India’s Interim Union Budget 2019-20: All you Need to Know

India’s Interim Union Budget 2019-20: All you Need to Know

India’s Interim Union Budget 2019-20: All you Need to Know

Interim Union Budget 2019-20: The interim Union Budget for 2019-20 was announced by Mr Piyush Goyal, Union Minister for Finance, Corporate Affairs, Railways and Coal, Government of India, in Parliament on February 01, 2019. It focuses on supporting the needy farmers, economically less privileged, workers in the unorganized sector and salaried employees, while continuing the Government of India’s push towards better physical and social infrastructure.

Total Expenditure for 2019-20 is Budgeted at Rs 2,784,200 crore (US$ 391.53 billion), an Increase of 13.30 per cent from 2018-19 (revised estimates).

Highlights of Interim Union Budget 2019-20

The most eagerly awaited economic event will be presented in a less than a month time. This will be Prime Minister Narendra Modi-headed Bharatiya Janata Party (BJP)-led (NDA) National Democratic Alliance Government’s last budget before the largest democracy in the world exercises its franchise in the Lok Sabha election 2019. The central government has already presented its final full-fledged budget in form of Budget 2018.

What is the Interim Budget, Full Budget, Vote-on-Account?

As per the tradition in India, the incumbent government does not present a full-fledged Union Budget in the election year. Instead, the Finance Minister tables an interim budget during the joint sitting of Rajya Sabha and Lok Sabha in Parliament. Through the full-fledged Union Budget, the central government presents an overview of revenue and expenditure for a financial year (April 1- March 31). Budget 2019 will be the central government’s last opportunity to woo voters as PM Modi’s government is seeking a second term.

The Finance Ministry has already made it clear this year’s Union Budget will be an interim Budget. Finance Minister Arun Jaitley will neither present a full Budget or a vote-on-account, as per reports. Through the vote-on-account, the central government presents the expenditure of government accounts.

Overview of The Economy

  • India is currently the fastest growing major economy in world and the sixth largest economy, compared to 11th largest in 2013-14.
  • India will be a US$ 5 trillion economy in the next five years and might become a US$ 10 trillion economy in the next eight years thereafter.
  • Average inflation rate in the country has gone down drastically to 4.6 per cent in the current government’s tenure, lower than inflation under any other past government.
  • Fiscal deficit of the Government of India is expected to be 3.4 per cent of the GDP for 2019-20 and 2018-19 (revised estimates).

Major Expenditure Items

  • Capital expenditure for 2019-20 is expected to be Rs 336,292 crore (US$ 47.29 billion).
  • Centrally sponsored schemes have been allocated Rs 327,679 crore (US$ 46.08 billion) in 2019-20.
  • Defence budget will surpass Rs 300,000 crore (US$ 42.19 billion) for the first time in 2019-20.
  • Allocation for North-East areas is pegged at Rs 58,166 crore (US$ 8.18 billion) in 2019-20, an increase of 21 per cent over 2018-19 (budget estimates).
  • Scheduled tribes have been allocated Rs 50,086 crore (US$ 7.04 billion) in 2019-20, an increase of 28 per cent over 2018-19 (budget estimates).

Poor & Backward Classes

  • The government is working to reduce the rural-urban and class divide in the country.
  • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has been allocated Rs 60,000 crore (US$ 8.44 billion) for 2018-19.
  • A new pension scheme named ‘Pradhan Mantri Shram-Yogi Mandhan’ will be launched for workers in the unorganised sector, with an outlay of Rs 500 crore (US$ 70.31 million) for 2019-20. This would provide them an assured monthly income of Rs 3,000 (US$ 42.19) from 60 years of age.
  • NITI Aayog will set up a committee to identify de-notified, nomadic and semi-nomadic communities, which are not yet classified. A welfare development board will also be set up for these communities’ empowerment.

Support for Farmers

  • A historic programme named ‘Pradhan Mantri Kisan Samman Nidhi (PM-KISAN)’ is being launched to provide assured income support to the vulnerable farmers in the country, effective from December 02, 2018. Under the scheme, families with cultivable land of up to two hectares will be given direct income support of Rs 6,000 (US$ 84.38) per year in three equal installments. Annual outlay for the programme is Rs 75,000 crore (US$ 10.55 billion). Around 120 million small and marginal farmer families will benefit from this programme.
  • Rashtriya Kamdhenu Aayog will be set up to enhance cow resources.
  • A separate Department of Fisheries will be created.
  • Farmers pursuing animal husbandry and fisheries activities, who avail credit under the Kisan Credit Card scheme (KCC) will become eligible for 2 per cent interest subvention and 3 per cent subvention on timely repayment.

Infrastructure

  • Railways will get capital support of Rs 64,587 crore (US$ 9.08 billion) in 2019-20. Operating ratio of the railways is expected to improve to 95 per cent in 2019-20.
  • Container cargo movement will be introduced to North-East areas as well.
  • Around 100,000 villages in the country will be made digital villages in the next five years.
  • A National Centre on Artificial Intelligence will be created on lines with the Centers of Excellence.
  • Pradhan Mantri Gram Sadak Yojana (PMGSY) has been allotted Rs 19,000 crore (US$ 2.67 billion) in 2019-20.

Micro, Small and Medium Enterprises (MSMEs) and Traders

  • The Government e-Marketplace (GeM) is being extended to all Central Public Sector Enterprises (CPSEs), providing more opportunities for MSMEs to sell their products.
  • Department of Industrial Policy and Promotion (DIPP) will be renamed as the Department for Promotion of Industries and Internal Trade.
  • Over 90 per cent of businesses paying goods and services tax (GST) will soon be able to file quarterly returns.

Tax Proposals

  • Individual taxpayers with annual income up to Rs 500,000 (US$ 7,031.34) will get full tax rebate and hence will not be required to pay any tax. As a result people with gross income up to Rs 650,000 (US$ 9,140.74) may get full tax exemption with specific investments. This is expected to provide tax benefit of around Rs 18,500 crore (US$ 2.60 billion) to around 30 million middle class taxpayers in the country.
  • Standard deduction for salaries persons is being increased from Rs 40,000 (US$ 562.51) to Rs 50,000 (US$ 703.13).
  • Income tax on notional rent for second self-occupied house will be exempted.
  • Threshold for tax deducted at source (TDS) for interest on bank and post office deposits is increased from Rs 10,000 (US$ 140.63) to Rs 40,000 (US$ 562.51).
  • Benefit of rollover capital gains up to Rs 2 crore (US$ 0.28 million) will be increased from investment in one residential house to two houses. This can be availed once in a lifetime.

Vision for the Next Decade

  • To build physical and social infrastructure for a US$ 10 trillion economy.
  • To create a Digital India that impacts life of all Indians.
  • Make India pollution free thrive on electric vehicles and renewable energy.
  • Expand rural industrialization using modern technology.
  • To have clean rivers, safe drinking water and efficient use of water.
  • Make our coastline and ocean waters power India’s growth.
  • To send an Indian astronaut to space by 2022 and make India a lunch pad for satellites of the world through our space programme – Gaganyaan.
  • Make India self-sufficient in food export to meet the world’s needs.
  • A distress free and healthcare and a functional and comprehensive wellness system.
  • Make India a minimum government and maximum governance nation.
Exchange Rate Used: INR 1 = US$ 0.0141 as on February 01, 2019

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