The newly formed Government’s Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman presented the Budget 2019-2020 in the Parliament on 5th of July 2019. The Government aspires to become a 5 trillion-dollar economy by 2024. Also, the Budget stated that India is all set to become $3 trillion economy this year (2019-2020). There are many other provisions in the Budget for various sectors of Indian Economy which have been covered in this eBook “Union Budget 2019-20 – Summary”. Union Budget 2019 Summary – facts and figure will be extremely important for all the upcoming exams in 2019 such as SBI PO and Clerk, IBPS PO and Clerk, RBI Grade B Officer and Assistant, SSC CGL, SSC CHSL, SSC CPO, IBPS RRB PO, Railways RRB, SEBI, NABARD and more.
Union Budget 2019-2020
The Finance Minister flagged ten points of the Government’s “Vision for the Decade”.
These 10 Points are mentioned below:
- Building Physical and Social Infrastructure
- Digital India reaching every sector of the Economy
- Achieving Pollution free India with Green Mother Earth and Blue Skies
- Emphasis on Make in India with particular emphasis on MSMEs, Start-ups, Defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices
- Water, Water Management, Clean Rivers
- Blue Economy
- Space programmes: Gaganyan, Chandrayan and Satellite programmes
- Achieving Self-sufficiency and Export of food-grains, pulses, oilseeds, fruits and vegetables
- Achieving Healthy Society – Ayushman Bharat, Well-nourished Women & Children, Safety of Citizens
- Building Team India with Jan Bhagidari: Minimum Government Maximum Governance.
Achievements during 2014-19
- $1 trillion added to Indian economy over last 5 years.
- India is now the 6th largest economy in the world.
- Indian Economy is globally the 3rd largest in Purchasing Power Parity (PPP) terms.
- Strident commitment to fiscal discipline and a rejuvenated Centre-State dynamic provided during 2014-19.
- Structural reforms in Indirect taxation, bankruptcy and Real Estate carried out.
- Average amount spent on food security per year almost doubled during 2014-19 compared to 2009-14.
- Patents issued more than trebled in 2017-18.
- Ball set rolling for a New India, planned and assisted by the NITI Aayog.
Roadmap for future
- Simplification of procedures.
- Incentivising Performance.
- Red-tape reduction.
- Making the best use of technology.
- Accelerating Mega programmes and services initiated and delivered so far.
Union Budget 2019 Summary
Theme of 2019 Budget – The $5Trillion Economy
- Indian economy will become a 3 trillion-dollar economy in the current year (2019-20) and is on the path of achieving a 5 trillion-dollar economy tag by the year 2024-25.
- For this India needs to maintain an Annual Growth Rate of 8%.
- Currently India is $2.7 Trillion Dollar economy.
- The FM said, “India Inc. are India’s job-creators and nation’s wealth-creators.”
- There need for investment in: Infrastructure, Digital economy, Job creation in small and medium firms.
- Initiatives to be proposed for kick-starting the virtuous cycle of investments.
- Common man’s life changed through MUDRA loans for ease of doing business.
Provisions for Various Sectors of Economy
1. Agriculture & Farmer Welfare
- 10,000 New Farmer Producer Organizations (FPO) to be formed to ensure economies of scale for farmers.
- Dairying through cooperatives to be encouraged by creating infrastructure for cattle feed manufacturing, milk procurement, processing & marketing.
- Union Government to work with State Governments to allow farmers to benefit from e-NAM (Electronic – National Agriculture Market).
- Private Entrepreneurship to be supported in driving value-addition to farmers’ produce from the field and for those from allied activities.
- Zero Budget Farming in which few states’ farmers are already being trained to be replicated in other states.
2. Transforming Rural India (Grameen Bharat)
- Electricity and Clean Cooking facility to all the willing rural families by 2022.
- Pradhan Mantri Awas Yojana – Gramin (PMAY-G) aims to achieve “Housing for All” by 2022. Eligible beneficiaries to be provided 1.95 crore houses with amenities like toilets, electricity and LPG connections during its second phase (2019-20 to 2021-22).
- Pradhan Mantri Gram Sadak Yojana (PMGSY) – Target of connecting the eligible and feasible habitations advanced from 2022 to 2019 with 97% of such habitations already being provided with all-weather connectivity. 30,000 KM of PMGSY roads have been built using Green Technology, Waste Plastic and Cold Mix Technology, thereby reducing carbon footprint. 1,25,000 KM of road length to be upgraded over the next five years under PMGSY III with an estimated cost of Rs. 80,250 crores.
