On July 5, Finance Minister Nirmala Sitharaman presented the first budget of the new Modi government. She announced a slew of measures in her maiden budget speech. Budget 2019 focuses on incremental measures. Among key announcements, the government is all set to launch an interoperable ATM-like card for pan-India travel (One Nation One Card), new rental laws for affordable housing, an interest subvention scheme for small and medium enterprises and women.
In her speech, Nirmala Sitharaman spoke about how the country came out to vote in large numbers this election. She said, “India celebrated its democracy by coming out to vote in large numbers, like never before. Voter turnout was the highest at 67.9%. Every section – young, old, first-time voters, voters since the first general election, women – all turned up to stamp their approval of a performing government. Through their unambiguous and firm mandate, they have reaffirmed 'putting the nation first'. The people of India have validated the two goals for our country’s future: that of the national society and economic growth.”
Nirmala laid the following reforms as part of Budget 2019:
1.Pension benefit to be extended to around 3 crore retail traders and shopkeepers with an annual turnover of less than Rs 1.5 crores under Pradhan Mantri Karam Yogi Man Dhan Scheme
2. Movement of cargo on river Ganga is estimated to rise 4 times in 4 years
3. Railway infrastructure would need an investment of 50 lakh crores between 2019 and 2030
4. Trading in corporate bonds would be made user-friendly
5. A comprehensive restructuring of National Highways Programme will be done to ensure the creation of National Highways Grid of desirable capacity
6. SEBI to increase public-holding in listed companies to 35% from 25%, inter-operability of platforms between RBI, Sebi will be improved
7. 100% FDI will be permitted for insurance intermediaries
8. User-friendliness of trading platforms for corporate bonds will be reviewed, including issues arising out of capping of International Securities Identification Number
9. Healthy society – Ayushman Bharat, well-nourished women & children, and safety of citizens
10. 25,000 km of road to be upgraded over next 5 years at a cost of 802.5 billion rupees
11. Electricity, clean cooking facilities for all Indian families by 2022
12. Investment in agricultural infrastructure and provide support to private entrepreneurship in driving value addition to farmers produce & those from allied activities too, like bamboo, timber & also for generating renewable energy
13. Railways will be encouraged to expand suburban networks
14. Expansion of the Swachh Bharat mission to undertake sustainable solid waste management in every village
15. 80 Livelihood business incubators and 20 technology business incubators to be set up in 2019-20 to develop 75,000 skilled entrepreneurs in agro-rural industries
16. Initiate ‘Study in India’ that will focus to bring foreign students to study in India
17. Commence a TV channel exclusively for start-ups
18. India will be made Open Defecation Free (ODF) on October 2nd, 2019
19. Ensuring India's water security & providing access to safe drinking water to all
20. NRIs with Indian passports will get Aadhaar cards after arrival without the mandatory wait of 180 days
21. Popularise sports at all levels, National Sports Education Board for development of sportspersons to be set up under Khelo India
22. PSU banks to be provided ₹70,000 crore to boost capital
23. Indian embassies and high commissions to be opened in countries where India doesn't have a resident diplomatic mission as yet
24. A new series of coins of denominations 1 rupee, 2 rupees, 5 rupees, 10 rupees and 20 rupees, will be made available for public shortly
25. The government will bring a new national education policy and ₹400 crore has been provided for world-class institutions
26. Income tax deduction of ₹1.5 lakh to buyers of electric vehicles
27. Tax deduction of 150,000 rupees on interest paid on housing loans for self-occupied house owners
28. PAN and Aadhaar cards would soon be interchangeable
29. Start-ups won't be subject to scrutiny on angel tax
30. A TDS of 2% to be levied on cash withdrawals exceeding ₹1 crore in a year from a bank account to discourage cash payments
But let’s take a closer look at how this budget will affect the common man.
For the first time in six years, the tariff on import duties on Gold have been hiked. Gold and silver in most forms will see a duty hike from 10 per cent to 12.50 per cent. A good time to sell off old jewellery, but probably not the best time to purchase more.
After the increase in fuel taxes was announced, petrol and diesel prices have risen by at least Rs 2.4 and Rs 2.36 a litre respectively across metro cities. Time to start carpooling.
The finance minister also said that 5 per cent customs duty has been imposed on imported books. Amazon, you listening?
The customs duty levied on tiles and vinyl flooring has been hiked from 10 per cent to 15 per cent. Time for wooden flooring, perhaps?
To discourage the import of cashews, the import duty on cashew kernels has gone up from 45 per cent to 70 per cent. I anyway loved peanuts more with my beverages! (If you know what I mean)
Customs duty on auto parts, including oil and petrol filters for engines horns, glass mirrors and locks, have gone up by 2.5-5 per cent. This increase will invariably lead to an increase in the prices of automobiles in the future. Let’s hope we don’t require any replacements anytime soon!
The finance minister has increased customs duty on CCTV cameras by 5 per cent to 20 per cent. What happened to taking safety measures more seriously?
The finance minister has levied an excise duty on tobacco products from 0.5-1 per cent. While the increase in prices of cigarettes may be marginal, it might be time to consider quitting smoking.
Customs duty on fully imported cars will now attract duty of 30 per cent from 25 per cent earlier. Let’s promote Make In India.
However, not all things are going to get more expensive.
To promote affordable housing, the Budget 2019 proposed to increase the deduction claimable for interest on housing loans from Rs 1.5 lakhs to Rs 3.5 lakhs per annum (for houses valued up to Rs 45 lakhs). You can avail this deduction on housing loans taken until March 31, 2020. Time to invest! The new budget also announced a new model tenancy law to streamline the rental housing market.
As per Budget 2019, the government will provide additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This amounts to a total of 2.5 lakhs over the loan period. An increase in fuel prices and a decrease in the price of electric vehicles seems like a fair move.
With an objective of securing our borders, the new Budget presented by the Modi government 2.0 proposed an exemption on customs duties levied on the import of defence equipment. The total allocation for defence spends is now Rs 4.31 trillion, this includes a defence pension of Rs. 1.12 trillion. This allocation is roughly about 2 per cent of the GDP, slightly lower than the 2.28% allocation in 2014-2015.
To provide relief to this industry, Finance Minister Nirmala Sitharaman announced rationalization of export duty on raw and semi-finished leather. Here’s hoping we find cheaper leather jackets, eventually!
Prime Minister Narendra Modi said that Budget 2019 is citizen-friendly, development-friendly and future-oriented, which will pave the way for building a ‘new India’.