The Union Budget 2023–24 will be unveiled by Finance Minister Nirmala Sitharaman at a time when the world economy is struggling due to recessionary pressures. It will be challenging for FM Sitharaman to support GDP growth, safeguard the Indian economy, and still adhere to the fiscal deficit objective in the India Budget 2023. The average taxpayers, corporates and NGOs have high expectations from the upcoming budget, as this will also be the last complete budget of this government. On this note let us look at some of the pre-budget expectations by leaders in the corporate world as well as civil society.
Climate and Sustainability
Anirban Mukherjee, Managing Director & Partner who leads Climate and Sustainability Practice for BCG India said,
“We expect the budget to have a balanced approach across mitigation action, and adaptation to climate change. With India making impressive strides in renewables, the budget could promote specific fiscal measures towards emerging technologies like storage, hydrogen and bio energy, and also cross sectoral action like circularity and energy efficiency. On the side of adaptation, budget outlays targeted at clean air mission, state climate action plans and water mission would be important to draw the right investment to safeguard against climate change.”
Emphasis on Energy Sector
Mr. Dinesh Patidar, Chairman and Managing Director of Shakti Pumps (India) Ltd. said, “We anticipate the Union Budget to place a major emphasis on the energy sector, considering the stated targets in green energy and its significance for economic growth, the government is likely to broaden the PLI incentives to integrate supply chains, fund and mobilize resources, and counteract the possibility of global risks and slowdown in development. To meet the goal of using non-fossil fuel power, solar will continue to play a significant role. Tax holidays should be provided to increase the ease of doing business for this technologically intensive industry. The government could also consider allowing the availment of credit or reducing the GST rates for the supply of raw materials used in the manufacturing of solar products. A major focus of the Budgetwill be to encourage the manufacturing of domestically produced cost-effective solar modules and a relief in GST for the R&D products required for the development could go a long way in establishing sufficient infrastructure for research and development that meets global standards at competitive prices. We believe that the government will offer concessional import duties on solar modules, which could defeat Atmanirbhar Bharat’s purpose of import substitution.
The PM-KUSUM scheme is a significant initiative for solarization that focuses on farmers who hold the majority of the market share for solar pumps. However, progress has been slow thus far; some states have approved solar pumps but haven’t installed any while most face the challenge of increasing awareness among the farmers about the scheme. In the future, we anticipate the availability of financing options for farmers in the form of formal credit to cover costs that are not subject to subsidies, the adoption of the proper pricing model to effectively expand the installation to remote areas, and the streamlining of administrative procedures. Another major focus of the Budget will be to provide the necessary infrastructure for the adoption and expansion of electric vehicles, by offering tax breaks and development incentives. After the success of the First & Second Round of Production Linked Incentive (PLI) Scheme, the third round should also be announced to attract investment in Electric Vehicle Component Manufacturing by offering incentives to Non-Automotive Investor /startups equivalent to the incentive available to the existing Automotive Investor.”
Mr. Kishan Karunakaran, Founder and CEO, Buyofuel laid emphasis on Biofuels and said, “Biofuels are an integral part of India’s strategy for attaining energy self-sufficiency and going carbon neutral by 2070. While existing policies provide the appropriate financial and fiscal incentives, advanced biofuels need more thrust from the government. It would be great if biofuel secure a spot in the Union budget. Undoubtedly, the industry is thriving. Hence, formulation of policies towards biofuel research and development, collaborations, consumer awareness by funding for programs on biofuels and their benefits, developing a better storage and distribution network infrastructure, providing tax incentives for biofuel consumers and producers, and finally promoting the growth of biofuel crops among farmers without jeopardizing food security with sector-specific frameworks and monitoring them with set long and short-term roadmap will keep the nation on its pace towards net-zero goals”.
HR and Skilling Sector
Mr. Karan Jain, Founder, HROne said, “The HR sector has witnessed major shifts in the industry over the last three years. Therefore, the industry has some major expectations from Budget 2023. Some of the major themes include the implementation of labour codes, more initiatives for job creation, improved security for informal employees, and provisions for employees contributing to the gig economy.
Labour codes have been in the pipeline for a while. The centre has already drafted key rules and codes, which focus on formalising employment for more people, enforcing a common definition of minimum wages, and rolling out security and health benefits schemes. Some components (like The Industrial Relations Code, and The Code on Social Security ) have already been issued at the central and the state level, but their implementation will be a key focus in 2023. To ensure a smooth implementation, the rollout of online portals and help desks will be crucial.
Another key theme is the rising skills gap that has impeded the creation of jobs. To prepare employees for the needs of a technology-driven era, Budget 2023 must focus on more upskilling initiatives. These initiatives should also offer incentives to existing organisations and employees to undertake large-sale upskilling projects.
Over the last few years, we have also seen a sizable increase in the gig economy. Until now, there have been no schemes that offer social security and other benefits to gig workers. As such, the industry expects new tax structures and incentives to improve the well-being and insurance coverage of these employees.
In addition, the industry is also looking forward to improvements in tax administration procedures and visibility into the status of the staffing industry.”
