The Indian government on Wednesday presented a 45 trillion Indian rupees ($549.14 billion) budget, hiking its defense allocation by nearly 13%, taking the total defense outlay to 5.94 trillion rupees ($74.25 billion).
Last year, the defense budget was 5.25 trillion Indian rupees ($65.625 billion). An amount of 1.62 trillion rupees ($20.25 billion) has been earmarked for modernization in defense. A major portion of the modernization budget would be used for acquiring weapons and equipment for the forces.
In the budget presented by Finance Minister Nirmala Sitharaman in the Indian parliament, more emphasis was given on job creation, infrastructure development, and the middle class as the ruling Bharatiya Janata Party (BJP), led by Prime Minister Narendra Modi, will be facing 10 provincial elections this year and general elections next year.
Referring to the COVID-19 crisis, Sitharaman said: “After a subdued period of the pandemic, private investments are growing again.”
The government also announced a revised fiscal deficit for the current financial year at 6.4% of GDP, which will be 5.9% of GDP for the financial year 2024.
Much to the relief of the middle class, Sitharaman announced a tax rebate increase on income tax from 500,000 rupees ($6,250) to 700,000 rupees ($8750). The slabs under the new system have also been tweaked.
The government has also allocated 6 trillion rupees ($75 billion) for the rural jobs guarantee scheme for the next fiscal year. The scheme played a vital role in the rural economy's recovery during the pandemic. It also protected the most vulnerable against complete income loss during the crisis.
The finance minister also announced an increase in capital expenditure by 33% to 10 trillion rupees ($125 billion).
Sitharaman also allocated 2.4 trillion rupees ($30 billion) for Indian Railways, which she claimed is the highest-ever allocation by any government.
The Economic Survey presented on Tuesday said the country’s growth for Financial Year 2023 is higher than all major economies.
The survey said: “Despite strong global headwinds and tighter domestic monetary policy, if India is still expected to grow between 6.5 and 7.0 percent, and that too without the advantage of a base effect, it is a reflection of India’s underlying economic resilience; of its ability to recoup, renew and re-energize the growth drivers of the economy.”
‘Growth focussed budget’
Dr. Jaijit Bhattacharya, president of the Centre for Digital Economy Policy Research, said that instead of being just another budget, this Union Budget 2023 is a growth focussed budget, supporting sectors that are critical, including Digital India, fintech, agriculture, and skills.
“Unprecedented budget allocation of 10 trillion rupees ($125 billion) for capex (capital expenditure) will go a long way in supporting demand in the economy, especially for the construction industry where we were witnessing softening of demand,” he told Anadolu.
“The budget is also high in technology, both in usage as well as leveraging technology, especially digital technology and industry 4.0 technologies. Promoting technologies such as lab-grown diamonds is timely and welcome. Overall, it is a budget that provides interventions in most areas that required it,” he added.