Starting with reciting a Kashmiri poem “nation blooming like a lotus in Dal Lake” Finance Minister presented a budget on Feb 1, 2020. Riding on an ambitious plan for disinvestment, a sharp jump in non-tax revenue and a tight control on outlays for subsidies the union budget conceded the slippage in the current year’s deficit to 3.5%. A common man as usual expecting a tax relief at an individual or industrial level & bold initiatives to revive the economic growth. In a report by CRISIL said that the budget unlikely to boost economy in short term mainly due to widening of the fiscal deficit target. The Sensex also closed about 1000 points lower on its previous note but bounce back 900 points and 350 points within a couple of days. In successive years the budget planning & its strength always increase and the expenditure spread over number of important sectors including new innovative programmes & schemes. The current union budget is based on employment generation oriented for our youth. The Renewable Energy gets 22000 crores for the current fiscal on various schemes of power, a boost to this sector. The new income tax regime announced by Finance Minister would discourage people from investing in tax saving instruments such as mutual funds may have impact on insurance companies in the long run. Incidentally on post budget impact the fuel prices come down of petrol by 9 paisa & diesel by 8 paisa in fourth time consecutively. It may be because of Coronavirus in China which slump the demand of petroleum products. Commenting whether the budget & its allocation has a potential to cope with GDP, Fiscal deficit and other parameters it is much imperative how to implement it on ground. The budget allocation to different sectors and its proper utilization so that each sector gets benefited shall remain a challenging task. It has been observed that despite adequate amount of allocation funds remains unutilized at the end of each FY. The current budget based on three major components comprising of inspirational India, building a caring society and economic development for all.
Education & Agriculture
In case of education sector the allocation of Rs.99, 300 crores against Rs.94,800 crores in the FY 2019-20 is a welcome step. The sum of Rs.3000 crores earmarked for the skill development will definitely boost the employment opportunities and will help of being India as the largest working age population. To attract foreigner students in education sector and will be helpful to promote India a destination for foreign students not only generate revenue but also to build a world class exposure environment in education. In view of global demand for teachers, medical and paramedical staff measures are taken in this direction for the youth to decrease the unemployment problem. By allocating Rs.2.83 lakh crore for irrigation & agriculture sector will boost agriculture export and government is looking to double the farmer’s income by 2022 hence increase in farm credit by 11%. The government proposal in the budget to enhance the fisheries by creating 500 fish farmer producers attract a gain in Avaanti Feed & others on stock market. The budget pushed to providing further relief to the famers by covering 6.11 crore farmers PM Fasal Bima Youjana under Kisan Credit Card will boost the morale of a farmer. One of the best steps towards the overall growth of agriculture sector is to focus on farm sector and replacement of revised incentive scheme against the use of chemical fertilizers. Shakti Pumps India ltd jumped the most at Sensex after the proposal announced to help the farmers by setting up standalone solar pumps.
Income Tax & Information Technology-IT’s
The tax relief on personal income were lowered as a step to boost consumption for an economic growth. Companies are no longer required to pay Dividend Distribution Tax (DDT) and simplified GST returns will commence from April 2020 are some positive measures in the budget. The Tax relief for builders developing affordable housing in line with government initiative “housing for all” shall continue. The shares of real estate companies declined in post budget like Godrej Properties, Oberoi Realty Ltd and DLF due to lack of any specific measure to propel sales for big corporate builders. Increase in bank deposit insurance cover from Rs.1 lac to Rs.5 lacs per depositor will definitely improve the confidence among customers. To allow IT firms like Infosys & Wipro setting Data Centre Parks will be benefited to Information Technology market and considered a welcome step by the respective organizations.
Transport system- Road & Airways.
A robust transport system network remains a priority of every country for economic growth & overall development. Huge funds allocation for establishment of hi-tech transport infrastructure will improve the transport system all over India. To save time, decrease the accident incidents and save revenue comes under the proposed plan. Plans for highways & railways unveiled by proposing Rs.1.7 trillion for transport infrastructure and completion of new airports by 2022. To ease congestion in existing airports and enhance the connectivity process between cities government plans to establish eleven new airports in 2020. The construction work on new and expansion of existing running under Regional Air Connectivity Scheme also known as UDAN is on with full swing. To start building new airports will directly improve the positivity in real estate sector market. The airport in Greater Noida of Jewar commence from 2022 and will be used an alternative to Indira Gandhi International Airport and cater North-east state flights. The Infrastructure companies like Larson & Toubro shares will achieve height upward trend in stock market. Out of already proposed 100 new airports in next 15 years with an estimated cost of Rs.4 lakh crore 70 airports will be at new locations.
Other sectors
The allocation of Rs.69000 crores for the health sector to establish hospitals in small cities with private sector participation will reduce the heavy rush & unbearable load to the hospitals currently functional across the country. From primary hospital at remote villages to big medical institutes to run as per the expectations of the people is important for health is wealth. The budget makes a way for higher allocation on some government initiated programmes such as PMGSY, PMKSY, Pradhan Mantri Awas Youjna (PMAY) and PM Kissan Samman Nidhi. One segment remain untouched again in this budget is the judiciary which has been ignored as usual. At the same time the budget tries to manage its finances added new dimensions to reduce the expenditure in the current year & restrict further slippage. It has been cleared that non-resident Indian (NRIs) would be liable to pay tax on income derived from business or profession in India only.
UT J&K Budget
In case of UT’s of J&K and Ladakh, the government (union budget) has allocated Rs.30,757/- crores for J&K and Rs.5958/- crores for Ladakh. In absence of J&K assembly the union ministry will present over Rs.1 lakh crore budget for J&K in coming weeks.
Shabir Ahmad Shah can be reached at shabir_anas@yahoo.com
