It was an interim-budget.
Not much was supposed to be expected from an interim-budget, considering the conventions that the outgoing government just presents a statement of revenues and expenditures. Proposals for sweeping changes and reforms have to wait until the full budget.
A few interim-budgets in recent past did speak about implementation of programs and benefits to people. However no government has proposed a change to the provisions of Income-Tax Act in an interim budget. Tax slabs have always been retained and very few proposals made in an interim budget can be referred to as earth-shattering.
To that regards, Finance Minister Piyush Goyal's speech certainly seems populist, impressive and manages a fine balance. At least on the face of it.
Goyal's interim budget touched upon the aspects of income tax- a tax rebate for salaried class up to Rs 5 lakhs. However, life doesn't convincingly change for those in slabs above Rs 5 lakh. A tick mark to that box called agricultural reform. A total of Rs 6,000 will be credited per annum to the bank accounts of farmers in installments. The opposition said that an amount of Rs 17 per day does no good to farmers.
The corporate sector which had been anxiously expecting a few benefits, namely cuts in corporate tax rate, benefits in GST, Customs and Excise benefits seemed content assuming that an uptick in consumer spending might turn as a positive impact for them.
Sector wise, the telecom sector was unhappy that there was no clarification on spectrum-usage charges. The Real Estate sector would have to wait for a Group of Ministers to elaborate on a policy for GST on real estate transactions. The construction sector has referred to change in ceiling for TDS, tax rebates and a tweak in capital gains tax on property transactions as good announcements.
On that note, Here is a look at previous interim budgets and the key statements announced in them: (Starting with the latest)
Piyush Goyal's Interim Budget of 2019-20:
Farm policies: Rs 6,000 per annum to be given to every farmer having up to 2 hectare land. Applicable from September 2018. Amount will be transferred in 3 installments. 2% interest subvention for farmers pursuing animal husbandry. Creation of separate department for fisheries.
Deductions: Full rebate up to Rs 5 lakh annual income after all deductions. Standard deduction increased from Rs 40,000 to Rs 50,000. Single window for approval of Indian filmmakers. Full Highlights available here
P Chidambaram the Finance Minister who presented India's dream budget also announced the Interim Budget of 2014-15. This interim budget was Announced on February 17, 2014:
- In this budget speech, he Offered an idea of the economy, emphasized that agriculture, Infrastructure development, and exports grew when his party was in control.
- A few major policies that he touched upon in his budget speech revolved around those on Sugar decontrol, Diesel Price Correction, and the liberalisation in FDI policies. He also elaborated upon the budgetary allocations made in scheduled caste sub-plan, tribal sub-plan, Child & Gender budget, and Defence.
- Although there was no major change, he announced a budget allocation on on One Rank One Pension policy. But the implementation was to be done prospectively from the next year.
- A provision to provide Rs 11,200 crore for capital infusion in public sector banks was mooted.
- Proposed that the moratorium for central scheme for interest subsidy on education loans be extended. Chidambaram said that this measure would benefit nearly 9 lakh student borrowers to the tune of approximately Rs 2,600 crore.
- No change in taxation policy owing to conventions of interim budget but other policy related measures proposed included a reduction of excise duty on cars and products under HS code chapter 24 and 25. Also, Healthcare services provided by blood bank servies were proposed to be exempt from service tax in this budget.
- To end his speech, Chidambaram quoted the Tamil Sage, Thiruvalluvar, “Vel Anru Venri Tharuvathu Mannavan Kol Athuvoom Kodaathu Enin.” (Not the spear but sceptre swayed with equity Alone gives the ruler victory.)
Pranab Mukherjee's Interim Budget of 2009-10 presented on February 16, 2009:
- Mukherjee proposed a total expenditure for fiscal 2009-10 at Rs.9,53,231 crore. He said this included a provision of Rs.2,85,149 crore under plan and Rs.6,68,082 crore under non plan.
