There was a meme circulating on WhatsApp groups a day before the Budget.

It read:

11:00 AM: Finance Minister will begin a platitude-filled

speech in Parliament congratulating herself.

12:30 AM: Business channels will hail it as a historic one.

1:00 PM: Research analysts will call it a fine-balancingact.

2:00 PM: Opposition parties will deride it for beinganti-poor or anti-farmer.

5:00 PM: Corporate honchos will rank it 11/10 but will not commit to new investments

10:00PM: The common man would go to sleep at night without any difference as he has to go to work the next day.

The meme advises the common man not to waste his precious day on account of the Budget.

Such memes often get one to chuckle. For, there is often truth in the sarcasm they dish out.

By the way, the finance minister Nirmala Sitharaman did get 11/10 marks from a few pundits on television for her 2023-24 Budget.

There was something for the common man too, for a change, in the form of a conditional income-tax relief. It is best when the Budget is not looked at through the prism of who gets what or misses out.

Sitharaman presented her fifth Budget Wednesday, in what would be the Modi government's last full Budget of this term. Sitharaman resisted the temptation to announce populist measures to woo voters ahead of elections to nine states this year and general elections in the next.

She announced only modest increases, if not cuts, in many of the social welfare schemes. This follows Prime Minister Modi's exhortations to avoid "rewaris", or freebies, to win votes, and instead focus on development.

GAMEPLAN

This Budget has given more clarity on what the Modi government has been trying to do in its second term which began in 2019.

The strategy can be summarised into these categories:

Hard Infrastructure – Focus on quality of expenditure by spending more on capital investments like roads, railways, and Made in India defence machinery,to create a virtuous cycle of growth and employment and cut the share of revenue expenditure like subsidies.

That explains the sharp jump in capital expenditure to ₹10 trillion, or 3.3% of GDP, in this Budget from 2.7% this year.

The government is willing to break the bank on welfare schemes like MGNREGA and subsidies only if such a need arises, like it did during the pandemic when massive allocations were made to free food programme and rural jobs.

The government had even increased the subsidy on fertiliser and auto fuels mid-Budget year after the Ukraine war drove up oil prices. So, large revenue expenditure will be curbed in normal circumstances.

The revenue deficit was cut to 2.9% of GDP for next year from 4.1% this year, arguably by the biggest margin in over 10 years. The government is still working with a high fiscal deficit of 5.9% for the next year and aims to reach 4.5% after two more years. Economists, markets, and even rating agencies have been more accepting of that because of the government's skew for capital expenditure.

Digital Infrastructure – Focus on scaling up digital infrastructure for better delivery of government services, ensuring ease of business, and lowering compliance burdens. All this in a bid to foster more inclusivity.

TAXES

> Direct: Adopt the spirit and, in some parts, the letter of the Direct Tax Code - a regime with lower tax rates and minimal exemptions that was not formally rolled out. This also explains why this Budget aimed to plug tax arbitrage being used by HNIs via their investments in MLDs, some insurance schemes, outward remittances, and REITs/InvITs, which all sit with the DTC approach.

> Indirect: Import duties changes were in line with the broader Atma Nirbhar Bharat approach to promote local manufacturing. Basic customs duty was cut for intermediary goods for making farm products, lab-grown diamonds, batteries, and mobile phones. Duties were hiked for some consumption goods, including gold and silver, to deter imports and lower the trade gap amid the weak prospects for global growth, and exports.

Common Man

This Budget offers income tax exemptions for the middle class, but with a huge rider. In 2020-21, the government introduced an optional new tax regime with lower tax rates for those who forego certain deductions and exemptions.

In the latest Budget, Sitharaman said only for those who opt for the new tax regime, the full income tax rebate will be raised by ₹2Lakhs to ₹7 Lakh rupees. So, no tax for up to ₹7 lakh rupees income. By government estimates, some 10 million people will go out of the tax bracket because of the move.

For those earning more, the number of income slabs was cut to five from six, and the tax exemption limit was raised to 3 lakh rupees from 2.5 lakh rupees. For an individual earning up to ₹15 lakhs, there could be a cumulative benefit of ₹52,500, the Budget said.

Even the maximum income tax rate was cut to 39% from the current 42.7% for the ultra-rich. There are no changes for those remaining in the old income tax regime and continue to seek tax exemptions through various savings and investment schemes.

Sitharaman said the new tax regime would become a default regime. The corollary is that exemptions will be tapered off in the coming years, and the old regime will be withdrawn fully.

Lower tax rates, lower tax planning, and higher tax compliance is the idea. It may take time, but that is the path ahead. The meme may yet be prophetic – the common man can go to bed ignoring all the Budget-day punditry.