Finance Minister Nirmala Sitharaman presents the maiden budget of the second Narendra Modi government in the Lok Sabha on July 5, 2019.
Here are the updates:
In the press conference of the Budget, Minister Nirmala Sitharaman says the government is progressively moving towards bringing in all industries under corporate tax.
As regards revenue loss, it is around ₹4,000 crore that the government has to forgo. She says that the defence Budget for the northeast has increased by 25%.
Fiscal deficit target is 3.3% of GDP, brought down from 3.4%.
She tables the Budget, medium-term fiscal policy.
The Finance Bill is introduced. The Budget speech was 2 hours 15 minutes long.
House adjourned till Monday.
On indirect taxes
17 taxes and 13 cesses became one tax under GST. In the initial phase, GST witnessed teething problems, and the Centre and States worked to make it better.
Relief of above ₹92,000 crore per year has been given. GST to be further simplified to a single monthly return.
The Minister reads out various exemptions under customs duty. Defence products not manufactured in India are exempt from basic customs duty.
Proposed to increase custom duty on gold and other precious metals from 10 % to 12.5%.
Special additional excise duty on fuel of ₹1 per liter.
"The budget from an indirect tax perspective was mostly aligned to the Government's Make in India, cleaner India and ease of business agenda. Proposal of Legacy Dispute Resolution Scheme was much sought for by industry players as most of them wanted to settle litigations of the past after stepping into the new tax era. Also, rate rationalizations for strategic goods like defence equipment, etc are as well welcome for the nation as a whole." - Abhishek Jain, tax partner, EY.
On digital payments
TDS of 2% on cash withdrawals exceeding ₹1 crore in a year from bank accounts, to discourage business payments in cash.
No charges or merchant discount rates shall be imposed on customers or the merchants. RBI and banks will absorb these costs.
Those in the highest income brackets will have to pay more surcharge for those in the ₹2-5 crore, and ₹5 crore and above, increasing the effective tax rate by 3% and 7% respectively.
Taxpayers performed their duty. She quotes from the Puranaanooru .
In direct taxes, due to a slew of efforts, the revenue has increased by over 78% to ₹11.37 lakh crore.
₹5 lakh minimum limit announced for taxpayers.
Additional deduction on loans upto March 31, 2020, for buying affordable houses giving ₹7 lakh benefit to home buyers
Lower rate of 25% so far only applicable to companies with turnover of ₹250 crore. Propose to increase this limit to companies with annual turnover of ₹400 crore. This will cover 99.3% of companies.
GST rate on electric vehicles already proposed to be lowered to 5%. Additional income tax deduction of ₹1.5 lakh on interest on loans taken to purchase electric vehicles.
To resolve the angel tax issue, startups will not be subject to any scrutiny in respect to valuation. Funds raised by startups will not require any scrutiny by the I-T department.
Period of exemption for capital gains arising from sale of house for investment in startups to be extended to March 31, 2021.
Additional deduction of ₹1.5 lakh for interest paid on loans for affordable housing borrowed upto March 31, 2020. This will come up to enhanced interest reduction of upto ₹3.5 lakh on loans for affordable homes.
PAN and Aadhaar to be interchangeable, and to allow those without PAN to file income tax by using Aadhaar number. Faceless and anonymous assessment system for income tax being rolled out this year in phases.
India’s sovereign external debt to GDP is at less than 5%.
New ₹20 coins to be made available soon. Part A concludes after 1 hour 35 minutes.
On banking and finance sector
Financial gains from cleaning up of banking sector are clearly visible. NPAs of commercial banks have come down by ₹1 lakh crore. Number of public sector banks reduced by 8, through consolidation.
₹70,000 crore recapitalisation for public sector banks.
NBFCs that are fundamentally sound should continue to get funding from banks and mutual funds. Govt will provide one-time 6-months partial credit guarantee for public sector banks, for the purchase of pooled assets of financially sound NBFCs.
The National Housing Bank is also the regulator of the housing finance sector. She proposes the regulation to be returned to the RBI. ₹100 lakh crore investment in infratructure over the next five years.
Pension Fund Regulatory Authority to be separated from the National Pension Scheme Trust.
To improve capital inflows, govt to realign its holdings in CPFCs. Strategic disinvestment of select CPFCs will continue to remain a priority.
Air India disinvestment to be reinitiated. Govt sets an enhanced target of ₹1.05 lakh crore from disinvestment.
Government's guarantee provision to PSU banks for purchase of high rated pooled assets of financially sound NBFCs will be a boost for NBFCs, currently reeling under bad loan pressure - Jiger Saiya, partner, Tax & Regulatory Services, BDO India.
