Watch | Key highlights from Finance Minister Nirmala Sitharaman's Budget speech
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Good Morning Dear Readers and welcome to our exhaustive coverage of Budget 2019, which comes in the backdrop of falling employment, farm distress, tepid growth and a liquidity crisis in the NBFC space.
Globally, too, things are not looking that great with trade wars, rising crude oil prices, growth slump, and an overall fall in key economic indicators. But it’s not all gloom. With the Modi government winning the recently held general elections with a decisive mandate, expectations are
Finance Minister Nirmala Sitharaman will present her first Union Budget shortly. The mandate for this year is steep as Sitharaman will have to kickstart India's economy by reviving consumption amid the beginnings of a global slowdown, the NBFC liquidity crisis and bolster farmers' income in a delayed monsoon.
- NPS Trust will be separated from Pension Fund Regulatory and Development Authority (PFRDA)
- PAN and Aadhaar made interchangeable, allowing those who
do not have PAN to file return
- Pre-filled tax returns to contain information from salaries, bank interest, capital gain and dividend income to be made available
- Surcharge on individuals having taxable income of Rs 2 crore to Rs 5 crore, and Rs 5 crore and more raised
- Lower 25 percent corporate tax will apply on companies with up to Rs 400 crore turnover, covering 99.3 percent of corporate India
- Simplified return form for GST registered businesses in the offing
- Basic customs duty on auto parts, optical fibres, digital camera, cashew, certain synthetic rubber, vinyl flooring hiked
- Customs duty exempted on components of specified electronic goods
- Customs duty on certain parts of electric vehicles removed
- Cess on petrol, diesel raised by Re 1 per litre; customs duty on gold raised to 12.5 percent from 10 percent
- A nominal basic excise duty imposed on tobacco- Proposes Legacy Dispute Resolution scheme to solve litigations in service tax and excise
Finance minister to do a tightrope walk in Budget 2019-20
Budget 2019 is likely to offer a mini-stimulus to take the economy out of five-year low, at the same time offering some tax relief to common man. This while balancing the needs of the economy and fiscal constraints.
So, here’s what one can reasonably expect:
1. Expect measures to boost spending at the cost of short-term slippage in fiscal deficit targets.
2. Finance Minister Nirmala Sitharaman will most likely lay down the Modi 2.0 government's road map for the economy and the nation in the next five years.
3. Offer some relief to the common man by raising personal income tax threshold for certain categories
4. Raise spending on agriculture, healthcare and social sectors.
5. The Budget may see a big push for infrastructure spending including roads and railways to drive growth
6. The FM may choose to offer stimulus via a combination of capital infusion in public sector banks, removing roadblocks that have crept into the Insolvency & Bankruptcy Code (IBC) process, providing liquidity to non-bank financial companies (NBFCs), addressing the agrarian crisis and stepping up allocations for infrastructure and social sectors
Finance Minister used a bahi khata (ledger) to carry the Budget papers instead of the traditional briefcase today. On that, news agency ANI has quoted Chief Economic Advisor (CEA) KV Subramanian as saying: “It is in Indian tradition. It symbolizes our departure from slavery of Western thought.”
The Har Ghar Jal scheme could be Modi’s ticket to 2024
Key takeaways
Analysis of the tax on super-rich individuals
Part 2 of the Speech - Taxation
For India's youth
Measures for Urban India
FM Nirmala Sitharaman begins Budget speech
Budget briefcase trivia 2
Budget briefcase trivia 1
Expect announcements on strategic sale of PSUs
Economic Survey 2019 highlights
Constraining factors
Here’s what to expect
Will these 3 words dominate Budget 2019?
Replication of Interim Budget: HDFC Bank
Watch | Key highlights from Finance Minister Nirmala Sitharaman's Budget speech
Congress leader P Chidambaram's opening statement on the Budget.
Opening statement of P. Chidambaram pic.twitter.com/w2GRXZes7m
— P. Chidambaram (@PChidambaram_IN) July 5, 2019
The Har Ghar Jal scheme could be Modi’s ticket to 2024
The Har Ghar Jal programme is going to be a challenge like no other. When Modi proposed Swachh Bharat it seemed like a very ambitious one, and, though the government claims to have built 9.6 crore toilets and that 95 per cent of cities are open defecation free (ODF), in its true sense there is a long way to go before India can be declared ODF.
This is because infrastructure is only one part of the problem. Behavioural changes need to follow and it takes time for the wheel to turn.
Water supply is an altogether different ballgame.
Click here to read more.
The Budget unveiled by the first full-time woman Finance Minister of India reminded me of a recent quote of Joseph Stiglitz from his article on progressive capitalism.
Stiglitz has said: “Reversing the malaise (of neoliberal policies) requires that we figure out what went wrong and chart a new course forward, by embracing progressive capitalism, which, while acknowledging the virtues of the market, also recognises its limitations and ensures that the economy works for the benefit of everyone.”
Nirmala Sitharaman’s Budget has been a step in this direction.
Rupa Rege Nitsure, Group Chief Economist, L&T Financial Services shares her thoughts on the Union Budget in A prudent and progressive Budget: FM steps up to the challenge
Biocon managing director Kiran Mazumdar Shaw gave full marks to the finance minister for the Budget that was presented on July 5. Read more: Budget is holistic, say tech industry leaders
Ayushman Bharat, launched in 2018, provides health insurance cover to almost 40 percent of India’s population, benefitting 100 million families which aims to provide a coverage of Rs 5 lakh per family annually. Read more: Ayushman Bharat gets Rs 6400 crore in 2019-20
It is estimated that 45,000 international students study in higher education institutes across India. The Budget proposal is expected to give a boost to these numbers, with a likely thrust on education infrastructure and focus on research will attract more number of foreign students to India. Read more: ‘Study in India’ will be promoted through a mix of easier entry, better facilities
“The Finance Minister’s maiden Union Budget is growth focussed and builds on the foundation that the government created in the last term. The sops announced in the affordable housing segment is a welcome move not just for home seekers but also for builders, banks and HFCs. The focus on infrastructure, entrepreneurs, small businessmen and medium sized companies through the various announcements is positive news for the economy. The Finance Ministry’s move to discourage cash payments will help expand the digital payment ecosystem bringing in more consumer convenience and accountability.” Chandra Shekhar Ghosh, MD and CEO, Bandhan Bank.
Now, gifts of any kind – namely shares, property, vouchers, cash etc exceeding Rs 50,000 made to anyone apart from the specified relatives or blood relations would be taxed in the hands of the NRI, except if a double taxation treaty prohibits the same.
Read more: Gift tax loophole plugged for NRIs
Markets, however, did not receive the budget very well and most of the sectors ended lower. Read more: Here are how much sectors got from the Budget
“The Union Budget reiterates the Government’s intent to accelerate digitisation in the economy. Incentivising digital transactions through measures such as a 2 percent levy on cash withdrawals from bank accounts above a cumulative one crore per annum threshold and reduced merchant discount rates can structurally change adoption levels. Additionally, encouraging measures for start-ups should boost digital entrepreneurship as well as efforts to increase digital literacy particularly in rural India will strengthen the Digital India transformation process.” Surojit Shome, CEO DBS Bank India.
All the tax sops, including the rebate for income earned up to Rs 5 lakh, which were announced in the interim Budget in February 2019, were accepted. However, the super-rich will have to pay more, by way of an increase in surcharge.
Read more: Budget 2019 for the tax payer