- Pradhan Mantri Gramin Digital Saksharta Abhiyan – Over 2 Crore Rural Indians made digitally literate. Internet connectivity in local bodies in every Panchayat under Bharat-Net to bridge rural-urban divide. Universal Obligation Fund under a PPP arrangement to be utilized for speeding up Bharat-Net.
- Pradhan Mantri Matsya Sampada Yojana (PMMSY) – A robust fisheries management framework is to be established through PMMSY by the Department of Fisheries to address critical gaps in the value chain including infrastructure, modernization, traceability, production, productivity, post-harvest management, and quality control.
- Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship (ASPIRE) – 80 Livelihood Business Incubators (LBIs) and 20 Technology Business Incubators (TBIs) to be setup in 2019-20. 75,000 entrepreneurs to be skilled in agro-rural industry sectors
- Scheme of Fund for Upgradation and Regeneration of Traditional Industrie (SFURTI) – Common Facility Centres (CFCs) to be setup to facilitate cluster-based development for making traditional industries more productive, profitable and capable for generating sustained employment opportunities. 100 new clusters to be setup during 2019-20 with special focus on Bamboo, Honey and Khadi, enabling 50,000 artisans to join the economic value chain.
- Swachh Bharat Abhiyan – 9.6 crore toilets constructed since Oct 2, 2014. More than 5.6 lakh villages have become Open Defecation Free (ODF). Swachh Bharat Mission to be expanded to undertake sustainable solid waste management in every village.
- Ujjwala Yojana and Saubhagya Yojana have transformed the lives of every rural family, dramatically improving ease of their living.
3. India’s water security – Jal Shakti
- New Jal Shakti Mantralaya to look at the management of our water resources and water supply in an integrated and holistic manner
- Jal Jeevan Mission to achieve Har Ghar Jal (piped water supply) to all rural households by 2024.
- To focus on integrated demand and supply side management of water at the local level.
- Convergence with other Central and State Government Schemes to achieve its objectives.
- 1592 critical and over exploited Blocks spread across 256 District being identified for the Jal Shakti Abhiyan.
- Compensatory Afforestation Fund Management and Planning Authority (CAMPA) fund can be used for this purpose.
4. Urban India
- Pradhan Mantri Awas Yojana – Urban (PMAY-Urban) – Over 81 lakh houses with an investment of about Rs. 4.83 lakh crores sanctioned of which construction started in about 47 lakh houses. Over 26 lakh houses completed of which nearly 24 lakh houses delivered to the beneficiaries. Over 13 lakh houses so far constructed using new technologies.
- More than 95% of cities have been declared Open Defecation Free (ODF).
- Around 1 crore citizens have downloaded Swachhata App.
- Target of achieving Gandhiji‟s resolve of Swachh Bharat to make India ODF by 2nd October 2019. To mark this occasion, the Rashtriya Swachhta Kendra to be inaugurated at Gandhi Darshan, Rajghat on 2nd October 2019.
- Gandhipedia being developed by National Council for Science Museums to sensitize youth and society about positive Gandhian values.
- Railways to be encouraged to invest more in suburban railways through SPV (Special Purpose Vehicles) structures like Rapid Regional Transport System (RRTS) proposed on the Delhi-Meerut route.
- Proposal to enhance the metro-railway initiatives by: Encouraging more PPP initiatives, Ensuring completion of sanctioned works & Supporting transit-oriented development (TOD) to ensure commercial activity around transit hubs.
- 400 crores to be provided for “World Class Institutions” for FY 2019-20.
- A television program proposed exclusively for and by start-ups, within the DD bouquet of channels.
- Draft legislation to set up Higher Education Commission of India (HECI), to be presented in Parliament.
- Khelo India Scheme to be expanded with all necessary financial support.
- National Research Foundation (NRF) proposed – To fund, coordinate and promote research in the country; To assimilate independent research grants given by various Ministries; To strengthen overall research eco-system in the country; This would be adequately supplemented with additional funds.
- National Sports Education Board for development of sportsperson to be set up under Khelo India, to popularize sports at all levels
- New National Education Policy to be brought which will proposes – Major changes in both school and higher education & Better Governance systems; Greater focus on research and innovation.
- Regulatory systems of higher education to be reformed to promote greater autonomy & to focus on better academic outcomes.
- A set of 4 labour codes proposed, to streamline multiple labour laws to standardize and streamline registration and filing of returns.
- Stand-Up India Scheme to be continued for the period till 2020-25. Banks to provide financial assistance for demand-based businesses.
- “Study in India” – to bring foreign students to study in Indian higher educational institutions.
