Indian Union Budget 2019-2020.
Interim Budget 2019-2020
Speech of
Piyush Goyal
Minister of Finance
February 1, 2019
Madam Speaker,
I rise to present the Interim Budget for the year 2019-20.
PART A
2. I am deeply conscious of the absence of Shri Arun Jaitley today.I am sure the House joins me in wishing Shri Jaitley speedy recovery, goodhealth and a long life in the service of the nation.
3. Madam Speaker, the people of India gave a strong mandate to ourGovernment. Under the visionary leadership of Hon'ble Prime Minister ShriNarendra Modi, we have given the most decisive, stable and cleanGovernment and have undertaken transformational structural reforms. Wehave reversed the policy paralysis engulfing the nation and have restored theimage of the country. The major achievement of this Government was that westrived our utmost to change the mind-set and ignited the self-confidence ofthe nation.
4. I can proudly say that India is solidly back on track and marchingtowards growth and prosperity. We have prepared the foundation forsustainable growth, progress and better quality of life for all our people.
5. We are moving towards realising a ‘New India’ by 2022, when wecelebrate 75 years of India’s independence: an India which is clean andhealthy, where everybody would have a house with universal access totoilets, water and electricity; where farmers’ income would have doubled;youth and women would get ample opportunities to fulfil their dreams;an India free from terrorism, communalism, casteism, corruption andnepotism.
State of the Economy
6. Madam Speaker, the last five years have seen India beinguniversally recognised as a bright spot of the global economy. The countrywitnessed its best phase of macro-economic stability during this period.We are the fastest growing major economy in the world with an annualaverage GDP growth during last five years higher than the growth achieved byany Government since economic reforms began in 1991. From being the11th largest economy in the world in 2013-14, we are today the 6thlargest in the world. Besides generating high growth rate, we containeddouble-digit inflation and restored fiscal balance.
7. Inflation is a hidden and unfair tax on the poor and the middleclass. The average rate of inflation during 2009-2014 was a backbreaking10.1%. The then Prime Minister admitted as much when he said, “Wehave also not been as successful in controlling persistent inflation as wewould have wished. This is primarily because food inflation has increased.”In contrast, our Govt. broke the back of back-breaking inflation. We broughtdown average inflation to 4.6% which is lower than the inflation duringthe tenure of any other Government. In fact inflation in December 2018was down to 2.19% only. If we had not controlled inflation, our familieswould have been spending around 35-40% more today on basicnecessities such as food, travel, consumer durables, housing etc.
8. From the high of almost 6% seven years ago, the fiscal deficit hasbeen brought down to 3.4% in 2018-19 RE. The current account deficit(CAD), against a high of 5.6% six years ago, is likely to be only 2.5% ofGDP this year. We contained the fiscal deficit notwithstanding the FinanceCommission's recommendations increasing the share of the States from32% to 42% in central taxes, which we accepted in the true spirit ofcooperative federalism, thereby transferring significantly higher amounts tothe States.
9. Due to a stable and predictable regulatory regime, growingeconomy and strong fundamentals, India could attract massive amount ofForeign Direct Investment (FDI) during the last 5 years - as much as $239billion. This period also witnessed a rapid liberalisation of the FDI policy,allowing most FDI to come through the automatic route.
10. Madam Speaker, the last five years have witnessed a wave of nextgeneration structural reforms, which have set the stage for decades ofhigh growth. We have undertaken path breaking structural reforms byintroducing Goods and Services Tax (GST) and other taxation reforms.
Banking Reforms and Insolvency and Bankruptcy Code (IBC)
11. The period of 2008-14 will be remembered as a period ofaggressive credit growth and, as per RBI, the primary reason for spurt innon-performing loans and stressed assets. Outstanding loans of publicsector banks ballooned from `18 lakh crore to `52 lakh crore during thisperiod. Many projects were started that could either not be completed orhad low capacity utilisation resulting in their inability to pay back theirloans. There were high stressed and non-performing assets (NPAs)amounting to ` 5.4 lakh crore in 2014. Many more were hidden throughrestructuring or otherwise which were discovered during Asset QualityReviews and inspections carried out since 2015.
12. We put a stop to such questionable practices and stopped theculture of “phone banking”. The 4Rs approach of recognition, resolution,re-capitalisation and reforms has been followed. A number of measureshave been implemented to ensure Clean Banking. Through a transparentand accountable process, we recognised these NPAs. The Insolvency andBankruptcy Code has institutionalised a resolution-friendly mechanism,which is helping in recovery of non-performing loans while preserving theunderlying businesses and jobs. Earlier, only small businessmen used to beunder pressure of repayment of loans while in the case of big businessmen, itwas the headache of banks. But now, defaulting managements are eitherpaying or exiting their businesses. An amount of close to ` 3 lakh crorehas already been recovered in favour of banks and creditors. To restorethe health of public sector banks, recapitalisation has been done with aninvestment of `2.6 lakh crore. Amalgamation of banks has also been doneto reap the benefits of economies of scale, improved access to capital andto cover a larger geographical spread.
Steps against corruption
13. We have ushered in a new era of transparency. We have given acorruption free government. The Real Estate (Regulation and Development)Act, 2016 (RERA) and Benami Transaction (Prohibition) Act, 1988 arehelping to bring transparency in the real estate sector. The FugitiveEconomic Offenders Act, 2018 will help confiscate and dispose off theassets of economic offenders who escape the jurisdiction of the laws inIndia. Additionally, we conducted transparent auction of natural resourcesincluding coal and spectrum. We have walked the talk.
