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Union Budget 2023 Expectations

Updated: Feb 10

Introduction to the Budget

  • Although the Constitution does not mention the term ‘Budget’, Article 112 says that the President shall, in respect of every financial year, cause to be laid before both the Houses of Parliament, the House of People (Lok Sabha) and the Council of States (Rajya Sabha), a statement of the estimated receipts and expenditure of the Government for that year. This statement is known as the ‘Annual Financial Statement’.

  • The financial year for the Union and the State Governments in India is from 1st April to 31st March. Each financial year is, therefore, spread over two calendar years. The period of the financial year as 1st April to 31st March was introduced in India from 1867. Prior to that, the financial year in India used to commence on 1st May and ended on 30th April (L.K. Jha Committee’s Report of the Committee on Change in Financial Year).

  • Presently, the Union Budget of India is presented each year on the 1st of February or any other suitable date by the Finance Minister to the Parliament.

Here are some Budget trivia

  • India’s first Budget was announced in pre-independent India, on April 7, 1860, when Scottish economist and politician James Wilson - of the East India Company -presented it to the British Crown.

  • First budget of independent India was presented by R.K. Shanmukham Chetty in November 1947. The defence forces played a pivotal role in the rehabilitation of refugees. The country was also in the middle of a military conflict with Pakistan. As a result, a staggering 47% of the total expenditure was earmarked for defence. The fiscal deficit was as much as 21% of the expenditure. The total expenditure was around ₹197 crores.

  • As part of gender budgeting that was introduced in 2005, women’s developmental needs dominate the gender budget with an 84% share in 2022-23.

  • THE TAX receipts of the central government have stayed at nearly 7% of GDP since FY10, after crossing 8% of GDP for a few years. The share of non-tax revenues has also dropped since then, mostly remaining below 2% and now just over 1%.

  • THIS ANNUAL financial exercise which sets the tone for policy and financial reforms every year derives its name from the French word bougette, which means a leather briefcase.

  • The Black Budget: Presented by Yashwantrao B Chavan under the Indira Gandhi government, the 1973-74 budget was called the Black Budget because the fiscal deficit during that year was INR 550 crore. The nation was embracing major financial distress at the time.

  • Carrot & Stick Budget: The PV Narasimha Rao government ended the licence raj in 1991 and the initial steps to demolish the system were taken when VP Singh presented the Union budget in 1986. The union budget presented by Singh for the Congress government on February 28 is known as the Carrot and Stick’ budget. The rewards and punishment budget introduced MODVAT (Modified Value Added Tax). It also launched a drive against smugglers, black marketers, and tax evaders.

  • Epochal Budget: Manmohan Singh’s iconic budget in 1991 brought an end to the licence raj and it also kickstarted the era of economic liberalisation. Singh’s Epochal Budget was presented in the Parliament when India was on verge of suffering an economic collapse. Taking essential steps to promote exports, Singh’s landmark budget also reduced customs duty from 220 percent to 150 percent at the time.

  • Dream Budget: Using the Laffer Curve principle to lower tax rates in order to increase collections, P Chidambaram presented the budget that became ‘everyman’s budget dream’ in 1997-98. Reducing corporate tax rates and cutting down personal income tax rates from 40 per cent to 30 per cent, Chidambaram’s Dream Budget also encouraged higher investment from Foreign institutional investors (FIIs).

  • Millennium Budget:. The Millennium Budget was presented by Yashwant Sinha in 2000. Sinha’s Millennium Budget presented the road map for the growth of India’s Information Technology (IT) industry. The Millennium Budget discontinued the practices of incentives on software exporters. The 2000 budget also reduced customs duty on computers and computer accessories.

  • Once-in-a-century Budget: In 2021, Sitharaman presented a 'once-in-a-century budget’ aimed at reviving Asia's third-largest economy through investing in infrastructure and healthcare while relying on an aggressive privatisation strategy and robust tax collections.

Scope of Budget

  • Broadly, the Budget documents depict information relating to receipts and expenditures for two years. They are:

  • Budget Estimates (BE) of receipts and expenditures in respect of current and ensuing financial years;

  • For the current year through Revised Estimates (RE); and

  • In addition, the Actuals of the year preceding the current year are also reflected.

