The first female finance minister of India, Ms Nirmala Sitharaman present the budget for the 2019-2020 financial year on Friday. This is the first budget of the 2.0 Modi government. There were huge expectations as it was sailing between the waves of an economic slowdown and record-high unemployment levels.
Ms Sitharaman said that India could grow to a $5 trillion economy in the next five years (from $2.7 trillion). The budget has been on everyone’s mouth globally, while all sorts of economists analyse, appreciate or criticise it, I’d like to let you have a look at what the budget really means to our pockets.
For the “Middles”:
Majority of the issues addressed by the budget are concerning interests of the middle-class, the employee section which constitute a major portion of the taxpayer. The interests of this “roti, kapda, makaan aur gaadi” gang have some representation in the budget.
- Fuel prices are something everyone is looking out for every time a budget is released, this year’s budget presents a hike of fuel cess on petrol of Rs. 2 and the special addition duty (like a Vat/sales tax, if the goods supposed to have manufactured in India) on petrol and diesel of Rs. 8 and 2 respectively. The estimated hike that the common consumer would have to bare is supposed to be Rs. 2 per litre.
- While fuel prices face a hike, the quantity of these fuels has been decreasing globally and we are on a lookout for alternatives for the same. As Electric vehicles have emerged to be one of these options recently, GST on them has been reduced to 5% and an income tax deduction of 1.5 lakh on loans for electric cars has been proposed.
- The prolonged persuasion for making the Aadhar the only identification required for any government procedure has earned fruit. Now, it can be interchangeably used for filing income tax returns with PAN. The UIDAI shall allot a PAN no. to people who want to file income tax with the Aadhar.
- Also, to keep a check on the corruption in the income tax process, the process will be made mostly electronic and there shall be no face to face contact between the taxpayer and the officer. The returns will also be pre-printed.
- 10% import duty on newspapers and 5% on books in order to promote domestic production of these items.
- Deduction of interest of 1.5 lakh on home loans taken after 31 March 2020.
While income tax doesn’t see a significant increase, some products are likely to become more expensive as the government seeks to boost its revenues.
For the self bosses:
The major focus lies on the investment and corporate sector.
- Lower corporate tax of 25% which was only applicable on an income of 250 crore has now expanded to cover 400 crore.
- Start-ups have been eased from the problem of angel tax, the income tax paid by unregistered companies which have raised a capital far higher than their market value funds raised by startups will not require any kind of scrutiny from the income tax department. The issue of establishing the identity of the investor and source of his funds will be resolved by putting in place a mechanism of e-verification.
- Public shareholding to be 35% minimum which was earlier 25%.
- TDS of 2% on cash withdrawals of 1 crore and above throughout the year has been imposed.
For the seniors:
- Pension benefit shall be given to 3 crore retail traders and small shop keepers.
- 60% of the amount received in pension by people included in National Pension System.shall be excluded from income tax.
For the ladies:
- The ‘women self-help group interest subvention programme’ shall be extended to all districts.
- Every Woman in the self-help groups(also known as ‘bachata gat‘ in Maharashtra)can take loans up to 1 lakh under the MUDRA scheme.
- Also, they will be allowed an overdraft of up to 5000 Rs.
- Under the Ujjwala scheme, the government is to provide 8 lakh more free connections.
The ones who didn’t make it:
The most hyped interim budget which was made public in the month of February this year had some reforms which had induced the cloud of hype is not what the actual budget exactly looks like. Some immediate problems of the country were not included in the budget. Opposition leaders while criticising the government for not including the vital issues also expressed genuine concerns for the aftermath that may be caused by drifting from the usual national budget pattern.
- While the budget for the agriculture department has been doubled it has nothing new in store for farmers. A majority portion of that money has been allotted to the PM-kisaan scheme, which is in place to provide income for small and marginal farmers but it highly misses points covered in the interim budget. To cover all the farmers under this scheme the cost is estimated to be 85000 crores while the new budget allows it only 75000 crores.
- During this period here almost half of the regions are facing a drought, there has been huge pressure on the Mahatma Gandhi national rural employment guarantee (MNREGA) due to failed crops, the budget for this scheme has faced a fund cut of 1000 crores (from 61084 crore to 60000 crore)
- The health care budget has also been increased but no address has been made to the major issue of child deaths that India is facing today, also there are no infrastructural prescriptions to allot the new funds.
- Most importantly, the budget does not give any significance to the Jal Jeevan scheme of providing clean water and sanitation in rural areas, moreover, it has reduced the amount allotted to the task of cleaning the Ganga from 2250 crore to 750 crore.
The budget which instantly became popular in its interim form for reducing the tax slabs cannot be said to have lived up to the expectations. However, it still can’t be declared completely disappointing as it has provided mental relief to a majority of the class, which connects on expressing distress over the uneven distribution of wealth in our country and the structure that helps the rich become richer and the poor become poorer. The budget expresses hike of 5% for income class of 2 crore to 5 crore and 7% for the ones above 5 crore which will earn a prospective revenue of 12000 crore and make up for the 4000 crore that the government will be losing after lowering the corporate tax.
Hence, it has made way for a fair contribution of the rich class to the revenue. It has been appreciated for giving place to the concerns of the middle class and some lower economic sections but has been equally criticised by the opposition and some economists.
“The budget has been prepared without listening to the voices of either the ordinary citizens or knowledgeable economists”– P. Chidambaram
The opposition has also pointed out that the Hon’ble finance minister did not speak about the total expenditure, total revenue in her speech and this may seem like a practice against transparency in governance as many people may not have access to the documents. The budget also suggests that there will be an increase in the foreign borrowing of the country which currently constitutes 5% of the GDP which is low considering the global average. It is said to favour the corporate sector and by encouraging foreign investments in areas of aviation and media the interference will increase.
“Treat for the ears but does not provide enough food for thought.”– M.K.Stalin
The budget looks like a disappointment is some main sections and is not very likely to become popular like the interim one. It fails at addressing the current issues at hand like droughts, sanitation, child deaths, etc.as parts of it remain vague. However, it can be described as a budget for futuristic India as it focuses on the growing sectors like aviation, business and new trends like start-ups and promoting alternative energies in the form of electric vehicles.
It would have been more welcomed if it was able to strike a balance between sections that require investments and the ones for public welfare. Considering all these factors, though there are many loopholes id still, like to appreciate for making reformative attempts towards solving chronic problems like corruption and uneven tax proportions which have been prevailing in our country for decades and also promoting digitisation in all aspects.