BUDGET 2019-20 | Incremental Steps for New India

On July 5, 2019- Friday (Day of Goddess Laxmi), the first full-time female Finance Minister and Minister of Corporate Affairs Ms Nirmala Sitaraman presented Union Budget 2019-20, which sought as small incremental measures to tackle problems in the economy of Making of New INDIA. This Budget can be viewed as the development of infrastructure and future-oriented budget focusing on govt. core points –“Sashakt Bharat, Naya Bharat” (Forceful India & New India). This budget proposes the role of taxpayers, rich, investors and industrialists to strengthen the Indian economy and emerge as top 4 economies.

Some Interesting Facts of Budget:

Word ‘Budget’ originates from the French word “Bougette” which means Leather Bag, thus used to be carried in a briefcase, leather case.
This time Budget was carried in ‘Bahi Khata’ which matches with Indian traditional Red coloured Cloth.
This Budget speech was 2 hours and 11 minutes which is the second longest budget speech.
This was 29th Budget speech.

Government Vision for the future:

To uplift present size of the Indian economy from 6th largest in the world top 4 economies i.e. from the US $2.7 trillion to the US $3 trillion in this FY and then to the US $5 trillion in the next few years.

• Construction of physical and social infrastructure.
•  Women Empowerment.
•  Water Conservation, Water management and Cleaning Rivers.
•  Encouragement of Blue economy and Space programmes.
•  Boost to Digital India and Make in India by an emphasis on MSMEs, Startups.
•  Environment Conservation.
•  Human Resource Planning, Society Education and Skill training programmes.
•  Poverty Abolition.
•  Healthy Society.
•  Promotion of Gandhi thinking –Gandhipedia.
•  Involvement of every citizen in Team India (Jan Bhagidari) i.e. Minimum Govt., Maximum Governance.

BUSINESS DEVELOPMENT, BANKING & TAXES

• Union Budget has proposed an increase in the effective tax rate by 3% and 7%, by hiking the surcharge paid by those earning more than ₹2 crore and ₹5 crore a year respectively. It is expected to earn the government ₹12,000 crore a year.
•  Micro, Small and Medium Enterprises (MSMEs) with a turnover of up to ₹400 crore a year would now have to pay tax at 25%. This turnover limit was earlier ₹250 crore a year. The new limit will now cover 99.3% of companies.
•  For Ease of Access to credits, govt. has introduced providing of loans up to 1 crore for MSMEs within 59 minutes through a dedicated online portal.
•  The Budget also proposed to make Aadhaar interchangeable with PAN, thereby allowing people without PAN to file income tax returns using only their Aadhaar.
•  FM proposed allotting Aadhaar to non-residential Indians upon arrival, on an expedited basis.
•  The budget proposes hiking duty and cess on petrol and diesel by ₹2 per litre each. Though she said that international crude prices have been softened so the increased tax will not have a major effect on the actual price.
•  To promote start-ups and entrepreneurship, Govt. proposed to launch a TV channel under DD bouquet for Start-ups.

Govt. eases angel tax norms.

