The interim budget for the fiscal year 2019-20 presented by the government of India encompasses numerous proposals catering to various sectors such as Defence, Textiles, Railways, Micro Small and Medium Enterprises (MSME), and notably, the direct taxes affecting the economy. The following report provides an analysis of these proposals and their implications.
Defence Infrastructure
The allocation for Defence in this year’s interim budget saw a significant boost, increasing to Rs 3.18 lakh crore. This surge might be attributed to imminent large-scale defence tenders forming part of military modernization procedures. For the first time, India’s defense budget is crossing the threshold of Rs.3,00,000 crore in FY 2019-20.
Textile Sector and its Schemes
Two major schemes currently in operation under the Ministry of Textiles – the ‘Amended Technology Upgradation Fund Scheme’ and the ‘Remission of State Levies’, registered a decreased allocation for 2019-20. The interim budget saw a decrease of over ₹1,000 crore in allocation for the textiles sector.
Amended Technology Upgradation Fund Scheme
Presented in 1999, the Technology Upgradation Fund Scheme aimed at promoting the use of new and suitable technology to render the textile industry globally competitive, facilitating reduced capital costs. In 2015, the scheme was revised and approved as the “Amended Technology Upgradation Fund Scheme (ATUFS)”.
Indian Railways
The Indian Railways received the highest-ever allocation of ₹1.5 lakh crore in the interim budget of 2019-20. Furthermore, the government introduced the Vande Bharat Express, the first indigenously developed and manufactured semi high-speed train.
Micro Small And Medium Enterprises (MSME)
The interim budget proposed a 2% interest rebate on an incremental loan of Rs. 1 crore to GST-Registered SME units, therefore giving an impetus to the MSME sector.
| Area | Description |
|---|---|
| Defence | Allocation increased to Rs. 3.18 lakh crore |
| Textile | Decreased allocation of over ₹1,000 crore |
| Railways | Received highest-ever allocation of ₹1.5 lakh crore |
| MSME | Proposed 2% interest rebate on incremental loan of Rs. 1 crore |
Economic Proposals in Detail
Direct Taxes have undergone several alterations with the new proposals stating that individual taxpayers with annual taxable income of up to Rs.5 lakhs will now be exempted from any income tax liabilities. The budget witnessed a considerable escalation in tax collections; an increment from Rs 6.38 lakh crore in 2013-14 to almost Rs 12 lakh crore this year. This increase is due to demonetization, enhanced digital technology for information collection, digital assessment, reduced number of scrutiny cases and ease of refunds majorly concerning small and medium taxpayers.
Growth and Foreign Direct Investment (FDI)
GST and other tax reforms have led to the potential for high economic growth. With increased tax base, higher collections, and ease of trade, the Finance Minister proclaims that India is likely to evolve into a USD 5-trillion economy in the next five years. The nation aspires to become a USD 10-trillion economy in the subsequent eight years. During the past five years, India has attracted substantial Foreign Direct Investment (FDI) amounting to $239 billion.
Allocation for North Eastern Areas and Other Provisions
The budget also marked the highest ever allocation of Rs 58,166 crore for North Eastern Areas. Provisions were made for single window clearance for Indian filmmakers on par with foreigners, and increased budgetary allocations for Education, Health, and Infrastructure.
Vision for India 2030
The government’s vision for India by 2030 includes an emphasis on creating infrastructure- both social and physical- and digitizing governmental processes along with implementing strides towards pollution reduction, rural industrialization, river cleaning, micro-irrigation, boosting the space programme, ensuring food sufficiency, improving health services, women empowerment and the principle of “minimum government, maximum governance”.