With an expectation to become the US$ 5 trillion economy in the next few years, the prime objectives of the Indian Budget 2019 – 20 are as follows:
Investments plans finalized for different sectors in Union Budget 2019 – 20
1. Infrastructure
i) Road
- Continuation of Pradhan Mantri Gram Sadak Yojana (PMGSY) for developing the industrial corridors and increasing investment in the catchment regions. The agenda is to upgrade 1,25,000 kms of road length over the next five years, with an estimated cost of INR 80,250 crore for PMGSY-III.
- Committed to the agenda of creating sustainable roads through green technology (i.e. by using waste plastics, cold mix technology etc.) for reducing carbon foot print.
- The ambitious programme like Bharatmala would help to develop national road corridors and highways.
ii) Water
- Expansion of waterways will help for shifting a significant portion of inland cargo movement from road and rail. The Jal Marg Vikas project is aimed at smoothening internal trade carried through inland water transport.
- As part of this project, for enhancing the navigational capacity of Ganga, a multi modal terminal at Varanasi has become functional in November 2018 and two more such terminals at Sahibganj and Haldia and a navigational lock at Farakka would be completed in 2019-20.
- This will reduce cost of transportation and import bill; make movement of freight and passenger cheaper and improve logistics.
iii) Railways
- It is estimated that Railway Infrastructure would need an investment of INR 50 lakh crores between 2018-2030 (capital expenditure outlays are around INR 1.5 to 1.6 lakh crores/annum). For making the completion of the projects faster, implementation of public-private partnership needs to be encouraged.
- During 2019, about 210 kms metro lines have been operationalized. With this, 657 kms of Metro Rail network has become operational across the country.
- Railways will be encouraged to invest more in suburban railways through Special Purpose Vehicle (SPV) structures like Rapid Regional Transport System (RRTS) proposed on the Delhi-Meerut route.
iv) Air
- The UDAN (Ude Desh ka Aam Naagrik) Scheme is providing air connectivity to smaller cities and enabling the common citizens of our country to avail air travel.
2. Power Sector:
- High-Level Empowered Committee (HLEC) on retirement of old & inefficient plants, and addressing low utilisation of Gas plant capacity due to paucity of Natural Gas, will be taken up for implementation.
- The performance of the scheme Ujjwal DISCOM Assurance Yojana (UDAY) launched in 2015 will be examined and their performance will be improved based on that.
- Central and state government will be working together for removing barriers like cross subsidy surcharges, undesirable duties on open access sales or captive generation for Industrial and other bulk power consumers.
- By 2022, every single rural family, except those who are unwilling to take the connection will have an electricity and a clean cooking facility through the schemes like Ujjwala and Saubhagya Yojana.
3. Real Estate:
- A Model Tenancy Law will be finalized and circulated to the States.
- Large public infrastructure can be built on land parcels held by Central Ministries and Central Public Sector Enterprises all across the country.
- Additional INR 1.5 lakh tax relief on home loan for purchase of a house up to INR 45 lakh.
- A total of INR 1.54 crore rural homes have been completed in the last five years under Pradhan Mantri Awas Yojana – Gramin (PMAY-G). It aims to achieve the objective of “Housing for All” by 2022. In the PMAY-G II, during 2019-20 to 2021-22, INR 1.95 crore houses are proposed to be provided to the eligible beneficiaries with suitable conveniences (e.g. toilets, electricity and LPG connections).
4. Digital Economy:
- The Government aims to bring greater ease of living for its citizens by implementing digitization across the different sectors in the economy. e.g. no charge on digital payments, MDR (Merchant Discount Rate) charges have been waived on cashless payment.
- 2% TDS on withdrawals of INR 1 crore in a year from your bank account for business payments.
- National Common Mobility Card (NCMC), India’s first indigenously developed payment ecosystem for transport, launched in March, 2019 will enable people to pay multiple kinds of transport charges, including metro services and toll tax, across the country.
- Under the Pradhan Mantri Gramin Digital Saksharta Abhiyan, over two crore rural Indians have so far been made digitally literate. Besides, Bharat-Net is targeting internet connectivity in local bodies in every Panchayat in the country.
5. Automobile:
- The Phase-II of FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) Scheme with an approval of an outlay of INR 10,000 crore for a period of 3 years, has commenced from 1st April, 2019.
- Faster adoption of e-vehicles (made from advance battery and are made with eco-friendly concept), establishment for suitable infrastructure, incentivizing the buyers for purchasing these cars are the parts of this initiative.
6. Technology:
- India has emerged as a major space power with the technology and ability to launch satellites and other space products at low cost in the international platform.
- A Public Sector Enterprise viz. New Space India Limited (NSIL) will commercialize various space products manufactured by the ISRO. The commercialization includes production of launch vehicles, transfer to technologies and marketing of space products etc. across the globe.
