UNION BUDGET OF INDIA

UNION BUDGET OF INDIA (2019-2020)

The Union Budget for 2019-20 was announced by Ms. Nirmala Sitharaman, Minister for Finance and Corporate Affairs, Government of India, in Parliament on July 05, 2019. India is all set to become US$ 3 trillion economies by the end of FY20. The budget focusses on reducing red tape, making best use of technology, building social infrastructure, digital India, pollution-free India, make in India, job creation in Micro, Small and Medium Enterprises (MSMEs) and investing heavily in infrastructure.

Total expenditure for 2019-20 is budgeted at Rs 2,786,349 crore (US$ 417.95 billion), an increase of 14.09 percent from 2018-19 (budget estimates).

  • Overview of the economy
    • India target to become US$ 5 trillion economies in the next five years and might become a US$ 10 trillion economy in the next eight years thereafter.
    • The Indian economy grew at 6.8 percent in 2018-19 and fourth-quarter growth slumped to 5.8 percent which was a 17 percent quarter low.
    • Movement of cargo on Ganga is estimated to rise four times in the next four years.
    • India was a US$ 1.85 trillion economy in 2014 and it has reached US$ 2.7 trillion in five years, the fastest-growing major economy and the sixth-largest economy in the world, compared to 11th largest in 2013-14.
    • Metro rail network of 657 km has become operational in the country.
  • Major Expenditure Items
    • Total capital expenditure will be Rs 876,209 crore (US$ 131.43 billion) for 2019-20.
    • Centrally sponsored schemes have been allocated Rs 331,610 crore (US$ 49.74 billion) in 2019-20.
    • Defence budget is Rs 305,296 crore (US$ 45.79 billion) for the first time in 2019-20.
    • Amount of Rs 174,300 crore (US$ 26.14 billion) has been approved for pension in the budget 2020.
    • The government has allocated Rs 184,220 crore (US$ 27.63 billion), Rs 79,996 crore (US$ 11.99 billion) and Rs 37,478 crore (US$ 5.62 billion) for Food, fertilizer and Petroleum subsidies respectively.
  • Labour and Youth Welfare
      • The Government of India has decided to extend the pension benefit to about three crore retail traders & small shopkeepers whose annual turnover is less than Rs 1.5 crore (US$ 0.22 million) under “Pradhan Mantri Karam Yogi Maandhan Scheme.
    • National Sports Education Board to be set up under Khelo India to prepare youth for new-age skills, Artificial Intelligence, IoT, Big Data, 3D Printing, Virtual Reality, etc.
    • National Research Foundation to be established to fund, coordinate and promote R&D.
    • Rs 400 crore (US$ 60 million) provided for ‘World Class Institutions’ for FY20
    • “Study in India” to bring foreign students to higher educational institutions
  • Support for Farmers
    • The focus of the government is on the “Pradhan Mantri Matsya Sampada Yojana” (PMMSY) for addressing critical gaps in the value chain, including infrastructure, modernization, traceability, production, productivity, post-harvest management, and quality control.
    • Government is planning to form 10,000 new Farmer Producer Organizations, to ensure economies of scale for farmers over the next five years.
    • The government will work with State Governments to allow farmers to benefit from e-NAM (National Agriculture Market).
    • The government might replicate “one count: Zero Budget Farming” model which can help in doubling our farmers’ income in time for our 75th year of Independence.
  •  Infrastructure
    • Ministry of Railways has been allocated Rs 94,071 crore (US$ 14.11 billion) in 2019-20.
      • Government has proposed to permit investments made by Foreign Institutional Investor’s (FIIs)/Foreign Portfolio Investments (FPIs) in debt securities issued by Infrastructure Debt Fund.
      • Road – Bharatmala phase 2 going to be launched to develop the state road networks.
      • Government has finalized the model tendency law- promotion of rental housing.
    • Government has announced to invest Rs 10,000,000 crore (US$ 1.5 trillion) in infrastructure over the next five years
    • To upgrade 1,25,000 km of road length over the next five years, the estimated cost of Rs 80,250 crore (US$ 12.03 billion) is envisaged under Pradhan Mantri Gram Sadak Yojana-III (PMGSY)
