Budget 2023 - Towards a Prosperous Digitally Empowered India
At the onset of the Budget 2023 speech, the Hon. Finance Minister Nirmala Sitharaman mentioned that India remains one of the world’s fastest-growing economies, despite global headwinds. “In our 75th year of independence, the world has recognized the Indian economy as a bright star”, she stated. The budget that followed contained a number of provisions that aim to capitalize on this buoyant state-of-affairs and unlock the tremendous potential of Indian enterprise and Indian talent.One aspect that particularly came across in the budget announcements was the government’s commitment to building a tech and knowledge focused economy, which will be key driver in India’s growth story in the years ahead.
Let us examine a few budget provisions that stood out, in terms of their overall implications for the Indian economy, as well as for the technology and digital focused sectors:
Betting Big on Artificial Intelligence
The budget laid a special emphasis on AI, in line with the government’s vision to ‘Make AI in India’ and ‘Make AI Work in India’. In this regard, the Hon’ble Minister has announced the setting up of three Centers of Excellence (CoEs) for AI in premiere educational institutions. AI is going to be a critical technology for India’s digital transformation journey in the years ahead, so this is a welcome move that is bound to stimulate further innovation and growth in this area.
Investing in 5G
Another key technology-focused measure announced was the setting up of 100 labs in engineering institutions across the country to develop 5G applications, covering a range of areas such as precision farming, healthcare, smart classrooms and intelligent transportation systems. This will give a strong shot in the arm to the growth in 5G-enabled technologies and services in India.
To unleash research and innovation by startups and academia, a National Data Governance Policy was announced as part of the budget
Focus on Upskilling
The decision to launch a new Unified Skill India digital platform will bolster the much-needed effort to upskill talent in the country. This platform will facilitate demand-based formal skilling, link job-seekers with potential employers (including MSME’s) and provide access to entrepreneurship schemes. The Hon’ble Minister also announced the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 4.0, which aims to equip youth with the requisite skills in areas such as coding, AI, IoT, robotics, mechatronics, 3D printing and more. This is another important measure that will ensure the future readiness of our work force.
To unleash research and innovation by startups and academia, a National Data Governance Policy was announced as part of the budget. This policy will enable access to anonymized data, a move that will give a boost to data-driven business and research initiatives while also addressing data privacy concerns. Moreover, a one stop solution for updating and reconciliation of individual identities/addresses as maintained by government agencies, regulators and regulated entities will also be established, with the DigiLocker service and Aadhar serving as foundational identity.
The Hon’ble Minister acknowledged the fact that entrepreneurship is vital for the nation’s development. Previous measures undertaken by the government have contributed to India becoming the third largest ecosystem for startups globally, as well as the second in quality of innovation among middle-income countries. Furthering that trend, this budget included additional measures to aid startups. Firstly, the date of incorporation, for the purposes of income tax benefits to startups, has been extended from 31st March 2023 to 31st March 2024. Secondly, the period of time to benefit from carrying forward losses on change of shareholding has been extended from seven years to ten years since the date of incorporation of the startup. These are moves that will be welcome to entrepreneurs and their stakeholders.
Relaxations in Personal Income Tax
Last but not least, a measure that brings relief to taxpayers across the country revisions in personal income tax. Individuals earning up to Rs.7 lakh will not have to pay tax, and there are significant reductions in tax rates across all slabs. The reduced tax burden will increase disposal income and likely stimulate spending. In addition, the simplified tax regime without exemptions will now be the default, while still providing taxpayers with the option to avail of the old regime. This will make tax compliance easier.
The CEA(Chief Economic Advisor) recently said that India is poised to become a $7 trillion economy by 2030. The outlook certainly looks positive for the India growth story, and the provisions of the 2023 budget will go a long way towards strengthening our digital and technology space, supporting job growth and entrepreneurship, and bringing us closer to that $7 trillion goal.