  • The budget thus sets forth the receipts and the expenditure of the Government for three consecutive years.

  • The Annual Financial Statement shows the receipts and expenditures of Government in three separate parts under which Government accounts are maintained viz. (i) Consolidated Fund of India (ii) Contingency Fund of India and the (iii) Public Account. As per Constitutional provisions (Article 112) the Annual Financial Statement has to distinguish expenditure on revenue account from other expenditure. It, therefore, includes (i) Revenue account and (ii) Capital account.

  • The expenditure of certain categories, charged on the Consolidated Fund of India and not subject to the Vote of Parliament, are also indicated separately in the Budget. The Demands for Grants show separately the revenue and capital, and the charged and voted expenditure.

  • Estimates of receipts are classified into tax receipts, non-tax receipts, capital receipts (both Debt and Non-Debt) and also those which are on revenue account and others which are on capital account.

  • Two Statements presented to the Parliament viz. the Macroeconomic Framework Statement, the Medium-Term Fiscal Policy Statement cum the Fiscal Policy Strategy Statement under the FRBM Act, 2003, has further enhanced the scope of Budget to provide an assessment of the growth prospects of the economy, indicate the rolling targets for specific fiscal indicators as well as outline the strategic priorities of the Government in the fiscal area for the ensuing year.

  • Year on year, the Finance Minister has just about 7% of the total budget at her disposal for fresh allocation. The first 93% goes into expenditures that are already committed — think of all the ministries and all the schemes that are already in play. So the FM doesn’t exactly have Rs 40 lakh crore (as in case of FY23) to allocate; rather just about 7% of it for new allocations.

Structure of Government Accounts

  • Under Article 266(1) of the Constitution of India, all revenues received by the Government of India, all loans raised by the Government by the issue of treasury bills, loans or Ways and Means advances and all money received by the Government in repayment of loans shall form one consolidated fund to be titled the “ Consolidated Fund of India”. The Consolidated Fund of India has the following two divisions-

  • Revenue Account

  • Capital Account

  • Revenue Account-Expenditure/Receipts: Revenue Account deals with the proceeds of taxation and other receipts classified as Revenue and expenditure met therefrom.

  • Tax Revenue

  • Non-tax Revenue - Interest received from States, UTs and other sources, Dividend from PSUs, RBI and other Banks & Insurance Companies

  • Capital Account-Expenditure/Receipts: Capital Account deals with expenditure incurred with the purpose of either increasing the concrete assets of durable nature or of reducing recurring liabilities. It is logical otherwise to meet Capital expenditure from borrowed funds, the liabilities in respect of which are spread over a number of years, as the benefits arising from Capital expenditure flow over a period of years. Capital Account also includes various types of Capital Receipts.

  • Non-debt Capital Receipt - loan repayments, disinvestment of equity holdings in PSEs,

  • Debt Capital Receipt - Market Loan, National Small Savings Fund, International Financial Institutions, Market Stabilization Scheme

  • Capital expenditure – increasing concrete assets, loans and advances lent by the Government

  • Direct Tax collections up to 10th January, 2023 show that gross collections are at Rs. 14.71 lakh crore which is 24.58% higher than the gross collections for the corresponding period of last year. This collection is 86.68% of the total Budget Estimates of Direct Taxes for F.Y. 2022-23.

  • Monthly GST revenues have been more than Rs 1.4 lakh crore for 10 straight months in a row.

Budget Documents

  • Annual Financial Statement (AFS)

  • Demands for Grants (DG)

  • Finance Bill

  • Statements mandated under FRBM Act:

  • Macro-Economic Framework Statement

  • Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement

  • Expenditure Budget

  • Receipt Budget

  • Expenditure Profile

  • Budget at a Glance

  • Memorandum Explaining the Provisions in the Finance Bill

  • Output-Outcome Monitoring Framework

  • Key Features of Budget

  • Implementation of Budget Announcements

  • Key to Budget documents

Along with Finance Minister ’s Budget Speech, the above listed documents are presented to the Parliament. Some of the key details regarding what they are all about –

