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Indian Economy

Highlights of Budget 2019

  • 06 Jul 2019
  • 8 min read
  • The Union Minister for Finance presented the Union Budget 2019-20 before the Parliament.

Constitutional Provisions

  • The term ‘budget’ has nowhere been used in the Constitution. It is the popular name for the ‘Annual Financial Statement’ that has been dealt with in Article 112 of the Constitution.
  • The budget is a statement of the estimated receipts and expenditure of the Government of India in a financial year (FY), which begins on April 1 and ends on March 31 of the following year.
  • In addition to the estimates of receipts and expenditure, the budget contains certain other elements. Overall, the budget contains the following:
    • Estimates of revenue and capital receipts;
    • Ways and means to raise revenue;
    • Estimates of expenditure;
    • Details of the actual receipts and expenditure of the closing financial year and the reasons for any deficit or surplus in that year; and
    • Economic and financial policy of the coming year, that is, taxation proposals, prospects of revenue, spending programme and introduction of new schemes/projects.
  • The Railway Budget was separated from the General Budget in 1921 on the recommendations of the Acworth Committee. In August 2016, the Central Government decided to merge the railway budget into the general budget.

Economy

  • Fiscal deficit in FY 19 has been set at 3.3% of the GDP.
  • Indian economy will become a 3 trillion dollar economy in 2019. Government aspires to make India a 5 trillion dollar economy by 2024-25. To achieve this, there is a need for investment in:
    • Infrastructure
    • Digital economy
    • Job creation in small and medium firms
  • PAN and Aadhaar will become interchangeable. One can use Aadhaar number to file I-T Returns.
  • Rs. 5 lakh minimum limit announced for taxpayers.
  • In view of rising income levels, those in the ₹2-5 crore and ₹5 crore-and-above brackets will see an increase in effective tax rate by 3% (39%) and 7% (42.74%), respectively.
  • No change in personal income tax rates.
  • Increase in cess on fuel by 1 rupee, petrol & diesel to get costlier; while customs duty on gold and precious items increased.
  • Corporate tax with a turnover of up to Rs 400 crore slashed to 25% from a current rate of 30%.
  • GST Council advised to reduce tax rate on Electric Vehicles from 12% to 5%.
  • No charge on digital payments: Merchant Discount Rate charges waived on cashless payment.
  • Measures related to MSMEs:
    • Proposed easing angel tax for startups.
    • E-verification mechanism for establishing investor identity and source of funds for startups.
    • 2% interest subvention for GST-registered MSME on fresh or incremental loans.
    • ‘Stand Up India' Scheme to continue till 2025.
    • New television channel for start-ups.
    • Pension benefit extended to retail traders with annual turnover less than Rs 1.5 crore.
    • New payment platform for MSMEs to be created.
  • Proposal to provide Rs 70,000 crore capital for PSU Banks.
  • Regulation of HFCs (Housing Finance Cos) to move to RBI from National Housing Bank.
  • Govt to modify the present policy of retaining 51% stake in PSUs.
  • Govt to continue with strategic divestment of select CPSEs.
  • Divestment target of Rs 1.05 lakh crore for FY 20.
  • Strategic disinvestment of Air India proposed to be re-initiated.
  • Global Investors Meet to be held in India.

Rural India and Agriculture

  • Gaon, Garib and Kisan are the focus of the government.
  • New Jal Shakti ministry will work with states to ensure Har Ghar Jal for all rural houses by 2024.
  • Pradhan Mantri Gram Sadak Yojana phase 3 is envisaged to upgrade 1,25,000 km of road length over the next 5 years.
  • Govt will set up 100 new clusters for 50,000 artisans in FY 20.
  • Every single rural family, to have electricity by 2022.
  • Govt to promote Zero Budget Farming.
  • 10,000 new farm produce organisations.
  • 80 Livelihood business incubators and 20 technology business incubators to be set up in 2019-20 under Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship (ASPIRE) to develop 75,000 skilled entrepreneurs in agro-rural industries.
  • Pradhan Mantri Matsya Sampada Yojana (PMMSY)
    • A robust fisheries management framework through PMMSY to be established by the Department of Fisheries.
    • To address critical gaps in the value chain including infrastructure, modernization, traceability, production, productivity, post-harvest management, and quality control.

Youth

  • To popularise sports at all levels, National Sports Education Board for development of sportspersons to be set up under 'Khelo India.'
  • Govt to launch 'Study in India' programme to attract foreign students in higher education.
  • Rs 400 crore allocated for world-class higher education institutions in FY 20 .
  • National research foundation to fund, coordinate and to promote research in the country.
  • New Higher Education Commission with focus on higher autonomy.
  • New national education policy to propose changes in school, higher education.
  • To make the Indian youth ready to take up jobs in foreign countries, more emphasis on new-age skills like Artificial Intelligence, Internet of Things, Big Data, etc.
  • Study in India proposed to bring foreign students to study in Indian higher educational institutions.

Social

  • Nari tu Narayani: Women SHG Interest Subvention Programme to be expanded to all districts in India.
  • Rs 1 lakh loan to be provided for SHG women members under Mudra Scheme.
  • Rs 3,000 pension per month for workers from the informal sector.
  • Gandhipedia being developed by the National Council for Science Museums to sensitize youth and society about positive Gandhian values.

Infrastructure

  • State road networks to be developed in the second phase of Bharatmala project.
  • Rs. 50 lakh crore investment needed in Railway Infrastructure during 2018-2030.
  • Public-Private-Partnership proposed for development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services.
  • Policy interventions to be made for the development of Maintenance, Repair and Overhaul (MRO), to achieve self- reliance in the aviation segment.
  • Outlay of Rs. 10,000 crore for 3 years approved for Phase-II of FAME Scheme.
  • National Highway Programme to be restructured to ensure a National Highway Grid, using a financeable model.
  • Power at affordable rates to states ensured under “One Nation, One Grid‟.
    • Blueprints to be made available for gas grids, water grids, i-ways, and regional airports.

Space

  • India has emerged as a major space power. It is time to harness our ability commercially.
  • A public sector enterprise, New Space India Limited (NSIL) has been incorporated to tap benefits of ISRO.

Roadmap for Future

  • Simplification of procedures.
  • Incentivizing performance.
  • Red-tape reduction.
  • Making the best use of technology.
  • Accelerating mega programmes and services initiated and delivered so far.
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