For a resilient India, which has seen its post-pandemic recovery confronted by cross-border inflationary pressures and an ongoing global recession, there are several reasons to cheer as the Finance Minister presented the Union Budget 2023-24, that aims to further consolidate the blueprint of India at 100.
The previous year’s Budget focused on foundational measures towards a consumer-driven economy by providing stability in the tax regime, focusing on employment generation, farmer welfare, infrastructure development, digital and technology. For the FMCG sector specifically, it outlined several concrete steps to boost the growing consumer appetite.
Unsurprisingly, the latest Budget, too, has prioritised stimulating domestic demand, controlling inflation and incentivising employment generation. The revision of income tax slabs, in particular, stands out as the most important fiscal policy in recent years and has the potential to have a transformative impact on the economy. Not only has the government exempted all tax for annual income up to ₹3 lakh, it has also raised the income tax rebate limit to ₹7 lakh. The new tax regime offers more disposable cash in the hands of salaried professionals, incentivising them to spend more. Individuals will also be happy with measures such as the introduction of a standard deduction for salaried taxpayers and the reduction of the highest surcharge rate from 37 per cent to 25 per cent. Similarly, some relief has also been provided to pensioners impacted by inflation.
For the agriculture sector, the Budget is a much-needed shot in the arm. The government has outlined its intention to transform India into a global hub for ‘Shri Anna’ or millets, of which it is currently the second largest exporter in the world, by pushing for millet development and research. The Indian Institute of Millet Research will be supported as a ‘Centre of Excellence’. Other positive measures are increasing the agriculture credit target to ₹20-lakh crore, building an agriculture-focused digital infrastructure and creating an agriculture accelerator fund to bolster the sector’s output. More importantly, these measures will enable innovative, tech-led solutions to challenges faced by farmers, helping them improve productivity and profits.
Another critical sector that the Budget brought a huge relief to is MSME. With the credit guarantee scheme being extended with an infusion of ₹9,000 crore, it will provide improved access to capital for MSMEs leading to a multiplier effect on the sector.
Commendable progress has also been made in promoting sustainability, green economy and net-zero targets. The recently launched National Green Hydrogen project has an outlay of ₹19,700 crore to facilitate India’s transition to a low carbon-intensity nation and reduce its dependence on fossil fuel imports.
After a slow start to 2022, the FMCG industry began demonstrating signs of recovery in the urban market by the third quarter, while towards the end of the year, even the rural market showed some green shoots. The financial incentives and tax breaks will stimulate the consumption sentiment and drive further growth for consumer goods and FMCG and create a virtuous cycle that delivers long-term benefits across the board.
The Budget has taken steps towards continuing the larger economic recovery with multiple positive measures. Incentives have been offered to drive agri reform with ₹2,200 crore to be spent on high-value horticulture. The agriculture accelerator fund will empower the growth of data-led farming. These initiatives will not only help boost the sector but also generate further employment.
All in all, the Budget will provide the stimulus for recovery and positivity. It is a growth-oriented Budget focused on infrastructure development, agriculture and green energy. The short-term benefits are obvious; the long-term gains will hopefully, be realised over time to drive India into becoming a $5-trillion economy by the end of this decade. This is truly India’s decade and nobody can stop us!
The author is the MD & CEO of Marico Ltd