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Budget 2019 LIVE: Opposition terms interim budget a 'jumla'; Congress says Narendra Modi giving a vision of 10 yrs at end of tenure

FP Staff

Budget 2019 LATEST Updates: Rajasthan chief minister Ashok Gehlot termed the budget as another 'jumla' of the Narendra Modi government. The Opposition has been targeting the interim budget calling it an exhibition of hollow dreams. Gehlot said that Narendra Modi was showing people dreams for the next 10 years when in reality, his term is going to end soon.

Prime Minister Narendra Modi on Friday addressed the nation after his government presented its final budget and highlighted its salient features. Modi said that under his government's proposed schemes, 12 crore farmers, 3 crore middle-class income taxpayers and 30-40 crore labourers will be benefitted.

At a press conference, former finance minister P Chidambaram said, "My one line comment on the budget is that it is not a vote on account but an account for votes."

Every report (on its performance) has exposed the false claims. None of the numbers put out by the government is true. The government is not able to see that thousands of villages and millions of homes that do not get electricity.

Piyush Goyal said that the government's hands were tied since this was an Interim Budget. However, the government still tried to reach out to the two poorest sections of society, ie small farmers and labourers in unorganised sector. He said that the Rs 6000 annual income support will really help the small farmers who are cash strapped for smallest of their needs. 

Piyush Goyal said that the government's hands were tied since this was an Interim Budget. However, the government still tried to reach out to the two poorest sections of society, ie small farmers and labourers in unorganised sector

BJP president Amit Shah weighed in on the Budget stating that it was a big move to offer relief to poor and farmers. He also lauded Prime Minister Narendra Modi and interim finance minister Piyush Goyal.

Union Minister Arun Jaitley Friday complimented Piyush Goyal for delivering an excellent pro-farmer, pro-poor budget which will also strengthen the purchasing power of middle class. However, Congress alleged that the Budget was more like an election manifesto read out from the floor of the House.

Benchmark equity indices held on to gains Friday morning even as the Budget overshot the fiscal deficit target for the current financial year. The 30-share BSE Sensex was trading 456 higher at 36,713. Similarly, the 50-share NSE Nifty rose 138 points at 1.28 percent to 10,969 at 1.10 PM.

Dangling a pre-poll carrot for the middle class, Finance Minister Piyush Goyal says the government proposes to raise the income tax exemption limit to Rs 5 lakh, but left the implementation to the next government in the full-fledged budget. It has also proposed to raise the standard deduction to Rs 50,000. Among the major sops, Piyush Goyal has announced Rs 6,000 per annum direct cash transfer to farmers owning less than 2 hectares of land.

At the end of his address, Piyush Goyal puts forth BJP's election pitch. Exalting the government's job and congratulating the Indian electorate, Goyal said, "We have only build the foundation. The plan is to build a grand India on this strong foundation. Intention is clear, policies are transparent and dedication is unwavering."

Noting that middle class tax payers should be exempted from income tax, Finance minister Piyush Goyal says, "Full tax rebate on income up to 5,00,000 rupees per annum." Exemption on tax deducted at source on interest earned from bank, post office savings raised to 40,000 rupees from 10,000 rupees. Standard deduction for salaried class raised to 50,000 rupees from 40,000 rupees, says Goyal.

Goyal says he is confident that disinvestment proceeds will cross 800 billion rupees this year. "Capital expenditure for 2019-20 seen around Rs 3.36 trillion on centrally sponsored schemes. Fiscal deficit would have been less than 3.1 percent in 2019-20 without farm income benefit scheme," says Goyal.

While there is no cheer for the middle class in income tax slabs, the government has made filing returns easier, said finance minister Piyush Goyal, and claimed that it will be processed within 24 hours. Within nearly two years, almost all assessment and verification of IT returns will be done electronically by an anonymised tax system without any intervention by officials, he promises.

India poised to become $5 trillion economy in next five years, says finance minister Piyush Goyal. Speaking of northeastern states, Goyal said, "Allocation to India's northeast region proposed to be increased by 21 percent over previous fiscal year."

India's fiscal deficit this financial year would be 3.4 percent of gross domestic product (GDP), slightly higher than the targeted 3.3 percent, the country's acting finance minister said on Friday while presenting an interim budget. All income tax returns to be processed within 24 hours, says Goyal. "Tax collection is at 12 trillion rupees," claimed Goyal.