7. MSMEs (Ministry of Micro, Small and Medium Enterprises):
- Government has introduced providing of loans up to INR 1 crore for MSMEs within 59 minutes through a dedicated online portal for ease of credit accessibility.
- Under the Interest Subvention Scheme for MSMEs, 350 crore has been allocated for FY 2019-20 for 2% interest subvention for all GST registered MSMEs, on fresh or incremental loans.
- Pension benefit extended to retail traders with annual turnover less than INR 1.5 crore under a new Scheme namely Pradhan Mantri Karam Yogi Maandhan Scheme.
- Easing angel tax for startups has been proposed.
- New payment platform for MSMEs to be created.
- New television channel for start-ups.
8. NBFCs (Non-Bank Financial Corporations):
- For purchase of high-rated pooled assets of financially sound NBFCs (amounting a total of INR 1 lakh crore) during the current financial year, Government will provide one time six months’ partial credit guarantee to Public Sector Banks for first loss of up to 10%.
- NBFCs which do public placement of debt need to maintain a Debenture Redemption Reserve (DRR) and also, a special reserve as required by RBI.
- To bring more participants for the NBFCs (which are specially not registered as NBFCs-Factor) on the TReDS (Trade Receivables electronic Discount System) platform, amendment in the Factoring Regulation Act, 2011 is necessary and steps will be taken to allow all NBFCs to directly participate on the TReDS platform.
9. Investment (Domestic & Foreign):
It is estimated that India requires investments averaging 20 lakh crores every year (USD 300 billion a year). Proposed measures for enhancing capital for infrastructure financing are as follows:
- A Credit Guarantee Enhancement Corporation (regulations notified by the RBI) will be set up in FY20.
- An action plan to deepen the market for long term bonds, corporate bond repos, credit default swaps etc., with specific focus on infrastructure sector, will be put in place.
- It is proposed to permit investments made by FIIs/FPIs in debt securities issued by Infrastructure Debt Fund – Non-Bank Finance Companies (IDF-NBFCs) to be transferred/sold to any domestic investor within the specified lock-in period.
Measures to be taken up in the corporate debt market:
- To deepen the Corporate tri-party repo market in Corporate Debt securities, Government will work with regulators RBI/SEBI to enable stock exchanges to allow AA rated bonds as collaterals.
- User-friendliness of trading platforms for corporate bonds will be reviewed.
- Increasing the minimum public shareholding in the listed companies (up to 25% to 30%).
- Rationalizing and streamlining the existing Know Your Customer (KYC) norms for FPIs to make it more investor friendly without compromising the integrity of cross-border capital flows.
- Creating an electronic fund-raising platform under the regulatory ambit of Securities and Exchange Board of India (SEBI) for listing social enterprises and voluntary organizations.
- The Government will take up necessary measures for the retail investors to invest in treasury bills and securities issued by the Government.
FDI & FPI (Foreign Direct Investment & Foreign Portfolio Investment)
- The Government will examine suggestions of further opening up of FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders.
- 100% Foreign Direct Investment (FDI) will be permitted for insurance intermediaries.
- Local sourcing norms will be eased for FDI in Single Brand Retail sector.
- A Global Investors Meet in India will be organized using National Infrastructure Investment Fund (NIIF) as the anchor, to get all three sets of global players-top industrialists/corporate honchos, top pension/insurance/sovereign wealth funds and top digital technology/venture funds.
- Increasing the availability of investible stock to the Foreign Portfolio Investors (FPIs) for attracting cross-border investments.
- FPIs will be permitted to subscribe to listed debt securities issued by ReITs (Real estate investment trust) and InvITs (Infrastructure Investment Trust).
- NRI-Portfolio Investment Scheme Route with the Foreign Portfolio Investment Route will be merged if possible, for providing seamless access to NRIs in Indian equities.
10. Banking & Finance:
- NPAs of commercial banks have reduced by over INR 1 lakh crore over the last year. The numbers of public sector banks have been reduced and the prompt corrective actions have also been enabled.
- Public sector banks have been asked to inject INR 70,000 crore for the strong impetus to the economy.
- Reforms will be undertaken for strengthening the governance in public sector banks.
- Certain regulations will be made for National Housing Bank.
- Steps will be taken to separate the NPS(National Pension System Trust) from PFRDA (Pension Fund Regulatory and Development Authority) with appropriate organizational structure for maintaining the large numbers of subscribers and their interest.
- Reduction of Net Owned Fund requirement from INR 5,000 crore to 1,000 crores has been proposed for facilitating on shoring international insurance and enabling opening of branches by foreign reinsurers in the International Financial Services Centre
- Govt to modify present policy of retaining 51% stake in PSUs.
- Aligning domestic corporate systems with the global ones for improving the capital flows in the Indian economy.
- Government is setting an enhanced target of INR 1,05,000 crore of disinvestment receipts for the financial year 2019-20. The Government will undertake strategic sale of PSUs and will also continue to do consolidation of PSUs in the non-financial space as well.