- He Proposed several budgetary allocations in the interim budget. For the Sarva Shiksha Abhiyan program, an allocation of Rs.13,100 crore for 2009-10. Also, Rs.30,100 crores for National Rural Employment Guarantee Scheme; Rs.8,000 crores for the national programme of Mid-day Meals in schools; Rs.6,705 crore towards Integrated Child Development Scheme; Rs.11,842 crore for Jawaharlal Nehru National Urban Renewal Mission; Rs.7,400 crore for Rajiv Gandhi Rural Drinking Water Mission.
- Extended the interest subvention of 2 per cent on pre and post shipment credit for certain employment oriented sectors such as Textiles (including handloom & handicrafts), Carpets, Leather, Gem and Jewellery, Marine products and SMEs beyond March 31, 2009 till September 30, 2009. He expected an additional financial outgo of Rs.500 crore during Financial Year 2009-10.
- Speaking about the provisions and the vote-on-account, Mukherjee said, "While the proposed provisions are appropriate for a Vote-on-Account, I would like to point out that Plan expenditure for 2009-10 may have to be increased substantially at the time of the presentation of the regular Budget, if we are to give the economy the stimulus it needs to cope with the global recession that is likely to continue through the year. In the current environment, there is a clear need for contra-cyclical policy and it calls for a substantial increase in expenditure in infrastructure development where we have a large gap and in rural development where the programs such as Bharat Nirman and NREGS are playing a vital social role. Since the scope for revenue mobilization is bound to be limited in a period of economic slowdown, any increase in plan expenditure will increase the fiscal deficit. Indeed, we may have to consider additional plan expenditure of anything from 0.5 per cent to 1.0 per cent of the GDP and gear up our systems accordingly"
Jaswant Singh, presented the interim Union Budget on Feb 3, 2004
- In this budget he presented a rosy picture of the economic growth of the country. A major announcement was foregoing the levy of tax on capital gains on acquisition of agricultural land.
- Singh said, "Farmers face hardship on account of levy of tax on capital gains, and accrued interest on enhanced compensation, when their agricultural land is acquired by the Government. The Government believes that capital gains on such acquisition should be exempt from tax. There should also be no deduction of tax at source on the interest earned on enhanced compensation for acquisition of such land."
- Another corporate policy that was keenly appreciated was that of taxation on shipping tonnage. "More than 90 per cent of world shipping tonnage is subject to very low levels of taxation. To provide a level playing field so that Indian shipping becomes internationally competitive, a tonnage tax scheme, with notional income at a fixed rate, on the basis of net registered tonnage should be considered."
- The budget did not seek major changes to taxation, but Singh said that it was necessary to bring about a change in Income Tax procedures under the amendment of the Income Tax Act.
- "With these proposals I estimate total revenue receipts of the Centre at Rs 290,882 crore, the fiscal deficit at Rs.136,452 crore, which is 4.4 per cent of the estimated GDP and the revenue deficit at Rs.89,860 crore, which is 2.9 per cent of the estimated GDP."
Yashwant Sinha's, interim budget delivered on 4th March 1991:
- The year 1991 was one of great economic and political turmoil. A new government had been formed following the premature dissolution of the Lok Sabha on March 13, 1991. In terms of economic challenges, the Balance of Payment crisis and feeble foreign exchange reserves were alarming issues to be tackled.
- Sinha, in this interim-budget sought to disinvest upto 20% of equity in public sector undertakings in favour of mutual funds and financial or investment institutions in the public sector. The modalities were to be announced separately.
- The Finance Bill presented in the interim-budget sought to continue existing rates of Income tax, and there was no change in the rates of Customs and Central Excise duties. However, provision was made in the Finance Bill for the continuance of the auxiliary duties of Customs and special duties of Excise at the existing rates for the next financial year.
- Speaking about tax revenues, he said, "In the sphere of receipts, at the existing rates of taxation, gross tax revenue is estimated at Rs.65,354 crores next year, compared to the revised estimate of Rs.58,916 crores in the current year. The payments to States of their share of taxes is placed at Rs.15,900 crores next year as against Rs.14,535 crores in the current year. Thus, the net revenue receipts of the Centre, including non-tax revenue, are estimated to increase from Rs.57,381 crores in 1990-91 to Rs.63,584 crores in 1991-92. Under capital receipts, market borrowings are placed at Rs.7,500 crores next year which is lower than Rs.8,000 crores in the current year. Budgetary receipts from net collections of small savings are estimated at Rs.6,000 crores in 1991-92 as compared with Rs.8,000 crores in 1990-91 on account of the transfer of the National Savings Scheme to the new Bharat Bachat Bank, proposed to be set up. External assistance excluding grants but net of repayments is expected to be Rs.4,000 crores in the next year as against Rs.3,984 crores in the current year.