• Angel tax applies to companies that have raised capital through the sale of shares at a value above their fair market value. This excess capital is treated as income and taxed accordingly. This tax predominantly affects startups and the angel investments they attract.
•  To encourage domestic publishing and printing industry, govt. imposed 10% customs duty on Newsprint (newspaper, magazines papers) and 5% import duty on printed books.
•  Announcement of Pradhan Mantri Karam Yogi Maandhan Scheme, pension benefits to 3 crore retail traders and small shopkeepers whose annual turnover is less than 1.5 crore.
•  TDS of 2% on cash withdrawal exceeding ₹1 Crore in a year from a bank account to promote cashless economy.
•  Direct tax revenue has significantly increased over the past couple of years by 78%.
•  From ₹6.38 lakh Crore (FY 2013-14) to ₹11.37 lakh crore (FY 2018-19).
•  Govt. of India also estimated a fiscal deficit of 3.3% of GDP in FY2019-20. Fiscal deficit in FY 2018-19 was observed to be 3.4%. The main reason for this is an increase on the revenue side, while expenditure is being controlled.
•  Govt. proposed to increase import duty from 10% to 12.5% on precious metals including gold, silver and platinum.
•  Govt. proposed a hike of 5%; Rs.119,025 crore allotted to Ministry of Home Affairs, special focus on Disaster management, cybercrime infrastructure and paramilitary forces.
•  Govt. has doubled the Agriculture ministry’s budget to Rs.1.38 lakh crore this year in which the major portion is of PM-KISAN scheme.
•  FM mentioned a focus on agricultural infrastructure, dairy cooperatives, fisheries sector. The govt. emphasized AND DATA (farmers) to emerge as URJADATA (Energy Producers) by using Grid-connected solar pumps in fields for irrigation and sell the extra produced electricity.
•  FM in her speech repeated policy initiatives such as online National Agricultural Market, e-NAM and back to basic approach-“Zero Budget or Organic farming”.

INFRASTRUCTURE DEVELOPMENT

• Govt.’s intention is to invest ₹100 Lakh crore in infrastructure in the next 5 years.
•  Total capital expenditure of ₹1,60,175.64 crore has been proposed for Railway Ministry for FY2019-20. This is the highest ever allocation to Railways.
•  This has been said that Indian railways require an investment of ₹50 lakh Crore in 2019-30, thus govt. pitched a Public-Private Partnership (PPP) model to unleash faster development and completion.
•  Govt. would launch Railway Station Modernization programme to provide comfortable travel.
•  Govt. proposed additional income tax deduction of ₹1.5 lakh on the interest paid on loans taken to purchase electric vehicles. The loan is required to be taken on or before March 31, 2023. In Feb 2019 cabinet started the second phase of Faster Adoption and Manufacturing of EVs (FAME).
•  GST on EVs cut out to 5%.
•  The government would reinitiate disinvestment of ‘Air India’ as well as open up Foreign Direct Investment (FDI) in aviation.
•  FM spoke about creating an environment for the Maintenance, Repair and Overhaul (MRO) industry, which could leverage India’s engineering advantage and potential to achieve self-reliance.
•  Govt. proposed a scheme UDAN (Ude Desh ka Aam Nagrik), which aim is to take air travel to masses.
•  FM also spoke that, govt. is working to give a massive push to all forms of connectivity- “PM Gramin Sadak Yojna; Insudtrial Corridors; Bharatamala and Sagarmala Projects; Jal Marg Vikas; UDAN”.
•  “One nation, one grid”, plan to provide affordable power to states and so govt. is going to work with state govts. to remove the barriers in the implementation of UDAY scheme.
•  FM also presented defence budget for 2019-20 stands at ₹3.19 lakh crore, excluding defense pensions of ₹1.12 lakh crore. She said that Defence has an immediate requirement of modernization and so the import of defence equipment are exempted from customs duty.
•  This is the first time when the defence budget crossed ₹3 lakh crore. The total defence allocation of ₹4,31,010.79 crore, including defence pensions, accounts for 15.47% of the total Central government expenditure for 2019-20.