Cleanliness
14. As a tribute to Mahatma Gandhi’s 150th birth anniversary in 2019,our Government initiated the world’s largest behavioural changemovement with the Swachh Bharat Mission. India has achieved 98% ruralsanitation coverage and as many as 5.45 lakh villages have been declared"Open Defecation Free." It is a holistic programme and has succeeded inchanging the mindset of our people. With the people participation, theytransformed it from a Government Scheme to a national movement. I thankthe 130 core people of the nation for the success of Swacch Bharat Abhiyanwho adopted it whole heartedly.
Poor and backward classes
15. The poor have the first right on the resources of the nation. TheGovernment while maintaining the existing reservation for SC/ST/OtherBackward Classes, have now ensured 10% reservation in educationalinstitutions and Government services for poors. In these institutions, around25% extra seats (approximately 2 lakh) will be provided so that, there is noshortfall of presently available/reserved seats for any class.
16. To provide food grains at affordable prices to the poor and middleclasses, about `1,70,000 crores were spent in the year 2018-19 which is almostdouble the amount of ` 92,000 crores spent in the year 2013-14. We ensuredthat everyone gets food and none goes to sleep hungry. `60,000 crores arebeing allocated for MGNREGA in BE 2019-20. Additional amount would beprovided if required.
17. We have worked to bridge the urban-rural divide in the country.Hon’ble Members in this August House, most of whom are from ruralareas, will agree that several times in the past, only empty promises havebeen made to people living in our villages. During the last five years, we have undertaken targeted expenditure to improve their quality of life inall its dimensions. Our aim, is to provide urban facilities in villages whilekeeping the soul of rural life intact.
18. Under the Pradhan Mantri Gram Sadak Yojana, construction ofrural roads has been tripled. 15.80 lakh habitations out of a total of 17.84lakh habitations have already been connected with pucca roads and workis going on to complete the rest very soon. Pradhan Mantri Gram SadakYojana (PMGSY) is being allocated ` 19,000 crore in BE 2019-20 as against` 15,500 crore in RE 2018-19. There was time when a child used to reachschool after walking on a foot trail, today the situation has changed and a buscan reach her/his village During the period 2014-18, a total number of 1.53crore houses have been built under the Pradhan Mantri Awas Yojana.
19. Till the year 2014, about 2.5 crore families were forced to live the life of18th centuary without electricity. Under 'Saubhagya Yojna', we provided freeelectricity connection to almost every household. By March, 2019, all willingfamilies will get electricity connection. In mission mode, we have provided 143crore LED bulbs with the participation of private sector. This has resulted into asavings of approximately ` 50,000 crore per year in electricity bills of poor andmiddle class families.
20. Madam Speaker, past five years have seen massive scale up ofhealth care. Earlier, a poor man used to be in dilemma whether to fulfil dailyneeds of the family or save the life of an ailing member. This situation hasdeeply pained our Hon'ble Prime Minister. We launched the world’s largesthealthcare programme, Ayushman Bharat, to provide medical treatment tonearly 50 crore people. Already close to 10 lakh patients have benefitedfor medical treatment which would have cost them ` 3,000 crore throughfree treatment made available under the scheme. Lakhs of poor and middleclass people are also benefiting from reduction in the prices of essentialmedicines, cardiac stents and knee implants, and availability of medicinesat affordable prices through Pradhan Mantri Jan Aushadhi Kendras.
21. There are 21 AIIMS operating or being established in the countrypresently. 14 of these 21 AIIIMS have been announced since 2014. I amhappy to announce setting up of new the 22nd AIIMS in Haryana.
22. The Aspirational Districts Programme is providing targeteddevelopment to the 115 most backward districts of the country. Theprogramme has achieved notable results with improved performance onall indicators - health and nutrition, education, agriculture and waterresources, financial inclusion and skill development.
Farmer's progress and Increase in Income
23. Madam Speaker, our hard working farmers were not getting the fullvalue of their produce. With an aim to double the income of farmers, ourGovernment, for the first time in history has fixed the minimum support price(MSP) of all 22 crops at minimum 50% more than the cost.
24. Agriculture continues to be the main driver of the rural economy.Our hard-working farmers, supported by pro-farmer policies of ourGovernment in the past four and half years, have produced agriculturecommodities in record quantities. Declining prices of agriculturalcommodities in the international market and fall in food inflation in Indiasince 2017-18, relative to non-food sector, have however, reduced thereturns from farming. Small and fragmented land holding on account ofrepeated divisions has also contributed in decline in the income of thefarmer family. Hence, there is a need for providing structured incomesupport to the poor land-holder farmer families in the country forprocuring inputs such as seeds, fertilizers, equipment, labour etc. and tomeet other needs. Such support will help them in avoiding indebtednessas well and falling into clutches of money lenders.
