The Union Budget 2023 which was laid in the Lok Sabha on 1st February 2023 has been one of the most widely reported, analysed, discussed and “webinar-ed” subject over the last two weeks. By the time this article is posted, the Budget probably would have lost its reading utility if the Law of Diminishing Marginal Utility were to be applied to the need to understand the Budget. However, the annual Union Budget being an important legislative and financial document, having wide ramifications for all stakeholders, the Union, its citizens, businesses, international community, etc., it would never be an exercise in futility to attempt a detailed analysis of the Budget.
In this article and a series of more to follow, I will make an attempt to analyse some important areas of the Budget, more importantly, the legislative amendments proposed through the Finance Bill, 2023.
The Budget Day
Every year in February, earlier on the 28th and post the present day Narendra Modi government, the 1st of February, the main menu in discussions in the media, in the professional communities, in business houses and in the minds of the common man is, “what would the finance minister of the day bring out from his (since a few years it has been “her”) bahi-khata. In pace with the digital transformation that India is going through, the first thing to come out of the Finance Minister’s bahi-khata since last two years has been the iPad and from it then and through her words, comes out the budget speech. Though common knowledge, yet, it needs to be acknowledged that our Finance Minister Smt. Nirmala Sitharaman has achieved the distinction of being the first female Finance Minister of the country to have presented five succeeding Budgets, a first of its kind. The Hon’ble Finance Minister merits congratulations at least on this achievement; budgets over the years under her watch, have never merited any commendation at all.
Before I endeavour to write on the Budget, I cannot help but record my observation on the “traditions” of Budget day. Everybody sits glued to their Television screens to hear the Finance Minister speak; analysis starts flashing onto the websites of news media, the BSE / NSE Index gives its “verdict” on the Budget, even before the Finance Minister has made her last, mandatory statement, “With this, Honourable Speaker Sir, I commend this Budget to this august House” and many such budget day traditions. One tradition which the present 45+ generation would probably remember and miss would be the budget analysis of Late Nani Palkhivala, Senior Advocate’s held at the Brabourne Statium. A feat unparalleled, Nani Palkhivala’s speech drew crowds in hordes. Back in my days as a student of Chartered Accountancy, Nani Palkhivala’s lecture would be an intellectual treat.
The most logical and rational tradition of the real analysis of the Budget starts after the entire set of documents are made available by the Finance Ministry on its website. It is the rational, well read, well understood analysis of the entire set of Budget documents that would give a clear and proper picture of the impact of the Budget. This article aims to critically analyse the budget; rather than rhetoric, the reality is what should matter to those who desire to understand the budget sans politics and political leanings.
Budget – the legislative provisions / background briefly explained
Every act of the Government is under any particular statute from which it derives power to do certain act(s). Budget is not merely a speech which the Finance Minister delivers in the Parliament. It is a parliamentary process of legislation. The Finance Minister speaks on the budget of the Government for a fiscal year which is based on a set of documents. One such document is the Finance Bill which seeks to give effect to the manner of implementation of the economic policies employed by the government to achieve its fiscal/budgetary goals for the coming financial year. The Finance Bill seeks to bring in various changes to the existing laws by amending the laws so as to enable it to exercise fiscal authority for purpose of collecting revenue and meeting its financial obligations in governance of the country.
Budget is a “Money Bill” as defined in Article 110 of the Constitution of India. The legislative process of Money Bill, more specifically the budget process is laid down in Articles 110, 112 and 113. Additionally, along with the Budget speech and the Finance Bill, the Finance Minister lays down certain other documents, known as Statements of Fiscal Policy, as mandated under the Fiscal Responsibility and Budget Management Act, 2003. A professional analysis of budget would require the analyst to read the Budget speech with a pinch of salt and temper it with the finesses provided in the various supporting documents that finally culminate in the amendments proposed via the Finance Bill. What is dished out for final reading is the result of the entire wholistic reading of the set of documents that are commonly known as THE BUDGET.
It is to be remembered that the Finance Bill contains direct and indirect tax proposals. Of these, the indirect tax proposals contain amendments to the Customs law. Except for the amendment to the customs provisions, rest of the amendments go through the minute eyes of the Parliamentarians before the Bill is finally passed and receives the assent of the President of India. The Customs proposals are notified immediately and become applicable on being notified.
More on Budget 2023 to follow…