Union Budget 2023-24: Pivotal Analysis & Budget Allotment To Different Departments

The Union Budget presented annually by the Finance Minister and authorized by Parliament outlines the central government’s expenditure for the upcoming financial year. Article 113 of the Constitution mandates that all expenditures, except for charged expenditure be presented as Demands for Grants to the Lok Sabha (the lower house of Parliament) in a Ministry wise format. These demands are then referred to the respective Departmentally-Related Standing Committees for further examination. After discussions and approval in Lok Sabha- an Appropriation Bill is introduced and passed to allow the government to spend money from the Consolidated Fund of India. Read More Business News on our website.

Union Budget FY 2023-24: Pivotal Analysis & Budget Allotment

The analysis of the Union Budget for 2023-24 provides an assessment of the allocations made to 15 ministrie which account for 72% of the total budget. It includes an examination of expenditure trends, various schemes, and key issues in each sector.

The Union Budget for 2023-24 proposes a total expenditure of Rs 45,03,097 crore. Out of this, revenue expenditure is estimated to be Rs 35,02,136 crore, representing a 1.2% increase from the revised estimates of 2022-23. Interest expenditure accounts for 41% of revenue receipts. On the other hand, capital expenditure is estimated at Rs 10,00,961 crore showing a significant increase of 37.4% from the revised estimates of the previous year. The rise in capital expenditure is mainly driven by higher allocations for transport infrastructure and capital loans to states. The budget aims to reduce the revenue deficit to 2.9% of GDP in 2023-24, lower than the revised deficit of 4.1% in 2022-23. The fiscal deficit target for 2023-24 is set at 5.9% of GDP, down from the revised deficit of 6.4% in the previous year.

The Finance Bill for 2023 introduces several changes to the tax regime. The income limit for availing a tax rebate and paying no taxes has been raised from Rs 5 lakh to Rs 7 lakh. The number of tax slabs has been reduced from six to five. Additionally, the surcharge for the highest income slab (over Rs 5 crore) has been reduced from 37% to 25%.

Highlights of the expenditure allocations for various ministries and departments are as follows:

1. Defence: The Ministry of Defence has been allocated Rs 5,93,538 crore the highest among all ministries, accounting for over 13% of the total expenditure. However, its expenditure as a percentage of GDP has decreased over the past decade and is estimated to be slightly below 2% of GDP in 2023-24. Notably, spending on defence pension has consistently exceeded 20% of the total budget while capital outlay has remained below 30%.
2. Road Transport and Highways: The Ministry has received an allocation of Rs 2,70,435 crore, a 25% increase from the revised estimates of the previous year. The majority of this additional allocation (60%) has been earmarked for investment in the National Highways Authority of India (NHAI). The increase in budgetary allocation is due to NHAI’s reduced reliance on market borrowing, with road construction primarily funded by public funds.
3. Railways: The Railways is expected to have a marginal revenue surplus in 2023-24, which will cover less than 1% of its capital expenditure. The majority of capital expenditure (92%) will be funded through budgetary support from the central government, while 7% will come from extra-budgetary resources. The operating ratio, which measures expenditures as a proportion of traffic receipts, stands at 98.5%, indicating limited surplus for capital investment.
4. Food and Public Distribution: The allocation for this department in 2023-24 is 31% lower than the revised estimate of the previous year due to the discontinuation of the Pradhan Mantri Garib Kalyan Anna Yojana, which provided free food grains to eligible beneficiaries during the pandemic. The estimated expenditure on food subsidy for 2023-24 is Rs 1.97 lakh crore. Updating the coverage of eligible families remains an issue, as the number of beneficiaries is still based on the 2011 Census.
5. Home Affairs: The Ministry of Home Affairs has been allocated Rs 1,96,035 crore, representing a 1.1% increase from the revised estimates of the previous year. Around 65% of the ministry’s expenditure is allocated to the police sector, while 31% is dedicated to grants for Union Territories. Within the police sector, 74% of the expenditure is allocated to the Central Armed Police. Challenges in the sector include shortages of police personnel and an inadequate number of cybercrime cells. Additionally, 24% of the Indo-Bangladesh border remains unfenced.
6. Rural Development: The Ministry of Rural Development has been allocated approximately Rs 1.6 lakh crore for 2023-24, which is 12% lower than the revised estimates of the previous year. This reduction is primarily due to a decrease in allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which is 33% lower than the revised estimate for 2022-23. The demand for work under MGNREGS is expected to decrease as the rural economy recovers from the pandemic. However, allocations for rural housing increased by 13% while those for rural roads remained unchanged.
7. Agriculture: The Ministry of Agriculture has been allocated Rs 1,25,036 crore for 2023-24, a 5% increase from the revised estimates of the previous year. Approximately 77% of the ministry’s expenditure is directed towards three schemes providing cash transfers, interest subsidies, and crop insurance. While institutional credit to farmers has increased over the past decade, these loans are primarily utilized for revenue expenditure in farming or recurring household expenses.
8. Education: The Ministry of Education is estimated to spend Rs 1,12,899 crore in 2023-24, a 13% increase from the revised estimates of the previous year. The Department of School Education and Literacy has been allocated 61% of the budget, while the Department of Higher Education has received the remaining 39%. Notably, 33% of the ministry’s budget is allocated to the Samagra Shiksha Abhiyan. However, overall allocation towards education has hovered around 2.8% of GDP since 2015.
9. Telecommunications: The Ministry has been allocated Rs 59,740 crore for 2023-24, with 56% of the funds dedicated to the revival package for BSNL and MTNL. No funds were disbursed under the PLI (Production-Linked Incentive) scheme in the previous year, and no funds are projected to be spent on the scheme in the current year. Delays have been observed in projects such as Bharatnet and Network for Defence.
10. Jal Shakti: The Ministry of Jal Shakti has been allocated Rs 97,278 crore for 2023-24, a 31% increase from the revised estimates of the previous year. The Jal Jeevan Mission receives the highest allocation of Rs 70,000 crore. Allocation for River Interlinking has also increased due to the implementation of the Ken-Betwa Link Project. However, schemes like the Swachh Bharat Mission-Gramin, Atal Bhujal Yoj.
11. Ministry of Health and Family Welfare: estimated to spend Rs 89,155 crore, marking a 13% increase from the revised estimates of the previous year. The National Health Mission receives the largest share, accounting for 33% of the ministry’s budget, while medical colleges and hospitals account for 27%. However, the high out-of-pocket expenditure and a shortage of healthcare personnel remain significant challenges in the sector.
12. Housing and Urban Affairs :the ministry has been allocated Rs 76,432 crore for 2023-24, reflecting a 2.5% increase compared to the revised estimates of the previous year. The major components of this allocation are urban housing (PMAY-U) with Rs 25,103 crore and metro projects with Rs 23,175 crore. It is worth noting that several metro systems are struggling to attain the required ridership to break even.
13. Ministry of Petroleum and Natural Gas has received an allocation of Rs 41,008 crore, which marks a 21% increase from the revised estimates of the previous year. This allocation includes Rs 30,000 crore for capital support to Oil Marketing Companies through equity infusions. However, there has been a decrease in the allocation towards LPG subsidy, and no funds have been allocated for the kerosene subsidy. The capital outlay has increased for the creation of caverns and the purchase of oil for the Strategic Petroleum Reserves.
14. Women and Child Development: the ministry has been allocated Rs 25,449 crore for 2023-24, signifying a 6% increase from the revised estimates of the previous year. These funds are distributed across three centrally sponsored schemes: Saksham Anganwadi and POSHAN 2.0, Mission Shakti, and Mission Vatsalya. It is worth noting that the ministry has underutilized its funds in the past five years.
15.  Ministry of Environment, Forests, and Climate Change: has been allocated Rs 3,079 crore for 2023-24, indicating a 24% increase from the revised estimates of the previous year. While India has set targets to transition to renewable energy in order to combat climate change, securing adequate finance remains a significant challenge. Experts estimate that India will require around Rs 86 lakh crore (at 2012 base price) to adapt to climate change by 2030.