Interim Budget 2019: Towards Sustainable Growth And Better Quality Of Life

A set of comprehensive reforms introduced in the Interim Budget on 1st Feb 2019 by Finance Minister Shri Piyush Goyal aimed at “realizing a New India by 2022’’ and had a strong focus on sustainable growth and achieving a better quality of life for all citizens of India. A well-balanced budget with its primary focus on the farm economy along with transformational reforms to address socio-economic challenges would ensure that the Indian economy is on a solid track. 

A notable feature of this years’ budget was the ambitious“10-dimensional vision for 2030” – a roadmap for India to become a US$ 5 trillion economy in the next 5 years and a 10 trillion economy in the next 8 years thereafter. Under this vision, India is envisaged to become a modern, technologically driven, innovative, transparent and equitable nation backed by strong reforms. The key dimensions are broadly in accordance with CII’s [email protected] Vision document. 

A major focus of the budget was on alleviating rural distress while ensuring farmer’s progress and increasing farmer incomes. In a historic move, the Government introduced the “Pradhan Mantri Kisaan Samman Nidhi”, which would provide direct income support of Rs 6,000 per year to small and marginal farmers having cultivable land up to 2 hectares. With around 12 crore farmer families to benefit from this scheme, a farm package of this kind was the need of the hour and Industry lauds the Government for such a pathbreaking measure. Additional benefits such as up to 5% interest subvention for farmers in the sector affected by natural calamities would be provided under the Kisan Credit Card Scheme, which would enable timely access to credit and loan relief to farmers. 

Measures were also announced to provide a fillip to the non-farm sector. Measures to enable easy access to credit, including interest subvention and simplified forms under the Kisan Credit Card scheme were announced for workers engaged in the fisheries and animal husbandry sector. 

Budget 2019 also saw various tax relief measures for salaried individuals which would greatly boost the economy through increased consumption spending. Individual taxpayers with annual income up to Rs 5 lakhs would now get full tax rebate. This would mean that incomes of individuals earning gross income of up to Rs 6.5 lakh would be tax free, considering investments and other interest incomes. 

 Other measures such as increased standard deductions for salaried individuals from Rs 40,000 to 50,000, capital gains exemption for investment in a second residential house, once in a lifetime would greatly benefit the common man by increasing their disposable incomes. 

 Measures were announced for providing an impetus to the real estate sector, which experienced slow growth over the last few years. Measures include extending the period of exemption from tax levy on notional rent on 2nd self-occupied house, benefits under the Affordable Housing scheme that has been extendedfor another year for all housing projects approved till 2020, among others. These housing and real estate reforms would bolster economic growth of the nation through a multiplier effect on income. 

 In a move to simplify the direct tax system and easy filing of returns, it was announced that within two years, the entire verification process along with assessment of returns would be done online through an anonymized back office with the help of tax experts and officials, without any personal interface between tax payers and tax officials. A more assesse-friendly system with the help of modern technology would not only simplify the system, easy processing and timely refunds would greatly encourage timely filing of returns. 

 For improving the welfare of the workers in the unorganized sector, a mega pension scheme “Pradhan Mantri Shram-Yogi Mandhan’ Yojana’ was announced, under which workers with monthly income of up to Rs 15,000 would get an assured monthly pension of Rs. 3,000 after attaining age of 60 years. Around 10 crore people in the largely fragmented informal sector are likely to benefit from this pioneering scheme. 

 The micro, small and medium enterprises (MSMEs)sector, the backbone of the Indian economy also received a significant boost in Budget 2019. A 2% interest subvention was announced for loans of up to Rs 1 crore for all MSMEs registered with the Goods and Services Tax(GST). Also the govt will procure 25% of their requirements from SME’s.

 Budget 2019 had many innovative provisions which would lay the foundations of a New India in the coming years. It is commendable that while ensuring that the growth momentum for the economy is maintained, the budget has taken the path of fiscal prudence. Although, the fiscal deficit has been revised to 3.4% of GDP in contrast to the 3.3% anticipate earlier, the fiscal slippage is minor in nature, considering the major announcements for providing income support to farmers were much needed for bringing in socio-economic equity in the country. 

 Overall industry has welcomed the pioneering measures introduced in Budget 2019 and is happy to note that many recommendations are in line with Industry’s vision such as tax relief to salaried individuals, increasing farmer incomes and pension to the unorganized sector. Given the multiple and complex challenges the Government faced with an impending election, this is a well-balanced budget which has addressed the economic realities of the country.