A Complete Report on 2019 Budget You Must Have a Look.

Finance Minister Mr. Piyush Goyal presented the interim Union 2019 budget on 1st February 2019 at Lok Sabha, The prime target of the 2019 budget is to eventually boost the investment in the sectors of agriculture, education, health, and social sector.

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2019 budget a complete report

Finance Minister Mr. Piyush Goyal presented the interim Union 2019 budget on 1st February 2019 at Lok Sabha, which was one of the most anticipated and talked about event of the year. As the elections are around the corner, the government is under the pressure to support the majority of the population in the country that covers the middle-class and the small-scale farmers, who are being deprived of the financial advantages. 

In the last few years, the budget was announced by the Financial Minister Mr. Arun Jaitley. However, he is undergoing treatment for his ailment in the United States due to which Mr. Piyush Goyal was appointed as the interim Finance Minister on 23rd January 2019. The budget was designed under the supervision of Modi-led administration and the key focus was on the fiscal deficit, along with the planned borrowings of the government and schemes or plans dedicated to the rural economy. He tabled the budget in favor of the farmers with an additional push to the consumption, raising the primary benchmark indices by half a percent and was cheered by the equity markets.

After the announcement of the 2019 budget by Mr. Goyal, the fine print of the Budget got a transparent picture. As a result, the BSE Sensex remained in the red region but settled at 36,349, which is 213 points or 0.59% higher than the previous day. Nifty, the counterpart of NSE, also settled at 10,894, adding up 63 points or 0.58%. 

The analysts are extremely satisfied with the 2019 budget and tagged it as a realistic move by the government, which was not expected in its anticipatory phase. Also, this realistic approach has helped the bulls to take over the market. 

Let us take a glance at some of the high points of the 2019 Budget to understand the present financial status of the government.

India experienced a year of the fiscal deficit despite various moves to revise the negative forces. However, this year, with elections knocking the door, the budget was designed to meet the target of the fiscal deficit while giving the finances a boost to take over the negative forces. However, the rating agencies and market analysts have already speculated repetition of the fiscal deficit target, resulting in financial turmoil. Some of the key highpoints to look for this year are: 

  • The government has declared to set aside INR 75,000 crore a year for the income of the farmers as well as assured to support the direct income for smaller farmers.
  • The fiscal deficit target for the financial year 2019 is set at 3.3%. The economists are expecting a maximum slippage of 10 to 20 percent from the target.
  • The fiscal deficit target projection for the financial year 2020 is set at 3.2% to 3.3%. However, this goal is also far away from reaching the aim of 3% fiscal deficit target. The expenditure target for the fiscal year 2020 is set to INR 27.84 lakh crore while the capital expenditure target for the same year was set at INR 3.36 lakh crore. Also, the gilt repayment for this fiscal year is set at INR 2.36 lakh crore. The fiscal deficit for the financial year 2019 was pinned at 3.4% of the GDP or Gross Domestic Product. The present account deficiency was marked at 2.5% of the Gross Domestic Product.
  • The economists and market analysts will minutely scrutinize the market scenarios and understand whether the fiscal deficit target moves in a positive direction or negative one. On the other hand, the government has decided to cease the habit of targeting the revenue deficit despite the economists believing this as an important step. The huge revenue deficit indicates that the fund is being borrowed to continue with the current expenses and not to support the investments.
  • The revenue was targeted to cover the shortfall of GST as with the progress of the financial year, it is clear that the Goods & Service Tax will not be able to meet the estimates. Hence, the fine print of the current budget will eye on the fact whether the higher tax collections will make up for the shortfall or the government will elaborate the umbrella of non-tax revenue items further to get over the crisis. 
  • The total budget of tax revenue estimate for the fiscal year 2019 was set at INR 22.71 lakh crore.
  • The middle-class released a sigh of relief after the 2019 budget was announced as the income tax exemption was doubled, extending the benchmark to INR 5 lakhs. On the other hand, the standard deduction was hiked from INR 40,000 to INR 50,000. 
  • Individual taxpayers will also get tax exemption if the gross annual income is up to INR 6.5 lakh provided they are making tax saving investments in the equities and provident funds. However, the slab of the people who have the gross income of INR 5 lakhs will remain unchanged.
  • The TDS threshold based on the rental income was increased to INR 2.4 lakh from INR 1.8 lakh. The limit of gratuity was also increased to INR 30 lakhs from INR 10 lakhs while the most bothering aspect of the middle-class people, the TDS on the interest from the capital deposited to the post office and the bank has been pushed to INR 40,000 from the previous amount of INR 10,000. The Finance Minister has also confirmed that around 3 crore citizens of India will be able to take advantage of the revised threshold. 
  • The advantage of rollover of capital gains tax is increased to two residential houses from one residential house. This is targeted for the taxpayers with capital gains of up to INR 2 crores that can be availed once in the lifetime.
  • The benefits offered under the section of 80(i)BA has also been extended for another year. However, this is applicable for the housing projects that are approved till 2020.  
  • The business houses that have turnover worth INR 5 crore or less will be enabled to offer quarterly returns if these have more than 90% GST payers.
  • Under the loan amount of INR 1 crore, 2% interest has been removed from the MSME units that are registered under the GST.
  • Goods and Service Tax is definitely the most impactful reconstitution of the tax structure since 1947 and has revamped the concept of tax in the nation. Since its inception, the government has been reducing the amount of GST on various products that have offered relaxation to the taxpayers from the middle-class group. Currently, they are paying GST that falls under the bracket of 0% to 5%. In fact, this tax consolidation has led to the conjugation of the Indian economy, contributing to the ease of business activities. 
  • Pradhan Mantri Shram Yogi Mandhan, the Mega Pension Yojana has been announced to ensure the employees from the unorganized sectors receive the monthly pension of INR 3,000 after they cross the age of 60 years in exchange for a monthly contribution of INR 100. This scheme has the potential to offer relief to around 10 crore employees belonging to the Unorganized sector and is also tagged as the biggest pension scheme ever designed. 
  • The farmers, who have less than 2 hectares of land holding will be offered INR 6,000 every year in three installments under the scheme of Pradhan Mantri Kisan Samman Nidhi. This amount will be directly transferred to their bank accounts. 
  • To boost the endeavor of clean banking, the 4R approach has been initiated which are resolution, recognition, reform, and recapitalization.
  • The double-digit inflation has also been controlled. During the period between 2009 and 2014, it was 10.1% but dipped to 2.1% in 2018. 

The prime target of the 2019 budget is to eventually boost the investment in the sectors of agriculture, education, health, and social sector. This was validated by the increase in the expense of INR 3, 26, 965 crores over the RE of the fiscal year 2018 while maintaining the fiscal deficit target to 3.4% of the GDP. 

Mr. Goyal attended a press conference immediately after announcing the 2019 budget at the Lok Sabha in which he mentioned that the people who earn a sumptuous amount every month sitting in AC rooms will never be able to understand the plight of the farmers. Hence, the government has decided to dedicate this budget primarily to those farmers along with the middle-class people. He also expects the Indian economy to be worth 5 trillion dollars in the upcoming 5 years and has indicated that in the next 8 years, it may cross the milestone of 10 trillion dollar economy.

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