- Prepare youth for overseas jobs, focus to be increased on globally valued skill-sets including language training, AI (Artificial Intelligence), IoT (Internet of Things), Big Data, 3D Printing, Virtual Reality and Robotics.
- Approach has to from shift from women-centric-policy making to women-led initiatives and movements.
- A Committee proposed with Government and private stakeholders for moving forward on Gender budgeting.
- SHG: Women SHG interest subvention program proposed to be expanded to all districts; Overdraft of Rs. 5,000 to be allowed for every verified women SHG member having a Jan-Dhan Bank Account; One woman per SHG to be eligible for a loan up to Rs. 1 lakh under MUDRA Scheme.
7. Micro, Small & Medium Enterprises
- Pradhan Mantri Karam Yogi Maandhan Scheme – Pension benefits to about 3 crore retail traders & small shopkeepers with annual turnover less than Rs. 1.5 crore. Enrollment for the same to be kept simple requiring only Aadhaar, Bank account and a Self-declaration.
- Rs 350 crores allocated for FY 2019-2020 for 2% interest subvention (on fresh or incremental loans) to all GST-registered MSMEs, under the Interest Subvention Scheme for MSMEs.
- Payment platform for MSMEs to be created to enable filing of bills and payment thereof, to eliminate delays in government payments.
8. Transport Sector
- India’s first Indigenously developed payment ecosystem for transport to be based on National Common Mobility Card (NCMC) standards, launched in March 2019.
- Rs. 50 lakh crore investment needed in Railway Infrastructure during the period of 2018-2030.
- 657 KM of Metro Rail network has become operational across the country.
- Additional Income tax deduction of Rs. 1.5 lakhs on interest paid on electric vehicle loans.
- Four times increase in next four years estimated in the cargo volume on Ganga, leading to cheaper freight and passenger movement and reducing the import bill.
- Inter-operable transport card runs on RuPay card and would allow the holders to pay for bus travel, toll taxes, parking charges, retail shopping etc.
- A massive push given to all forms of physical connectivity through – (i) Pradhan Mantri Gram Sadak Yojana (ii) Industrial Corridors, Dedicated Freight Corridors (iii) Bhartamala and Sagarmala projects, Jal Marg Vikas and UDAN Schemes.
- Under Jal Marg Vikas Project, Navigational capacity of Ganga to be enhanced via multi modal terminals at Sahibganj and Haldia and a navigational lock at Farakka by 2019-2020.
- An outlay of Rs. 10,000 crores for 3 years approved for Phase-II of FAME Scheme.
- Policy interventions to be made for the development of Maintenance, Repair and Overhaul (MRO), to achieve self-reliance in aviation segment.
- Public-Private-Partnership proposed for development and completion of tracks, rolling stock manufacturing and delivery of passenger freight services.
- Regulatory road-map for making India a hub for aircraft financing and leasing activities from Indian shores is to be laid by the Government.
- State road networks to be developed in 2nd phase of Bharatmala project.
- An upfront incentive proposed on purchase and charging infrastructure to encourage faster adoption of Electric Vehicles.
- Power to be made available at affordable rates to states ensured under “One Nation, One Grid”.
- Blueprints to be made available for gas grids, water grids, i-ways, and regional airports.
- Cross subsidy surcharges, undesirable duties on open access sales or captive generation for industrial and other bulk power consumers to be removed under Ujjwal DISCOM Assurance Yojana (UDAY).
- High Level Empowered Committee (HLEC) recommendations to be implemented for the retirement of old & inefficient plants. Low utilization of gas plant capacity due to paucity of Natural Gas to be addressed.
- National Highway Programme to be restructured to ensure a National Highway Grid using a financeable model.
- Package of power sector tariff and structural reforms to be announced soon.
- Reform measures to be implemented to promote rental housing.
- Model Tenancy Law to be finalized and circulated to the states.
- Joint development and concession mechanisms to be used for public infrastructure and affordable housing on land parcels held by the Central Government and CPSEs.
- An additional deduction up to Rs. 1.5 lakhs for interest paid on loans borrowed up to 31st March 2020 for purchase of house valued up to Rs. 45 lakhs.
- Overall benefit of around Rs. 7 lakhs over loan period of 15 years.
11. Capital Markets
- Cumulative resources garnered through new financial instruments like Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs) as well as models like Toll-Operate-Transfer (ToT) exceed Rs. 24,000 crores.
- Foreign Portfolio Investors (FPIs) to be permitted to subscribe to listed debt securities issued by ReITs and InvITs.
- Union Government to organize an annual Global Investors Meet in India, using National Infrastructure Investment Fund (NIIF) as an anchor to get all three sets of global players (pension, insurance and sovereign wealth funds).