R Venkatraman's interim budget of 1980-81 was presented on June 18, 1980.
- The proposed Finance Bill sought to continue existing rates of income-tax. In Venkatraman's words, he sought "three proposals of a non-controversial nature for the amendment of the income-tax Act."
- A tax exemption for residents of Ladakh was proposed to be continued for a period of three years. Another Tax concession was proposed for outstanding work in alleviating distress of the poor, weak and ailing. The tax liability on the Nobel prize awarded to Mother Teresa was notably exempted. Venkatraman said, "Honorable Members will be glad to know that this provision will set at rest doubts about the taxability of the Nobel Prize awarded to Mother Teresa in recognition of her service to suffering humanity."
- "There is no change in the rates of customs and Central excise duties. However, provision has been made in the Finance Bill for the continuance of the auxiliary duties of customs and special duties of excise at the existing rates for the year 1980-81."
- Offering a glimpse of the economic situation, he said, "In the current year the economic situation has deteriorated greatly. The year 1979-80 is likely to record a decline of 1 to 2 per cent in Gross National Product. Agricultural production is expected to show a decline of something like 8 per cent and industrial production will be stagnant if not marginally lower than last year."
- "In the Budget for 1980-81 which is now being presented for purposes of vote on account, budgetary support for Central Plan is placed at Rs.4500 crores. Government is considering revamping of the present scheme of ‘food for work’ to make it a more potent instrument of employment generation. For the present, therefore, a provision of only Rs.70 crores is being made in the Budget for the existing scheme. Taking this also into account, budgetary support for Central Plan will be Rs.4570 crores against the Budget estimate of Rs.4411 crores for 1979-80."
HM Patel's Interim Budget, presented on March 28, 1977
- HM Patel's budget speech was reportedly the shortest at approximately 800 words, nearly one-tenth of Finance Minister Dr Manmohan Singh' budget speech of 1991.
- Patel clarified at the very outset of his budget that there was no time to prepare estimates and print budget documents afresh. "The annual financial statement and the demands for grants prepared earlier will serve the limited purpose of fulfilling the Constitutional requirements for taking a Vote on Account before the 31st March, 1977," he said in his budget speech.
- He claimed that the expenditures had increased. He proposed a budget with a deficit of Rs 1,432 crores. And during this interim budget, Patel also asked ministries, departments and Public Sector Undertakings under the control of the Central Government to abstain from taking up new schemes and fresh major commitments till a review was completed.
TT Krishnamachari's interim budget speech, presented on March 19, 1957
- TTK (Founder of Prestige) had become the first minister in independent India to resign over charges of corruption. Well, his exit meant that the then Prime Minister had to step in to announce the budget speech in Lok Sabha. Here's that story here.
- TTK's opening statement explains the reason for an interim budget and the conventions. I rise to present the budget of the Central Government for the year 1957-58. "In 1952, under similar circumstances, my predecessor [referring to CD Deshmukh's budget of 1952] presented an interim budget. Its main purpose is to place before Parliament, an account of the finances of the Central Government for the current year and to obtain from the House a vote on account to meet Government’s expenditure until the new Parliament considers the budget again.
- TTK presented revenues collected over headers such as direct taxation, capital gains tax, duties on rayon, synthetic fibres etc. Total expenditure was Rs 625 crores of which Rs 252.71 crores would go towards Defence services.
- Situation of foreign exchange and soaring imports was a grim reminder of the state of economy. TTK referred to a sum of $200 million sought from the International Monetary Fund. He also referred to tackling soaring imports and improving exports to tackle the challenge of balance of payments.
Interim budget was presented by CD Deshmukh in 1952-53 too.
Independent India's maiden budget speech too was an interim-budget. RK Chetty presented this budget speech. More details on that here.