Budget aimed at boosting incomes, enhancing purchasing power; fundamentals of economy strong, inflation well-contained, says finance minister Nirmala Sitharaman
Guwahati: Major cuts in personal income tax rates, massive state funding including a rail (Krishi rail) and air (Krishi Udaan) push for the farm sector to double farm income by 2022, an allocation of Rs 99, 300 crore for education sector, Rs 64,200 crore allocation for women, big push for infrastructure development have been some of the key highlights of Budget 2020 presented on Saturday by finance minister Nirmala Sitharaman.
This year's Union Budget centred around three ideas — Aspirational India, Economic Development, A Caring Society.
Undoubtedly, the high point of Sitharaman’s second Budget has been the income tax bonanza for the middle class. The new personal income tax regime would now have five slabs.
BIG INCOME TAX RATE CUTS
Those earning Rs 5 to Rs 7.5 lakh will have to pay only 10% tax (down from 20%). For income between Rs 7.5 lakh and Rs 10 lakh, the tax rate will be 15% (down from 20%). For income between Rs 10 lakh and Rs 12.5 lakh the tax rate will be 20% (down from 30%). For earnings between Rs 12.5 lakh and Rs 15 lakh tax at 25% (down from 30%) to be paid. No tax for those earning up to Rs 5 lakh. Tax rate of 30% remains for income over Rs 15 lakh.
But the new tax structure is optional and can be availed by only those who do not opt for the deductions and exemptions available in the earlier regime that allows a person to lower the salary to be taxed.
“Takeaways for me are related to the creation of the physical space for spending on rural infrastructure, capital spending on rural infrastructure be roads, accelerated highways be it irrigation that will not only ease the quality of life but that will also provide employment. The personal income tax has been rationalised and made easier as well so hopefully it will put money in the hands of the people and should start increasing the consumption cycle. If the consumption cycle goes up demand goes up and then economic activity of the country will also go up,” said Vipin Sondhi, MD and CEO, Ashok Leyland.
Another important announcement has been the proposal to guarantee bank deposits upto Rs five lakh, up from the current limit of Rs one lakh.
“When the speech was going on, Sensex was down 300 points. It shows the middle class businessman and upper class businessman have not accepted this budget. They will not gain this way. There is no scheme for the farmers. The Fasal Bima Yojana, this scheme is for the corporate and not for the interest of the farmers. People won’t benefit. It is budget for the corporate, it is the budget for the upper class, it is not for the workers interest.” CPI (M) leader from Tripura, Pabitra Kar said reacting to the Budget.
THINGS WHICH BECAME COSTLIER
Cigarettes & tobacco products – Excise duty to be increased
Fans – Custom duty raised to 20% from 10%
Refrigerators & Air Conditioners – Custom duty of specified goods used in refrigerators and ACs raised to 12.5% from 10%.
ALLOCATIONS TO KEY SECTORS
Infrastructure Sector –
-Rs 100 lakh crore to be invested on infrastructure over the next 5 years
-Rs. 103 lakh crore worth projects launched on December 31, 2019
-Rs 1.7 lakh crore for transport infrastructure
-100 more airports to be developed
- 1,150 trains to run in PPP mode
- 4 stations to be redeveloped with help of private sector
- More Tejas type trains to connect tourist destinations
- Delhi-Mumbai Expressway to be completed by 2023
- Chennai-Bengaluru Expressway to be launched soon
- National logistic policy soon
- Rs 27,300 crore provided for development and promotion of industry and commerce
ANNOUNCEMENTS FOR WOMEN
-Rs 28,600 crore for programmes specifically for women.
-Task force to recommend marriageable age for women
-Rs 35,600 cr allocated for nutritional related programmes
-Campaign to eliminate tuberculosis by 2025
-Rs 69,000 crore allocated for healthcare sector
-Rs 6,400 crore sanctioned for Ayushman Bharat Yojna.
-Agriculture sector allocation Rs1.38 lakh crore
-Rural development allocation Rs1.23 lakh crore
Rs 9,000 crore allocated for the welfare of senior citizens
GROWTH AND FISCAL DEFICIT
The finance minister has set a fiscal deficit target of 3.5% of GDP for the year ending March 2021 and said it expected nominal GDP of 10% in the next fiscal. The government had targeted nominal growth of 12% for the current fiscal year. Sitharaman further announced a fiscal deficit target of 3.8% of GDP in the current fiscal, up from the earlier target of 3.3% for the fiscal.
“This budget is nothing but eyewash. Did not see any such message that would help India overcome the economic crisis,” said Hare Krishna Bhowmik, Tripura Congress spokesperson.
Industrialist and former Chairman, R S Joshi said, “It is clearly an aspirational budget for an aspirational India, but I would like to describe it as 50% aspirational and 50% status quo budget. Keeping in view the present picture of Indian economy, challenges for the government is very high from one side and on the other they have tried to address the challenges through the recent budget. Some of the welcome feature for the capital through this budget is that they have abolished the Dividend Distribution Tax that has be irritant for long and through its removal both foreign and domestic companies will be in benefit..”
KEY TAKEAWAYS OF BUDGET 2020
– LIC stake sale: Government announces partial stake sale in LIC
- Rs 9,000 crore allocated for the welfare of senior citizens
- Tax harassment won’t be tolerated
- Modi govt proposes Tax Payer Charter
Krishi Udaan For Farmers
The finance minister said that Krishi Udaan will be launched by the Civil Aviation Ministry to transport agri-products to national as well as international destinations. Self Help Groups will be allowed to set up village agri storage facilities. NABARD will map and geo-tab 162 mn tonne capacity agri warehouses across country.
Kisan Rail in PPP mode for farmers
Indian Railways will set up Kisan Rail in PPP mode for cold supply chain to transport perishable good. Agriculture credit target has been set at Rs 15 lakh cr. NABARD refinance scheme will be expanded. Sates have been asked to adopt three central model laws on agricultural land leasing, marketing and contract farming
“The Budget aims to balance the sluggish growth of Indian economy and to make it more constructive. This budget is aiming to shift the paradigm from urban economy to rural economy by allocating Rs 1.23 lakhs crore to the rural sector. It also aims at reduction of taxes for corporate and individual sector and it is a bold step by the government,” said FINER (Federation of Industry and Commerce of North Eastern Region) president Pabitra Buragohain.