  • Part A – sectoral allocation, new schemes/policies, Govt policy priorities

  • Part B – tax proposals

Annual Financial Statement - It distinguishes the expenditure on revenue account from the expenditure on other accounts, as is mandated in the Constitution of India. The Revenue and the Capital sections together, make the Union Budget. The estimates of receipts and expenditure included in the Annual Financial Statement are for expenditure net of refunds and recoveries. In a nutshell, the Annual Financial Statement includes the following:

Statement I: Consolidated Fund of India:

Revenue Account-Receipts;

Revenue Account-Disbursements;

Capital Account-Receipts;

Capital Account-Disbursements;

Statement IA: Disbursements Charged on the Consolidated Fund of India

Statement II: Contingency Fund of India

Statement III: Public Account of India

Finance Bill - At the time of presentation of the Annual Financial Statement before the Parliament, a Finance Bill is also presented in fulfilment of the requirement of Article 110 (1)(a) of the Constitution, detailing the imposition, abolition, remission, alteration or regulation of taxes proposed in the Budget. It also contains other provisions relating to Budget that could be classified as Money Bill. A Finance Bill is a Money Bill as defined in Article 110 of the Constitution. However, the bill has to be passed by Parliament within 75 days of introduction.

Statements mandated under Fiscal Responsibility and Budget Management (FRBM) Act -

  • Macro-Economic Framework Statement: contains an assessment of the growth prospects of the economy along with the statement of specific underlying assumptions. It also contains an assessment regarding the GDP growth rate, the domestic economy and the stability of the external sector of the economy, fiscal balance of the Central Government and the external sector balance of the economy.

  • Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement: It sets out the three-year rolling targets for six specific fiscal indicators in relation to GDP at market prices, namely, ( i) Fiscal Deficit,( ii ) Revenue Deficit, (iii) Primary Deficit (iv)Tax Revenue (v) Non-tax Revenue and (vi) Central Government Debt.

Outcome Budget / Output-Outcome Monitoring Framework: Output-Outcome Monitoring Framework (OOMF) for Central Sector Schemes (CSS) and Centrally Sponsored Schemes(CSSs) with financial outlay of ` 500 crore or more, are prepared by respective Ministries/Departments, and the same is presented in the Parliament along with the Budget as a consolidated statement.

  • From the fiscal year 2006-07, Outcome Budget has been a part of the budgetary process, wherein every Ministry presents a preliminary Outcome Budget.

  • Since 2017-18, the expected outputs and outcomes of the schemes are also being presented in a consolidated Outcome Budget document, along with the Budget.

The merger of the Railway Budget with General Budget was one of the landmark budgetary reforms implemented from the Budget for FY 2017-18.

The presentation of separate Railway budget started in the year 1924, and continued after independence as a convention rather than under Constitutional provisions. The presentation of a unified budget is to bring the affairs of the Railways to centre stage and present a holistic picture of the financial position of the Government. The merger is expected to reduce the procedural requirements and instead bring into focus, the aspects of delivery and good governance. Consequent to the merger, the appropriations for Railways are, now, part of the main Appropriation Bill.

Budget Design

  • Though Union Budget is presented on 1st February or any other suitable date as decided by the Government, the process of Budget preparation commences in mid of August of previous year and continues till the end of March.

  • In the year in which General Elections to the Lok Sabha (upcoming 2024) are held, the interim Budget is presented to Parliament. After the General Elections are over and assumption of office by the new Government, the Regular Budget is presented to Parliament on a date as decided by the new Government.

  • The Budget process mainly consists of two types of activities: First, administrative process, wherein the budget along with documents are prepared in consultation with various stakeholders; secondly, legislative process wherein the Budget is passed by Parliament after discussion.

  • From economics perspective, our entire focus will be around the economics of budget making combined with more & less administrative process.

  • BUDGET CIRCULAR - Commencement of Budget process takes place with issue of the Budget Circular, normally in the month of September each year.

  • ESTIMATES OF EXPENDITURE - [Revised Estimates (RE) and Budget Estimates (BE)]

  • ESTIMATES OF RECEIPTS - Government receipts are classified under two categories: Revenue Receipts which consists of Tax Revenue and Non Tax Revenue; Capital Receipts which consists of debt receipts (borrowing) and Non debt Capital Receipts (disinvestment and repayment of loans & other receipts).