- Govt to continue with strategic divestment of select CPSEs (Central Public Sector Enterprises).
- India’s sovereign external debt to GDP is among the lowest globally at less than 5%. The Government would start raising a part of its gross borrowing programme in external markets in external currencies.
- New series of coins of One Rupee, Two Rupees, Five Rupees, Ten Rupees and Twenty Rupees (easily identifiable to the visually impaired) will be made available in FY20.
- Regulation of HFCs (Housing Finance Cos) to move to RBI from National Housing Bank.
11. Water Management & Environment:
- Jal Shakti Mantralaya , a new department has been set up for providing safe and adequate drinking water and for managing our water resources and water supply in an integrated and holistic manner. It will ensure piped water supply to all rural households by 2024 under the Jal Jeevan Mission.
- Swachh Bharat Mission, launched in 2014 is going to undertake sustainable solid waste management in every village.
- For maintaining a cleaner environment and ensuring sustainable energy, a programme of mass scaling up of LED bulbs for widespread distribution at household has been taken up for replacing incandescent bulbs and CFLs in the country.
12. Make in India:
- Being the third largest domestic aviation market in the world, the work like aircraft financing and leasing activities will start from Indian shores.
- Government will adopt suitable policy interventions to create a congenial atmosphere for the development of MRO (Maintenance, Repair and Overhaul) industry in the country.
- A mission for linking the creative industry with the economy will be launched for promoting our traditional artisans and their creative products in the global market. The Intellectual Property Rights will be protected for these products in the National and International Market front.
- Exemption of custom duties will be given to specific electronic components which are now being manufactured in India, is withdrawn, which indicate the government’s intention to withdraw exemptions and promote Make in India by disincentivising imports.
13. Tax:
- No change in Income Tax in case of income up to INR 2 crores.
- 3% surcharge hikeon an income of INR 2 crore; 7% on INR 5 crore and above.
- All companies having annual turnover of INR 400 crores, will now be under the bracket of 25% tax.
- GST Council will be advised to reduce tax rate on Electric Vehicles from 12% to 5%.
- Income Tax return can be filed using either Aadhar Number or PAN No.
- Faceless Income Tax Assessment in electronic mode is going to be launched in 2019 with the aim to reduce taxpayer trouble.
- Proposal has been given to provide relief in levy of securities transaction tax.
- Prefilled Income Tax Returns(ITR) for Salaries, Interest, Mutual Fund Income etc.
- Increase in cess on fuel by 1 rupee, petrol & diesel to get costlier; while Customs duty on gold and precious items increased.
14. Others:
Education:
- New National Education Policy will be set up for transforming India’s higher education system to one of the global best education systems.
- National Research Foundation (NRF) will be established to fund, coordinate and promote research in the country.
- Massive Online Open Courses (MOOC) will be encouraged further through the SWAYAM (Study Webs of Active –Learning for Young Aspiring Minds) initiative for reaching the disadvantaged section of the student community.
Agriculture:
- Promoting zero budget farming by the government.
- Forming 10,000 new farm produce organizations.
- 80 Livelihood business incubators and 20 technology business incubators to be set up in 2019-20 under ASPIRE (A Scheme for Promotion of Innovation, Rural Industries and Entrepreneurship) to develop 75,000 skilled entrepreneurs in agro-rural industries.
Ease of Living:
- Aadhaar card for NRIs on arrival in India.
Skills and Jobs:
- Further expansion of “Khelo India Scheme” for encouraging sports and wellness among the mass.
- Creating large pool of skilled manpower through Pradhan Mantri Kaushal Vikas Yojana (PMKVY).
- Pradhan Mantri Shram Yogi Maandhan scheme launched in March’19 aims to provide INR 3,000 per month as pension on attaining the age of 60 to crores of workers in unorganized and informal sectors. About 30 lakh workers have joined the Scheme.
Women Empowerment:
- Banks will provide necessary financial assistance for “Stand up” India scheme which has helped to grow thousands of women and also the ones from the Scheduled Castes and Scheduled Tribes.
- Women SHG Interest Subvention Programme to be expanded to all districts in India.
- INR 1 lakh loan to be provided for SHG women members under Mudra Scheme.
- Every verified woman SHG member having a Jan Dhan account can avail INR 5,000 rupees overdraft facility.
Different Industries:
- Pradhan Mantri Matsya Sampada Yojana (PMMSY) will establish a robust fisheries management framework for addressing critical gaps in the value chain, including infrastructure, modernization, traceability, production, productivity, post-harvest management, and quality control.
- ‘Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI) aims to set up more Common Facility Centres (CFCs) to facilitate cluster-based development to make the traditional industries (sectors which involve Bamboo, Honey and Khadi clusters etc.) more productive, profitable and capable for generating sustained employment opportunities. The SFURTI envisions setting up 100 new clusters during 2019-20 which should enable 50,000 artisans to join the economic value chain.
Source: Union Budget 2019-2020, Economic Times, LSI Research