25. To provide an assured income support to the small and marginalfarmers, our Government is launching a historic programme namely“Pradhan Mantri KIsan SAmman Nidhi (PM-KISAN)”. Under thisprogramme, vulnerable landholding farmer families, having cultivable landupto 2 hectares, will be provided direct income support at the rate of`6,000 per year. This income support will be transferred directly into thebank accounts of beneficiary farmers, in three equal instalments of ` 2,000each. This programme will be funded by Government of India. Around 12crore small and marginal farmer families are expected to benefit fromthis. The programme would be made effective from 1st December 2018and the first instalment for the period upto 31st March 2019 would bepaid during this year itself. This programme will entail an annualexpenditure of ` 75,000 crore.
26. PM-KISAN would not only provide assured supplemental income tothe most vulnerable farmer families, but would also meet their emergentneeds especially before the harvest season. PM-KISAN would pave theway for the farmers to earn and live a respectable living.
27. I propose an outlay of ` 75,000 crore for PM-KISAN for theFY 2019-20. I am also providing ` 20,000 crore in the Revised Estimates ofFY 2018-19.
28. During the last five years, for providing affordable loans to farmers, theamount of interest subvention has been doubled. The crop loan to farmersincreased to `11.68 lakh crore in year 2018-19. We have made genuine effortsto remove the hardships of farmers by providing them Soil Health Cards,quality seeds, irrigation scheme and Neem Coated Urea to remove shortage offertilizers.
29. Animal Husbandry and Fisheries sector also needs considerablesupport. I have increased the allocation for Rashtriya Gokul Mission to `750crore in the current year itself. I announce setting up of "Rashtriya KamdhenuAayog" to upscale sustainable genetic up-gradation of cow resources andto enhance production and productivity of cows. The Aayog will also lookafter effective implementation of laws and welfare schemes for cows.
30. India is the second largest fish producing nation in the worldaccounting for 6.3% of global production, registering an average annualgrowth of more than 7% in recent years. The sector provides livelihood toabout 1.45 crore people at the primary level. To provide sustained andfocused attention towards development of this sector, our Governmenthas decided to create a separate Department of Fisheries.
31. In the last Budget, our Government announced the facility ofextension of Kisan Credit Card scheme (KCC) to Animal Husbandry andFisheries farmers. Now, I propose to provide the benefit of 2% interestsubvention to the farmers pursuing the activities of animal husbandry andfisheries, who avail loan through Kisan Credit Card. Further, in case oftimely repayment of loan, they will also get an additional 3% interestsubvention.
32. To ensure provision of easy and concessional credit and to bring allfarmers under KCC fold, our Government has decided to initiate acomprehensive drive with a simplified application form.
33. When natural calamities strike, farmers are generally unable torepay their crop loans. Presently, the crop loans are rescheduled for suchaffected farmers and they get benefit of interest subvention of 2% onlyfor the first year of the rescheduled loan. Our Government has nowdecided that all farmers affected by severe natural calamities, whereassistance is provided from National Disaster Relief Fund (NDRF), will beprovided the benefit of interest subvention of 2% and prompt repaymentincentive of 3% for the entire period of reschedulement of their loans.
Labour and Workers Dignity
34. Madam Speaker, our Government firmly believes that workmen and allthe people working in Government services should get benefit of the fastgrowing economy. During the last five years India has witnessed industrialpeace.
35. High growth and formalistation of the economy has led to theexpansion of employment opportunities as shown in EPFO membership,which has increased by nearly 2 crore in two years reflecting formalisationof the economy and job creations.
36. After submission of the 7th Central Pay Commission Report, therecommendations were implemented immediately. The New Pension Scheme(NPS) has been liberalized. Keeping the contribution of the employee at 10%,we have increased the Government contribution by 4% making it 14%.Maximum ceiling of the bonus given to the labourers has been increased from` 3,500 pm to ` 7,000 pm and the maximum ceiling of the pay has beenincreased from ` 10,000 pm to ` 21,000 pm. The ceiling of payment of gratuityhas been enhanced from ` 10 lakhs to ` 20 lakhs. During the last five years theminimum wages of labourers of the all categories have been increased by 42%,which is the highest ever. The ceiling of ESI's eligibility cover has beenincreased from ` 15,000 pm to ` 21,000 pm. Minimum pension for everylabourer has been fixed at ` 1,000 per month. In the event of death of alabourer during service, the amount to be paid by EPFO has been enhancedfrom ` 2.5 lakh to ` 6 lakh. Under Anganwadi and Asha Yojana honorarium hasbeen enhanced by about 50% for all categories of workers.
37. Half of India’s GDP comes from the sweat and toil of 42 croreworkers in the unorganised sector working as street vendors, rickshawpullers, construction workers, rag pickers, agricultural workers, beediworkers, handloom, leather and in numerous other similar occupations.Domestic workers are also engaged in big numbers. We must provide themcomprehensive social security coverage for their old age. Therefore, inaddition to the health coverage provided under ‘Ayushman Bharat’ andlife & disability coverage provided under ‘Pradhan Mantri Jeevan JyotiBima Yojana’ and ‘Pradhan Mantri Suraksha Bima Yojana’, our Governmentproposes to launch a mega pension yojana namely 'Pradhan MantriShram-Yogi Maandhan' for the unorganised sector workers with monthlyincome upto ` 15,000. This pension yojana shall provide them an assuredmonthly pension of ` 3,000 from the age of 60 years on a monthlycontribution of a small affordable amount during their working age. Anunorganised sector worker joining pension yojana at the age of 29 yearswill have to contribute only ` 100 per month till the age of 60 years. Aworker joining the pension yojana at 18 years, will have to contribute aslittle as `55 per month only. The Government will deposit equal matchingshare in the pension account of the worker every month. It is expectedthat at least 10 crore labourers and workers in the unorganised sectorwill avail the benefit of 'Pradhan Mantri Shram-Yogi Maandhan' withinnext five years making it one of the largest pension schemes of theworld. A sum of `500 crore has been allocated for the Scheme. Additionalfunds will be provided as needed. The scheme will also be implemented fromthe current year.