Piyush Goyal highlights Modi government's rural outreach programme: Centre to allocate Rs 75,000 crore per year to support farmers' incomes; Impact of Rs 20,000 crore in current fiscal year; Vulnerable farmers to receive Rs 6,000 per year in three equal instalments; Government to allocate Rs 60,000 crore for UPA's flagship MNREGA in 2019/20; Allocation of Rs 19,000 crore for construction of rural roads in 2019-20.

Finance Minister Piyush Goyal says more than 70 percent of the beneficiaries of the PM Mudra Yojana are women and it additionally helps them set up businesses and other entrepreneurship related activities.

our soldiers are our pride and honour. "One Rank One Pension', which was pending for the last 40 years, was implemented by us. We have already disbursed Rs 35,000 crore for our soldiers under 'One Rank One Pension', substantial hike in military service pay has been announced."

Government will set up a national centre for artificial intelligence to look into AI programmes. It will also provide two percent loan relaxation for businesses registered as SMEs, says Piyush Goyal.

Goyal says that the 'job seeker is now a job creater'. "India is among the youngest nations of the world. PM Kaushal Vikas Yojana is training over 1 crore youths. More than 70 percent of the beneficiaries of the PM Mudra Yojana are women to help them set up businesses and other entrepreneurship related activities. Job seeker is now a job creator. Now, government offices and factories are not the only employers. The definition of employment and self employment is changing now. India is the hub of second largest start up," he says.

The Modi government has decided to set up 'Rashtriya Kamdhenu Aayog' for implementation of policies and schemes for welfare of cows. "We are committed to the cause of gaumata," says finance minister. "Increase in allocation for fisheries and husbandary sector for GOKUL scheme. Government has decided to create a separate department for fisheries. Two percent relaxation in credit for will be given to farmers who are in animal husbandary," says Piyush Goyal.

"Farmers earlier did not get full cost for their produce. Farmers income has reduced over the years. Income support to farmers small and marginal faers Pradhan Mantri Kisan Samman Nidhi (KISAN) has been approved. Farmers owning 2 hectares and less will be provided with Rs 6,000 per annum directly into their accounts. There are nearly 12 crore such farmers,' says Piyush Goyal in a major incentive for farmers in Budget 2019.

Exalting Modi government's contribution to "farmers' welfare", finance minister Piyush Goyal says. "For the welfare of farmers and for doubling their income, historic decision was taken to increase MSP by 1.5 times the production cost for all 22 crops."

Among the first major announcements in budget speech 2019, Finance Minister Piyush Goyal says Rs 60,000 crore has been set aside for MGNREGA, the rural employment scheme, adding that the allocation can be increased further. Expectations are running high across demographics from the Narendra Modi government's Budget 2019, with the finance exercise expected to be a little more robust than the traditional election-year vote-on-account.

Amid Opposition ruckus, Piyush Goyal says, "Rs 3 lakh crore has been recovered in favour of banks, creditors and big defaulters have also not been spared." "From from 10.1 percent in the period 2009-14, we have brought it down to 2.12 percent. We have broken the back of back-breaking inflation," says finance minister.

File image of Prime Minister Narendra Modi. Reuters

File image of Prime Minister Narendra Modi. Reuters

"We are moving to realising a new India by 2022. In the last 5 years India has emerged a major economy in the last year. Our GDP numbers are higher than any developing economy," says Finance Minister Piyush Goyal. Inflation is a hidden and unfair tax, says Goyal.

Finance minister Piyush Goyal starts presenting the interim budget. Goyal began with wishing early recovery to Arun Jaitley. People of India gave a strong mandate to our government. Under Narendra Modi, we have given more decisive, stable and clean government," says Goyal.

Mallikarjun Kharge says, "They'll try to introduce populist schemes in the Budget keeping an eye on Lok Sabha polls. Budgets they've presented so far haven't really benefitted general public. Only 'Jumlas' will come out today. They've only 4 months when will they implement the schemes?" Meanwhile, the Narendra Modi Cabinet has approved the Budget 2019. Piyush Goyal, who is filling in for Arun Jaitley, will present the Budget at 11 am. Ministers in the Modi government dropped ample hints to suggest that the interim Budget 2019 will be a populist one. Union minister for Parliamentary Affairs Narendra Singh Tomar said that it will be in line with the government's motto of Sabka Sath Sabka Vikas,while MoS Railways Manoj Sinha said that the focus will be on youth and farmers, MoS Civil Aviation Jayant Sinha said that a policy response to the unemployment crisis is likely in this Budget.  

