SIMPLIFYING THE BUDGET (JULY 2019)[1]
The General Elections 2019 have recently given us a mandate which brought the Bhartiya Janata Party led National Democratic Alliance government again in power after it completed the 5 years from 2014-19. The budget which was brought pre-elections before the country like always had the vision and aim of strengthening the economy by virtue of boosting the infrastructure and also focused on giving weightage to foreign investments. The reason was to compensate the slowing down of economy. In the NDA-II regime, 5th July 2019 has got a great significance now. Nirmala Sitharaman, being the first woman finance minister of India, on this day, presented the budget on behalf of the Modi Government. The ambition of $5 trillion economy compelled the finance department and the minister to bring changes in the existing norms. But the basic attraction for most of us i.e. the tax slab for direct taxes remains unchanged and the slab proposed in the 2019 Interim Budget would continue.
Education is something which builds every block of a nation and this time, a proposal to allocate Rs 400 crore for higher education was made by the Finance Minister in her speech. A very new and awaited promotion of “Study in India” programme was announced which will give ample opportunities to the students across the world to come and pursue their studies and carrier in India. With a vision of promoting both higher education and environment for it, the Finance Minister was very confident on her New Education Policy. For development of the National Research Foundation, all the ministries will direct the funds to it and NRF will further fund, understand and coordinate the research grants. “Gandhi-pedia” as a platform to spread awareness about Mahatma Gandhi’s teachings and ideas amongst the youth was announced. For making education more accessible, Swayam Initiative – an online education programme will be launched by the government. The research and technical engineering challenges will be resolved by pooling of resources by Information Technology Institutions and IISC.
Banking and Finance was another important area dealt by this budget. If we talk about non-performing assets of commercial banks, they have reduced by Rs 1 lakh crore over the last year. A landmark recovery was achieved over the last 4 years which amounted to more than Rs 4 lakh crore. This was possible because of the Insolvency and Bankruptcy Code (IBC)[2] and few other measures. In last seven years, the Provision Coverage Ratio[3] has been at its highest point and as far as domestic credit growth is concerned, there has been an increase of 13.8% recorded. Keeping all these things in mind, in order to boost credit, Rs 70000 crore has been proposed to be rendered to the Public Sector Banks. The PSBs will help in rendering personal loans online, and banking assistance will be at the doorstep through the use of technology. Now customers will be attached to one PSB to have access to services across all PSBs. In order to make the regulatory authority of the Reserve Bank of India (RBI) much stronger as compared to a Non-Banking Financial Company (NBFC)[4], proposals will be enshrined in the Finance Bill. To include infrastructural development, go hand in hand, an investment of Rs 100 lakh crore is intended for the coming five years. Disinvestment receipts have also been attached with a target of worth Rs 1,05,000 crore for the financial year 2019-2020. A reinitiating process for Air India’s strategic disinvestment process will be done by the government and this will offer more and more Central Public Sector Enterprises (CPSEs) to ensure that there is a lucid and vital participation from the side of private sector. The government is also planning to realign its holdings in the CPSEs. In order to widen the investment space, banks will increase the availability of their shares and investment options will be provided in relation to the Exchange Traded Funds (ETFs)[5]. In the currency changes issue, in order to help visually impaired person to easily identify the coins, new series of one rupee/five, ten, twenty rupees coin will be made available.
Start-Up is something which Prime Minister Narendra Modi has been talking about and encouraging for since he had been put forward as the face of BJP in 2013. The term Angel tax is of much importance in context of Start-ups and this budget. If a privately – held company raises funds at premium more than its “fair valuation”, the tax imposed is called as Angel Tax. The purpose for introducing this tax in 2012 was to curb the cases of money laundering. This budget has proposed to exempt start-ups from any kind of scrutiny assessment. The three – tier challenge being faced by start-up sector is lack of adequate funding, numerous regulatory bottlenecks and high cost of credit. A TV programme on Doordarshan was proposed by the NDA government exclusively for start-ups. In the actual words of the finance minister Nirmala Sitharaman, the programme will be of the start-ups, by the start-ups and by the start-ups. By this, an attempt to bring start-ups and venture capitalists together can be made. The FDI rules have also been eased by the government and incentives have been proposed for digital payment system start-ups. The minister also added that scrutiny on the valuation of share premiums for start-ups will not be there. A new mechanism will replace the e-verification process. The IT department will not evaluate the funds received by the start-ups. The period for carrying forward and set-off of loss from capital gains from the sale of residential houses has also been proposed to be extended to 31 March 2021 for start-ups.
Women Empowerment is an unavoidable area for any government of the country and the woman finance minister, for the welfare and empowerment of woman, has made few announcements. To bring the sacrifices and contributions of woman which adds up in the economic growth of the country, she used the heading of ‘Naari to Narayani’. The minister proposed to set up a high-level committee which will focus on suggesting different ways for woman empowerment. If we read few figures in the announcement for woman empowerment, we find that now every woman who is a part of the self-help groups and also posses verified Jan Dhan accounts will be allowed an overdraft of Rs 5000. Women under Mudra Scheme will be entitled to a loan worth Rs 1,00,000.
A very basic line which we have been witnessing since childhood is that most of the India’s population lives in villages and is agriculture oriented. This fact compels every budget to keep an eye on farmers and agriculture. The government as per the finance minister is going to make huge infrastructural investments in agricultural sector. Government would support private entrepreneurship in adding value to the produce from field and other allied activities which includes bamboo, timber from hedges, and generating renewable energy. To quote that farmer can even produce electricity, the minister said “Annadata can also be Urjadata”. Farmers will be supported by the government for procurement, processing and marketing of milk. Self-sufficient country in terms of pulse productivity was attributed to farmers. Associating digital India initiative, the minister said that farmers can now enjoy e-NAM which is an online platform for trading agricultural commodities in India. The Jal Jeevan Mission will guide department of drinking water and sanitation to create infrastructure for rainwater harvesting, groundwater recharge and reuse of household water. On the face of GST, this budget has promised a reduction in tax rates from 18% to 12% on specified agricultural, horticultural, forestry, harvesting and other threshing machinery.
A simple analysis concludes me with the point that this budget in a political sense is to please women, farmers and the youths, in an economical sense it is for bringing the economy back on the track of growth by paying for the losses, in a legal sense it positively interprets the statutes and law and tries to meet the legislative intent, and in a much wider angle i.e. for the whole country, this budget does not have that energetic move which will frame a superpower image of India.
[1] Akhil Kumar Singh, 4th Year B.A.LL.B Student of National Law University, Jodhpur.
[2] The Insolvency and Bankruptcy Code, 2016.
[3] Provision Coverage Ratio: It given an indication of the provision made against bad loans from the profit generated.
[4] Non-Banking Financial Company: It is a financial institution that does not have a banking licence or is not supervised by a national or international banking regulatory agency.
[5] Exchange Traded Funds: It is an investment fund traded on stock exchanges.
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