In the Union Interim Budget for the year 2019-20, the Finance Minister has made an all out attempt to please two major constituencies from the point of view of the coming General Election – farmers and the urban middle-income class.
At the macro level the Finance Minister has managed to restrict the Fiscal Deficit, the much debated number before the presentation of the Union Budget, of year 2019-20 at 3.4 percent of GDP. A slippage of 0.1 percent than the promised figure of 3.3 percent. The Finance Minister has attributed the slippage to an additional allocation of Rs 20,000 crore towards the income support scheme to farmers.
According to the Budget the total expenditure rises from Rs 24,57,235 crore in 2018-19 (RE) to Rs 27,84,200 crore in 2019-20 (BE), a rise of 13.30 percent. Capital Expenditure for 2019-20 (BE) is estimated at Rs 3,36,292 crore. Of which, the Centrally Sponsored Schemes (CSS) are proposed to be allocated Rs 3,27,679 crore in 2019-20 as against Rs 3,04,849 crore allocated in 2018-19.
Barring some sops to the SME & Real Estate sectors, no major steps have been announced in the budget to fasten the small revival seen in projects investment. The overall assumptions seems to be that the increase in investment in the hands of farmers and middle class will reverse the fall in demand seen in the recent months and will induce Indian corporates to revive their investment plans. On the infrastructure front, more money has been allocated to MNREGA, Pradhan Mantri Awas Yojana, Road building and Railways projects.
As of 31 Dec 2018, there were 69,235 projects worth Rs 1,35,84,006 crore under various stages of execution in India.
|Projects Investment (as of 31 Dec 2018)
Benefits to Rural India
- Rs 60,000 crore allocated for MGNREGA in BE 2019-20. One of the major employment generating schemes.
- Pradhan Mantri Gram Sadak Yojana (PMGSY) is being allocated Rs 19,000 crore in BE 2019-20 as against Rs 15,500 crore in RE 2018-19. So far, 15.80 lakh habitations have been connected.
- PM Kissan – Structured Income Support to small and marginal farmers – Allocation of Rs 75,000 crore for 2019-20 and Rs 20,000 crore for current fiscal.
- Under Saubhagya Yojana, by March, 2019, all willing families will get electricity connection.
- Till date, Under Ayushman Bharat programme, around 10 lakh patients have benefited to the tune of Rs 3,000 crore.
- Minimum support price (MSP) of all 22 crops fixed at minimum 50 percent more than the cost.
- Rs 75,000 crore set aside for Pradhan Mantri KIsan Samman Nidhi (PM-KISAN). Under this programme, farmers having cultivable land upto 2 ha, will be provided direct income support of Rs 6,000 per year in three equal installments. Around 12 crore small and marginal farmer families are expected to benefit from this. The programme would be made effective from 1 December 2018. Rs 20,000 crore provided for the for FY 2018-19.
- Rs 750 crore to Rashtriya Gokul Mission in the current year. To set up Rashtriya Kamdhenu Aayog to upscale sustainable genetic up-gradation of cow resources and to enhance productivity of cows.
- A 2 percent interest subvention to the farmers pursuing animal husbandry and fisheries, who avail loan through Kisan Credit Card. Additional, 3 percent interest subvention in case of timely repayment of loan.
Benefits to Middle and Labour class
- Under the New Pension Scheme (NPS) employee’s contribution has been kept at 10 percent but Government’s contribution has been hiked from 10 percent to to 14 percent.
- Maximum ceiling of the bonus given to the labourers has been increased from Rs 3,500 pm to Rs 7,000 pm and the maximum ceiling of the pay has been increased from Rs 10,000 pm to Rs 21,000 pm.
- The ceiling of payment of gratuity has been enhanced from Rs 10 lakhs to Rs 20 lakhs.
- The ceiling of ESI’s eligibility cover has been increased from Rs 15,000 pm to Rs 21,000 pm.
- Minimum pension for every labourer has been fixed at Rs 1,000 per month. In the event of death of a labourer during service, the amount to be paid by EPFO has been enhanced from Rs 2.5 lakh to Rs 6 lakh.
- Under Anganwadi and Asha Yojana honorarium has been enhanced by about 50 percent for all categories of workers.
- Under the Pradhan Mantri Shram-Yogi Maandhan for the unorganised sector workers with monthly income upto Rs 15,000 an assured monthly sum of Rs 3,000 will be paid from the age of 60 on a monthly contribution ranging from Rs 55 to Rs 100 depending upon the age of joining. A sum of Rs 500 crore has been allocated for the Scheme.
- The Budget has also extended several benefits in Income tax payment to the Salaries class.
Benefits to MSMEs and Traders
GST-registered SME units will get 2 percent interest rebate on incremental loan of Rs 1 crore. The requirement of sourcing from SMEs by Government enterprises has been increased to 25 percent. Of this, the material to the extent of at least 3 percent will be sourced from women owned SMEs.
To enhance the revenue of this sector, the Government e-Marketplace (GeM), where SMEs can sell their products, is now extended to all CPSEs.
- The number of operational airports has crossed 100 with the commissioning of the Pakyong airport in Sikkim.
- India has emerged as the fastest highway developer in the world with 27 km of highways built each day.
- Capital support from the budget for railways is fixed at Rs 64,587 crore in 2019-20, 21.7 percent up from Rs 53,060 crore allocated in 2018-19. The Railways’ overall capital expenditure programme is pegged at Rs 1,58,658 crore.
- Similarly, a sum of Rs 72,025 crore has been allocated to Road and Highway building. An increase of 5.05 percent when compared with the last year’s allocation of Rs 68,564 crore.
- The Government will make 1 lakh villages into Digital Villages over next five years.
In the Real Estate sector, one of the high employment generator, housing projects approved till 31st March, 2020 will now be eligible to avail the Income Tax benefits extended under Section 80-IBA of the Income Tax Act. Further, the period of exemption from levy of tax on notional rent on unsold inventories has been extended from one year to two years, from the end of the year in which the project is completed.
Increase in Defence outlay
Defence sector has received an all-time high budget support of over Rs 3,00,000 crore in the current year’s budget. This should be a good news to Indian private companies who have shown increased interest to be part of defence equipment manufacturing under the Make in India scheme.
Most of the proposals mentioned in the budget will be implemented by a new government which will assume office in June 2019. Some of the proposals might undergo changes in the full budget presented by the new government.
However, the finance minister seems to be confident of coming back to power. Hence, in his first budget, he has also listed 10 visions of his government for India 2030.
- To build next-gen infra – physical and social
- Expanding rural industrialisation using modern technology
- Clean Waters, with safe drinking water to all Indians
- Gaganyaan, to put Indian astronaut in space by 2022
- Self-sufficiency in food and improving agricultural productivity
- Healthy India, with distress-free and comprehensive wellness system for all
- Under Sagarmala programme, India’s coastline and ocean waters would power India’s development and growth
- Minimum Government Maximum Governance – a proactive, responsible and friendly bureaucracy
- Clean and Green India – an India that drives electric vehicles, with renewables becoming major source of energy
- Aim to build a Digital India that reaches every citizen by creating innumerable startups and jobs