On India’s soft power
She mentions the International Yoga Day as an example of India’s soft power. She proposes Aadhaar cards for NRIs with Indian passports, after their arrival in India without waiting for the mandatory 180 days.
In March 2018, govt approved opening of 18 new Indian diplomatic missions in Africa. 4 embassies to be opened in 2019-20.
17 iconic tourism sites are being developed as world-class destinations. Digital repository proposed for preserving tribal history.
In India’s growth story, particularly in the rural economy, the role of women is a sweet story.
Govt wishes to encourage and facilitate the role of women. She proposes to form a broad-based committee for gender analysis.
She cites record turnout of women voters in the recent elections. She says the Parliament has a record of 78 women MPs.
Minister proposes to expand the women SHGs interest subvention to all districts in India. For every verified woman SHG member having a Jan Dhan account, an overdraft of ₹5,000 shall be announced. One woman in every SHG will be made eligible for a loan of upto ₹1 lakh under the Mudra scheme.
On ease of living
This government aims to bring greater ease of living in the lives of its citizens.
35 crore LED bulbs have been distributed through Ujala Yojana, leading to a cost-saving of ₹18,341 crore annually. India is going to be free of incandescent bulbs.
A massive programme for railway station modernisation to be launched.
On the youth
She cites the new National Education Policy. National Research Foundation to assimilate all research grants given by different ministries independent of each other.
Massive Open Online Courses through SWAYAM has been successful, she says. She proposes the programme Study in India to bring in foreign students.
Draft legislation for setting up of Higher Education Commission will be presented later this year. 10 million youth to take up industry-relevant skill training under the Kaushal Vikas Yojana.
Multiple labour laws to be streamlined into four labour codes.
“We propose to start a TV channel, within DD's boquet of channel, just for start-ups.”
On the urban sector
Over 81 lakh houses at investment of Rs 4.83 lakh crore have been sanctioned and construction has started in about 41 lakh houses, under PMAY-Urban. More than 95% of all cities have declared themselves open defecation free.
Rashtriya Swachchta Kendra to be inaugurated at Gandhi Darshan on October 2, 2019.
Metro Rail initiatives to be enhanced by encouraging PPPs and faster completion. Dedicated freight corridor is almost complete.
Govt to support private entrepreneurs in agriculture. The Minister says the government will focus more on agricultural infrastructure.
“Ease of doing business and ease of living should apply to farmers.” She proposes zero-budget farming, as a model for farmers. “Steps such as this can help doubling farmers income.”
Zero-Budget farming is natural farming which is neither chemical-loaded nor organic with its reliance on manure. It’s a form of gardening as a self-sustainable practice with minimum external intervention. This concept of zero budget natural farming (ZBNF) was first propagated 25 years ago by Subhash Palekar as a movement for farmers who were in debt due to the Green Revolution and is now being used by a large number of farmers across the country.
She says the Jal Shakti Ministry was created by integrating many water management ministries. To all rural households by 2024, water will be supplied. Govt will explore additional funds for Jal Shakti by accessing the Compensatory Afforestation Fund management and Planning Authority fund.
9.6 crore toilets have been constructed till now. More than 5.6 lakh villages have become open-defecation free. She proposes to expand Swachch Bharat to solid waste management in every village.
Over 2 crore rural Indians have been made digitally literate.
On the rural sector
The Minister moves on to the rural portion of the Budget. “Gaon, Gareeb aur Kisan at the centre of all our policies.”
“All villages and almost 100% of houses have been provided with electricity.”
She asssures that by 2022 every single rural family, except those who are unwilling to take the connection, will have electricity and clean cooking gas.
The completion of houses has come down from 314 days per house in 2015-16 to 114 days now, she says.
The Department of Fisheries will establish a fisheries management network, says the Minister. She says the government’s rural road scheme has brought about socio-economic improvements. “All-weather connectivity has now been provided to over 97% of such habitations.” 30,000 km of roads in this cheme have been built using green technology, she says.
Under phase three of PM Gram Sadak Yojana, 1.25 lakh kms of road to be built in the next five years. Project cost estimated at over Rs 80,000 crore.
For investments and markets
Investment by FIIs and FDIs in debt securities in infrastructure debt funds to be allowed. Minimum public shareholding in listed companies can be increased from 25% to 35%, says the Minister, saying this is being considered.
A social stock exchange is proposed, for social and voluntary organisations, to raise capital, equity and debt.
Global FDIs fell to $1.3 billion from $1.5 trillion, but inflows in India remained strong at $54.37 billion, a growth of 6%.
“100% FDI for insurance intermediaries. Local sourcing norms to be eased for FDI in single-brand retail.”
