Budget 2023 Simplified
Hi Everyone. When you hear the word ‘Budget’ what comes to your mind? For most of us, it is about managing our expenses. In every budget, there are sources of income and avenues of expenditure (i.e where we spend our money). We earn money from our job, borrow money from family, or have passive sources of income such as the stock market. These are sources of income. We may spend this money on our needs, such as groceries, paying bills such as water and electricity or spending money on our wants such as a high-end phone, a brand-new car or a trip to an exotic place. Just as all of us have a personal budget, the government also has an annual budget to track its expenditure.?
As the budget for 2023 is already released, we would like to attempt to simplify it for you. The budget is researched months before it is presented. It is kept confidential before it is released to the public. The Budget comprises 2 parts - Announcements and Accounts. Announcements can be generic or specific. Accounts comprise 3 parts:?
The receipt budget talks about how much money India is going to earn. The receipt budget is further divided into Revenue Receipts and Capital Receipts. ‘Capital’ signifies only once i.e the frequency is only once. ‘Revenue’ signifies recurring i.e the frequency is more than once.?
Examples of Revenue Receipts include Income Tax, GST and Customs, Fees and Penalties. The preceding examples are under Revenue receipts because they are recurring. Taxes are paid frequently and so are GST and Customs. The Government of India is going to earn from Income Tax, GST and Customs, and Fees and Penalties on a recurring/frequent basis.
An example of Capital Receipt includes Loans and Grants. A loan is granted only once and not multiple times, hence it comes under Capital Receipt.
Now, let's move on to the expenditure budget. Expenditure Budget as the name suggests talks about where the Government of India is spending money.?
The Expenditure Budget also has Capital Expenses and Revenue Expenses. Examples of Capital Expense includes the Cost of building Roads, Highways, Airports, Dockyards, Defence Equipment etc. For the Government, this is a one-time expense which generates future cash flows.
An example of Revenue expense is the salaries that the Government of India has to pay to its employees. Salaries are paid monthly and hence they are on a recurring basis.
Demands for grants from Central Government talk about how the budget is going to be allocated.?
Some points to note:
Only 2% of the Indian population pays direct taxes.
Ideally, Capital Expenditure should be greater than Revenue Expenditure, as Capital Expenditure brings a higher return on investment.
India makes a deficit budget. This means that the Expenses > Income. The gap is filled by the government by taking loans. On these loans, Interest is paid.
Credit is part of your financial power. It helps you to get the things you need now, like a loan for a car or a credit card, based on your promise to pay later. Working to improve your credit helps ensure you'll qualify for loans when you need them.
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Since FatakPay as a company deals with retail credit disbursement, we will talk about how different types of credit affect different sectors:
When it comes to credit growth, Banks have seen a 10-year high at 18% in November 2022.
There is a revamp of the Credit Guarantee Scheme for MSMEs through an infusion of INR 9000 crores thereby enabling additional collateral-free guaranteed credit of INR 2 lakh crores while reducing the cost of credit by 1%
Green Credit Program under Environment (Protection) Act to incentivize sustainable and responsive actions by entities. The Guarantee Emergency Credit Line Facility for the Ministry of MSME has been allocated Rs.14,100 Crore which is a 34.2% Year on Year Increase.
? Extension of Emergency Credit Line Guarantee Scheme (ECLGS)?
? Offering additional credit of INR 2 lakh crores for MSME under the Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE)?
MSMEs lie at the core of India’s growth story. The 2023-24 Budget supports the MSME sector by easing the doing business ecosystem through digitization, reducing the cost of MSME credit guarantee, launching a refund scheme for failed MSMEs, and infusing Rs. 9,000 crores in the corpus through Revamped Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE), allowing additional collateral-free credit of Rs 2 Lakh crores.
Simplification of the KYC process, and expanding the scope of DigiLocker, as a one-stop solution for reconciliation and identity verifications.Continuation of fiscal support to promote digital payments in FY 23-24. This will be a one-stop solution for identity verification across all financial pillars of credit, insurance, and investment which will help reduce friction and increase digital adoption.
When it comes to the Agriculture sector, the Agriculture Credit Target has been raised to INR 20 Lakh Crore with a focus on Animal Husbandry and Fisheries.?
As far as the Energy sector is concerned, the Green Credit Program will be notified under the Environment Protection Act to encourage behavioural change.
The focus on Green Agriculture will also support the development of a carbon credit market for Agriculture in India.
We hope this article was an informative read!