The 5th of July marked the presentation of the Union Budget 2019 in the Parliament. The newly elected government presented a budget which was more for the longer term, aiming to take India’s economy to around USD 5 trillion by 2024. The aim and target is certainly a positive one, and the budget presents viable opportunities to reach this target, as presented by the finance minister.
In the backdrop of the impending economic slowdown, the budget has focused on promoting foreign investment, providing aid to the economy, and boosting infrastructure. The focus on development of a “New India” was very clear in the finance minister’s presentation, with the particular phrase being used rather heavily. As proposed in the Interim budget 2019, the tax slabs for direct taxes remain the same.
A focus on education
According to the budget, the new government plans to allocate around INR 400 crore to higher education facilities. These include funding and allocation to universities, colleges, and other institutions of higher education. This is a part of the larger aim of the government to promote better standards of higher education in the country. Inviting students from around the world to study, the government also aims to promote the “Study in India” programme.
As a result of the Swayam initiative, which is an online educational portal, the access to education will be made much easier for students. The funds from all ministries will also be directed towards the National Research Foundation for the funding and coordination of research grants.
A newfound importance of women empowerment
The finance minister was indeed quick to highlight the importance of women in the economy of India. The budget included some major announcements related to the welfare of women in the country, starting with the segment “Naari tu Narayani”. This proposed to set up a high level committee which would take further decisions on how to empower the women of India.
Under the Mudra scheme, there was also an announcement of a loan worth INR 100000 for women. The women who have verified Jan Dhan accounts and are part of self help groups will also be allowed an INR 5000 overdraft on their bank accounts.
The banking and finance sector
The budget saw major changes being brought about in the finance sector. The non performing assets of commercial banks have seen a reduction in about INR 1 lakh crore over the last year. Addressing these legacy issues and a lot more, the public sector banks were now proposed to be rendered with a capital of INR 70000 crore to boost credit. Banks were also advised to provide doorstep banking services, make efficient use of tech, and provide online personal loans as part of the 2019 union budget. In the near future, customers of one bank will also be able to access service across all other public sector banks, with reforms being implemented to improve governance in this sector.
The government also looks to expand its investment space, by realigning its holdings in the CPSEs. Banks are also advised to increase their share availability, and depth of market. In the near future, a new series of one, two, five, ten, and twenty rupee coins, which will be easily identifiable by the visually challenged, will be released.
The startup era
The startup sector in India suffers from three major problems. These are-
- A lack of funding
- High costs of credit.
The budget 2019 proposed to exempt the startups from numerous scrutiny assessments, including angel tax, which most startups struggle with. Angel tax was imposed in 2012 as a counter to money laundering.
The government has also proposed a TV program, broadcast on Doordarshan, serving as a platform to bring entrepreneurs and venture capitalists together. In the words of the finance minister, this program would be for the startups, of the startups, and by the startups. In addition, the budget also brought about the announcement of no more scrutiny for share premium valuations of startups. The funding received by startups would be categorized as Category II AIF funds, and would not be investigated by the income tax department.
Interchangeability of PAN and Aadhaar card
Since more than 120 crore taxpayers now possess an Aadhaar card, the budget 2019 proposed the interchangeability of PAN and Aadhaar card for the ease of filing returns. This also aids those taxpayers that do not possess a PAN card, who would now be able to enter their Aadhaar number and file their taxes.
Another announcement was that NRIs could now apply for an Aadhaar card the moment they land in the country, instead of waiting for the previously mandated 180 day period.
A motive to save the environment
To highlight the importance of climate change and promote environment protection, the government has decided to lower the GST rate on electric vehicles from 12% to 5%. The budget also proposes an INR 1.5 lakh tax deduction on loans taken to purchase electric vehicles. Custom duties on certain parts of electric vehicles are also being removed, in order to promote the sale and purchase of said vehicles. By promoting the right incentives and charging infrastructure all across the country, the government is doing its best to encourage quicker adoption of electric vehicles. All of this is part of a bigger plan for the government and the nation to do its bit in saving the environment.
Final words- the budget at a glance
In addition to all the points discussed above, the budget 2019 proposed a few more changes across all sectors, ranging from petrol and diesel prices, to the duties on precious metals like gold and silver. Some of these proposals are as listed below.
- An increase in custom duty on precious metals from 10 to 12.5%.
- For the purchases of a house on INR 45 lakh, an additional deduction of INR 1.5 lakh in interest on loans is also offered.
- All companies that have an annual turnover of more than INR 400 crore are now under the bracket of 25% corporate tax rate, covering around 99.3% of all companies.
- With an increase in the focus on employment, around 20 tech business incubators, and 80 livelihood business incubators will be set up in the financial year 2019-2020.
- Between 2019 and 2030, it is estimated that the railways would need an investment of INR 50 lakh crores. To provide faster delivery of services to consumers, PPP would also be used.
The union budget of 2019 has brought in a wave of approval from around the nation. While people appreciate most of the proposals as part of the budget, many analysts are also questioning the government over the lack of a common man-focused budget. It will be interesting to see how the government responds to these concerns in the coming years, with the budget clearly being focused on the development of a New India.