Know all the details of 2019’s Interim/Maiden Budget of the Union of India
On the 31st day of May 2019, Nirmala Sitaraman was appointed the finance minister of the union of India. The principal duty of the finance minister in India is to instigate and supervise the implementation of fiscal policies in India. This duty can be exercised through the planning and presentation of the annual budget.
Once the annual budget presented by the minister for finance is approved by the parliament the same becomes the fiscal blueprint of the Union of India for the given period. In exercise of this duty, the minister is assisted by the minister for state and the deputy minister(s).
Nirmala Sitaraman on her appointment on the day and year first above mentioned steps into the shoes of the former minister and therefore expected to discharge the duties relating to the office she now occupies. In the discharge of the duties of the office which the honorable minister occupies on the 5th day of July 2019, she presented to the country an interim or alternatively a maiden budget.
The concern of this study is the Union budget as presented by the new finance minister on the 5th day of July 2019.
The Unions Budget
Before delving into the highlights of the 5th day of July 2019, it is pertinent to state that Arun Jaitley prior to the end of his appointment as the finance minister of India presented the 2019 Intermin Budget of the Union of India through Minister Piyush Goyal on the 1st day of February 2019. The budget cuts across: (a) tax proposals on private persons and business entities, (b) measures which will empower women, the poor and the economically backward class, (c) corporate/banking and agricultural reforms, and (d) pensioners beneficial pension scheme.
The highlights of the budget of the 5th day of July 2019 is as follows:
- Under the new budget, the personal income tax rate remained static.
- The budget suggested a 2 percent rate on Tax Deducted from Souce on cash withdrawals of Rupees 1 crore in a year.
- The budget sought to avail incentives for the purchase and use of electric vehicles
- The budget also sought to harmonize labour laws which are in force in India.
- The budget called for an increase in Public Sector Undertaking in the housing sector
- Public companies in operation in India will adopt a simpler KYC which means “KNOW YOUR CUSTOMER” or means of identification.
- The outright sale of the state-owned carriers or renting (leasing) while encouraging foreign participation (Foreign Direct Investment) in the Aviation, Insurance and Media sector of the Indian economy.
- The injection of Rupees 70,000 crore in the state-owned financial institutions.
- The Reserve Bank of India will be mandated to regulate and finance the housing sector.
- A minimum of Rupees 100 crore is availed for development.
- A proposed increase in the prices of petrol, diesel and gold and other pieces of jewellery.
Having stated the general highlight of the maiden budget of 5th July 2019 under the Honourable Minister for finance it further highlights some sector-specific impact or proposed policy and effect of the said budget and the area of contrast will be observed under the budget of Goyal Priyush.
The Transport Sector
- The Finance Minister while presenting the maiden budget-stressed the need for India to start making considerable revenue from the aviation industry
- Various projects and schemes in the transport sector such as The Udaan scheme, Bharatmala programme and Sagarmala will provide air connectivity, roads/highways and water/port connectivity to the common man.
- National Common Mobility Card which was introduced by the distinguished Prime minister will be put into use to harmonize and ease the payment of transport charges which includes parking charges anywhere in India.
- The revitalization of the railway station to meet up with the global railway standards. In actualizing this the minister suggested for a resort to a public-private partnership in order to ensure speedy implementation.
The Small and Medium Scale Enterprises (Start-ups)
- The approval of, and implementation of the maiden budget of 5th July 2019 the government will create a payment platform specifically for Small and Medium Scale Enterprises. The creation of this platform will afford the stakeholders/participants in the sector to file bills and process payments easily.
- The central government of India through the implementation of the maiden budget will ease the “angel tax” for startups and growing business undertakings. This will entail that the income tax department of the government will overlook the startups
- The implementation of the maiden budget if approved will ensure that pension benefits are extended to retail traders whose annual return on investment is less than Rupees 1.5 crore.
- As earlier observed the Labour laws in force in India will be harmonized into a maximum of four laws in order to create certainty and uniformity in the Indian labour laws.
- Government funded TV programmes which are solely geared towards encouraging Start-ups.
- The Government will create enabling environment which will lead to technological advancement such as the form of artificial intelligence.
The Housing and Real Estate Sector
- The budget proposed several reforms which will ultimately improve and promote rental in the housing and real estate sector.
- The laws governing the landlord and tenants relationship will be enacted and extended to the states. This will equally create uniformity in tenancy causes.
