Bharat SainiLast Updated on February 5, 2019 by Bharat Saini
Interim Budget 2019-20, viewed as a medium for a progressive path for the country, with major schemes for farmers and informal sector workers, and income tax sops, was presented by Piyush Goyal Union Minister for Finance, Corporate Affairs, Railways & Coal, in parliament on Friday 1 February 2019, who in the Opening Remarks of his Budget speech asserted that,
“We are the fastest growing major economy in the world with an annual average GDP growth during last five years higher than the growth achieved by any Government since economic reforms began in 1991. From being the 11th largest economy in the world in 2013-14, we are today the 6th largest in the world”.
India witnessed its best phase of macro-economic stability during the last five years. A stage has now been set for high growth in decades to come, after a wave of next generation path breaking structural reforms over the last five years, including introduction of Goods and Services Tax (GST) and other taxation reforms.
Prime Minster Narendra Modi said, “It is essential to ensure [that] the benefits of development reach all sections of society. This Budget will empower the poor; give a boost to the farmers and impetus to economic growth.”
SOME OF THE MAJOR HIGHLIGHTS OF THE INTERIM BUDGET ARE AS UNDER:
Pradhan Mantri KIsan SAmman Nidhi (PM-KISAN): A new deal for 12 crore Small and Marginal farmers to extend direct income support of ₹6000 per year to farmer families, having cultivable land upto 2 hectares, will be implemented from 1 December 2018; with an outlay of ₹75000 crore for the FY 2019-20 and ₹20000 crore in the Revised Estimates of FY 2018-19. Under this Government of India funded Scheme, ₹2000 will be transferred to the bank accounts of each of the farmer families, in three equal instalments and the first instalment for the period upto 31 March 2019 would be paid during this year itself.
Pradhan Mantri Shram-Yogi Maandhan: A path breaking initiative to ensure fixed monthly pension ₹3000 per month after 60 years of age, with an affordable contribution of only ₹55 to ₹100 per month depending upon the worker’s age, for 10 Crore unorganized sector workers, ₹15000 will be the monthly income limit for the workers to join the scheme. It would be one of the largest pension schemes of the world within next five years. A sum of ₹500 crore has been allocated for the Scheme. Additional funds will be provided as needed. The scheme will also be implemented from the current year.
Direct Taxes: There has been a Growth of 18% in Direct Tax Collections in 2017-18 and increase in tax base by as many as 1.06 crore people filing income tax returns for the first time in FY 2017-18, mainly on account of demonetisation. “We are poised to become a Five Trillion Dollar Economy in the next five years and aspire to become a Ten Trillion Dollar Economy in the next 8 years thereafter”, Finance Minister said,
- Exempting Income up to ₹5 lakhs from Income Tax for Individual taxpayers.
- Persons having gross income up to ₹6.50 lakhs are not required to pay any income tax if they make investments in provident funds, specified savings and insurance etc.
- Additional deductions such as interest on home loan up to ₹2 lakh, interest on education loans, National Pension Scheme contributions, medical insurance and medical expenditure on senior citizens etc.
- Thus tax benefit of ₹18500 crore provided to an estimated 3 crore middle class and small taxpayers comprising self-employed, small business, small traders, salary earners, pensioners and senior citizens.
- Standard Deduction raised from current ₹40000 to ₹50000 for salaried persons.
- This will provide additional tax benefit of ₹4700 crore to more than 3 crore salary earners and pensioners.
- Exemption on levy of income tax on notional rent on a second self-occupied house.
- Currently, income tax on notional rent is payable if one has more than one self-occupied house.
- TDS threshold on interest earned on bank/post office deposits is raised from ₹10000 to ₹40000.
- TDS threshold for deduction of tax on rent increased from ₹180000 to ₹240000 for providing relief to small taxpayers.
Defence Budget: The highest ever allocation to cross ₹3 lakh crore.
North Eastern Areas: Have record allocation of funds at ₹58,166 crore
Education, Health, Infrastructure: Get higher budgetary allocations
Weaker Sections including SC & ST: Allocation enhanced to ₹76801 crore in BE for 2019-20, an increase of 35.6% over BE of 2018-19 for Scheduled Caste and allocation enhanced to ₹50086 in 2019-20 BE, an increase of 28% BE 2018-19 for Scheduled Tribes.
Integrated Child Development Scheme (ICDS): Allocation increased from ₹23357 crore in RE 2018-19 to ₹27584 crore in BE 2019-20.
Entertainment Industry: A major employment generator, regulatory provisions will now rely more on self-declarations and Indian Film Makers also to get Single window clearance for ease of shooting films, now available only to foreigners, “We will also introduce anti-camcording provisions in the Cinematograph Act to control the menace of piracy”.
Animal Husbandry: 2% interest subvention to farmers pursuing activities of animal husbandry, who avail loan through Kisan Credit Card and in case of timely repayment of loan, they will also get an additional 3% interest subvention.
Fisheries: Separate Department to provide sustained and focused attention towards development of Fisheries and promote further growth of over 7% for welfare of 1.5 crore fishermen. 2% interest subvention on loans through Kisan Credit Card and in case of timely repayment of loan, an additional 3% interest subvention.
Rashtriya Kamdhenu Aayog: To be set up to upscale sustainable genetic up-gradation of cow resources and to enhance production and productivity of cows, this will also look after effective implementation of laws and welfare schemes for cows. Allocation for Rashtriya Gokul Mission enhanced to ₹750 crore.
