The BJP government on Friday unveiled an interim budget with giveaways for rural citizens and the middle class, in what is being seen as a critical test for Prime Minister Narendra Modi, who is facing anger over depressed farm incomes and unemployment with a general election just months away.
Here are the highlights of interim Finance Minister Piyush Goyal’s budget for the 2019/20 fiscal year beginning 1 April.
Taxation/Banking
- Income tax exemption limit raised to Rs 5 lakh in 2019/20
- Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to 20 million rupees; can be exercised once in a lifetime
- Average monthly tax collection at Rs 971 billion per month so far this year
- Gross market borrowing seen at Rs 7.04 trillion in 2019/20 - traders citing agencies
- Small and medium-sized businesses registered under the Goods and Services Tax to get 2 percent interest subvention on loan of Rs 10 million - finance minister
- Goyal says expects other banks on the central bank’s Prompt Corrective Action list to be removed soon
Farming/Rural Affairs
- India to allocate Rs 750 billion ($10.56 billion) per year to support farmers’ incomes
- Impact of Rs 200 billion in current fiscal year
- Vulnerable farmers to receive Rs 6,000 per year under new scheme
- Farmers affected by natural disasters to receive 2% interest subvention, additional 3 percent if they repay loans on time
- Government to provide 2% interest subvention for farmers pursuing animal husbandry, fisheries
- India to allocate Rs 190 billion for construction of rural roads in 2019/20
Employment
- India to launch social security coverage for workers in unorganised sector
- New scheme to provide assured monthly pension of Rs 3000 per month, with contribution of Rs 100 per month, for workers in unorganised sector after 60 years of age
- Scheme will benefit 100 million workers in unorganised sector, may become the world’s biggest pension scheme for unorganized sector in five years - Goyal
- Government to allocate Rs 600 billion for a rural employment scheme in 2019/20
Expenditure
- Total expenditure in 2019/20 budgeted at Rs 27.84 trillion
- Capital expenditure for 2019/20 seen around Rs 3.36 trillion in centrally sponsored schemes
- Defence budget raised to beyond Rs 3 trillion in 2019/20
- To allocate 645.87 billion rupees for railways capital expenditure in 2019/20
- Allocation to India’s northeast region proposed to be increased by 21% over previous fiscal year
Deficit/Growth
- Fiscal deficit for 2018/19 seen at 3.4% of GDP
- Fiscal deficit for 2019/20 estimated at 3.4% of GDP
- Fiscal deficit for 2020/21 seen at 3% of GDP
- Government’s stated commitment earlier was to bring down the fiscal deficit to 3.1 percent of GDP by the end of March 2020, and to 3 percent by March 2021
- India’s current account deficit for 2018/19 seen at 2.5% of GDP
Finance Minister’s comments
- “We are poised to become a 5 trillion dollar economy in the next five years, we aspire to become a 10 trillion dollar economy in the next eight years”
- “India is now on the way to becoming a global manufacturing hub in several sectors”