Union Budget of 2019–20 has sparked new hopes in the long stressed financial market in India. Nirmala Sitharaman, Hon’ Minister of Finance, released her 10-point vision on July 5, 2019. The vision will ameliorate capital and financial market conditions and drive India out of NPA and NBFC crisis.
1. Building physical and social infrastructure;
2. Digital India reaching every sector of the economy;
3. Pollution free India with green Mother Earth and Blue Skies;
4. Make in India with particular emphasis on MSMEs, Start-ups, defence manufacturing, automobiles, electronics, fabs and batteries, and medical devices;
5. Water, water management, clean Rivers;
6. Blue Economy;
7. Space programmes, Gaganyan, Chandrayan and Satellite programmes;
8. Self-sufficiency and export of food-grains, pulses, oilseeds, fruits and vegetables;
9. Healthy society — Ayushman Bharat, well-nourished women & children. Safety of citizens;
10. Team India with Jan Bhagidari. Minimum Government Maximum Governance.
Key Budget Documents
The list of Budget documents presented at the parliament includes-
1. Annual Financial Statement -
2. Demand for Grants
3. Finance Bill
4. Statements mandated under Fiscal Responsibility and Budget Management Act,2003:
(1) Macro-Economic Framework Statement
(2) Medium-Term Fiscal Policy cum Fiscal Policy Strategy Statement
5. Expenditure Budget
6. Receipt Budget
7. Expenditure Profile
8. Budget at a Glance
9. Memorandum explaining the provisions in the Finance Bill
10. Outcome Budget.
Aggregates of Budget
Fiscal Deficit is the difference between the Revenue Receipts plus Non-debt Capital Receipts (NDCR) and the total expenditure. FD is reflective of the total borrowing requirements of Government. Revenue Deficit refers to the excess of revenue expenditure over revenue receipts. Effective Revenue Deficit is the difference between Revenue Deficit and Grants for Creation of Capital Assets. Primary Deficit is measured as Fiscal Deficit less interest payments.
Key Features of Budget (Development and Future Policies)
Infrastructure Development:-
1. Bharatmala phase 2 to be launched. State road networks to be developed.
2. Developed world’s third largest aviation market
3. Under UDAAN scheme, number of operational airports have crossed 100
4. Jal Marg Vikas Project and Sagarmala initiatives to improvise logistics, reduce transportation cost and icrease competitiveness
5. 657 km Metro rail network is operational. National common mobility card is launched.
6. Model Tenacy law to be finalised in order to promote rental housing.
Measures to boost infrastructure financing:-
1. Credit Gurantee Enhancement Corporation to be setup in 2019–20.
2. Action Plan to deepen long-term bond markets
3. To permit transfer of FII/FPI investment in debt securities issued by IDF-NBFC to domestic investors.
Industrial Development:-
1. Interest Subvention Scheme for MSMEs
2. Payment platform for bill filing for MSMEs will be created
3. Changes in custom Duties to promote Make In India
4. Exclusive TV Channels for startups
5. FAME Scheme Phase-2 commenced for Electric Vehicles
6. Income Tax deduction of interest on loans for e-vehicle purchase
Tax Reforms:-
1. A scheme of faceless e-assessment involving no human interface will be launched this year.
2. Aadhar and PAN Card to be used interchangeably
3. Threshold for applicability of lower corporate tax rate of 25% increased from ₹250 crore to ₹400 crore.
4. Enhanced interest deduction up to ₹3.5 lakh for purchase of an affordable house.
5. Deposit taking and systemically important non-deposit taking NBFCs can now pay tax in the year they receive interest for certain bad or doubtful debts.
6. No charges or MDR on specified digital mode of payments. These modes are to be compulsorily provided by large businesses.
Other Schemes:-
1. Pradhan Mantri Laghu Vyapaari Mann-Dhan Yojana (PMLVMY) — Pension benefits to around 3 crore retail traders and small shopkeepers with annual turnover less than ₹1.5 crore.
2. National Research Foundation to be established to fund, coordinate and promote R&D
3. National Sports Education Board to be setup under Khelo India.
4. To prepare youth for new age skills: Artificial Intelligence, IoT, Big Data, 3D Printing, Virtual Reality etc.
Future Of India
1. With a mandated increase in Provision Coverage Ratio, Banks have seen a certain dip in their profits in last quarter after marginal profit in December 2018 Quarter. But NPAs have slid for the fourth straight quarter in Q4 of FY2019. Credit Enhancement Corporation is expected to reinvigorate the banking sector of India.
2. Automobile Sector which has hit a rough patch in last 11 months is expected to come out of the mud. Bharat VI emission norms, election-related uncertainty and liquidity freeze were the major cause. Now that, a decisive macro-policy framework is in place and monsoon is round the corner the sector is expected to see a new boost.
3. Disruption in decision making process on account of State and central elections dampened finalization and execution of orders on the Capital Goods front. Liquidity crisis and delayed onset of summer caused a dip in electric consumer durables in Q4 of FY2019. Completion of the election and return of the NDA Government will ensure continuity of policies. With cuts in taxes for certain electric durables, efforts to improvise road and rail network and improved credit growth will cause the sector to see much-required boost.
4. Cement Industry and Cement Products Industry is also expected to grow in near future owing to increased focus on affordable and better housing, demand for high value added Boards & panels and attention to premium housing projects. This will help in reinvigorating much stressed cement product industry.
5. NITI aayog is expected to promoted Research facilities and make room for emerging tech.
References
Union Budget 2019–20 — https://www.indiabudget.gov.in/
