Finance Minister Piyush Goyal is expected to present on February 1 a populist Budget for 2019-20 as the Bharatiya Janata Party (BJP)-led government makes a last-ditch attempt to woo voters ahead of the general elections
Prime Minister Narendra Modi-led National Democratic Alliance (NDA) government's sixth and final budget before the polls due in April-May is supposed to be an interim budget or a Vote on Account. Finance Minister Piyush Goyal is expected to present on February 1 a populist Budget for 2019-20 as the Bharatiya Janata Party (BJP)-led government makes a last-ditch attempt to woo voters ahead of the general elections.
The Budget will seek Parliament's nod for spending for four months till a new government is sworn-in and comes a day ahead of dismal job growth in 2017-18. Goyal is standing in for Arun Jaitley who is in the US for health reasons.
Here are 10 important figures that one should take note of in Budget 2019:
FY19 fiscal deficit: Analysts expect the government to stick to its fiscal consolidation target, with markets keeping a close eye on the estimates of fiscal deficit — a measure of how much the government borrows to fund its expenses. However, with tax revenues expected to fall short by Rs 1.5 lakh crore than budgeted estimates, and disinvestment revenues still far lower than the targeted Rs 80,000 crore, the government also runs the risk of overshooting the 3.3 percent of GDP fiscal deficit target estimated for 2018-19.
FY20 fiscal deficit: The government is likely to stick to the fiscal deficit target of 3.2 percent of GDP for FY20, according to a recent SBI research report. "For FY20, the fiscal deficit is likely to be Rs 6.72 lakh crore, or 3.2 percent of GDP, assuming a modest 11.7 percent of nominal GDP growth," it said in a report dated January 30.
Gross borrowing figure: In a press release issued on December 26, 2018, the government said it would borrow an additional gross amount of Rs 50,000 crore from markets in FY19, taking total borrowings to Rs 6.3 lakh crore. At the time of the Union Budget 2018-19, the government had pegged gross borrowings at Rs 5.8 lakh crore.
GST collections: Revenue collection from Goods & Services Tax (GST) witnessed a substantial jump, crossing Rs 1 lakh crore mark in January from Rs 94,726 crore in December, the Finance Ministry said. The Centre has set a target of over Rs 13 lakh crore for FY19, which can only be achieved if the average monthly mop-up is around Rs 1 lakh crore, as compared with Rs 89,885 crore in 2017-18. Till date (April-January), the government has collected Rs 9.71 lakh crore revenue from GST, with the shortfall pegged at around Rs 1.4 lakh crore.
Nominal GDP assumption: The government on January 31 sharply revised its GDP growth estimates for FY18 and FY17 to 7.2 percent and 8.2 percent, making the year of demonetisation the fastest growing fiscal since 2010-11. The Ministry of Statistics and Programme Implementation pegged GDP growth during 2018-19 at 7.2 percent.
India Ratings and the International Monetary Fund (IMF) expects the Indian economy to grow at 7.5 percent in FY20, a pace similar to the Centre’s growth projection for the current financial year. However, ratings agency Crisil expects a tad lower figure at 7.3 percent “on assumptions of normal rains, oil prices lower than 2018 and stable political outcome.”
Allocation to the farm sector: The Finance Minister is likely to announce some form of direct cash transfer to farmers after the BJP’s dismal performance in three state elections – Rajasthan, Madhya Pradesh and Chhattisgarh. The package could involve a transfer of Rs 12,000 annually to all small and marginal farmer households, The Financial Express reported. The scheme could reportedly involve a flat cash transfer to all identified beneficiaries similar to Odisha's Kalia scheme, and not based on a per-acre basis like Telangana's Rythu Bandhu scheme. There are almost 12 crore small and marginal farmer households in India, which brings the cost of this scheme to Rs 1.44 lakh crore, or 0.76 percent of the projected GDP for FY19. However, sources told PTI that the farm relief package may cost anywhere between Rs 70,000 crore to Rs 1 lakh crore.
Boost to MNREGA: In his 2018-19 Budget, Finance Minister Arun Jaitley allocated Rs 55,000 crore for Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS). Interim Budget 2019 is likely to allocate an additional Rs 5,000 crore in the revised estimates for 2018-19, reports Business Standard. Through the supplementary demand for grants it has allocated Rs 6,084 crore and the revised estimates will take the total allocation for the year to over Rs 66,000 crore, it added. For FY20, officials told the newspaper that the allocation could be more than Rs 60,000 crore, or almost Rs 5,000 crore more than budget estimates for 2018-19 but Rs 6,000 crore less than the revised estimates for FY19.
Disinvestment target: The government had set a target of Rs 80,000 crore for FY19. But only a fourth of the disinvestment target was being met by November 20, 2018. Till date, the government has raised Rs 35,100 crore from three initial public offerings: RITES, IRCON International and Garden Reach Shipbuilders. Around Rs 17,000 crore was raised from third further fund offer (FFO) of CPSE ETF and Rs 8,300 crore from Bharat 22 ETF. Also, five companies including Bharat Heavy Electricals (BHEL), Cochin Shipyard, National Aluminium Company (Nalco), NLC India and KIOCL (formerly Kudremukh Iron Ore Company) announced share buybacks during the year.
Business Standard and Reuters expect the disinvestment target for FY20 to be around Rs 80,000 crore. Some of the IPOs lined up for next year are Telecommunications Consultants India (TCIL), RailTel Corporation India (RCIL), National Seeds Corporation (NSC), Tehri Hydro Development Corporation (THDCL), Water and Power Consultancy Services (WAPCOS), FCI Aravali Gypsum and Minerals (FAGM), Kudremukh Iron Ore Company (KIOC), Garden Reach Shipbuilders, IRFC, IRCTC, among others.
Capital expenditure: India Ratings & Research expects GDP growth to be a tad higher at 7.5 percent in FY20. It sees gross fixed capital formation growing 10.3 percent in FY20. “While services are expected to grow at 8.3 percent, the industrial sector may grow at 7.4 percent in FY20. Agriculture may see milder growth of 3 percent under the normal monsoon,” it said in a recent report.
Growth in revenue receipts: The Centre’s receipts have risen just 3.4 percent YoY till November 2018 against 4.6 percent YoY growth recorded in the like-wise period last year and could fall short of its budgeted revenue target for FY19 by Rs 1,50,000 crore.Ind-Ra sees a revenue deficit of 0.5 percent in FY20 GDP due to a higher growth in revenue expenditure than in revenue receipts. On the expenditure side, it expects India's revenue expenditure to grow at 18.9 percent YoY to Rs 33.2 lakh crore in FY20, up from 11.2 percent in FY19.