NEW DELHI, Feb 1: India on Friday unveiled an interim budget with giveaways for rural and poorer citizens, in what is being seen as a critical test for Prime Minister Narendra Modi, who is facing anger over depressed farm incomes and unemployment with a general election just months away.
India’s Hindu nationalist-led government poured extra money into support for farmers and a tax cut for low-income workers, but that came at a cost, with the country letting its fiscal deficit targets slip this year and next.
Here are the highlights of interim Finance Minister Piyush Goyal’s budget for the 2019/20 fiscal year beginning April 1.
GROWTH/DEFICIT
* GDP growth in 2018/19 estimated at 7.2 percent
* Fiscal deficit for 2018/19 seen at 3.4 percent of GDP
* Fiscal deficit for 2019/20 estimated at 3.4 percent of GDP
* Fiscal deficit for 2020/21 and 2021/22 estimated at 3 percent of GDP
* Government’s stated commitment earlier was to bring down the fiscal deficit to 3.1 percent of GDP by the end of March 2020, and to 3 percent by March 2021
* India’s current account deficit for 2018/19 seen at 2.5 pct of GDP
BORROWING
* Gross market borrowing seen at 7.1 trillion rupees in 2019/20
* Net market borrowing seen at 4.73 trillion rupees in 2019/20
Highlights: India unveils budget aimed at boosting pandemic-hit...
* Government to buy back 500 billion rupees worth of bonds in 2019/20
* India to raise 1.08 trillion rupees via cash management bills in 2019/20
* Debt to GDP ratio to be brought down to 40 percent by 2024/25
RECEIPTS
* Revenue receipts seen at 1.98 trillion rupees in 2019/20 (2.2 percent of GDP)
* Capital receipts seen at 8.06 trillion rupees in 2019/20
EXPENDITURE
* Total expenditure in 2019/20 budgeted at 27.84 trillion rupees
* Capital expenditure for 2019/20 seen around 3.36 trillion rupees in centrally sponsored schemes
* Defence budget raised to beyond 3 trillion rupees in 2019/20
* To allocate 645.87 billion rupees for railways capital expenditure in 2019/20
* Allocation to India’s northeast region proposed to be increased by 21 percent over previous fiscal year
FARMING/RURAL AFFAIRS
* India to allocate 750 billion rupees ($10.56 billion) per year to support farmers’ incomes
* Impact of 200 billion rupees in current fiscal year
* Vulnerable farmers to receive 6,000 rupees per year under new scheme
* Farmers affected by natural disasters to receive 2 percent interest subvention, additional 3 percent if they repay loans on time
* Government to provide 2 percent interest subvention for farmers pursuing animal husbandry, fisheries
* India to allocate 190 billion rupees for construction of rural roads in 2019/20
TAXATION
* Income tax exemption limit doubled to 500,000 rupees in 2019/20, tax slabs for others unchanged
* Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to 20 million rupees; can be exercised once in a lifetime
* Average monthly tax collection at 971 billion rupees per month so far this year
* Small and medium-sized businesses registered under the Goods and Services Tax to get 2 percent interest subvention on loan of 10 million rupees - finance minister
BANKING/FINANCE
* Dividends to government from the Reserve Bank of India (RBI) and public sector financial institutions dividends seen at 829.1 billion rupees in 2019/20
* Dividends to government from RBI and public sector financial institutions dividends revised to 741.4 billion rupees in 2018/19
* Goyal says expects other banks on the central bank’s Prompt Corrective Action list to be removed soon
EMPLOYMENT
* India to launch social security coverage for workers in unorganised sector
* New scheme to provide assured monthly pension of 3000 rupees per month, with contribution of 100 rupees per month, for workers in unorganized sector after 60 years of age
* Scheme will benefit 100 million workers in unorganized sector, may become the world’s biggest pension scheme for unorganized sector in five years - Goyal
* Government to allocate 600 billion rupees for a rural employment scheme in 2019/20
FINANCE MINISTER COMMENTS
* “We have reversed the policy paralysis engulfing the nation, and have restored the image of the country”
* “Several times in the past only empty promises have been made to the people living in our villages”
* “We are poised to become a 5 trillion dollar economy in the next five years, we aspire to become a 10 trillion dollar economy in the next eight years”
* “India is now on the way to becoming a global manufacturing hub in several sectors”