- The power sector reform under the “One nation, One grid” slogan will ensure the availability of power in both the urban and rural areas in India and at an affordable rate.
- With the approval and implementation of the maiden budget, about 1.95 crore units of houses will be provided for the citizens at an affordable rate on or before the year 2021.
- The central government offered tax rebates to investors in the real estate sector in order to stimulate the interest of the investors in this sector.
- The Reserve Bank of India will play a supervisory role over any state-owned real estate housing scheme in order to ensure that housing schemes are affordable and given to those who really need it.
Economic Empowerment for Women
- The minister informed at the presentation of the budget that various schemes will be expanded and extended to all districts to promote women.
- The budget will see to the availability of Rupees 5000 overdraft for every verified and identifiable woman under the Jan Dhan Account.
- At least one man in every SHG to be entitled to receive 1 lakh rupees under MUDRA scheme for her business.
- In addition, the former budget of February 2019 made provision of a minimum of 26 weeks of maternity leave for women.
The Education Sector
- The budget will come with new education policy, and reforms in higher education
- The government through the budget will provide funds in order to promote research in the country.
- In line with the budget, a minimum of about Rupees 400 crore will be allocated for world-class higher education institutions in Financial Year 2020.
- The National research foundation will be fully funded in order to effectively coordinate and to promote research in the country.
- A foreigner-friendly study scheme/‘Study in India’, would lead to bringing foreign students to India especially in the higher education institutes.
The Rural Areas in India
- The rural districts of Gaon, Garib and Kisan are adjudged to be the focus of the government.
- The minister of Finance insisted on the budget and at the presentation that the ease of doing business and ease of living should extend to farmers too.
- The New Jal Shakti ministry will work with states to ensure Har Ghar Jal for all rural houses before 2024
- Pradhan Mantri Gram Sadak Yojana phase 3 is envisaged to upgrade 1,25,000 km of road length over the next 5 years
- The government will set up 100 new clusters for 50,000 artisans in Financial Year 2020
- The budget will promote zero Budget farming
- The budget is aimed at encouraging the investors in the National Pension System (NPS) of India. On coming into force of the budget of 5th July 2019 lump sum withdrawals at the time of maturity from the NPS investment plan will enjoy tax-exemption. The NPS only permits the investors to withdraw 60 per cent of their investment upon maturity and the 40 per cent by the operation of law is compulsorily reinvested (annuity).
- Private persons whose taxable income is not above the sum of Rupees 5 lakh for the Financial Year 2019-20 are already under the tax exemption in previous budgets and will continue to enjoy same under this budget.
- In order to promote cashless economy, the budget imposes a 2 per cent tax on persons or companies that withdraw more than Rupees 1 Crore in cash.
- The compulsory practice of notional rent will be abolished if the budget is approved by the parliament whereas under the budget of February the tax exemption was for two years.
- This budget will impose a tax on gifts and items received by non-resident Indian(s) from the resident Indian(s).
- Where individuals or Hindu Undivided Family engages the services of a contractor and the contractor is to be paid the sum exceeding Rupees 5o lakhs, the person or HUF is entitled to withdraw 5 percent of the entire sum paid to such contractor
The budget of 5th July 2019 is far from addressing the rising economic realities of India. Notwithstanding the budget, if well implemented will occasion enviable growth and well-received development in the areas of housing and real estate, the zero-budget farming under the agricultural sector/MSME and the stimulation of Foreign participation in the Indian Corporate Sector through Foreign Direct Investment in the aviation, corporate and insurance sectors.
On the other hand, the budget has received some nods of disapproval in some cases, for instance, is the inequality or lack of uniformity in corporate tax. The budget did not impose a uniform tax structure on all companies. Again the budget has been criticized as failing to make adequate provisions for defence. It is believed that with the security challenges faced by the nation, the defence if the country is pivotal to any form of economic advancement which the country may experience. In other words, all economic advancement dependent on the security standing of the Country.
Also, the budget seems to have imposed a lot of responsibility both financially and administratively on the Reserve Bank of India. With these tasks which includes various degrees of tax rebates and holidays on the RBI the government still expects a substantial payout from it. Surely it will be odious if not an impossible task for the RBI to meet up with all the mandates imposed on it in the maiden budget of 5th July 2019.
Finally, the budget may on the face of it appear to be in favour of MSME but surely it did not make a bold statement towards creating direct employment for the teaming labour force of India which till date is the biggest failure of the successive Minister of Finance.