Budget 2020-21 aims at energising Indian economy

Source :ANI
Author :ANI
Last Updated: Sat, Feb 1st, 2020, 18:33:32hrs
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Union Finance Minister Nirmala Sitharaman (Photo/ANI)

New Delhi [India], Feb 1 (ANI): The Union Budget 2020-21, which Union Finance and Corporate Affairs Minister Nirmala Sitharaman presented in the Lok Sabha on Saturday, aims at energising the economy of India through a combination of short-term, medium-term, and long term measures.

"I congratulate Finance Minister Nirmala Sitharaman and her team for presenting the first Budget of the decade that has vision as well as action," said Prime Minister Narendra Modi. "India will now move to become a key member of the global value chain. Skill sets needed for the development of a modern and New India have been focussed," he said, adding that key announcements have been made to aid exports and MSME sector.
The Union Budget has been structured on the overall theme of 'Ease of Living' which has been achieved by farmer-friendly initiatives such as agriculture credit target of Rs 15 lakh crore for 2020-21, schemes of 'Kisan Rail' and 'Krishi Udaan' for a seamless national cold supply chain for perishables, and expansion of PM-KUSUM to provide 20 lakh farmers for setting up stand-alone solar pumps.
Chief Statistician of India and Secretary, Ministry of Statistics & Programme Implementation, said the bold initiatives in the Union Budget are crucial to India for achieving a 5 trillion-dollar economy.
In a statement, he said the government's focus on developing infrastructure and its emphasis on health, education, skill development, innovations, tourism, MSMEs, agriculture and allied areas will contribute to economic growth.
For the year 2020-21, nominal growth of GDP has been estimated at 10 pc, while receipts have been pegged at Rs 22.46 lakh cr and expenditure at Rs 30.42 lakh cr. For the FY 2019-20, revised estimates of expenditure were Rs 26.99 lakh crore and revised estimates of receipts Rs 19.32 lakh crore.
Net market borrowings were at Rs 4.99 lakh crore for 2019-20, which have been pegged at Rs 5.36 lakh crore for 2020-21. A good part of the borrowings for the financial year 2020-21 to go towards capital expenditure that has been scaled up by more than 21 per cent.
In the health sector, the Budget proposes more than 20,000 empanelled hospitals under the PM Jan Arogya Yojana for poor people; and expansion of Jan Aushadhi Kendra Scheme to all districts offering 2000 medicines and 300 surgicals by 2024.
Infrastructure receives a boost, with 100 more airports by 2024 to support Udaan scheme; and operation of 150 passenger trains to be done through PPP mode. Starting apprenticeship embedded courses through 150 higher educational institutions by March 2021 and a proposal to establish the Indian Institute of Heritage and Conservation are some of the other major highlights.
Finance Minister Sitharaman said: "The Union Budget aims to achieve seamless delivery of services through digital governance, improve the physical quality of life through National Infrastructure Pipeline, risk mitigation through disaster resilience social security through pension and insurance penetration."
The Finance Minister said that more than Rs 2.83 lakh crore would be spent on agriculture, rural development, irrigation and allied activities as farmers and rural poor continue to remain the key focus of the government.
Moreover, comprehensive measures for 100 water-stressed districts, proposal to expand PM-KUSUM to provide 20 lakh farmers for setting up stand-alone solar pumps and for another 15 lakh farmers to solarise their grid-connected pump sets, setting up of efficient warehouses at the block level.
Dwelling on the wellness, water and sanitation theme, Sitharaman said Rs 69,000 crore is being provided for health care including Rs 6400 crore for Prime Minister Jan Arogya Yojana (PMJAY) under which there are more than 20,000 empanelled hospitals more in Tier-2 and Tier-3 cities for poorer people.
On education and skill front, Rs 99,300 crore has been allocated in 2020-21 and Rs 3,000 crore for skill development. New Education Policy will be announced soon. About 150 higher educational institutions will start apprenticeship embedded degree and diploma courses by March 2021.
Referring to economic development, the Finance Minister said that Rs 27,300 crore would be allocated for development and promotion of industry and commerce for the year 2020-21. An Investment Clearance Cell will be set up to provide 'end to end' facilitation. It is proposed to develop five new smart cities in collaboration with States in PPP mode.
A scheme to encourage the manufacture of mobile phones, electronic equipment and semi-conductor packaging is also proposed. A National Technical Textiles Mission would be set up with a four-year implementation period from 2020-21 to 2023-24 at an estimated outlay of Rs 1,480 crore to position India as a global leader in technical textiles.
On infrastructure sector, as highlighted by Prime Minister Modi that Rs 100 lakh crore would be invested over the next five years, the National Infrastructure Pipeline was launched on December 31, 2019, of Rs 103 lakh crore. It consists of more than 6500 projects across sectors and is classified as per their size and stage of development.
On the new economy, Sitharaman said that a policy to enable the private sector to build Data Centre parks throughout the country will be brought out soon. Fibre to the Home (FTTH) connections through Bharatnet will link 100,000-Gram Panchayats this year. It is proposed to provide Rs 6,000 crore to Bharatnet programme in 2020-21.
Harping on the theme of a caring society, she said that Rs 35,600 crore proposed for nutrition-related programmes for the financial year 2020-21. Rs 28,600 crore proposed for programmes that are specific to women. Moreover, Rs 85,000 crore would be allocated towards the welfare of Scheduled Castes and Other Backward Classes for 2020-21.
Similarly, for furthering development and welfare of Scheduled tribes, Rs 53,700 crore is proposed for 2020-21. She said the government is mindful of the concerns of senior citizens and Divyang. Accordingly, an enhanced allocation of Rs 9,500 crore is being provided for 2020-21.
On environment, states that are formulating and implementing plans for ensuring cleaner air in cities above one million will be encouraged. Parameters for the incentives to be notified by the Ministry of Environment, Forests and Climate change and the allocation for this purpose is Rs 4,400 crore for 2020-21.
