Budget 2023: Top Hits And Misses Of Union Budgets Presented In Last Five Years

Finance ministers made significant announcements, including those that helped the economy stay afloat amid the pandemic while some proved to be disappointing. Here's rundown of the past 5 year's Budget

This year's event will be the last full Budget of the Modi 2.0 government ahead of the general elections next year.

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Every year, the government presents the Union Budget which is closely watched by companies, investors, economists, and the common man due to its potential impact on the economic growth and development of the nation. This year's event will be the last full Budget of the Modi 2.0 government ahead of the general elections next year. Finance minister Nirmala Sitharaman is scheduled to table her fifth Budget for FY24 on February 1.

Here’s a rundown of the past five year’s Budget, including the hits and misses in the announcements made in the last few years by Sitharaman and her predecessor Arun Jaitley and Piyush Goyal.

2018  

Former Finance Minister Arun Jaitley presented his fifth and last full Budget of the Narendra Modi-led NDA government ahead of the Lok Sabha Polls in 2019. The 2018 Budget by Jaitley turned out to be his last budget where he used 'Hinglish' moving away from the tradition of presenting the budget in English, unlike the past four occasions since 2014.

One of the biggest highlights of the Budget 2018 was reinstating the standard deduction for an amount of Rs 40,000 (applicable for the financial year 2018-19) by withdrawing tax benefits available for transport allowance (of Rs 19,200) and reimbursement of medical expenses (of Rs 15,000).

The other major announcement that year that spooked the market was the reintroduction of the long-term capital gains (LTCG) tax that would see investors paying 10 per cent tax on the gains made by selling shares even after holding them for more than a year.

Earlier in 2004-05, the government in a bid to encourage long-term investment in equity shares, had abolished LTCG tax replacing it with securities transaction tax (STT). While the Centre brought back LTCG, it decided against abolishing or reducing the STT rates, which others felt was a case of double taxation.

2019 

This year, the Narendra-Modi government presented the Interim Budget, also known as ‘Vote on Account’ as it is close to the end of its term. This interim budget was followed by another budget by the new government in 2019. It is this year that finance minister Nirmala Sitharaman presented her maiden Budget on July 5. It was also the first budget of Narendra Modi led NDA government's second term. The Budget had nothing spectacular to offer. 

One of the most contentious announcements made by Sitharaman that year was the hike in the surcharge on income tax paid by super-rich individuals. The Budget proposed to increase the surcharge, charged on top of the applicable income tax rate, from 15 per cent to 25 per cent for those with taxable incomes of between Rs 2 crore and Rs 5 crore, and to 37 per cent for those earning more than Rs 5 crore. This takes the effective tax rate for those two groups to 39 per cent and 42.74 per cent respectively.

The move was in lieu of the rising income levels, said Sitharaman at the time of Budget. However, the tax proposal, along with a lack of measures to boost the economy in the July 5 budget, led to foreigners withdrawing more than $3 billion from Indian shares, putting pressure on stocks and the rupee. Later, the government rolled back an additional levy on foreign funds and announced other measures to boost economic growth.

One of the significant changes includes the announcement of making PAN and Aadhaar interchangeable. As per the announcement, individuals who do not have PAN will soon be able to file their income tax return (ITR) just by giving the Aadhaar number.

2020 

The only big bang measure announced that year was the Life Insurance Corporation of India (LIC) IPO. The FM said the insurance behemoth LIC will be listed as part of the government disinvestment initiative. The government had owned the entire 100 per cent stake in LIC.

Finance Minister Nirmala SItharamam announced that the government launch the digital rupee using blockchain technology in 2022/23. She also announced a scheme for the taxation of virtual digital assets. The income from virtual digital assets is to be taxed at 30 per cent. The finance minister further said that losses from the sale of virtual digital assets cannot be offset against other income.

The government also announced 5G auctions to be held in 2022 and the scheme for design-led manufacturing for 5G will be part of the production-linked scheme. 

2021

This was Sitharaman’s third budget under the National Democratic Alliance (NDA) government led by Prime Minister Narendra Modi. In a significant departure from the age-old tradition, the Budget was unique as it went paperless since it didn't printed for the first time since Independence owing to Covid-19 pandemic. In fact, the finmin also ditched the leather briefcase for a traditional “bahi khaata” — or red, handmade ledger — saying that it was “high time we move on from the British hangover, to do something on our own”. The Budget 2021-22 also came at a time when India’s economy was reeling under the effects of the Covid-19 induced lockdown.

The Budget saw the two sectors -infrastructure and healthcare receiving the biggest allocation, which is in line with the challenges due to pandemic and growth. The total healthcare allocation in budget 2021 is Rs 2.23 lakh crore, which is a 135 per cent hike over the previous budget.

Some of the other measures included the removal of income tax for senior citizens under certain conditions including new rules to be notified for the removal of double taxation for NRIs, along with a reduction in the time period of tax assessments. The Budget went on to impose a Rs 2.5 per litre agri infra cess on petrol and Rs 4 on diesel.

While the travel and hospitality sector didn't much mention in the budget as most businesses were still struggling to recover from the initial impact of the pandemic.

2022

Last year, the Union Budget gave a blueprint of the economy from India at 75 to India at 100, highlighting the four pillars of development, including inclusive development, productivity enhancement, energy transition, and climate action.

In a major push for digital currency, Sitharaman stated that the digital rupee will be issued using blockchain technology by the RBI starting 2022-23 in a boost to the economy. The Budget announced a reduction in corporate surcharge from 12 per cent to 7 per cent. The Budget also announced that all income from the transfer of virtual digital assets will be taxed at 30 per cent. Announcing the decision in the Budget speech, the finmin said there has been a tremendous increase in the use of virtual digital assets and it requires a specific tax regime. "No deduction in respect of any expenditure or allowance shall be allowed while computing such income except cost of acquisition. Further, loss from transfer of virtual digital asset cannot be set off against any other income," Sitharaman said.

The above compilation of the previous Budgets is by no means exhaustive, but it gives us a perspective just before the Budget 2023-24 arrives on the scene.