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A day after presenting the Union Budget for 2023-24, Union Finance Minister Nirmala Sitharaman said growth was the predominant focus from Day 1 when she and her team sat down to prepare the last full-year Budget ahead of Lok Sabha elections. Sitharaman added that her “single-minded” guiding imperative was that this was a “golden opportunity” for India and this time “we should really not miss the bus.”
She said given that there was no let up in the pandemic, and the hit the private sector took due to this, the government remained consistent with its capex plan over the last three years.
We weren’t really looking if they (the private sector) were investing or not. We went about investing. Simultaneously, of course, the private sector has come out, the twin balance sheet problem has been addressed, they have deleveraged themselves considerably.
To a question if the high government capex outlay for yet another year meant the private sector was still averse to invest, she said that the private sector was looking at investment, not just as a tool for expansion, but also to manage transition at a time of rapidly changing technologies including AI and Internet of Things.
But we “cannot sit back and watch,” she said. “So I’m not even getting into that terrain where you’re saying that it (private sector investment) may not happen this year also and, therefore, would you want to go on with the government expenditure.
Sitharaman also said the huge capex did not mean she had wielded the axe on welfare spending. Citing the Rs 79,000-crore allocation for PM Awas Yojana and the higher outlay for Jal Jeevan Mission, which goes to states in the form of grants, she noted that even for NREGA, it being a demand-driven programme, the government would keep adding to its allocation through extra grants during the year. She added that NREGA job cards are also given to those who work on Awas projects so there was a synergy.
By allowing standard deduction and restructuring the tax slabs, the Finance Minister said she expected about 50-55 per cent of taxpayers to shift to the new exemption-free income tax regime.
Even for those utilising the maximum available exemption (in the old regime), the new regime without exemptions would be attractive.
J &K cop arrest teacher, recover perfume bomb (Page no. 9)
(GS Paper 3, Internal Security)
The Jammu and Kashmir Police arrested a government teacher who was allegedly involved in carrying out a number of Improvised Explosive Device (IED) blasts in Jammu city and one in a passenger bus near Katra town in the last year.
The police have also seized a ‘perfume IED’ from the accused identified as Arif of Reasi, said Director General of Jammu and Kashmir Police Dilbagh Singh, who added that it was for the first time the police are recovering such a kind of explosive device from the Union Territory.
Explaining the mechanism, Singh told reporters in Jammu that the ‘perfume IED’ could have blown off causing maximum damage to a person when he or she would try to spray the perfume or open the bottle.
The teacher who owed allegiance to the terrorist outfit Lashkar-e-Toiba was apprehended following an investigation into the twin IED explosions in Jammu’s Narwal area in which nine civilians were injured on January 21.
During questioning, he confessed to his involvement in other blasts at Shastri Nagar in Jammu city and a speeding bus near Katra.
In order to destroy all evidence showing his involvement in the twin blasts, Arif had even burnt his clothes and shoes which he wore while planting the IEDs and damaged his mobile phone, the DGP pointed out.
The police team led by SSP Jammu Chandan Kohli barely slept during the night to work out this blind case in a short span of 11 days, the officer said.
While there were no casualties in the Shastri Nagar explosion in February 2022, four people were killed and over 20 injured in another blast inside a passenger bus near Katra on May 13.
Two explosions rocked the Narwal area of Jammu city on January 21 this year in which nine people were injured.
Editorial Page
An eye on the future (Page no. 12)
(GS Paper 3, Economy)
Are all budgets invariably contextual — a melange of flashbacks, existing in realities and crystal gazing? This budget is an innovative amalgamation.
It comes in the backdrop of the impending state elections and the general election in 2024. Temptations for excessive subsidies and measures designed to influence the electoral psyche are inevitable.
It is laudable when the short-term temptations are spurned in favour of longer-term outcomes.Indeed, the budget is a unique example of being both responsive and responsible.
