to pay any tax

 Standard deduction of Rs 50,000 to salaried individuals, and deduction from family pension up to Rs 15,000, is
currently allowed only under the old regime. Government has proposed to allow these two deductions under the
new regime also

 Government has proposed that capital gains on market-linked debentures will be taxed as short-term capital
gains instead of long-term capital gains

 Change in New tax Regime

Earlier Tax Slab Tax proposed

Total Income Rate of Tax Total Income Rate of Tax
Upto Rs 2.5 Lakh Nil
Upto Rs 3 Lakh Nil
From Rs 2,50,001 - 5,00,000 5%
From Rs 3,00,001 - 6,00,000 5%
From Rs 5,00,001 - 7,50,000 10%
From Rs 6,00,001 - 9,00,000 10%
From Rs 7,50,001 - 10,00,000 15%
From Rs 9,00,001 - 12,00,000 15%
From Rs 10,00,001 - 12,50,000 20%

From Rs 12,50,001 - 15,00,000 25% From Rs 12,00,001 - 15,00,000 20%

Above Rs 15 lakh 30% Above Rs 15 lakh 30%

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Union Budget - 2023-24

Reduction in Custom Duty (Effective 02-02-2023)

Old Customs New Customs

Sr No Particulars
Duty (%) Duty (%)

A. Agriculture

1 Pecan Nuts 100 30

2 Denatured ethyl alcohol used in manufacturing of industrial chemicals. 5 Nil

3 Crude glycerin used in manufacturing of Epichlorohydrin 7.5 2.5

B Minerals

Acid grade fluorspar (containing by weight more than 97% of calcium

1 5 2.5
fluoride)

C Gems and Jewellery Sector

1 Seeds used in manufacturing of rough lab-grown diamonds 5 Nil

D Capital Goods

Specified capital goods/machinery used in manufacturing of Li-ion cell Nil (Up to

1 5
for use in battery of electrically operated vehicles (EVs) 31.03.2024)

E IT and Electronic Appliances

Specified chemicals/items for manufacture of Pre-calcined Ferrite Nil (Up to

1 7.5
Powder 31.03.2024)

Camera lens and its inputs/parts for use in manufacture of camera

2 2.5 Nil
module of cellular mobile phone

3 Specified parts used in manufacture of open cell of TV panel 5 2.5

4 Heat coils used in manufacturing of electric kitchen chimneys 20 15

F Auto and Auto Components

Vehicles, specified automobile parts/components, sub-systems and

1 tyres when imported by notified testing agencies, for the purpose of As applicable Nil
testing and/ or certification, subject to conditions.

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Union Budget - 2023-24

Increase in Custom Duty (Effective 02-02-2023)

Old Customs New Customs

Sr No Particulars
Duty (%) Duty (%)

A Chemicals & Petrochemicals

1 Styrene & Vinyl chloride monomer 2 2.5

2 Naphtha 1 2.5

B Precious Metals

7.5 10
Silver (including silver plated with gold or platinum), unwrought or in
1 (+ 2.5 AIDC+ (+ 5 AIDC+ Nil
semi-manufactured forms, or in powder form
0.75 SWS) SWS)

2 Silver dore 6.1 10

C Gems and Jewellery Sector

1 Articles of Precious Metals such as gold/silver/platinum 20 25

20 or Rs 400/ 25 or Rs 600/kg.,
2 Imitation Jewellery kg., whichever whichever is
is higher higher

D Automobiles

30 35
1 Vehicle (including electric vehicles) in Semi-Knocked Down (SKD) form
(+3 SWS) (+Nil SWS)

Vehicle in Completely Built Unit (CBU) form, other than with CIF more
than USD 40,000 or with engine capacity more than 3000 cc for 60 70
2
petrol-run vehicle and more than 2500 cc for diesel-run vehicles, or with (+6 SWS) (+Nil SWS)
both

Electrically operated Vehicle in Completely Built Unit (CBU) form, other 60 70

3
than with CIF value more than USD 40,000 (+ 6 SWS) (+Nil SWS)

4 Bicycles 30 35

E Commodity

Rs 25 or 30/kg.,
1 Compounded Rubber Rs 10
whichever is

2 Electric Kitchen Chimney 7.5 15

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Union Budget - 2023-24

Changes in Central Excise: NCCD Duty rate on Cigarettes (Effective 02-02-2023)

Old Customs Duty New Customs Duty

Sr No Particulars From (per 1,000 To (per 1,000
Sticks) Sticks)

1 Other than filter cigarettes, of length not exceeding 65 mm 200 230

Other than filter cigarettes, of length exceeding 65 mm but not

2 250 290
exceeding 70 mm

3 Filter cigarettes of length not exceeding 65 mm 440 510

4 Filter cigarettes of length exceeding 65 mm but not exceeding 440 510

Filter cigarettes of length exceeding 70 mm but not exceeding

5 545 630
75 mm

6 Other cigarettes 735 850

7 Cigarettes of tobacco substitutes 600 690

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Union Budget - 2023-24

Research Team

Name Email ID

Siddarth Bhamre siddarth.bhamre@religare.com

Ajit Mishra ajit.mishra@religare.com

Manoj M Vayalar manoj.vayalar@religare.com

Nirvi Ashar nirvi.ashar@religare.com

Suhanee Shome suhanee.shome@religare.com

Gaurav Arora gaurav.arora3@religare.com

Akshay Tiwari akshay.tiwari@religare.com

Amandeep Singh amandeep.sg@religare.com

Abhijeet Banerjee abhijeet.banerjee@religare.com

Gaurav Sharma gauravsharma2@religare.com

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Union Budget - 2023-24

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