    • The government has suggested the investment of Rs 5,000,000 crore (US$ 750 billion) for railways infrastructure between 2018-2030.
    • Metro rail network has reached to 657 Km.
    • Operating ratio improved by 95 percent in 2019-20
    • 30,000 km of PMGSY roads have been built using Green Technology, Waste Plastic, and Cold Mix Technology.
    • Government has ensured power availability to states at affordable rates through model – One Nation, One Grid.
  • Micro, Small and Medium Enterprises (MSMEs) and Traders
    • Government has proposed granting of loans up to Rs 1 crore (US$ 0.15 million) for MSMEs within 59 minutes through a committed online portal. Under the Interest Subvention Scheme for MSMEs, Rs 350 crore (US$ 52.50 million) has been allocated for FY 2019-20
    • The government will create a payment stage for MSMEs to enable filing of bills and payment thereof on the platform itself.
    • The Government e-Marketplace (GeM) is being extended to all Central Public Sector Enterprises (CPSEs), providing more opportunities for MSMEs to sell their products.
  • Tax Proposals
    • Individual taxpayers with annual income up to Rs 500,000 (US$ 7,500) will get full tax rebate and hence will not be required to pay any tax.
    • Tax Deducted at Source (TDS) of 2 percent on cash withdrawal exceeding Rs 1 crore (US$ 0.15 million) in a year from a bank account to promote less cash economy
    • The effective tax rate for individuals having taxable income above Rs 2 crore (US$ 0.30 million) has been increased.
    • The limit for applicability of lower corporate tax rate of 25 percent increased from Rs 250 crore (US$ 37.50 million) to Rs 400 crore (US$ 60 million)
    • Enhanced interest deduction up to Rs 350,000 (US$ 5,250) for purchase of an affordable house.
    • The government increased income tax surcharge for HNIs (high net worth individuals) earnings more than Rs 2 crore (US$ 0.30 million) a year. Those earning between Rs 2-5 crore (US$ 0.30-0.75 million) will have shell out 3 percent more, with surcharge rate being increased from 15 percent to 25 percent. Those earning above Rs 5 crore (US$ 0.75 million) will have to shell out a surcharge of 37 percent, from current 15 percent.
    • No charges or Merchant Discount Rate (MDR) on the specified digital mode of payments. These modes are to be compulsorily provided by large businesses.
    • The government announced Rs 150,000 (US$ 2,250) income tax deduction on interest paid on loans for the purchase of electric vehicles.
    • Sabka Vishwas Legacy Dispute Resolution Scheme proposed for quick closure of service tax and excise related litigations.
    • To increase Special Additional Excise duty and Road and Infrastructure Cess each by one rupee a liter on petrol and diesel.
    • It also proposed to increase customs duty on gold and other precious metals from 10 percent to 12.5 percent.
    • Scheme of faceless electronic tax assessment
    • Aadhaar and PAN to be interchangeable and permit those who do not have PAN to file Income Tax returns by only citing their Aadhaar number.
    • Taxpayers having an annual turnover of less than Rs 5 crore (US$ 0.75 million) can now file quarterly returns.
    •  Fully automated GST refund module shall be implemented.
    • An electronic invoice system is proposed that will eventually eliminate the need for a separate e-way bill
  • Vision for the Next Decade
    • The become a US$ 3 trillion economy by the end of 2019
    • Make in India with emphasis on MSMEs, Start-ups, defense manufacturing, automobiles, electronics, fabs and batteries, and medical devices
    • Building physical and social infrastructure
    • Digital India reaching every sector of the economy
    • India plans electricity, clean cooking facilities for all Indian families by 2022.
    • To ensure ‘Har Ghar Jal’ by 2024
    • 125,000 km of road to be upgraded over next 5 years at a cost of Rs 80,250 crore (US$ 12.03 billion)
    • Aims to achieve housing for all by 2022
    • Blue Economy
    • Healthy society – Ayushman Bharat, well-nourished women & children. Safety of citizens
    • Team India with Jan Bhagidari. Minimum Government Maximum Governance.
    • 19.5 million households to be built in rural areas.
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