Micro, Small and Medium Enterprises (MSMEs) Sector: The cornerstone of Indian economy got a boost with 2% subvention for loans upto ₹1 crore and extending Government eMarketplace (GeM) platform to support domestic services and trade. With the Budget largely focused on the rural segments of the country, this will benefit the MSME sector greatly as 51% of all 634 lakh MSMEs are based in rural areas, consequently being a vital source of rural employment.
Government e-Marketplace (GeM): Platform created by the present Government two years ago, resulted in average savings of 25-28%, to be extended to all CPSEs. Transactions of over ₹17,500 crore have taken place so far.
Stamp Duties: On one instrument relating to one transaction to bet collected at one place only through the Stock Exchanges. The duty so collected to be shared with the State Governments seamlessly on the basis of domicile of buying client
GST: Burden on home buyers to be reduced, the GST Council has been moved accordingly to appoint a Group of Ministers to examine and make recommendations in this regard at the earliest. Businesses comprising over 90% of GST payers will be allowed to file quarterly return.
Major Schemes:
- MGNREGA: Enhanced allocations of ₹60000 crore for Budget Estimates 2019-20
- Pradhan Mantri Gram Sadak Yojana: Enhanced allocations of ₹19000 crore for Budget Estimates 2019-20
- Pradhan Mantri Awas Yojana: Number of 1.53 crore houses have been built
- Ayushman Bharat: To provide medical treatment to nearly 50 crore people in the country, around 10 lakh patients have already benefited through free treatment, which would have otherwise cost them ₹3000 crore.
- Pradhan Mantri Jan Aushadhi Kendras: Lakhs of poor and middle class people are also benefiting from reduction in the prices of essential medicines, cardiac stents and knee implants, and availability of medicines at affordable prices through these.
AIIMS: 14 of the 21 AIIMS operating or being established in the country presently, have been announced since 2014 and 22nd AIIMS is being set up in Haryana.
Foreign Direct Investment: India could attract massive amount of as much as $239 billion of FDI during the last 5 years, when most of the FDI was allowed to come in through the automatic route due to such a stable and predictable regulatory regime, growing economy and strong fundamentals.
Electricity Connections: By March 2019, all households will be provided with electricity connection. Till now, 143 crore LED bulbs have been provided in a mission mode which has resulted in saving of ₹50000 crore for the poor and middle class.
Ujjwala Yojana: Aiming delivery of 8 crore free LPG connections, more than 6 crore connections have already been given and the remaining will get by next year.
Welfare Development Board: To frame special strategies for the benefit of the hard-to-reach De-notified Nomadic and Semi-Nomadic communities to be set up under the Ministry of Social Justice and Empowerment. A Committee under NITI Aayog to be set up to complete the task of identifying De-notified, Nomadic and Semi-Nomadic communities not yet formally classified.
National Artificial Intelligence Portal: To be developed soon as a part of the National Programme on ‘Artificial Intelligence’.
Department for Promotion of Industries and Internal Trade: To be the new name of Department of Industrial Policy and Promotion.
Domestic Air Traffic Passengers: Have doubled during the last five years, leading to large number of jobs also being created. The number of operational airports has crossed 100 with the commissioning of the Pakyong airport in Sikkim. Arunachal Pradesh came on the air map recently and Meghalaya, Tripura and Mizoram have come on India’s rail map for the first time.
Indian Railways: Capital support from the budget to be at ₹64587 crore in 2019-20 BE. The Railways’ overall capital expenditure programme is of ₹158658 crore. The Finance Minister, who is also holding the portfolio of Railway Ministry, announced that the Operating Ratio is expected to improve from 98.4% in 2017-18 to 96.2% in 2018-19 RE and further to 95% in 2019-20 BE.
India’s Installed Solar Generation Capacity: Has grown over ten times in last five years. Stating this, Finance Minister said that, “our commitment to promote renewable energy is reflected in setting up the International Solar Alliance, the first treaty based international inter-governmental organisation headquartered in India. This sector is now creating lakhs of new age jobs”.
Inflation: Average inflation brought down to 4.6% over the last five years, which is lower than the inflation during the tenure of any other Government. The average rate of inflation during previous five years 2009-2014 was a backbreaking 10.1%. In fact Inflation in December 2018 was down to 2.19% only.
Current Account Deficit: Likely to be only 2.5% of GDP this year as against a high of 5.6% six years ago, “We contained the fiscal deficit notwithstanding the Finance Commission’s recommendations increasing the share of the States from 32% to 42% in central taxes, which we accepted in the true spirit of cooperative federalism, thereby transferring significantly higher amounts to the States”, the Finance Minister said.
Fiscal Deficit: Brought down to 3.4% in 2018-19 RE from the high of almost 6% seven years ago.
In all the total expenditure is to increase from ₹2457235 crore in 2018-19 RE to ₹2784200 crore in 2019-20 BE. A rise of ₹326965 crore or approximately 13.30%, reflects a high increase considering low inflation.
The Finance Minister pointed out that after completion of the fiscal deficit consolidation programme, the Government would now focus on Debt consolidation, “We have maintained the glide path towards our target of 3% of fiscal deficit to be achieved by 2020-21. India’s Debt to GDP ratio was 46.5% in year 2017-18. The FRBM Act prescribes that the Debt to GDP ratio of the Government of India should be brought down to 40% by 2024-25. Along with completion of the fiscal deficit consolidation programme, we will now focus on Debt consolidation”.