38. Our Government is committed to reach the most deprived citizens ofthis country. To this end, the condition of the De-notified, Nomadic and SemiNomadic communities merits special attention. These communities are hard toreach, less visible, and therefore, frequently left out. The Nomadic and SemiNomadic communities move from place to place in search of a livelihood. TheRenke Commission and the Idate Commission have done commendable workto identify and list these communities. A Committee under NITI Aayog will beset up to complete the task of identifying De-notified, Nomadic and SemiNomadic communities not yet formally classified. Our Government will also setup a Welfare Development Board under the Ministry of Social Justice andEmpowerment specifically for the purpose of implementing welfare anddevelopment programmes for De-notified, Nomadic and Semi-Nomadiccommunities. The Board shall ensure that special strategies are designed andimplemented to serve these hard-to-reach communities.
Women’s development to women led development
39. Madam Speaker, in our Election Manifesto, we had promised thatwe will transform the quality of life of women in rural India by providingcleaner fuel. For securing the health of every home-maker in rural areasand to ensure that she does not have to shed tears for cooking food tonourish her family, our Government embarked upon a programme to deliver 8 crore free LPG connections under the Ujjwala Yojana. More than6 crore connections have already been given and the remaining will getfree gas connections by next year. Ujjwala is a remarkable success story ofour Government programme, defined by a bold yet practical Vision of aresponsible and compassionate leadership.
40. More than 70% of the beneficiaries of Pradhan Mantri MUDRAYojana are women who are getting affordable and collateral-free loans tostart their own businesses. Amongst many measures, benefits of Maternityleave of 26 weeks and Pradhan Mantri Matru Vandana Yojana forpregnant women have provided financial support to women whileempowering them to participate in work.
Empowering Youth to fulfil their potential
41. India is amongst the most youthful nations in the world. ThroughPradhan Mantri Kaushal Vikas Yojana, over 1 crore youth are beingtrained to help them earn a livelihood. We have harnessed ªÉ Ö´ÉÉ ¶ÉÉ ÊkÉEthrough self-employment schemes including MUDRA, Start-up India andStand-up India. Under MUDRA Yojana 15.56 crore loans have been disbursedamounting to `7,23,000 crore. The concept of employment is changing all overthe world, now the employment generation is not confined merely toGovernment services or factories. With job seekers becoming job creators,India has become the world’s second largest start-up hub. We are proud ofthe hard work and innovative ideas of our youth.
42. In order to take the benefits of Artificial Intelligence and relatedtechnologies to the people, a National Programme on 'Artificial Intelligence'has been envisaged by our Government. This would be catalysed by theestablishment of the National Centre on Artificial Intelligence as a hub alongwith Centres of Excellence. Nine priority areas have been identified. A NationalArtificial Intelligence portal will also be developed soon.
Empowering MSMEs and Traders
43. Government has undertaken many effective steps to strengthen MSMEsector, which provides employment to crores of people. Recently, a scheme ofsanctioning loans upto ` 1 crore in 59 minutes has been launched. GSTregistered SME units will get 2% interest rebate on incremental loan of ` 1Crore. The requirement of sourcing from SMEs by Government enterprises hasbeen increased to 25%. Of this, the material to the extent of at least 3% will besourced from women owned SMEs.
44. Government e-Marketplace (GeM), created by our Government twoyears ago, has transformed public procurement by making it fullytransparent, inclusive and efficient. MSMEs have an opportunity to selltheir products through GeM. Transactions of over ` 17,500 crore havetaken place, resulting in average savings of 25-28%. The GeM platform isnow being extended to all CPSEs.
45. We have focussed on supporting domestic trade and services. OurGovernment has recently assigned the subject of “promotion of internaltrade including retail trading and welfare of traders, and their employees”to the Department of Industrial Policy and Promotion, which will now berenamed as the Department for Promotion of Industries and InternalTrade.
Strengthening Defence and National Security
46. Madam Speaker, our soldiers protect our borders in toughconditions. They are our pride and honour. We also respected their dignity.In our Election Manifesto, we had promised to implement One Rank OnePension (OROP). This was pending for the last 40 years and has beenresolved by us. The previous Governments announced it in three budgetsbut sanctioned a mere ` 500 crore in 2014-15 Interim Budget; in contrastwe have already disbursed over ` 35,000 crore after implementing theScheme in its' true spirit. The Government also announced substantial hikein the Military Service Pay (MSP) of all service personnel and specialallowances given to Naval and Air Force personnel deployed in high riskduties.
47. Our Defence Budget will be crossing ` 3,00,000 crore for the first timein 2019-20. For securing our borders and to maintain preparedness of thehighest order, if necessary, additional funds would be provided.
Supporting Indians across the world
48. Today, all persons of Indian origin feel secure that theirmotherland Bharat cares for them and at times of need will supportthem. India’s transformation has inculcated a sense of pride and respectfor Indians and persons of Indian origin across the globe. We have takenseveral initiatives to strengthen their connect with India, facilitate theirinvestment in India and ease their travel.