SOCIAL DEVELOPMENT

• Govt. announced its focus on youth education and thus promoted 3-language formula in schools i.e. teaching English, mother tongue and any third language preferably Hindi.
•  For this, Rs. 50 Crore has been allotted to appoint Hindi teachers in non-Hindi speaking states.
•  National Sports Education Board to be set up under Khelo India.
•  12% rise is introduced in allocations for the midday meal and Samgra Shiksha schemes.
•  Govt. is trying to prepare youth for new age skills: AI, IoT. 3D printing, VR etc.
•  Drop from Rs.256 crore to Rs.100 crore is done in a scheme to incentivize girls’ enrolment in secondary education. This can be seen as a great result as mindsets of parents are changing towards girl education because girls are taking enrolment in secondary education.
•  Women can get a loan up to Rs. 1 lakh under Mudra yojana.
•  A new scheme for women empowerment – Nari Tu Narayani – is announced but no budget allotted for it. Under this one committee will direct incorporation of women development.
•  FM also stated that India has the potential to become an education hub, so she proposed the “Study in India” programme to encourage foreign students. Rs.65 Crore has been allotted for this scheme.
•  Govt. announced JAL JEEVAN MISSION which has no budget allocation of its own but would converge with several other central and state govt. water schemes.
•  The PM had previously promised to provide piped water supply to all rural households by 2024, thus an estimate of more than Rs.10000 crore has been allotted for National Rural Drinking water mission.
•  Govt. showed an emphasis on water conservation. The govt. build Jal Shakti ministry to promote water values and launched Har Ghar Jal Scheme.
•  The budget 2019-20 allotted Rs. 12,644 crore for Swachh Bharat Abhiyan phase-2. The last year allocation was Rs. 16,978 crore. The economic survey recommended leveraging corporate, market and crowdfunding for SBA 2.0.
•  Centre slashes funds for National Ganga Plan and Ghats works from Rs.2250 crore in FY 2018-19 to Rs.750 crore in FY 2019-20. This may be because of last year govt. has only managed to spend Rs.750 crore to complete 10 out of 100 projects.
•  FM announced increased tax deductions up to Rs.3.5 lakhs for interest paid on loans for houses up to Rs.45 lakhs; this being the centre’s plan to construct and distribute 1.95 crores affordable, rural houses with other beneficiaries like LPG connections, electricity connections.
•  This can be seen as the second phase of PM was awas yojna-gramin.
•  Govt. also announced to distribute 35Crore LED bulbs under Ujjwala Yojna.
•  Govt. announced the construction of World Class Institutes and National Research Foundation with allotted 400 Crore budget.
•  The budget 2019-20 proposed an allocation of Rs.64999 Crore to the health sector. Central Govt. is planning to set up more than 1.5 lakh health and wellness centres by the year 2022 under Ayushman Bharat scheme and to develop district hospitals as medical colleges using Rs.2000crore allotted budget.
•  Govt. announced to launch PM Matsya(fish) Sampada Yojna, which bring all fishermen under the ambit of all farmer welfare programmes and social security schemes with expanded coverage for accident insurance.
•  Govt. emphasized on agro-rural industries under SFURTI scheme with prime focus on bamboo, honey, khadi.

MISCELLANEOUS

• A ‘Gandhipedia’ is being developed by the national council for science museums to sensitize society, particularly youth, about Gandhian values towards cleanliness.
•  Rashtriya Swachhta Kendra would be inaugurated at Gandhi darshan at Rajghat, Delhi on October 2nd, 2019.
•  National Common Mobility Card (NCMC), an inter-operable transport card to be introduced which will enable people to pay multiple kinds of transport charges like bus travel, metro charge, toll taxes, retail shopping and even money withdrawal. It will run on the RuPay card.
•  Blue Economy (Sea-Based economy) has the potential to produce an economy of Rs.3.2 lakh crore. This was stated in the Organization for Economic Co-operation and Development report. If churned right, a large share would be of India’s. At present, India was mainly in sea oil and fishery business sector, but now India started to magnify its tourism and cruise businesses sectors. Min. 8% increment is estimated in every year.

Space Economy-

• Recently, India emerged 4th in Space power after America, China and Russia. Thus, India has a great scope in the space economy.
• At present, the space market is of 1 Lakh Crore, and India can enjoy Lion’s bite
• Sources of Space Economy: Space tourism, space mining, Launching foreign satellites and providing satellite services, remote sensing and development etc.

Tushar Chauhan is an electrical engg pass out in 2019 from Aligarh Muslim University. He is a Naval Brat and wants to join Defence as an Officer. Currently he's working in a private industry and preparing for defence exams.