What is Budget in India?

A budget is an accounting book of income and expenditure. The government prepares it by estimating income and expenses for the current year.

Let’s find out knew top remarkable facts about this India budget.

  1. In November 1947, the first budget of Independent India was presented. The second remarkable thing was that the work of making the budget began six months before that date.
  2. Any work begins before the budget ceremony with the sweet pudding ceremony.
  3. Indira Gandhi was the first woman in India who presented the budget.
  4. Till 1970 and for many years, the Railway Budget used to be presented separately. But after 2017, this march happened with the union budget.
  5. The government focuses on annual earnings, but in reality, the expenditure is more than the earnings, called a deficit. Tax is the most significant source of income for the government.
  6. Taxes are of two types Direct Tax and Indirect Tax Rates Tax, Income Tax and Indirect Tax on Corporate Tax such as GST (Goods and Services Tax). 
  7. The Finance Minister’s budget speech consists of two parts. In Part A, it is decided how much in each sector will be funded. Also, there are proposals for government schemes. Part B proposes how much income should be taxed for expenses.
  8. Before the budget presentation, all the work is done in secrecy. In the capital’s North Block, officials and employees of the Ministry of Finance calculate income and expenditure.
  9. Officers and support staff are kept in isolation until the budget is presented.
  10. The country’s budget affects its economy, interest rates, and markets. Higher interest rates mean that industries will have to pay more to get capital, which can lead to lower profits and a slowing of the economy.

India Budget for 2023-24

Here’s how this year’s budget proposes to allocate money to various ministries when compared to the last one:

Category Budgeted for 2022 Allotted Funds in 2023
Defence Ministry ₹5.25 Trillion ₹5.94 Trillion
Road and Highways ₹1.99 Trillion ₹2.70 Trillion
Consumer Affairs ₹2.17 Trillion ₹2.06 Trillion
Railways ₹1.4 Trillion ₹2.41 Trillion
Home Affairs ₹1.82 Trillion ₹1.96 Trillion
Rural Development ₹1.38 Trillion ₹1.60 Trillion
Agriculture ₹1.32 Trillion ₹1.25 Trillion
Communications ₹1.05 Trillion ₹1.23 Trillion

Five Key Insights from the 2023-24 Budget as seen by Easebuzz

  • Boost in Spending for Infrastructure Development

In line with the government’s increased focus on building roads, highways, and power plants since 2014, India’s capital expenditure has seen a significant jump of 33%. Although this is slightly lower than the 35.4% increase budgeted last year, it still marks a three-fold increase in capital expenditure in 2019, totalling $122 billion.

Railway projects received the highest-ever allocation, with a budget of $24 billion. Additionally, the finance minister, Nirmala Sitharaman, announced funds for constructing 50 new airports, airfields, and heliports to enhance regional connectivity and a 66% increase in spending on affordable housing projects, totalling approximately $10 billion.

  • Containment of Fiscal Deficit by the Government

The government has declared its intention to reduce the fiscal deficit, the difference between its earnings and spending, by 0.5% from 6.4% in 2022-23 to 5.9% this year. It will be achieved by moderately increasing total spending by 7%, which some analysts believe could be challenging in a pre-election year.

Despite this, the finance minister has confirmed her commitment to meeting the medium-term goal of reducing the deficit further to under 4.5% by 2025-26.

India’s fiscal deficit had surged to a record high of 9.3% in 2020-21 due to increased government spending on free vaccines and aid for the poor during the Covid-19 pandemic.

According to Aurodeep Nandi, an India economist and vice president at Nomura, “The government’s limited room for fiscal expansion has required a focus on fiscal consolidation while also increasing public expenditure and catering to the middle-class electorate.

  • Middle-Class Rejoice: Relief is on the Way

As the country gears up for crucial state elections and the general elections of 2024, the government has announced tax relief measures for India’s middle class. Individuals who have adopted the new tax regime implemented in 2020 will see their threshold for personnel income taxes raised.

Individuals earning less than 700,000 rupees ($8,500, £6,900) will no longer be required to pay income tax if they switch to the new regime. Additionally, India’s maximum Tax on personal income has effectively decreased from 42% to 39%.

The measure is expected to stimulate consumption by putting more money into the hands of citizens during a time when inflation is affecting disposable incomes.

The finance minister stated that the new tax regime, which does not allow individuals to claim deductions on their investments, will be the default, although individuals can still choose to use the old system.

  • Reducing Allocations for Low-Income Assistance and Subsidies

The recent budget provisions offer some alleviation for the middle class. However, they do not significantly enhance the standard of living for the most vulnerable population in the country. The allocation for the rural employment program, a vital safety net, has experienced a significant reduction of over 30% amidst high unemployment levels and prolonged worker compensation delays.

Moreover, the government has terminated a Covid-19 induced free food program, reducing the food subsidy expenditure by nearly 30% compared to the previous year’s revised estimates. Furthermore, the outlays for fertilizer subsidies to farmers have declined by over 20%.

  • Improving the Business Climate in India

Good news for small businesses in India! The government has made things easier by reducing 39,000 requirements for companies and getting rid of more than 3,400 legal provisions that used to cause trouble. In the past, too many laws have made it difficult for businesses to operate in India, and over half of them had penalties that included going to jail.

India has been doing better lately in the World Bank’s rankings for ease of business and is now ranked 63rd out of 190 countries. Even though many parts of the world are facing a recession because of the pandemic, India’s economy is doing well and is one of the bright spots in 2023. Although the government’s targets for the year’s economic growth have been lowered a bit, India is still expected to be the fastest-growing major economy in the world for the second year. The economic survey predicts that growth will be between 6-6.8%.

Tax on Income – The new 2023-24 Income Tax Slab on Indian Working Public

India Finance Minister on 1st Feb 2023 announced that the rebate limit had been increased from Rupee 5 lakhs to seven lakhs under the new tax regime, which means an annual income of up to Rupee seven lakhs will be exempt from taxes.

However, the new tax regime also says that annual income of Rupee 6 – 9 lakhs will be taxed at a rate of 10%.

Earned Income % of your income you pay in taxes
0 to ₹ 3 Lakh Nil
₹ 6Lakh to ₹ 9Lakh 5%
₹ 9Lakh to ₹12Lakh 10%
₹ 12Lakh to ₹ 15Lakh 15%
₹ 15Lakh and above 30%
Maximum Tax, along with a surcharge 39%


Understand with this sample: Suppose Mr. Ravi earns Rupee 7 Lakh per annum, then his income would be taxed as follows:

  • First Rupee 3lakh: Nil Tax as per 0 – 3 lakh slab.
  • Next, Rupee 3lakh: taxed at 5% per 3 – 6 lakh slab.
  • Last Rupee 1lakh: taxed at 10% per 6 – 9 lakh slab.

Therefore, total tax liability will be:

  • 5% of Rupee 3 lakhs: 15,000
  • 10% of Rupee 1 lakh: 10,000
  • Total tax liability: Rupee 25,000

Interestingly, Mr. Ravi will get a complete refund of this Tax since his annual income is Rupee 7 lakh, which is not the rebate limit.

What if someone earns under/over ₹7 lakh?

Taxpayers who earn under Rupee 7 will be able to enjoy these benefits and get a rebate. However, Individual earning over Rupee seven lakhs, say Rupee 8 lakhs, Rupee 10 lakhs, etc., will not get any refund, as per the new tax regime.


The author writes about fintech, banking, and future of SAAS services. He works as an SEO analyst at Easebuzz, so if you're looking for an account that tracks India's fintech scene, you should check out his Easebuzz blog.