Union Budget 2023-24: Wishlist of a common Indian

My Budget 2023-24

The Union Budget for the FY 2023-24 is all set to be presented by Finance Minister Nirmala Sitharaman on the 1st of Feb. All eyes are on this space as this will be the last budget before the 2024 general elections. There is a lot of debate about whether this budget will have a flavour of populism to woo the Indian voters for one last time before the general Lok Sabha elections in 2024.

Let’s look at some key figures to keep our eyes on.

Key figures to watch out for this Budget

• The fiscal deficit figure
• The CAPEX planned and their sectoral allotments
• Money raised from divestment and privatization
• Tax reforms and revenue collections
• Subsidies and welfare schemes
• Healthcare, education, sustainability, and urban reform outlays

What about the common Indians?

Clearly, budget discussions are full of hopes and big promises. It’s a complex document of even bigger numbers on how the government is likely to function for the forthcoming year. But when it comes to a common man, the demands are often very simple and basic.

My Budget 2023

Finance minister Nirmala Sitharaman recently said, “I belong to a middle class, understand their pressures”. This has raised hopes among Indians that the Budget FY2024 might reward the middle class.

The past year has proven to be highly challenging for the middle class and expect the government to do something big to help ease some of their tensions. With purchasing power drying out over COVID, doubled with soaring inflation and unemployment rates, the common man has been hit the hardest. Let’s look at some basic demands of a common Indian man from this year’s budget.

More money in my wallet

Any budget talk is incomplete without a demand for tax benefits. The salaried class seems to have hardly benefited from the New Taxation Regime of 2020, and they have big expectations from the budget. There are expectations that the highest tax rate of 30% to be reduced to 25% and the threshold limit for the highest tax rate increased from Rs 10 lakh to Rs 20 lakh.

There is also an expected revision in the deductions offered under section 80C to somewhere between 2-2.5 lakhs, with medical insurance provisions being increased to cover the effect of inflation.

However, with inflation concerns taking up much of FY 2023, the possibility of any change in income tax slabs looks unlikely.

Better houses

Soaring inflation and rising interest rates have harmed the purchasing power of homebuyers. Experts in the real estate sector feel that the tax deduction limit on the interest paid on home loans should be increased from Rs 2 lakh to Rs 5 lakh. Another demand is for a separate section on principal repayment of housing loans other than Section 80 C to be introduced for Rs 4 lakh.

Lower fuel and food prices

Inflation was a trouble all common man faced last year. In 2022, food inflation, as measured by the CPI, averaged 6.8%, more than double the 3.1% it averaged in 2021. Inflation for basic products like milk products has averaged more than 8% since the middle of 2021. Domestic diesel prices have gone down by only 3% since June 2022, despite the price of India’s crude basket falling by a third during this time.

A relief to help cut down day-to-day living expenses for the common man is thus on the wishlist of most Indians.

Populist vs. Prudence

All in all, the Indian consumer has had it tough these last few years. Given that the demand revival is crucial to boost the private investment cycle, measures to reduce the price burden or enhance disposable incomes can be beneficial for the individual and may have a multiplier effect on the economy.

It all looks so easy no? But it ain’t so. Too many dole-outs and populist measures could fuel inflation again and that’s something which the government will dare not do this year. Plus government has been working on the path of fiscal prudence and has committed to a medium-term target of 4.5% of GDP by FY 2026.

Considering that the deficit was budgeted at 6.4% for FY 2023, there is an expectation of a staggered reduction of the deficit by around 0.5-0.75% of GDP in the next three years.

With covid and lockdowns concerns well behind us, and tax collections handsomely beating budget estimates, Budget FY24 is expected to make marked progress in improving its finances.

So the government will be walking on a very tightrope of populist vs. prudence and we shall soon find out whether it will maintain a balance or bend.

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