Infrastructure development
49. Infrastructure is the backbone of any nation’s development andquality of life. Whether it is highways or railways or airways or even digi-ways, we have gone beyond incremental growth to attain transformativeachievements.
50. Because of 'UDAAN Scheme', today an ordinary citizen is also travellingby air. The number of operational airports has crossed 100 with thecommissioning of the Pakyong airport in Sikkim. Domestic passenger traffichas doubled during the last five years leading to large number of jobsbeing created also. Today, India is the fastest highway developer in theworld with 27 kms of highways built each day. Projects stuck for decadeslike the Eastern Peripheral Highway around Delhi or the Bogibeel rail-cumroad bridge in Assam and Arunachal Pradesh have been completed. Theflagship programme of Sagarmala along the coastal areas of the countrywill develop ports for faster handling of import and export cargo. For thefirst time, container freight movement has started on inland waterwaysfrom Kolkata to Varanasi. Our Government will introduce container cargomovement to the North East as well, by improving the navigation capacityof the Brahmaputra river.
51. Indian Railways has experienced the safest year in its history. AllUnmanned Level Crossings on broad gauge network have been eliminated.Introduction of the first indigenously developed and manufactured semihigh-speed "Vande Bharat Express" will give the Indian passengers worldclass experience with speed, service and safety. This major leap in whollydeveloped technology by our engineers will give an impetus to the Makein India programme and create jobs. Capital support from the budget forrailways is proposed at ` 64,587 crore in 2019-20 (BE). The Railways’overall capital expenditure programme is of ` 1,58,658 crore. TheOperating Ratio is expected to improve from 98.4% in 2017-18 to 96.2%in 2018-19 (RE) and further to 95% in 2019-20 (BE).
52. India provided leadership to the global effort to address theproblem of climate change. Our commitment to promote renewableenergy is reflected in setting up the International Solar Alliance, the firsttreaty based international inter-governmental organisation headquarteredin India. India’s installed solar generation capacity has grown over tentimes in last five years. This sector is now creating lakhs of new agejobs.
53. India's import dependence on crude oil and natural gas has been asource of big concern to our Government. While we have taken a large numberof measures to moderate the increasing demand through usage of bio fuel andalternate technologies, urgent action is needed to increase hydrocarbon production to reduce imports. A high level Inter-Ministerial Committee,constituted by our Government, has made several specific recommendations,including transforming the system of bidding for exploration, changing fromrevenue sharing to exploration programme for Category II and III basins. TheGovernment is in the process of implementing these recommendations.
54. The people of North East have also received significant benefits ofinfrastructure development. Arunachal Pradesh came on the air maprecently and Meghalaya, Tripura and Mizoram have come on India’s railmap for the first time. Allocation for the North Eastern Areas is beingproposed to be increased by 21% to ` 58,166 crore in 2019-20 BE over2018-19 BE.
Digital India Revolution
55. Madam Speaker, India is now leading the world in theconsumption of mobile data. Monthly consumption of mobile dataincreased by over 50 times in the last five years. The cost of data andvoice calls in India is now possibly the lowest in the world. Today, underMake in India, mobile and parts manufacturing companies have increasedfrom 2 to more than 268 providing huge job opportunities. More than 3lakh Common Service Centres (CSCs) employing about 12 lakh people, aredigitally delivering several services to the citizens. The Common ServiceCentres are expanding their services and also creating digital infrastructure inthe villages, including connectivity, to convert the villages into Digital Villages.The Government will make 1 lakh villages into Digital Villages over next fiveyears.
56. Jan Dhan-Aadhaar-Mobile (JAM) and Direct Benefit Transfer havebeen game changers. Bank nationalisation was first done 50 years ago,but a large part of the country was still left out of the economicmainstream with no access to formal banking. In the last five years,nearly 34 crore Jan Dhan bank accounts were opened. Aadhaar is nownear universally implemented. This has helped ensure the poor andmiddle class receive the benefits of Government schemes directly in theirbank accounts by eliminating middlemen.
Entertainment
57. Entertainment industry is a major employment generator. Topromote entertainment industry - Single window clearance for ease ofshooting films, available only to foreigners, is now going to be madeavailable to Indian filmmakers as well. Regulatory provisions will rely more on self-declaration. We will also introduce anti-camcording provisions inthe Cinematograph Act to control the menace of piracy.
Simplification of Direct Tax System to benefit Tax-payers
58. Madam Speaker, for making the life of our direct tax-payers easy,we reduced tax rates, more for the common man and middle class, andmade the interface with the tax department much simpler and largelyfaceless. Due to this, the tax collections increased significantly from ` 6.38Lakh crore in 2013-14 to almost ` 12 lakh crore this year. The numberof returns filed have also increased from 3.79 crore to 6.85 crore showing80% growth in tax base. I thank the honest taxpayers of India forreposing faith in our Government. Let me assure them that we have usedtheir contribution to serve the poor and create better infrastructure.
59. The Income Tax Department now functions online. Returns,assessments, refunds and queries are all undertaken online. Last year,99.54% of the income-tax returns were accepted as they were filed. OurGovernment has now approved a path breaking, technology intensiveproject to transform the Income-tax Department into a more assesseefriendly one. All returns will be processed in twenty-four hours andrefunds issued simultaneously. Within the next two years, almost allverification and assessment of returns selected for scrutiny will be doneelectronically through anonymised back office, manned by tax experts andofficials, without any personal interface between taxpayers and tax officers.
