Finance Minister Piyush Goyal is all set to present Narendra Modi-led  NDA government's Interim Budget 2019 in Parliament  on Friday amidst a lot of hopes and expectations from across the spectrum of society-right from the common people to industries.

With the Lok Sabha elections 2019 only a few months away, the Interim Budget for 2019, the last financial exercise by Prime Minister Narendra Modi led Central government will be presented in the Lok Sabha by Finance Minister Piyush Goyal on Friday at 11 am.

The govt may announce tax cuts for the middle class and further relief for the farmers. According to media reports, Finance Minister Piyush Goyal may announce Universal Basic Income scheme as well.

 

Interim Budget 2019-20 LIVE UPDATES:

08:42 am: Piyush Goyal​ reaches office 

08:28 am: Like every time, this time too govt will present a good Budget: Shiv Pratap Shukla

Shiv Pratap Shukla, MoS (Finance): Modi government is a popular govt, it's natural that we will take care of everything. We will do whatever is possible for the people. We have always presented a good budget. pic.twitter.com/ea8WGiewiw

— ANI (@ANI) February 1, 2019

08:00 am: Piyush Goyal to present Interim Budget today

Interim or general Budget

Confusion was created after the commerce ministry on Wednesday in a whatsapp message to media said: "do not refer Budget 2019-20 as interim Budget, it is officially referred as general Budget 2019-20".

However, the Finance Ministry later clarified that the Budget will be called Interim Budget 2019-20.

There were confusion in political circle that the government may deviate from the practice of presenting Interim Budget and come up with full Budget ahead of the general elections.

To this principal opposition party Congress had said it will strongly oppose both inside and outside Parliament the presentation of a "full budget" by the BJP-led NDA government as it has "no electoral legitimacy" and the step will go against set precedents and Parliamentary traditions.

Last week, Railway Minister Piyush Goyal was given additional charge of the Finance Ministry as Arun Jaitley has gone to the US for treatment. Jaitley as the Finance Minister has presented five Budgets.

As per practice, a Vote-on-Account or approval for essential government spending for a limited period is taken in an election year and a full-fledged budget presented by the new government.

While P Chidambaram had presented the previous UPA government's Vote-on-Account in February 2014, Jaitley presented a full budget in July that year. Narendra Modi-led government scrapped a colonial-era tradition of presenting the Budget at the end of February.

Fitch Ratings warns of fiscal slippage if government goes for populist interim budget

Ahead of BJP-led NDA government presenting the final budget of its tenure, Fitch Ratings on Thursday warned of a second consecutive year of fiscal slippage in the event of Finance Minister Piyush Goyal resorting to populist spending to win over lost vote base.

The interim budget to be presented on Friday could give some indication of the government's commitment to fiscal consolidation, which is one of the main sensitivities in the sovereign ratings, Fitch said.

"Pressure for new expenditure to attract votes, particularly among rural and small-business owner voters, has increased as polls have shown the ruling Bharatiya Janata Party (BJP) is becoming less assured of victory in the general elections.

"The BJP has reportedly lost votes in some recent state elections due to rural distress and public concerns over job creation. Targeted cash programmes appear the most likely form of support, as they would avoid downside risks of alternatives, such as the farm loan waivers that undermined the loan repayment culture in the past," it said.

Populist spending, it said, would aggravate fiscal pressures, which are already building due to revenue shortfalls.

"Higher pre-election spending could risk a second consecutive year of fiscal slippage relative to the government's targets and would further delay plans to reduce the high general government fiscal deficit and debt burden," it said.

Fitch said longer-term trends are more important to the sovereign rating profile.

"We believe the central government may still be able to meet its fiscal deficit target of 3.3 per cent of GDP for FY19, which would help support its fiscal credibility, although this may be achieved by deferring capital expenditure and postponing bill payments until after March," it said.

The final budget for the fiscal year ending in March 2020 (FY20) will be presented soon after the next government takes office following general elections, which are due by May 2019.

Revenue from the new GST is well below target, Fitch said citing it as a reason for revenue falling short of the target so far in the current fiscal year that ends on March 31, 2019.

"Officially, the government still aims to adhere to a debt ceiling of 60 per cent of GDP by March 2025, as adopted under the Fiscal Responsibility and Budget Management Act. However, this would require significant and politically difficult fiscal consolidation. The newly elected government's final budget, likely to be presented around July, should provide more meaningful guidance on the medium-term fiscal outlook," it said.

Fitch's base-case scenario is that general government debt will remain close to 70 per cent of GDP in the next few years and will constrain India's sovereign rating (BBB-/Stable).

Indian budgets normally offer guidance on plans for structural reforms and tax changes.

"The current government could choose in its interim budget to signal the reform direction it would adopt in a possible second term, but we believe it is more likely to include such plans in the final budget...," it said.

The government's reform efforts have led to a strong improvement in the World Bank's Ease of Doing Business ranking in recent years, but FDI inflows have remained roughly stable as a percentage of GDP over the past five years, as there are lingering difficulties, such as in enforcing contracts and the functioning of the labour market.

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(With inputs from agencies)