It is responsive in terms of the priorities articulated in the vision for Amrit Kaal — opportunities for citizens with a focus on the youth, growth and job creation, and strong and stable macroeconomic environment; and the Saptarishi — seven priorities, which entail infrastructure and development, green growth, financial sector, inclusive development and reaching the last mile, to mention a few. These embrace all major stakeholders.
It is also responsible as it achieves the stipulated fiscal deficit of 6.4 per cent of GDP, and seeks a half percentage point correction — primarily from an unwinding of subsidies (food and fertiliser of 0.6 pp of GDP; likely reflecting both withdrawal of Covid-related relief and global commodity tailwinds).
A rather laudable goal, especially amid elections, and given that it is rare across economies to withdraw spending programmes at any time; yet offset by an increase in much needed capital spending, and a continued decline in the ratio of revenue to capital spending. A modest nominal GDP and tax buoyancy, besides other parameters, gives room and flexibility.
Ultimately, what matters for macroeconomic stability and growth are the overall fiscal deficit and liabilities of the sovereign. Notably, the budget aims for restraint on borrowings of CPSEs (1.2 per cent of GDP). Still, even excluding state PSEs for which we do not have reliable estimates, and allowing for some buffer in states’ estimates, consolidated deficit for the sovereign is running at ~10 per cent of GDP (5.9+3.4+1.2), and debt/GDP at ~85 per cent.
Ideas page
LiFE lessons for all (Page no. 13)
(GS Paper 3, Environment)
The past year has seen the onset of the world’s first truly global energy crisis, with turbulent markets and sharp price spikes creating difficulties for citizens, businesses and governments.
Although India has been more insulated from the crisis than many countries, it has still been affected. With the world also contending with the major challenges of climate change and air pollution, the latest crisis has prompted many people to look again at how they use energy.
Efforts to improve the energy efficiency of items of everyday use — from home appliances to cars — along with changes in habits and behaviour will play a crucial role in making the world’s energy use more sustainable.
India’s new Lifestyle for Environment (LiFE) initiative is an important platform that could help lower energy costs, carbon dioxide emissions, air pollution and inequalities in energy consumption.
LiFE demonstrates India’s leadership on global issues by promoting sustainable lifestyles and consumption choices worldwide. The programme could potentially help put developing and advanced economies alike onto a more sustainable path.
Prime Minister Narendra Modi launched the LiFE initiative in October 2022 to nudge individual and collective action to protect the environment. This includes making informed personal choices such as using public transport more, buying electric rather than petrol or diesel vehicles, adopting energy-efficient appliances in homes, and much more.
New IEA analysis shows that if all countries were to adopt the kind of measures recommended by LiFE, it would reduce global carbon dioxide emissions by more than 2 billion tonnes by 2030.
This alone would deliver around one-fifth of the emissions reductions needed this decade to put the world on a path to net zero emissions. The measures would also save consumers globally around $440 billion in annual energy bills.
A budget for a few (Page no. 13)
(GS Paper 3, Economy)
Looking at the reaction in the media to the Union budget, it would appear that many have been carried away by the lofty ideals of “Amrit Kaal”, the glitter of high-tech schemes and the surge in capital expenditure.
Very few seem to have remembered what Mahatma Gandhi said: “Recall the face of the poorest and weakest man you have seen, and ask yourself if this step you contemplate is going to be of any use to him.”
Poverty alleviation programmes have been given short shrift in Budget 2023. The most important among them is MGNREGA, whose allocation has been cut to Rs 60,000 crore.
The actual expenditure in 2021-22 was Rs 98,468 crore and the expected expenditure in 2022-23 is Rs 89,400 crore. The total allocation for the National Social Assistance scheme, anganwadis, the National Livelihood Mission and nutrition programmes has stagnated at less than Rs 60,000 crore.
As a ratio to GDP, the allocation for the above anti-poverty programmes has declined from 0.79 per cent in 2022-23 to 0.53 per cent.