60. Reducing the tax burden on middle class has always been ourpriority ever since our Government took over in 2014. We increased thebasic exemption limit from ` 2 lakh to ` 2.5 Lakh and gave tax rebate sothat no tax was payable by persons having income up to ` 3 lakh. Wealso reduced the tax rate from 10% to 5% for the tax slab of `2.5 lakh to` 5 lakh and introduced Standard Deduction of ` 40,000 for the salariedclass. Deduction of savings under section 80C was increased from` 1 lakh to ` 1.5 lakh. Deduction of interest for self-occupied houseproperty was raised from `1.5 lakh to `2 lakh.
61. Special benefits and incentives were also given to small businessesand start-ups. Overall compliance processes were simplified. Thresholdlimit for presumptive taxation of business was raised from` 1 crore to ` 2 crore. The benefit of presumptive taxation was extendedfor the first time to small professionals fixing threshold limit at `50 lakh.In order to promote a less cash economy, the presumptive profit rate hasbeen reduced from 8% to 6%. The tax rate for companies with turnover of up to `250 crore, covering almost 99% of the companies, was reducedto 25% which was also applicable to new manufacturing companieswithout any turnover limits.
GST Reform for benefit to consumers and businesses
62. The Goods and Services Tax (GST) reforms lingered on during theprevious Government for almost a decade. Our Government implementedthe GST, which is undoubtedly the biggest taxation reform undertakensince Independence. Seventeen different taxes levied by the Central andState/UT Governments with cascading effect of tax on tax, wereconsolidated into one GST. India became a common market. GST hasresulted in increased tax base, higher collections and ease of trade. Thiswill reduce the interface between the tax payer and the Government forday-to-day operations and assessments. Now returns are fully online ande-way bill system is in place. Inter-state movements have become faster,more efficient, and hassle free with no Entry Tax, check posts, and truckqueues.
63. The high taxation levied on multiple commodities in the pre-GSTregime has been rationalised and the burden on the consumer, especiallythe poor and the middle class, has been significantly reduced. The GSTCouncil, comprising the Centre and States/UTs, finalised the GST ratescollectively mostly lower than pre-GST rates. Since then, GST has beencontinuously reduced providing relief of about ` 80,000 crore annually toconsumers. Most items of daily use of the poor and middle class are nowin the 0% or 5% tax slab. Cinema goers who were subjected to multipletaxes up to 50% are mostly paying much lower tax at 12% now. OurGovernment wants the GST burden on home buyers to be reduced andaccordingly we have moved the GST Council to appoint a Group ofMinisters to examine and make recommendations in this regard at theearliest.
64. GST aims to benefit small traders, manufacturers and serviceproviders. Exemptions from GST for small businesses has been doubledfrom `20 lakh to `40 lakh. Further, small businesses having turnover upto ` 1.5 crore have been given an attractive composition scheme whereinthey pay only 1% flat rate and have to file one annual return only.Similarly, small service providers with turnover upto `50 lakhs can now optfor composition scheme and pay GST at 6% instead of 18%. More than 35lakh small traders, manufacturers and service providers will benefit fromthese trader friendly measures. Soon, businesses comprising over 90% ofGST payers will be allowed to file quarterly return.
65. In spite of such major rate reductions and relaxations, revenuetrends are encouraging. The average monthly tax collection in the currentyear is ` 97,100 crore per month as compared to ` 89,700 crore permonth in the first year. The State revenues are improving withguaranteed 14% annual revenue increase for the first five years.
Customs and Trading Across Border Reforms
66. To promote the “Make in India” initiative, we have undertakenrationalization of customs duties and procedures. Our Government hasabolished duties on 36 capital goods. A revised system of importing dutyfree capital goods and inputs for manufacture and export has beenintroduced, along with introduction of single point of approval undersection 65 of the Customs Act. Indian Customs is introducing full andcomprehensive digitalization of export/import transactions and leveragingRFID technology to improve export logistics.
Demonetisation and Drive against Black Money
67. Our Government is committed to eliminating the ills of blackmoney from our country. The anti-black money measures taken by usduring the last four and half years in the form of Black Money Law, theFugitive Criminal Offenders Act, and Demonetisation, have broughtundisclosed income of about ` 1,30,000 crore to tax, led to seizure andattachment of assets worth approximately ` 50,000 crore, and compelledholders of large cash currency to disclose their source of earnings. Duringthis period, Benami assets worth ` 6,900 crore and foreign assets worth`1,600 crore have been attached. As many as 3,38,000 shell companieshave been detected and de-registered, and their directors disqualified.Growth of 18% in direct tax collection in 2017-18 and increase in taxbase by as many as 1.06 crore people filing income tax returns for thefirst time in FY 2017-18 is mainly on account of demonetization.
Vision for the next Decade
68. Madam Speaker, the NDA Government headed by Hon'ble PrimeMinister Shri Narendra Modi has laid the foundation for India’s growthand development for times to come. We have resolved many problemswhich were coming in the way of realising our full potential as a societyand an economy. We are poised to become a Five Trillion Dollar Economyin the next five years and aspire to become a Ten Trillion Dollar Economyin the next 8 years thereafter.