The BSE benchmark Sensex Friday jumped over 100 points ahead of the Budget presentation amid heavy buying by foreign portfolio investors. The 30-share index was trading 119.01 points, or 0.33 per cent, higher at 36,375.70. Similarly, the 50-share NSE Nifty rose 34.15, or 0.32 per cent, to 10,865.10.

The electoral compulsions mean that major economic reforms, such as tax cuts for bigger companies and plans to bring down the Budget deficit, could be put on hold at least until after the election, government sources said. However, there is a chance that the government could take corrective action in March, with an expectation that the election schedule will be settled by that time and that public focus will shift to campaigning.>

Finance Minister Piyush Goyal has arrived at the Finance Ministry ahead of the Budget presentation. His speech is expected to start at 11 am and will last roughly two hours, as the minister covers key highlight points of the Interim Budget.

Goyal is expected to come up with a populist measure in the Interim Budget such as a minimum income guarantee or universal basic income. The figure may vary in accordance with the plan but it won't be anything less than 1.6 percent to even 4 percent of the GDP. It is difficult to understand how the government will fund the scheme.

Finance Minister Piyush Goyal declared at an all-party meeting Wednesday that a "Budget is a Budget" and not an Interim Budget or a Vote-on-Account, which is the norm with just a few months to go for the general elections, sending alarm bells in the Opposition camp. Meanwhile, Congress has declared that it will oppose the move in the Lok Sabha when the Budget is presented.

A lot will be expected from Finance Minister Piyush Goyal who will present the Narendra Modi-led NDA government's sixth and last budget before the Lok Sabha elections due in a couple of months. Income tax concessions for individuals, a farm relief package, support for small businesses and possible populist spending measures may be part of Goyal's budget on 1 February, as the government makes a last-ditch attempt to woo voters ahead of the general elections. Meanwhile, Fitch Ratings on Thursday warned of a second consecutive year of fiscal slippage in the event of Goyal resorting to populist spending to win over lost vote base.

"Higher pre-election spending could risk a second consecutive year of fiscal slippage relative to the government's targets and would further delay plans to reduce the high general government fiscal deficit and debt burden," it said.

This budget is supposed to be an interim budget or a 'Vote on Account'. But it is widely expected that Goyal may go beyond seeking Parliament nod for government expenditure for four months of next fiscal and announce sops to woo rural and urban middle-class voters, industry sources and experts said. As per convention, the outgoing government only seeks parliamentary approval for limited period spending, leaving the full Budget presentation for the new regime in July.

Under pressure from a resurgent Congress which is going all out to lure voters with the promise of debt waiver for farmers and a minimum income for the poor if voted to power, Goyal may announce some form of a direct transfer of cash to farmers. This may or may not replace subsidies that farmers get but will certainly be aimed at addressing rural distress, which was primarily blamed for BJP's defeat in recent Assembly elections in three states €" Rajasthan, Chhattisgarh and Madhya Pradesh. The farm relief package may cost anywhere between Rs 70,000 crore to Rs 1 lakh crore, according to sources.

Goyal, who was given the additional charge of the finance ministry after former finance minister Arun Jaitley had to fly to New York for medical treatment, is widely expected to raise income tax exemption thresholds. Basic exemption limit may be raised from Rs 2.5 lakh to Rs 3 lakh for individuals of less than 60 years of age and from Rs 3 lakh to Rs 3.5 lakh for those aged 60 years or more but less than 80. Women taxpayers may get a higher basic exemption of Rs 3.25 lakh or even at par with senior citizens, as per sources.

An alternative to raising the exemption limit is to raise the 80C deduction to Rs 2 lakh from Rs 1.5 lakh to encourage taxpayers to save more for their future.

Considering delay in housing projects and also rising interest rates, deduction of interest amount on housing loan for a self-occupied house property may be enhanced to Rs 2.5 lakh from Rs 2 lakh. The set-off cap of adjusting loss from house property against other heads of income may also be accordingly raised to Rs 2.5 lakh from Rs 2 lakh, according to sources. The increase in personal income tax exemption limit is unlikely to meaningfully reduce collections unless the successive tax slabs are also changed. Also, being speculated are cheap loans for small businesses and increased rural spending.

For the farm sector, the possible options include the direct transfer of money to farmers like in the Telangana model of Rythu Bandhu, interest-free crop loan for those farmers who pay on time and zero premium for insurance of food grain crops. The measures, industry and informed sources say, could include those to create employment as the government faces a tag of giving a jobless high GDP growth.