The need to transform Education Sector
Mr. Vineet Nayar, Founder, and Chairman, of Sampark Foundation has said, “The cascading effects of covid can be seen in significant drop in learning levels but an increase in enrolment in government schools. Unless we substantially increase allocation to education in the upcoming budget we will see this negative trend continue. Education builds the future of our country and we need 30% increase in number of teachers and their capabilities to teach in the right way. If we miss this opportunity we would have millions of children who will miss benefiting from the focus on foundational numeracy and literacy skills and next year will be too late.
The challenge of balancing the budget is huge and I hope government sets the right priorities for the future of the children of this country. Today not only the allocation to education is much lower than what it needs to be, a substantial part of that budget goes into teachers doing non-teaching activities . Thus, what actually reaches the classroom is much lower than what is allocated in the budget. I hope we will not just have a substantial increase in education budget this year to fulfil the FLN mission but also draw a red line on using teaching time for non-academic activities, investing in frugal ideas instead of expensive technology solutions that are easy to buy but difficult to use and investment in increasing number of teachers at the cost of everything else because technology is not a replacement of teachers.”
Agricuture Sector
Mr Saket Dalmia, President, PHD Chamber of Commerce & Industry (PHDCCI) has said that Agriculture and Rural sector must be at the forefront of the upcoming budget. He said, “Further reforms in rural infrastructure logistics and a cold chain are required as it would help in increasing the level of food processing industry and rural entrepreneurship. These would lead to increased participation in the global agriculture and food exports. Exports of agri and food processing products should be increased to the level of US$ 100 billion in next three years from the current level of around US$ 50 billion (2021-22).
The increase in public investments in agricultural infrastructure would attract private investments in cold storage, warehousing and supply chain of agriculture produce in order to reduce food wastages and get them to urban citizens at moderate rates. It shall also raise the returns to agriculturists.
There is a need to strengthen access to credit for long-term loans to enhance growth and productivity in the sector and to enhance farm incomes. Also, adoption of direct transfer of subsidies on electricity, fertilisers, etc. is required to the beneficiaries to ensure better delivery of subsidies to the end-users.
There must be a focus on minimising the wastage from the current level of more than 30% to less than 10% in next five years by augmenting storage capacities, modernising/upgrading the godowns.
It is essential that an integrated holistic view of the agriculture value chain is taken towards providing the necessary fillip to the agricultural growth. This requires a joint participatory approach from all concerned stakeholders including the farmers, input vendors, traders, processors and the government. The Union Budget can be very effective in laying down a comprehensive policy framework and providing a tremendous thrust through appropriate fiscal benefits and closely monitor the action plans.”
Boost to Chemicals and Petrochemicals Sector
Rahul Tikoo, Managing Director – India Sub-continent & Polyurethanes South Asia Business, Huntsman said,
“With increasing focus from the government to increase the capacity of manufacturing chemicals and petrochemicals, we are confident that the Hon’ble Finance Minister will come out with a budget that will provide a boost to the sector.
The government’s proposal to reduce customs duties on certain key chemicals in last year’s union budget was a huge relief and will aid in expanding the chemical industry’s scope and integrating it into the circular economy. Consumer spending patterns influenced by Covid and global supply chain disruptions have created significant opportunities, compelling specialty chemical companies to re-evaluate their manufacturing footprints to participate in this growth.
We are observing substantial investments in the feedstock ecosystem, and India is being considered as an alternative location for sourcing chemicals. A new PLI is currently being developed for the chemical industry, which will be of great benefit to the entire chemical value chain and help reduce reliance on imports.”
Fintech Sector
Mr. Gaurav Jalan, Founder & CEO, mPokket has shared, “”The constant innovative reforms and technological advancements have provided an impetus to the growth of the FinTech industry in India. With the annual budget just around the corner, it is expected that the government will prioritize the needs of the FinTech players and implement policies to add to their growth trajectory.
It can be expected that the government will bring in reforms to strengthen the partnerships between FinTech institutions and banks. We are expecting that the Finance Minister will take into account the financial burden on start-ups and suggest policies to ease it. In the last budget, she gave major tax reliefs to start-ups and employees, in order to boost their development and to resolve the dual taxation issue and the tax burden that employee stock ownership plans (ESOPs) have on employees. However, the qualification criteria were too stringent, and as a result, very few start-ups could gain benefits from them. So, we can expect that the government will look into this and provide tax relief to budding FinTech start-ups and their employees.
India’s journey to financial inclusion is being paved by exceptional financial solutions provided by FinTech companies. The work that we are doing to make financial services accessible to all is a major positive outcome of digitization. FinTech will continue to grow at a faster rate and penetrate deeper into the country only if rural areas have a strong digitization network. This sector expects more assistance from the government to develop strong partnerships with banks and financial institutions in order to foster better financial inclusion, both offline and online.
The upcoming budget should also consider and offer tax benefits on the total expenditure incurred by FinTech startups, maybe in the form of a small GST subsidy. “Since personal loans now make up the bulk of the loan market, efforts to offer some form of tax refund for people who take out personal loans and education loans, similar to what those who take out house loans receive, would also be appreciated by people who take out such loans.”