Key Steps in Preparing Union Budget

  • Nominal GDP (or what will the size of the economy be next year?) - Nominal GDP is nothing but the total market value of all the goods and services produced in India in a financial year. For purposes of analysing the economy one often uses the “real” GDP but for preparing the budget, it is the nominal GDP that matters.

  • Once the government knows the nominal GDP of the current financial year, it uses this number to project the likely nominal GDP in the next financial year (in this case, 2023-24) for which the budget is being made.

  • Fiscal Deficit (or how much money can the government borrow?) - The Fiscal responsibility and Budget Management (FRBM) Act stipulates that the total borrowings (fiscal deficit) cannot be more than 3% of the (nominal) GDP.

  • India’s estimated Fiscal deficit for FY 22-23 is 6.4% of GDP, which was 6.7% of GDP in FY 21-22.

  • 15th Finance Commission has recommended to attain FD of 4.5% of GDP by 2025-26.

  • So once the government has arrived at an estimate of the nominal GDP it then calculates the total amount of money it can raise from borrowings.

  • Total Revenues (or how much money can the government raise on its own?) - Once the government knows the maximum money it can raise from borrowings, it trains its attention towards its revenues. The challenge now is to figure out how much money can be raised through various means. There are three main ways to raise revenues — tax revenues (by levying taxes), non-tax revenues (such as the dividends earned by government-owned enterprises etc.), and money raised through disinvestment of public sector undertakings.

  • Total Expenditure (or what is the maximum it can spend and where?) - By now the government knows both how much money it can raise on its own and how much money it can borrow. Taken together, they provide it with the total money it can spend on different schemes — old or new. The next step is to apportion this money among different ministries and departments.

Budget Review

  • The Union Budget is more technically called the Annual Financial Statement. Any budget essentially provides three big details –

  • One, the total amount of money that the government will raise in the coming year; this is called the total receipts.

  • Two, the total amount of money it will spend; this is called the total expenditure.

  • Three, the total amount of money it will borrow from the market to plug the gap between what it spends and what it earns; this is referred to as the fiscal deficit.

  • In India, out of every Rs 100 that the government spends, only Rs 2 goes towards public health. On education, too, the government spends Rs 2.

  • It spends Rs 10 on defence. Rs 12 is spent on subsidies (food, fuel and fertilisers). And Rs 22 is spent on paying back the interest on past loans.

  • The Halwa ceremony, marking the final stage of the Budget preparation process for Union Budget 2023-24, was held in North Block on 26th Jan. A customary Halwa ceremony is performed every year before the “lock-in” process of Budget preparation begins.

  • The lock-in period ends only after the Finance Minister has given the Budget speech in Lok Sabha. The halwa is a gesture of appreciation for all those who work to bring out the Budget.

  • Like the previous two Union Budgets, Union Budget 2023-24 will also be delivered in paperless form. The Union Budget 2023-24 is to be presented on 1st February, 2023.

  • Budget session 2023 of Parliament will commence on Tuesday the 31st January, 2023 and subject to exigencies of Government Business, the session may conclude on Thursday, the 6th April, 2023. During this period, both the Houses will be adjourned for recess on Monday, the 13th of February, 2023 to reassemble on Monday, the 13th of March, 2023 to enable the Standing Committees to examine the Demands for Grants of various Ministries/Departments and make their Reports thereon. The Session will provide a total of 27 sittings (10 sittings in first part and 17 sittings in second part) spread over a period of 66 days.

  • The Budget documents will be available on the Mobile App after the completion of the Budget Speech by the Finance Minister in Parliament on 1st February, 2023.

  • The App can also be downloaded from the Union Budget Web Portal (

First Advance Estimates of National Income 2022-23

  • Real GDP or GDP at Constant (2011-12) Prices in the year 2022-23 is estimated at ₹157.60 lakh crore, as against the Provisional Estimate of GDP for the year 2021-22 of ₹147.36 lakh crore, released on 31st May, 2022. The growth in real GDP during 2022-23 is estimated at 7.0 per cent as compared to 8.7 per cent in 2021-22.