- Government to supplement efforts by RBI to get retail investors to invest in government treasury bills and securities, with further institutional development using stock exchanges.
- Know Your Customer (KYC) norms for Foreign Portfolio Investors to be made more investor friendly.
- Measures to deepen bond markets: (i) Stock exchanges to be enabled to allow AA rated bonds as collaterals. (ii) User-friendliness of trading platforms for corporate bonds to be reviewed.
- Measures to enhance the sources of capital for infrastructure financing: (i) Credit Guarantee Enhancement Corporation to be set up in 2019-2020. (ii) Action plan to be put in place to deepen the market for long term bonds with focus on infrastructure. (iii) Proposed transfer/sale of investments by FIIs/FPIs (in debt securities issued by IDFNBFCs) to any domestic investor within the specified lock-in period.
- Measures to make India a more attractive FDI destination: (i) FDI in sectors like aviation, media (animation, AVGC) and insurance sectors can be opened further after multi-stakeholder examination. o Insurance Intermediaries to get 100% FDI. (ii) Local sourcing norms to be eased for FDI in Single Brand Retail sector.
- New Space India Limited (NSIL), a PSE, incorporated as a new commercial arm of Department of Space.
- NRI – Portfolio Investment Scheme Route is proposed to be merged with the Foreign Portfolio Investment Route.
- SEBI to consider raising the threshold for minimum public shareholding in the listed companies from 25% to 35%.
- Social stock exchange: (i) Electronic fund-raising platform under the regulatory ambit of SEBI. (ii) Listing social enterprises and voluntary organizations. o to raise capital as equity, debt or as units like a mutual fund.
- Statutory limit for FPI investment in a company is proposed to be increased from 24% to sectoral foreign investment limit. Option to be given to the concerned corporate to limit it to a lower threshold.
- To tap the benefits of the Research & Development carried out by ISRO like commercialization of products like launch vehicles, transfer to technologies and marketing of space products.
12. Direct Taxes
- The tax rate reduced to 25% for companies with annual turnover up to Rs. 400 crores.
- Surcharge increased on individuals having taxable income from Rs. 2 crores to Rs. 5 crores and Rs. 5 crores and above.
- India’s Ease of Doing Business ranking under the category of “paying taxes” jumped from 172 in 2017 to 121 in the 2019.
- Direct tax revenue increased by over 78% in past 5 years to Rs. 11.37 lakh crore.
13. Tax Simplification and Ease of living
Making compliance easier by leveraging technology:
- Interchangeability of Aadhaar & PAN – Those who don’t have PAN can file tax returns using Aadhaar. Aadhaar can be used interchangeably wherever PAN is required.
- Pre-filling of Income-tax Returns for faster, more accurate tax returns – Pre-filled tax returns with details of several incomes and deductions to be made available. Information to be collected from Banks, Stock exchanges, mutual funds etc.
- Faceless e-assessment – Faceless e-assessment with no human interface to be launched.
- Other Direct Tax measures – Simplification of tax laws to reduce genuine hardships of taxpayers
- Higher tax threshold for launching prosecution for non-filing of returns
- Appropriate class of persons exempted from the anti-abuse provisions of Section 50CA and Section 56 of the Income Tax Act.
- Capital gains exemptions from sale of residential house for investment in start-ups extended till Financial Year 2021.
- “Angel tax” issue resolved – Start-ups and investors who file requisite declarations and providing information in their returns not to be subjected to any kind of scrutiny in respect of valuations of share premiums.
- Funds raised by start-ups to not require scrutiny from Income Tax Department – E-verification mechanism for establishing identity of the investor and source of funds.
- Special administrative arrangements for pending assessments and grievance redressal – No inquiry in such cases by the Assessing Officer without obtaining approval of the supervisory officer.
- There will be no scrutiny of valuation of shares issued to Category-II Alternative Investment Funds.
15. Indirect Taxes
Make in India
- A 5% Basic Customs Duty to be imposed on imported books.
- Basic Customs Duty increased on cashew kernels, PVC, tiles, auto parts, marble slabs, optical fibre cable, CCTV camera etc.
- Custom duty on gold and other precious metals increased.
- Customs duty reduced on certain raw materials such as Inputs for artificial kidney and disposable sterilised dialyser and fuels for nuclear power plants etc. Capital goods required for manufacture of specified electronic goods. 8 Defence
- Defence equipment not manufactured in India exempted from basic customs duty & other Indirect Tax provisions
- End use-based exemptions on palm stearin, fatty oils withdrawn.