She said that in the last few years, the Government of India has infused about Rs 3,50,000 crore by way of capital into public sector banks (PSBs) for regulatory and growth purposes. The governance reforms would be carried out in these banks so that they become more competitive.
On disinvestment, the Finance Minister said that listing of companies on stock exchanges discipline a company and provides access to financial markets and unlocks its value. It also gives an opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of Initial Public Offer (IPO).
On fiscal management, she announced to transfer to the GST Compensation Fund balances due out of the collection of the years 2016-17 and 2017-18, in two instalments. Hereinafter, transfers to the fund would be limited only to the collection by way of GST compensation cess.
She said the government has estimated nominal growth of GDP for the year 2020-21, on the basis of trends available, at 10 per cent. Accordingly, receipts for the year 2020-21 are estimated at Rs 22.46 lakh cr and, keeping in mind commitment of the government towards various schemes and need for improvement in the quality of life, level of expenditure has been kept at Rs 30.42 lakh cr.
She said that to make sure India stays globally competitive and a favoured destination for investment, a bold historic decision was taken to reduce the corporate tax rate for new companies in the manufacturing sector to an unprecedented level of 15 per cent. For existing companies, the rate has been brought down to 22 per cent.
According to the new regime of personal income tax, individual taxpayers will pay tax at a reduced rate of 10 per cent for income between Rs 5 lakh and 7.5 lakh against the current rate of 20 per cent.
"Those with an income between Rs 7.5 lakh and Rs 10 lakh will pay tax at 15 per cent against the current 20 per cent. Those with income between Rs 10 and Rs 12.5 lakh will pay tax at 20 per cent, down from 30 per cent," she said.
The Finance Minister further said that tax rates for income between Rs 12.5 lakh and Rs 15 lakh will be 25 per cent under the new regime.
"To provide significant relief to individual taxpayers and simplify the tax law, a new regime of personal income tax to be introduced," she said.
To boost start-ups, the tax burden on employees due to tax on Employee Stock Options (ESOPS) has been deferred by five years or till they leave the company or when they sell, whichever is earliest.
Around 70 of more than 100 income tax deductions and exemptions have been removed, in order to simplify the tax system and lower tax rates, said the minister, adding that substantial tax benefit will accrue to individual taxpayers under the new personal income tax regime.
Key HIGHLIGHTS
* Those earning up to Rs 5 lakh in a year will pay no tax.
* Income between Rs 5-7.5 lakh, the tax rate is 10 pc.
* Income between Rs 7.5-10 lakh, the tax rate is 15 pc.
* Income between Rs 10-12.5 lakh, tax rate cut to 20 pc from 30 pc.
* Income above 15 lakh rupees will continue to be taxed at 30 pc.
* A person earning Rs 15 lakh per anum and not availing any deductions will now pay Rs 1.95 lakh tax in place of Rs 2.73 lakh.
* The new personal income tax regime entails an estimated revenue foregone amounting to Rs 40,000 crore per year.
The new tax regime shall be optional for taxpayers. An individual who is currently availing more deductions and exemption under the Income Tax Act may choose to avail them and continue to pay tax in the old regime.
The Finance Minister said she had reviewed all exemptions and deductions which got incorporated in the income tax legislation over the past several decades. Currently, more than one hundred exemptions and deductions of different nature are provided in the Income Tax Act. She said that she has removed around 70 of them in the new simplified regime.
She said that the remaining exemptions and deductions would also be reviewed and rationalized in the coming years, with a view to further simplifying the tax system and lowering the tax rate.
Currently, companies are required to pay Dividend Distribution Tax (DDT) on the dividend paid to its shareholders at the rate of 15 per cent plus applicable surcharge and cess, in addition to the tax payable by the company on its profits.
In order to remove the cascading effect, the Finance Minister has proposed to allow a deduction for the dividend received by holding company from its subsidiary. The removal of DDT will lead to estimated annual revenue foregone of Rs. 25,000 crore. This will further make India an attractive destination for investment.
The Finance Minister noted that during their formative years, Start-ups generally use Employee Stock Option Plan (ESOP) to attract and retain highly talented employees. Currently, ESOPs are taxable as perquisites at the time of exercise.
In order to give a boost to the start-up ecosystem, the Finance Minister has proposed to ease the burden of taxation on the employees by deferring the tax payment for five years or till they leave the company or when they sell their shares, whichever is earliest.
In order to reduce the compliance burden on small retailers, traders, shopkeepers who comprise the MSME sector, the Finance Minister has proposed to raise by five times, the turnover threshold for audit from the existing Rs 1 crore to Rs 5 crore. In order to boost a less-cash economy, she has proposed that the increased limit shall apply only to those businesses which carry out less than 5 per cent of their business transactions in cash.
On the customs side, India has taken a quantum leap in the 'Trading across border' parameter of Ease of Doing Business rankings by the World Bank. India's rank has improved from 146 to 68. Imports under Free Trade Agreements are on the rise.
Keeping in view the need of the MSME sector, customs duty is being raised on items like footwear and furniture. Rate of duty for footwear is being raised from 25 pc to 35 pc, and for 'parts of the footwear' from 15 pc to 20 pc. Rate of duty for specified furniture goods is being raised from 20 pc to 25 pc.
To give impetus to the domestic industry, and to generate a resource for health services, it is proposed to impose a nominal health cess of 5 per cent on imports of specified medical equipment. Basic customs duty on imports of newsprint and light-weight coated paper is being reduced from 10 per cent to 5 per cent. (ANI)

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