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Why Budget 2023 Is More Crucial For The Economy

From the common man to the corporate sector, the budget is highly anticipated year in and year out. The upcoming Budget 2023-2024 is potentially the most challenging of all the preceding budgets rolled out by the Finance Minister, Nirmala Sitharaman. The budget will be tabled on 1 February 2023. It will not just have a clear roadmap to pave India's momentum of growth at a time in history with a recession looming, but also takes on relevance for the fact that it is the Indian government’s last complete budget before general elections in May 2024. 

Why This Budget 2023-2024 is Crucial

The crux of this budget taking on a crucial nature is that it has to be able to deliver what team India wants. Who and what is Team India? This is every citizen and organisation that stands to benefit from the budget and its clauses. As the year of vital elections is around the corner, the present government would seek to maintain the impetus in infrastructure development. This was a decision of policy, but analysts hope that the financial allocation for this purpose will be extended further. Furthermore, with some dissatisfaction over the last budget, the middle class must be appeased with this one. In the last budget, the middle class hardly gained any relief from taxation. The government, it is hoped, realises that this is society’s component that is the driver of consumption, the needs of which have to be addressed urgently. 

Key Taxation Expectations from the Budget Address

The Finance Ministry's final decision will only be revealed on 1 February 2023. Still, a host of areas that the budget is expected to bring to the table are being discussed with gusto. Much noise is being made about tax, especially in the domain of capital gains. Reports suggest that the government wishes to change the regime of capital gains taxation, somehow making it more straightforward. This is something that would be vital to gaining the sympathy of the millions of taxpayers in India. Taxpayers ardently predict that the government will target the rationalisation of the holding period concerning the regime of capital gains tax. There should also be some modifications in the tax slabs and rates. A cleanup of the existing regime, complex at the very best, has been long in coming. 

A Further Growth Spurt

Critically, the most challenging aim for the current government is how to quicken the pace of India’s economic growth rate. For a while now, inflation has been a stubborn issue. In December 2022, inflation stood, for the very first time, below the level of tolerance mandated by the Reserve Bank of India at 5.88%. The tolerance level is 6%. The tremendous economic growth challenge that the Modi government faces is boosting development and growth while mitigating inflation. The catch-22 situation that this government needs to see a way out of is the fact that growth results in consumption, which every country needs. However, an increase in consumption leads to more inflation. The Reserve Bank of India, attempting to solve this issue, has tried to keep interest rates on the high side. Nonetheless, this only curbs investment and, therefore, growth. Hopefully, the new budget will find a way out of this maze. 

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