- Withdrawal of exemptions from Custom Duty on certain electronic items now manufactured in India.
- Withdrawal of exemptions to various kinds of papers.
- Export duty to be rationalised on raw and semi-finished leather.
- Increase in Special Additional Excise Duty and Road and Infrastructure Cess each by Rs. 1 per litre on petrol and diesel.
- Legacy Dispute Resolution Scheme for quick closure of pending litigations in Central Excise and Service tax from pre-GST regime.
16. India’s Soft Power
- There is a proposal to consider issuing Aadhaar Card for NRIs with Indian Passports on their arrival without waiting for 180 days.
- Mission to integrate traditional artisans with global markets proposed, with necessary patents and geographical indicators.
- 18 new Indian diplomatic Missions in Africa approved in March 2018, out of which 5 already opened. Another 4 new Embassies intended in 2019-20.
- Proposing the revamping of Indian Development Assistance Scheme (IDEAS).
- 17 iconic Tourism Sites being developed into model world class tourist destinations.
- Present digital repository aimed at preserving rich tribal cultural heritage, to be strengthened.
17. Banking and Financial Sector
- Non Performing Assets (NPAs) of commercial banks reduced by over Rs. 1 lakh crore over the last year.
- Record recovery of over Rs. 4 lakh crores effected over the last four years.
- Provision coverage ratio at its highest in seven years.
- Domestic credit growth increased to 13.8%.
- Measures related to PSBs: Rs.70,000 crores proposed to be provided to PSBs to boost credit. PSBs to leverage technology, offering online personal loans and doorstep banking, and enabling customers of one PSBs to access services across all PSBs. Steps to be initiated to empower account holders to have control over deposit of cash by others in their accounts. Reforms to be undertaken to strengthen governance in PSBs.
- Measures related to NBFCs: Proposals for strengthening the regulatory authority of RBI over NBFCs to be placed in the Finance Bill. Creating a Debenture Redemption Reserve will be done away with to allow NBFCs to raise funds in public issues. Steps to be taken to allow all NBFCs to directly participate on the TReDS platform.
- RBI to be the regulatory authority for Housing Finance companies. National Housing Bank (NHB) no longer the regulatory authority.
- Rs 100 lakh crores investment in infrastructure intended over the next five years. Committee proposed to recommend the structure and required flow of funds through development finance institutions.
- Steps to be taken to separate the NPS (National Pension Scheme) Trust from PFRDA.
- Proposed reduction in Net Owned Fund requirement from Rs. 5,000 crores to Rs. 1,000 crores to facilitate on-shoring of international insurance transactions, also enable opening of branches by foreign reinsurers in the International Financial Services Centre.
18. Measures related to CPSEs
- A target of Rs. 1, 05,000 crore of disinvestment receipts set for the FY 2019-2020. Government to reinitiate the process of strategic disinvestment of Air India, and to offer more CPSEs for strategic participation by the private sector.
- Government is to undertake strategic sale of PSUs and continue to consolidate PSUs in the non-financial space.
- Government is to consider going to an appropriate level below 51% in PSUs where the government control is still to be retained, on case to case basis.
- Present policy of retaining 51% Government stake to be modified to retaining 51% stake inclusive of the stake of Government controlled institutions.
- Retail participation in CPSEs to be encouraged.
- To provide additional investment space: Government to realign its holding in CPSEs § Banks to permit greater availability of its shares and to improve depth of its market. o Government to offer an investment option in ETFs on the lines of Equity Linked Savings Scheme (ELSS). Government to meet public shareholding norms of 25% for all listed PSUs and raise the foreign shareholding limits to maximum permissible sector limits for all PSU companies which are part of Emerging Market Index.
- Government to raise a part of its gross borrowing program in external markets in external currencies. This will also have beneficial impact on demand situation for the government securities in domestic market.
- A New series of coins of One Rupee, Two Rupees, Five Rupees, Ten Rupees and Twenty Rupees, easily identifiable to the visually impaired persons to be made available for public use shortly.
19. Digital Payments
- A Tax deducted at source (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 crores shall offer low cost digital modes of payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers as well as merchants.
20. Mega Investment in Sunrise and Advanced Technology Areas
- Scheme to invite global companies to set up mega-manufacturing plants in areas such as Semi-conductor Fabrication (FAB), Solar Photo Voltaic cells, Lithium storage batteries, Computer Servers, Laptops, etc
- Investment linked income tax exemptions to be provided along with indirect tax benefits.
This was all from us in this blog of “Union Budget 2019 Summary”. We hope that you like it and will also benefit from it.