69. In the Indian ethos, anything which is good is supposed to bestow,cause, create and do good in all ten directions. I will, therefore, layout ourvision for ten most important dimensions in 2030.
70. The First Dimension of this Vision will be to build physical as wellas social infrastructure for a ten Trillion Dollar economy and to provideease of living. It will comprise next generation infrastructure of roads,railways, seaports, airports, urban transport, gas and electric transmissionand inland waterways. On the social infrastructure side, every family willhave a roof on its head and will live in a healthy, clean and wholesomeenvironment. We will also build a quality, science oriented educational systemwith Institutes of Excellence providing leadership at the top.
71. The Second dimension of our Vision is to create a Digital Indiareaching every sector of the economy, every corner of the country andimpacting the life of all Indians. Digital Infrastructure and digital economyof 2030 will be built upon the successes achieved in recent years indigitisation of Government processes and private transactions. Our youthwill lead us in this endeavour with innumerable start-ups creating digitalIndia, and millions of jobs in this eco-system.
72. Making India a pollution free nation with green Mother Earth andblue skies is the Third Dimension of our Vision. This India will drive onElectric Vehicles with Renewables becoming a major source of energysupply. India will lead the world in the transport revolution throughelectric vehicles and energy storage devices, bringing down importdependence and ensuring energy security for our people.
73. Expanding rural industrialisation using modern digital technologiesto generate massive employment is the Fourth Dimension of our Vision.This will be built upon the Make in India approach to develop grass-rootslevel clusters, structures and mechanisms encompassing the MSMEs,village industries and start-ups spread in every nook and corner of thecountry. India is now on the way to becoming a global manufacturing hubin various sectors including automobiles and electronics, defence andmedical devices.
74. Our rivers and water bodies are our life supporting assets. OurGovernment has worked vigorously for cleaning River Ganga. FifthDimension of our Vision for India of 2030 is Clean Rivers, with safedrinking water to all Indians, sustaining and nourishing life and efficientuse of water in irrigation using micro-irrigation techniques.
75. India’s long coastline has the potential of becoming the strengthof the economy, particularly through exploitation of the Blue Economy, toensure better standards and quality of life for a large number of peopleliving in the coastal areas. Our efforts in the Sagarmala programme will bescaled up and we will develop other inland waterways faster. Ourcoastline and our ocean waters powering India’s development and growthis the Sixth Dimension of our Vision.
76. The Seventh Dimension of our Vision aims at the outer skies. Ourspace programme – Gaganyaan, India becoming the launch-pad ofsatellites for the World and placing an Indian astronaut into space by2022 reflect this dimension of our vision.
77. Making India self-sufficient in food, exporting to the world to meettheir food needs and producing food in the most organic way is theEighth Dimension of our Vision. High farm production and productivity willbe achieved through modern agricultural practices and value addition. Anintegrated approach towards agro and food processing, preservation,packaging and maintenance of the cold chain will be our focus ofattention.
78. A healthy India is the Ninth Dimension of our Vision. We will beaiming at healthy society with an environment of health assurance and thesupport of necessary health infrastructure. Our Government has rolled outthe Ayushman Bharat scheme. By 2030, we will work towards a distressfree health care and a functional and comprehensive wellness system forall. Such a healthy India built with the participation of women having equalrights and concern for their safety and empowerment.
79. Our Vision can be delivered by Team India - our employeesworking together with the elected Government, transforming India into aMinimum Government Maximum Governance nation. This is the TenthDimension. Our India of 2030 will have a proactive and responsiblebureaucracy which will be viewed as friendly to people.
80. With this comprehensive ten-dimensional Vision, we will create anIndia where poverty, malnutrition, littering and illiteracy would be amatter of the past. India would be a modern, technology driven, highgrowth, equitable and transparent society.The Fiscal Programme for 2019-20 and beyond
81. The estimate of incomes and expenditure which I am presentingtoday, pegs the fiscal deficit of year 2019-20 at 3.4% of GDP. We wouldhave maintained fiscal deficit at 3.3% for year 2018-19 and taken further stepsto consolidate fiscal deficit in year 2019-20. However, considering the need forincome support to farmers we have provided `20,000 crore in 2018-19 RE and` 75,000 crore in 2019-20 BE. If we exclude this, the fiscal deficit would havebeen less than 3.3% for 2018-19 and less than 3.1% for year 2019-20.
82. Total expenditure rises from ` 24,57,235 crore in 2018-19 RE to`27,84,200 crore in 2019-20 BE, a rise of `3,26,965 crore orapproximately 13.30%. This reflect a high increase considering low inflation.Capital Expenditure for 2019-20 BE is estimated to be ` 3,36,292 crore.Centrally Sponsored Schemes (CSS) are proposed to be allocated `3,27,679crore in BE 2019-20 as against ` 3,04,849 crore in 2018-19 RE. Allocationfor National Education Mission is being increased from ` 32,334 crore inRE 2018-19 to ` 38,572 crore in BE 2019-20. Allocation for IntegratedChild Development Scheme (ICDS) is being increased from ` 23,357 crorein RE 2018-19 to `27,584 crore in BE 2019-20.