For investors, these sops may translate into another breach in the budget deficit target of 3.3 percent of GDP for the current fiscal and a possible record borrowing in the coming financial year.

In 2018-19, the largest downside to revenues has been from the GST collections with the shortfall likely at around Rs 1.4 lakh crore. Goyal may also look at higher interim dividend from RBI and deferring subsidy payouts on fertiliser as well as LPG and kerosene to provide funds for the populist schemes. Credit rating agencies have warned that without bringing down another spending, a higher farm subsidy bill will increase future fiscal deficits.

Sources said the interim budget would provide an opportunity for the government to outline its medium-term economic priorities, specifically with regards to improving farm/rural incomes. It would be important to continue its focus on overall infrastructure expansion, especially as private sector investments remain tepid and a nascent recovery hinges on government spending. There is also a talk of the government looking at the idea of a Quasi-Universal Basic Income Scheme (QUBI). The concept of a Universal Basic Income (UBI) in the context of India was outlined in the Economic Survey 2016-17.

However, a UBI for the entire population (and even for the BPL population) will entail a prohibitively high fiscal outgo. In fact, without a commensurate reduction in various transfers (subsidies and social programmes), it might not be feasible to implement a UBI for the entire population. However, the government could target the poorest of the poor (possibly 40 percent of the BPL population) based on the 2011 census. Some say a hypothetical Rs 700 to Rs 1,200 per month can be provided to the poorest of the population (around 12 crore people). This will entail an outgo of Rs 1 lakh crore or 0.5 percent of the GDP.

The interim budget to be presented could give some indication of the government's commitment to fiscal consolidation, which is one of the main sensitivities in the sovereign ratings, Fitch said. "Pressure for new expenditure to attract votes, particularly among rural and small-business owner voters, has increased as polls have shown the ruling Bharatiya Janata Party (BJP) is becoming less assured of victory in the general elections.

"The BJP has reportedly lost votes in some recent state elections due to rural distress and public concerns over job creation. Targeted cash programmes appear the most likely form of support, as they would avoid downside risks of alternatives, such as the farm loan waivers that undermined the loan repayment culture in the past," it said.

Populist spending, it said, would aggravate fiscal pressures, which are already building due to revenue shortfalls. "Higher pre-election spending could risk a second consecutive year of fiscal slippage relative to the government's targets and would further delay plans to reduce the high general government fiscal deficit and debt burden," it said. Fitch said longer-term trends are more important to the sovereign rating profile.

"We believe the Central Government may still be able to meet its fiscal deficit target of 3.3 percent of GDP for FY19, which would help support its fiscal credibility, although this may be achieved by deferring capital expenditure and postponing bill payments until after March," it said. The final budget for the fiscal year ending in March 2020 (FY20) will be presented soon after the next government takes office following general elections, which are due by May 2019. Revenue from the new GST is well below target, Fitch said citing it as a reason for revenue falling short of the target so far in the current fiscal year that ends on 31 March, 2019.

"Officially, the government still aims to adhere to a debt ceiling of 60 percent of GDP by March 2025, as adopted under the Fiscal Responsibility and Budget Management Act. However, this would require significant and politically difficult fiscal consolidation. The newly elected government's final budget, likely to be presented around July, should provide more meaningful guidance on the medium-term fiscal outlook," it said.

Fitch's base-case scenario is that general government debt will remain close to 70 per cent of GDP in the next few years and will constrain India's sovereign rating (BBB-/Stable). Indian budgets normally offer guidance on plans for structural reforms and tax changes. "The current government could choose in its interim budget to signal the reform direction it would adopt in a possible second term, but we believe it is more likely to include such plans in the final budget...," it said.

The government's reform efforts have led to a strong improvement in the World Bank's Ease of Doing Business ranking in recent years, but FDI inflows have remained roughly stable as a percentage of GDP over the past five years, as there are lingering difficulties, such as in enforcing contracts and the functioning of the labour market.

With inputs from PTI

Also See: Budget Speech 2019 Highlights: Income tax relief for common man, assured cash for farmers in FM's 'roadmap for development'

Budget 2019: Things to watch for in the new mega pension scheme; will it make Atal Pension Yojana redundant?

Budget 2019: Piyush Goyal announces structural income for farmers at Rs 6,000 per annum in 3 instalments

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