Budget 2019: What to expect from FM Nirmala Sitharaman

A file picture of Finance Minister Nirmala Sitharaman. Photo credit: PTI

Finance Minister Nirmala Sitharaman will present Modi 2.0 government's first Budget on July 5, 2019. As she presents her Budget speech in Parliament, India will decode her Budget taking into account the advantages and disadvantages of the annual exercise. Ahead of the Sitharaman's Budget announcement, let us look at some of the key points that can form the fulcrum of Union Budget 2019-20. 

The road to $5-trillion economy

Prime Minister Narendra Modi said the Economic Survey 2019 outlines a vision to achieve a $5-trillion economy by FY25. To meet the target, India needs a sustained 8 per cent GDP growth, according to the Economic Survey estimate. Meanwhile, India's GDP growth rate has decelerated from 6.6 per cent to 5.8 per cent and in turn the country lost out on the fastest-growing major economy tag to China. It will be interesting to see how Union Budget tackles this situation, that demands a substantial growth in the rate. 

Direct Tax Code

The direct tax code is the most anticipated tax reform that the Narendra Modi government has been pushing for some years. If the proposed direct tax code is put into action, it will replace the Income Tax Act, 1961 and the Wealth Tax Act of 1957.

Tax Rebate

The Interim Budget 2019 increased the tax rebate to Rs 12,500 for taxpayers whose taxable income was up to Rs 5 lakh. However, there was no change brought in the basic exemption limit. It can be expected that the Union Budget will increase the basic exemption limit from Rs 2.5 lakh to Rs 3 lakh, as this would benefit even those tax payers who are not eligible for the Rs 12,500 tax rebate.

Corporate Tax

The Union Budget may propose to phase out tax exemptions that have led to litigation. A corporate tax rate of 25 per cent is already available since 2018-19 for corporate houses with sales less than Rs 250 crore.

Farmer's Income

In the BJP manifesto that was released before the Lok Sabha Elections 2019, it was promised that the government will aim to double farmer's income by 2022 and enable the creation of 10,000 new Farmer Producer Organisations, something that the Budget can focus on. 

Farmer's Loan

Agriculture loan is going to be a highly anticipated topic of the new Budget, especially keeping in mind the recent problems faced by the farmers because of the water scarcity and loans.

Corruption-free India

The current government has stressed repeatedly on the need to wipe out black money and create a corruption free country. It was in this regard that the much-debated demonetization step was taken by the government. Will the Budget focus on this? 

Education

The BJP manifesto declared that the new government will enable investment of 1 lakh crore in higher education through Revitalising of Infrastructure and Systems in Education. In all possibility, education is going to have a prominent role in the upcoming Union Budget. 

Healthcare

The manifesto also promised to establish 1.5 lakh health and wellness centers under Ayushman Bharat and set up 75 new medical colleges/postgraduate medical colleges. 
Healthcare was a the focus of battle in the build up to the Lok Sabha Elections 2019. The Budget thus, can possibly have a vital space for the improvement of healthcare facilities in the country. 

Care for Kisan

The Interim Budget 2019  proposed an outlay of Rs 75,000 crore for PM-KISAN scheme for FY20, and also aimed to provide Rs 20,000 crore in the Revised Estimates of FY19. It will be interesting to see whether the Union Budget backs that proposal. 

Income Tax Exemption

Life Insurance can play a prominent part in the Budget as the insurance companies want Finance Minister Nirmala Sitharaman to increase the tax exemption limits for insurance policies. At present, life insurance premiums paid are exempt from taxation under Section 80C of the Income Tax Act. This is part of the Rs 1.5 lakh exemption limit. However, insurers want the government to introduce separate limits for life insurance.

The Unemployment Problem

Niramla Sitharaman will have her task cut out while dealing with the unemployment problem in the country. According to Centre for Monitoring Indian Economy (CMIE) data, India's unemployment rate at 8.1 per cent is at a 45-year high.

New Investments

The Budget also needs to focus on the issue of new investment by the major companies, both domestic and foreign. Data from CMIE show that investments in new projects have touched a 15-year low. According to CMIE, fresh investments plunged by 87 per cent in the April-June quarter compared to the same period last year.

Automobile industry

India's auto sales have been flagging for the past one year and the industry would be expecting some measures that could spur sales.

Farmer's pension

Launch a pension scheme for small and marginal farmers to ensure social security after 60 years of age, as was promised in the BJP manifesto. 

More investment, more jobs

Increase in private investments, as it will make firms more productive, bringing jobs and increasing exports, making firms able to compete in international markets; this will increase demand and further investment. 

Inflation menace

The Interim Budget 2019 focused on the major problem of inflation that affects the poor and middle class on a large scale. It can be expected that the Union Budget 2019 will include provisions to defend the society from the onslaught of inflation. 

Fiscal Deficit

Containing the fiscal deficit will be one of the major challenges of the Union Budget. According to the Interim Budget 2019, from the high of almost 6 per cent seven years ago, the fiscal deficit has been brought down to 3.4 per cent in 2018-19. 

The balance 

An important aspect of the Union Budget will be to balance the fiscal stability and GDP growth. NITI Aayog vice chairman Rajiv Kumar said the Economic Survey 2019 reflects the government's resolve to maintain fiscal stability while pushing up GDP growth rates by measures to accelerate private investment. He said the report provides a comprehensive and clear picture of economic trends and challenges ahead.

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