Finance Minister Nirmala Sitharaman presented the Budget 2019-20 in the Parliament on Friday, the first budget since the Narendra Modi-led BJP government came back to power in May.
Here are the highlights of Budget 2019:
$3 Trillion Economy This Year
Sitharaman said India will become a $3-trillion economy in the current fiscal year. “It took us over 55 years to reach $1 trillion dollar economy. But when the hearts are filled with hope, trust & aspiration, we in just 5 years, added $1 trillion,” she said.
The fiscal deficit for 2019-20 is seen at 3.3% of GDP down from 3.4%, Sitharaman said.
Housing, Electricity For All By 2022
Govt aims to achieve housing for all by 2022 and plans electricity, clean cooking facilities for all families by 2022.
Water For All Rural Houses By 2024
The Jal Shakti ministry to ensure water supply to all rural households by 2024.
Ensuring India’s water security and providing access to safe drinking water to all a priority. A major step in this direction — the constitution of Jal Shakti Ministry, says Sitharaman.
No tax for people with annual income below Rs 5 lakh.
Additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken to purchase electric vehicles.
Additional tax deduction of Rs 1.5 lakh on interest paid on housing loans for self-occupied house owners, for purchase of house up to Rs 45 lakhs.
Increased tax surcharge on individuals with taxable income between Rs 2-5 crore and 5 crore and above, so that effective tax rate will increase by around 3% and 7% respectively.
Govt to introduce faceless scrutiny of tax assessment.
All companies with an annual turnover of up to Rs 400 crores to have a corporate tax of 25%. “This will cover 99.3% of all the companies.”
To discourage the practice of making business payments in cash, TDS of 2% on cash withdrawal exceeding Rs 1 crore in a year from a bank account.
Business establishments with annual turnover more than Rs 50 crore may offer low-cost digital payments; no charges or merchant discount rates to be imposed on customers or merchants for these.
Aadhar card and Pan card made interchangeable. Aadhaar can now be used by people to file income tax returns without needing a PAN card.
Broad-based committee to evaluate and suggest actions for moving forward on gender analysis of budget to be formed.
Women SHG Interest Subvention Programme to be expanded to all districts in India.
Every verified woman SHG member having a Jan Dhan account will be allowed an overdraft of Rs 5000 rupees. One woman in every SHG shall be made eligible for a loan of Rs 1 lakh under MUDRA scheme.
Public Sector Undertakings
Government to set a target of over Rs 1 lakh crore of disinvestment proceeds in FY 2019-20.
A model tenancy law will be formulated.
New series of coins to be introduced shortly, including Rs 20 coins. “A new series of coins of Re 1, Rs 2, Rs 5, Rs 10, Rs 20 easily identifiable to the visually impaired were released by the PM on 7 March. These coins will be made available for public use shortly,” Sitharaman said.
Pension programme for retail traders
The government will introduce a pension programme, the Pradhan Mantri Karma Yogi Maan Dhan Scheme, for 30 million retail traders with less than Rs 1.5 crore turnover.
Foreign Direct Investment
— Will increase FDI in aviation, media and animation
— Ease FDI norms for single-brand retail
— Further open up FDI into the insurance sector
Defence spending seen at Rs 3.05 trillion
Government to invest Rs 100 lakh crore in infrastructure over the next five years. “The massive push given to all forms of physical connectivity would give required boost to the economy,” Sitharaman said.
Multiple labour laws to be streamlined to into a set of four Labour Codes, to standardise registration and filing of returns and reduce disputes.
80 livelihood business incubators and 20 technology business incubators to be set up in 2019-20 under ASPIRE to develop 75,000 skilled entrepreneurs in agro-rural industries
Public Sector Banks
PSU banks to be provided Rs 70,000 crore of capital.
NPAs of banks reduced by Rs 1 lakh crore.
Public sector banks will use technology, enabling customer of one PSB to access service across all PSBs as well.
A television programme on Doordarshan exclusively for startups. This channel will be designed and executed by startup’s themselves.
At present startups are not required to justify the fair market value of their shares issued to certain investors including category 1 alternative investment funds. This benefit extended to category 2 alternative investment funds also.
To resolve so-called Angel Tax issue, the startups and their investors who file requisite declarations and provide information in their returns will not be subjected to any kind of scrutiny in respect of valuations of share premiums.
A simplified single monthly return being rolled out, taxpayers with annual turnover less than Rs 5 crore need to file only quarterly returns.
Fully automated GST Refund module shall be implemented. Multiple tax ledgers to be replaced by one; invoice details to be captured in a central system.
Special additional excise duty on petrol and diesel by Re 1 per litre.
Customs duty on gold, precious metals increased from 10% to 12.5%.
5% customs duty on imported books to encourage domestic printing industry.
Public sector enterprise New Space India Limited to harness India’s space ability commercially to tap the benefits of ISRO.
Aadhar cards for NRIs with Indian passports after arrival without the mandatory wait of 180 days.
NRIs seamless access to Indian equities, NRI portfolio investment route to be merged with foreign portfolio investment route.
Pre-Budget Economic Survey
Sitharaman presented the pre-Budget Economic Survey in the Parliament on Thursday which said India’s economic growth will rebound from a 5-year low this year, but would need a huge boost in spending and reforms to accelerate higher rate of expansion to double the economy’s size to $ 5 trillion by 2024-25.
The real GDP growth, which slowed to a five-year of 5.8 per cent in the first three months of 2019 ― well below China’s 6.4 per cent, is expected to rise to 7 per cent in the fiscal year 2019-20 that started in April, it said.
India is currently the sixth-largest economy in the world with a size of USD 2.7 trillion. It is expected to overtake Britain to become the fifth-largest next year.
Authored by Chief Economic Adviser Krishnamurthy Subramanian, the Economic Survey said investment (especially private), is the ‘key driver’ that boosts demand, creates capacity, increases labour productivity, introduces new technology, allows creative destruction and generates jobs.
While the survey retained the fiscal deficit estimate for 2018-19 at 3.4 per cent, the general fiscal deficit — Centre and states combined — was pegged at 5.8 per cent in 2018-19, down from 6.4 per cent in the previous fiscal.
For India to become a $5 trillion economy (more than double the current size) by 2024-25, it needs to sustain a real GDP growth rate of 8 per cent, which international experience suggests is possible only through a sustained “virtuous cycle” of savings, investment and exports.
It said oil prices will decline in current fiscal, pushing consumption. Consumption accounts for about 60 per cent of the GDP.
Stating that low pay and wage inequality remain serious obstacles towards achieving inclusive growth, it called for legal reforms, policy consistency, efficient labour markets and use of technology focus areas.