  • Nominal GDP or GDP at Current Prices in the year 2022-23 is estimated at ₹273.08 lakh crore, as against the Provisional Estimate of GDP for the year 2021-22 of ₹236.65 lakh crore, released on 31st May, 2022. The growth in nominal GDP during 2022-23 is estimated at 15.4 per cent as compared to 19.5 per cent in 2021-22.

Macroeconomic Picture

  • According to CEA V Nageswaran, India would be $5 trillion economy by 2026-27 & $10 trillion economy by 2033-34. India, is currently classified as a developing nation. A 7-7.5 % real economic growth can make India an upper-middle income country by 2047 and could become a 20 trillion-dollar economy, however the growth rate needs to accelerate to 8-8.5 % to make the country a higher income nation, Bibek Debroy, Chairman, EAC-PM said.

  • At current prices and exchange rates, India will be a US$ 3.7 trillion economy in 2023, maintaining its lead over the UK as the fifth largest economy of the world. According to the IMF’s calculations, India will move into fourth place in 2025 and into the third place in 2027 as a US$ 5.4 trillion economy.

  • By 2030, 14 crores people in Indian economy will be from middle income class and 1.4 Cr high net worth family in economy.

Forces that shape a Budget

  • People and firms lobby want to get their tax burden reduced by a lower rate of taxation and/or a higher rate of exemptions.

  • people/firms wanting higher or newer subsidies - An example could be a firm that produces green energy or produces products that run on cleaner fuels. Such a firm/entrepreneur may argue that subsidising (or increasing existing subsidies) will help India transition to a cleaner environment in the coming years. There might also be sectors — such as travel and tourism — that have been most severely hit by the pandemic (and have struggled to recover adequately) and want some special help from the government.

  • Another group of people demand something called “fiscal rectitude or prudence”. They are exactly opposite of the previous two. They demand that the government cuts down on its fiscal deficit (essentially the total amount of money the government borrows from the market in order to bridge the gap between its total expenditure and its total receipts). More often than not, cutting down the deficit, in turn, requires the government to maximise revenues and prune subsidies.

  • The final details of the Union Budget are the compromise solution between the pulls and pressures of these three demands.

Budget Expectations

  • India is likely to peg its nominal gross domestic product (GDP) growth at about 11% in the Budget, marking a slowdown from its estimate for the current fiscal due to weak export prospects. The Centre expects nominal growth of 15.4% for FY23.

  • Thrust on infrastructure especially railways and highways, appears evident from the continuous focus of the government on these things. Similarly, there may be announcements for agriculture, manufacturing, defence, housing, real estate, auto sector, startups, IT, exports and others, so that GDP growth rate along with job creation process may receive a big boost. Particularly, the capital expenditure push for infrastructure, manufacturing and a few others may be on the rise.

  • Strongly spurred by the Covid pandemic, the healthcare sector is already being given very much importance by the government both at the Centre and in states. Similarly, in automotive sector, there may be a booster for electric vehicle segment, as the rising clamour being caused by the climate change, has made it mandatory to have a very proactive environment protection policy. The EVs industry has also sought from the government the inclusion of light to heavy commercial vehicles in it to promote electric mobility.

  • There appears a clear indication that the government may announcement something important for the education sector. The government is giving so much importance to the New Education Policy (NEP). There is a hope for a renewed focus from the Centre. While states largely cater to the needs of the school education, the Centre also does a lot for the sector to help recover the lost ground.

  • One in four Indians are concerned about the ongoing layoffs due to fears of recessions.

  • Less chances of reduction of taxes due to signs of global recession, capital outflow.

  • Efforts to keep GDP more than 8%, is to be looked upon

Education Budget 2023: From focus on research to upskilling, here is what stakeholders looking for

  • Investment in technology and upskilling is needed - Fresh flows of funding and incentives must be made into programmes like Pradhan Mantri Gramin Digital Saksharta Abhiyaan and FutureSkills Prime. Implementation and audit taskforces must be built to accelerate and catalyze various ongoing broadband expansion and quality improvement projects.