The other two major programmes are the drinking water and housing programmes with an overall allocation of Rs 1.5 lakh crore and an increase of 13 per cent from the revised estimate of 2022-23, but still below the budget estimate of 2021-22.
The allocation for agriculture and allied sectors, including PM-KISAN, is Rs 1.4 lakh crore, lower than the budget estimate for 2022-23.
The food subsidy has been cut by 31 per cent from Rs 2.87 lakh crore to Rs 1.97 lakh crore and the fertiliser subsidy by over 22 per cent from Rs 2.25 lakh crore to Rs 1.75 lakh crore. The allocation for food procurement and market intervention has been reduced from Rs 72,000 crore to Rs 60,000 crore.
The education and health sectors have seen a marginal improvement from the budget estimates for 2022-23, but are totally inadequate in terms of the requirement.
As a ratio to GDP, the allocation for education has witnessed a steady decline during the NDA regime, from 0.63 per cent in 2013-14 to 0.37 per cent in the present budget.
India is on course to be the third largest economy, but we will continue to be at the bottom in terms of the quality of life of people.
Explained
Choosing the right tax regime (Page no. 15)
(GS Paper 3, Economy)
By tweaking tax slabs and rates in the new personal income tax regime in the Budget for 2023-24, Union Finance Minister Nirmala Sitharaman nudged taxpayers towards a simpler, hassle-free tax regime with minimal compliance burden, as against the more complicated old system.
In her Budget speech for 2023-24, Finance Minister Nirmala Sitharaman said that the new tax regime would be the “default” for individual taxpayers, leading to considerable speculation on what exactly this meant.
According to senior government officials, it only means that when taxpayers log on to the income tax portal to file returns, the new tax regime option would be checked by default.
But that does not mean that the taxpayer cannot opt for the old regime. In fact, individual taxpayers, except those with income from business, can switch between the two tax regimes every year. This flexibility will also be available to new taxpayers.
Introduced in 2020-21, the new tax regime has found few takers so far. While the government wanted to push individuals towards the new tax regime, which did not allow any deduction or exemption, the benefits on tax savings in the old regime far outweighed benefits of migrating.
But Sitharaman changed all that by offering a significantly more attractive version of the new tax regime in the latest Budget.
The scope of full rebate on income tax has been expanded to those earning up to Rs 7 lakh per annum from Rs 5 lakh under the new regime.
This essentially means that anyone with an annual income of up to Rs 7 lakh will not have to pay any income tax, that too without claiming any deduction. Government officials estimate that nearly one crore income tax return filers stand to benefit from this.
As the enhanced rebate in the new scheme is set to leave more in the hands of individuals, disposable incomes at the lower end of the income curve could rise, which in turn could push up consumption.
Deer could be the reservoir of old coronavirus variants: suggests US-based study (Page no. 15)
(GS Paper 3, Environment)
The alpha and gamma variants of the coronavirus continued to circulate and evolve in white-tailed deer, even after they stopped spreading widely among people, a new study suggests.
Whether the variants are still circulating in deer remains unknown. “That’s the big question,” said Dr Diego Diel, a virus expert at Cornell University and an author of the study, which was published in Proceedings of the National Academy of Sciences.
But the findings, which are based on samples collected through December 2021, provide more evidence that deer could be a reservoir of the virus and a potential source of future variants, which could spill back into human populations.
Previous studies of deer have suggested humans have repeatedly introduced the coronavirus into white-tailed deer populations in the United States and Canada and that deer can spread the virus to one another.
Scientists are not sure how people are passing the virus to deer, but they have speculated that it might happen when people feed deer or deer encounter human trash or waste.
The scale of the risk that infected deer pose to humans remains unclear. Scientists have documented one case that most likely resulted from deer-to-human transmission in Ontario, and they note that hunters and others who have regular contact with the animals could potentially catch the virus from them.
For the new study, Diel and his colleagues analysed about 5,500 tissue samples collected from deer killed by hunters in New York state from September through December in 2020 and 2021.
