Date: 5th July 2019
Piyush Goyal, the then acting Finance Minister, had presented the Interim Union Budget of India for the year 2019 on 1st February 2019. The notable highlights of the budget were the government’s introduction of the Pradhan Mantri Kisan Samman Nidhi and Pradhan Mantri Shram Yogi Mandhan. After the landslide victory in the May 2019 polls, the government has decided to present its final budget on 5th July 2019.
Before the Budget presentation in the parliament, the Department of Economic Affairs of the Finance Ministry presents the Economic Survey in Parliament every year a day before the Union Budget. Some of the key highlights from the Economic Survey are as follows:
- The center predicts seven percent GDP growth in FY20 if there are stable macro-economic conditions.
- It also has estimated that the growth rate for agriculture, forestry, and fishing sectors in FY20 would be provisionally around 2.9 percent.
- As compared to the 6.4 percent fiscal deficit in FY18, the fiscal deficit would be at 5.8 percent in FY19.
- We need an 8% growth in the economy to reach $5 trillion in the coming 5 years.
Nirmala Sitharaman, the Acting Finance Minister in the Modi Government, presented the budget on Friday 5th July 2019. The notable feature in the budget presentation was the aesthetics used for the budget document. Traditionally since colonial times, the briefcase has been used to present the budget, but Nirmala Sitharaman had broken the stereotype by submitting the budget documents draped in a four-fold red cloth called a ‘bahi-khata’ (ledger). CEA Krishnamurthy Subramanian said that the government is following “Indian Tradition” by switching from the briefcase to the red cloth.
The key takeaways from the budget presented today are noted below.
- Govt proposes to include solid waste management in every village in the Swachch Bharat program.
- Government has proposed to streamline various labor laws into a set of four labor codes.
- To liberalize FDI in aviation, media, animation and insurance intermediaries.
- Banks which are run by the State to get Rs 70,000 crore capital to boost credit.
- Fundamentally strong NBFCs to keep getting funding from banks and mutual funds.
- Debt securities issued by NBFCs will be open to FIIs and FPIs for investment.
- The government proposes to set up NRF(National Research Foundation) to finance, organize, and to encourage research in the country.
- PAN and Aadhaar made interchangeable, allowing those who do not have PAN to file the return.
- Individuals whose taxable income falls in the Rs 2 crore to Rs 5 crore, and Rs 5 crore bracket will have their Surcharge raised by around 3% and 7%, respectively.
The budget is sound, but expectations are for bolder reforms provided the mandate received by the government. The markets did not take the budget pleasantly. The Sensex tanked 395 points as Union Budget fails to impress Dalal Street; Nifty also took a deep dive of 135 points but barely managed to hold above 11,800.
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