  • A detailed roadmap and resource allocation for escalating the implementation of the National Educational Technology Forum.

  • The ‘Manodarpan’ scheme by the Ministry of Education could be enriched with expert resources to better guide students with issues like addiction, self-healing, adjustment training, and short online courses, one-to-one online sessions with subsidized fees, etc.

  • Boost research and development - supporting the formation of a common pool of scientific infrastructure of costly, world-class tools, instruments, and equipment, spread across science and engineering institutions across India.

  • If a substantial portion of the funds earmarked for the National Research Foundation could be allocated for this model with equal participation from the established Higher education Institutes in terms of sharing existing world-class equipment available with them, it can impart a major boost to R&D in multiple disciplines across the country.

  • Research and better equipment should be the priority - Covid crisis has amply demonstrated the importance of universal primary care in the public sector.

  • Increasing the GDP spend from 1.7 per cent to 6 per cent will help in opening more opportunities and bring education for everyone regime closer to success.

  • Encourage vocational education - The whole concept of vocational education will be relevant only when secondary-level education in the vocational space is linked to higher education.

  • Give incentives to the Edtech sector - The Edtech industry needs government support in the form of subsidised schemes and incentives for improving online initiatives. Reduction in GST on education services to democratise education and increase reach among students, especially those who cannot afford quality education. The focus should be on upskilling, and reskilling so that students are equipped with New-age tech skills from an early age.

  • By 2030 India will have the largest pool of working-age population globally, surpassing China, so we need to ensure that the youth are truly employable.

Glossary of Important Budget Related Terms

Below is a list of some of the terminologies used frequently in government budgets. Let's learn about them.

  • ‘Annual Financial Statement’ – Also referred to as the Budget means the statement of estimated receipts and expenditure of the Central Government for the financial year.

  • ‘Appropriation’ - means the amount authorized by Parliament for expenditure.

  • ‘Budget’ – It is the statement of estimated receipts and expenditure of the Central Government as per its fiscal policy.

  • ‘Budget Estimates’ - are the detailed estimates of receipts and expenditure of a financial year.

  • ‘Charged Expenditure’ or ‘Charged Appropriation’ - means such expenditure as is not to be submitted for the vote of the Parliament under the provisions of the Constitution.

  • Consolidated Fund of India- Under Article 266 (1) of the Constitution, all revenues of the Union Government, loans raised by it and all moneys received in repayment of loans form one consolidated fund called the Consolidated Fund of India. No moneys out of this Fund can be appropriated except in accordance with the law and for the purposes and in the manner provided in the Constitution.

  • ‘Contingency Fund’ – means the Contingency Fund of India established under the Contingency Fund of India Act, 1950, in terms of Article 267 (1) of the Constitution. Contingency Fund is in the nature of an imprest. The Contingency Fund is intended to provide advances to the executive /Government to meet unforeseen expenditure arising in the course of a year pending its authorization by the Parliament. The amounts drawn from the Contingency Fund are recouped after the Parliament approves it through the Supplementary Demands for Grants.

  • ‘Outcome Budget’- is the document prepared and presented annually to the Parliament, reflecting the purposes and objectives for which funds were provisioned, the cost of various programmes and activities proposed for achieving these objectives and quantitative projection of the work performed and services rendered under each programme and activity.

  • ‘Public Account’- means the Public Account of India referred to in Article 266(2) of the Constitution. Disbursements from the Public Account are not subject to vote by the Parliament, as they are not moneys issued out of the Consolidated Fund of India.

  • ‘Revised Estimate’ - is an estimate of the probable receipts or expenditure for a financial year, framed in the course of that year, with reference to the transactions already recorded and anticipated for the remainder of the year.

  • ‘Vote on Account’ - means a grant made in advance by the Parliament, in respect of the estimated expenditure for a part of new financial year, pending completion of the procedure relating to voting of the demand for grants and the passing of the Appropriation Act.

  • ‘Voted expenditure’ - means expenditure which is subject to the vote of Lok Sabha. It is to be distinguished from ‘charged’ expenditure, which is not subject to vote, even though it can be discussed in the Parliament.


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