During the 2020 season, just 0.6% of the samples tested positive for the virus, a figure that rose to 21% during the 2021 season. Genetic sequencing revealed that three variants of concern — alpha, gamma and delta — were all present in deer during the 2021 season.
At the time, delta was still prevalent among New York’s human residents. But alpha and gamma had practically vanished, especially in the rural parts of the state where the infected deer were found.
Proposed Pen Monument to Karunanidhi’s memory — the plan and the criticism (Page no. 15)
(Miscellaneous)
A planned offshore memorial to the late DMK patriarch M Karunanidhi was opposed by representatives of some opposition parties and fishermen’s and environmental groups on grounds of environmental damage and loss of livelihoods in Chennai this week, and the leader of a Tamil nationalist party threatened to break the installation if it was built.
The proposed ‘MuthamizhArignar Dr Kalaignar Pen Monument’ off Marina
beach falls under Coastal Regulation Zones (CRZ) IA, II, and IVA, and requires clearance under Section 4(ii)(j) of the Union Environment Ministry’s Coastal Regulation Zone Notification, 2011 (amended up to March 22, 2016).
The Rs 81-crore ‘Pen Monument’, standing in the Bay of Bengal 360 m from the coast, was proposed by the government last year, and is expected to become a Chennai landmark on completion.
It has been planned as a representation of Tamil culture and architecture, and will incorporate regional motifs, architecture, and designs with Tamil heritage elements.
The Pen Memorial pays tribute to Karunanidhi, one of the most influential figures in Tamil Nadu and Dravidian politics who, apart from being president of the DMK from 1969 to 2018 and Chief Minister of Tamil Nadu for five terms between 1969 and 2011, made significant contributions to Tamil literature as an orator, poet, and writer of non-fiction and fiction, plays, and films.
The memorial in the shape of a pen represents his many contributions to Iyal (poetry and literature), Isai (music), and Naadagam (theatre), the three fundamental pillars of both ancient and contemporary Thamizh, or Tamil, according to an official document.
Karunanidhi, the document says, ruled Tamil hearts and developed into a mass leader using the pen, a “symbol of [his] greatest talent and prowess”.
The design of the monument is based on the Veena, a traditional Carnatic music instrument that is handmade in Tamil Nadu with extreme precision, the document says.
The Thumba is used to represent the pen pedestal, the neck portion the long bridges, the music hole a pen statue, and the peg the tensile canopy seating on the bridge.
Economy
Why proposed change has rattled Indian start-up? (Page no. 19)
(GS Paper 3, Economy)
A recently proposed detail has Indian start-ups worried. These new age firms, that offer their shares to foreign investors, may have to pay ‘angel tax’, which was earlier only supposed to be paid for investments raised by resident Indian investors, as per a motion made in the Finance Bill, 2023.
The move could adversely impact financing available to the start-ups, which have already been reeling under a funding winter since 2022, industry insiders are speculating.
The Finance Bill, 2023, unveiled by Finance Minister Nirmala Sitharaman on Wednesday, has proposed to amend Section 56(2) VII B of the Income Tax Act.
The provision states that when an unlisted company, such as a start-up, receives equity investment from a resident for issue of shares that exceeds the face value of such shares, it will be counted as income for the start-up and be subject to income tax under the head ‘Income from other Sources’ for the relevant financial year.
However, with the latest amendment, the government has proposed to also include foreign investors in the ambit, meaning that when a start-up raises funding from a foreign investor, that too will now be counted as income and be taxable.
For instance, if the fair market value of a start-up share is Rs 10 apiece, and in a subsequent funding round they offer it to an investor for Rs 20, then the difference of Rs 10 would be taxed as income.
Section 56(2) VII B of the Income Tax Act, colloquially known as the ‘angel tax’ was first introduced in 2012 to deter the generation and use of unaccounted money through the subscription of shares of a closely held company at a value that is higher than the fair market value of the firm’s shares.