Global Investors Meet to happen in India. Limit on FPI in a company increased to 24%. NRI investment in Indian capital markets is comparatively less. NRI investment to merged with FPIs.
“The proposal to let FIIs and FPIs to invest in debt securities issued by NBFC, would provide a much needed boost of capital to a sector now starving of capital; an important prop to several sectors, particularly, real estate and automobile which are reeling for lack of finance to purchasers/buyers.” - Milind Kothari, managing partner, BDO India, partner & head, Tax & Regulatory Services.
She then goes on to cite the government’s transport infrastructure schemes such as Sagar Mala, UDAN etc. “This government has given a massive push to all forms of physical connectivity. The time is right for India to enter into aircraft financing, critical for a self-reliant aviation industry.”
“Government will do a restructuring of the national highway programme. In the second phase of Bharat Mala, States will be helped to develop State highways.”
“Government envisions using rivers for cargo transport.”
The Minister proposes ₹50 lakh crore investment for Railway infrastructure between 2018 and 2030, and using public-private partnerships unleash faster development, completion of tracks, passenger freight services.
“Recommendations of high-level committee on retiring old power plants, and addressing the under-utlilisation of power plants will be taken up now. A package for power sector tariffs and reforms will be announced soon.”
The Minister proposes a modern tenancy law. Loans of upto ₹1 crore to be given to MSMEs for ease of access.
Government will create a payment platform for MSMEs to enable them to pay bills, and save time. The Government will extend pension benefits to 3 crore retail traders and shopkeepers who have a revenue of less than ₹1.5 crore. This will be called the PM Karam Yogi Maan Dhan scheme.
Lok Sabha convenes. Speaker Om Birla is in the Chair.
Finance Minister Nirmala Sitharaman begins her Budget speech.
She says that India celebrated its democracy, referring to the mandate given to this government. The first term of the Narendra Modi government, stood out as a performing government, she says.
The principles — reform, perform and transform — can work, says the Finance Minister. Between 2014 and 2019, we provided rejuvenated Centre-State dynamic, cooperative federalism, and the GST Council, she says.
Average amount spent on food security approximately doubled in 2014-19, number of patents tripled in 2017-18. “ Mazboot desh ke liye mazboot nagrik .”
“Our economy was at approx $1.85 trillion in 2014, within 5 years, it has reached $2.7 trillion.” She says it is iwell within the government’s capacity to reach the $5-trillion-economy target.
“Indian economy will become $3 trillion economy in this year itself. It is now 5th largest in the world and in purchasing power parity terms, it is the third largest, behind only U.S. and China.”
“It took us over 55 years for the Indian economy to reach $1 trillion. But when people's hearts are filled with hope, trust and desire, in just five years we could make it $3 trillion.”
“All of India's private sector industries have played a substantial role in India’s growth. If before independence, India Inc understood swadeshi , today they understand Make In India.”
The Finance Minister also mentions the virtuous cycle, as suggested by the Economic Survey.
Finance Minister Nirmala Sitharaman and her team arrive at Parliament ahead of the Budget presentation.
Sensex reclaims 40,000 mark ahead of Budget
Domestic equity benchmark BSE Sensex on Friday reclaimed the 40,000 mark and the NSE Nifty inched closer to 12,000 level ahead of the Union Budget presentation.
The 30-share index was trading 114.67 points, or 0.29%, higher at 40,022.73 at 0930 hours. Similarly, the broader Nifty was quoting 31.85 points, or 0.27%, up at 11,978.60.
“The market is eagerly looking forward to the budget proposals, especially for those things that matter for speedy recovery or revival in growth and employment,” said K. Joseph Thomas - head of research, Emkay Wealth Management.
Finance Minister Nirmala Sitharaman arrives at North Block at the Finance Ministry.
Opinion: Budget 2019 needs to give the economy a much needed stimulus
Faltering GDP growth, a consumption slowdown, a truant monsoon that has already hit kharif sowing, global trade tensions and a freeze in the credit market that has set alarm bells ringing across the financial system. This is the backdrop to the maiden Budget of Ms. Sitharaman, writes The Hindu's Business Editor Raghuvir Srinivasan .
Sensex, Nifty end on a positive note on Thursday
Extending gains for the fourth straight session, equity benchmarks ended on a positive note Thursday after the Economic Survey projected India’s economic growth rebounding from a five-year low to 7% this year.
The 30-share BSE Sensex settled 68.81 points, or 0.17%, higher at 39,908.06. The index hit an intra-day high of 39,979.10 and a low of 39,858.33.
Similarly, the broader NSE Nifty gained 30 points, or 0.25%, to finish at 11,946.75. During the day, the index touched a high of 11,969.25 and a low of 11,923.65.