83. A substantial increase is proposed in the allocation for welfare ofthe Scheduled Castes and Scheduled Tribes. The allocation of `56,619 croremade in BE of 2018-19 for Scheduled Caste, further increased to ` 62,474crore in RE is proposed to be enhanced to `76,801 crore in BE for 2019-20, an increase of 35.6% over BE of 2018-19. For the Scheduled Tribesalso, proposed allocation in 2019-20 BE is ` 50,086 crore as against`39,135 crore in BE 2018-19, an increase of 28%.
84. We have pursued the public enterprises asset management agendato make these enterprises accountable to the people. As many as 57CPSEs are now listed with total market capitalisation of over ` 13 lakhcrore. The Government received over ` 1 lakh crore from disinvestmentproceeds during 2017-18. We are confident of crossing the target of`80,000 crore this year.
85. We have maintained the glide path towards our target of 3% offiscal deficit to be achieved by 2020-21. India’s Debt to GDP ratio was46.5% in year 2017-18. The FRBM Act prescribes that the Debt to GDPratio of the Government of India should be brought down to 40% by2024-25. Along with completion of the fiscal deficit consolidationprogramme, we will now focus on Debt consolidation.
86. Our Government had promised last year that we will carry outreforms in stamp duty levied and collected on financial securitiestransactions. I am proposing, through the Finance Bill, necessaryamendments in this regard. The amendments proposed would usher in avery streamlined system. Stamp duties would be levied on one instrumentrelating to one transaction and get collected at one place through theStock Exchanges. The duty so collected will be shared with the StateGovernments seamlessly on the basis of domicile of buying client.
PART B:
Tax Proposals
87. On behalf of all the people of India and our Government, I would firstlike to thank all our taxpayers for their valuable contribution to nation buildingand for providing a better life to the poor and marginalized sections of society.Your tax helps provide dignity to our sisters and mothers with toilets andcooking gas connections. Your tax pays for the electricity connections to thepoor who lived in darkness for generations. The tax you pay will provide healthcare to 50 crore brothers and sisters, and children. It is you who is ensuringrespect, dignity, and a secure future to our retired jawans through One RankOne Pension. Thank you, taxpayers.
88. Because of major tax reforms undertaken by us during the last four andhalf years, both tax collections as well as the tax base have shown significantincrease and we have made progress towards achieving a moderate taxation–high compliance regime. It is, therefore, just and fair that some benefits fromthe tax reforms must also be passed on to the middle class taxpayers. Keepingthis in view, I propose to further reduce the tax burden on such taxpayers.Though as per convention, the main tax proposals will be presented in theregular budget, small taxpayers especially middle class, salary earners,pensioners, and senior citizens need certainty in their minds at the beginningof the year about their taxes. Therefore, proposals, particularly relating to suchclass of persons should not wait. Hence, while for the present the existingrates of income tax will continue for FY 2019-20, I propose the following:
89. Individual taxpayers having taxable annual income up to ` 5 lakhs willget full tax rebate and therefore will not be required to pay any income tax. Asa result, even persons having gross income up to ` 6.50 lakhs may not berequired to pay any income tax if they make investments in provident funds,specified savings, insurance etc. In fact, with additional deductions such asinterest on home loan up to ` 2 lakh, interest on education loans, NationalPension Scheme contributions, medical insurance, medical expenditure onsenior citizens etc, persons having even higher income will not have to pay anytax. This will provide tax benefit of ` 18,500 crore to an estimated 3 croremiddle class taxpayers comprising self employed, small business, smalltraders, salary earners, pensioners and senior citizens.
90. For salaried persons, Standard Deduction is being raised from thecurrent ` 40,000 to ` 50,000. This will provide additional tax benefit of` 4,700 crore to more than 3 crore salary earners and pensioners.
91. Currently, income tax on notional rent is payable if one has more thanone self-occupied house. Considering the difficulty of the middle class havingto maintain families at two locations on account of their job, children’seducation, care of parents etc. I am proposing to exempt levy of income tax onnotional rent on a second self-occupied house.
92. TDS threshold on interest earned on bank/post office deposits is beingraised from ` 10,000 to ` 40,000. This will benefit small depositors and nonworking spouses. Further, the TDS threshold for deduction of tax on rent isproposed to be increased from ` 1,80,000 to ` 2,40,000 for providing relief tosmall taxpayers.
93. The benefit of rollover of capital gains under section 54 of the IncomeTax Act will be increased from investment in one residential house to tworesidential houses for a tax payer having capital gains up to ` 2 crore. Thisbenefit can be availed once in a life time.
94. Fo94. For making more homes available under affordable housing, thebenefits under Section 80-IBA of the Income Tax Act is being extended for onemore year, i.e. to the housing projects approved till 31st March, 2020.
95. Also, for giving impetus to the real estate sector, I have proposed toextend the period of exemption from levy of tax on notional rent, on unsoldinventories, from one year to two years, from the end of the year in which theproject is completed.
Concluding Remarks
96. Madam Speaker, This is not merely an Interim Budget, but a medium ofthe country's development journey. All the transformation that we arewitnessing, is because of the passion of the people of our nation. The creditgoes to them only. Development has become a mass-movement during theperiod of our Government.
97. We will transform India into a leading nation of the world with the helpof our people. We, along with them have laid the foundation. A grand edificewill be erected with their support. We have given a decisive leadership, whoseintent is clear, policy is transparent and integrity is resolute.
98. With this, I commend the Budget to this august House.