Union Finance Minister Nirmala Sitharaman presented the second budget of the second term of the Narendra Modi government in the Lok Sabha today. The finance minister arrived in a turmeric yellow sari to read the budget speech.
The minister said that this budget was committed to ensuring income of common people and increasing their purchasing power. She paid tribute to the late GST architect Arun Jaitley.
1. Budget announces big relief for income tax assessees
The new tax slabs are just four in number. Those earning between Rs 5 lakh and Rs 7.5 lakh will be taxed at the rate of 10%, which was 20% earlier.
An annual income from Rs 7.5 lakh to Rs 10 lakh will be subjected to an income tax rate of 15%. This was earlier 20%.
Income between Rs 10 lakh and Rs 12.5 lakh will be taxed at the rate of 20%. This was earlier 30%.
Income from Rs 12 lakh to Rs 15 lakh will be taxed at the rate of 25%, which was 30% earlier.
Income above Rs 15 lakh will be taxed at the rate of 30% as before.
If the taxpayers do not take some of the exemptions under the Income Tax Act, those with an annual income each of up to Rs 15 lakh will have to pay tax at a lower rate than before.
2. Budget to boost investment, generate jobs
Sitharaman said that the government would set up an investment clearance cell to support startups and entrepreneurs in funding. “I propose to set up an investment clearance cell that will provide end-to-end facilitation and support including pre-investment advisory, information related to land banks and facilitate clearances at Centre and also at the state level,” the finance minister said.
The budget speech included a proposal for a new portal for the same purpose.
Sitharaman said entrepreneurship was the spirit of India; it has been its strength. Sitharaman said this budget would create more opportunities.
The finance minister said India had embraced the trends of a shared economy with aggregators replacing regular businesses. Among the old and big businesses, pipeline suppliers, GAIL, port facility and gas importing companies will benefit from the expansion of the gas grid.
Data Centre Parks will boost IT companies to expand their data business division.
Optic fibre companies like Finolex Cables and Sterlite Technologies will benefit from the Rs 6,000 crore allocated to Bharat Net.
A significant increase by 6% in the expenditure on infrastructure, exceeding Rs 5 lakh crore, announced during the budget speech, will not only accelerate the building of roads but also help urban infra companies. In the process, it will create a lot of jobs. “A huge employment opportunity exists for India’s youth in construction, operation and maintenance of infrastructure,” Sitharaman said.
The finance minister said in her budget speech that she would like to encourage the manufacturing of mobile phones, electronic equipment and semiconductor packaging, but added that the details of the scheme would be announced later. Whatever the details are, both big companies and small firms in these segments of the market will stand to benefit from the scheme.
Sitharaman’s budget announcement of “development of 2,500 km access control highways, 9000 Km of economic corridors, 2,000 km of coastal and land port roads and 2,000 km of strategic highways” is bound to generate employment on a massive scale besides improving transportation in the country and creating new centres of businesses.
3. Sensitivity to ‘tax terrorism’
While it was nobody’s case that Indians were taxed the highest, the business class in the country had got the jitters due to an indirect impact of Prime Minister Narendra Modi’s anti-corruption drive. This gave the taxman the idea of being a new-age lagaan collector. Chartered accountants complained of the unpredictable nature of the new regime. Those given to hyperbole called it “tax terrorism”. Sensitive to this concern, the finance minister announced there would now be a taxpayer charter.
This means that while reminding the taxpayer his duty to serve the country as a citizen, there will be a guideline or code of conduct in place for the tax officials. This will, hopefully, keep the zealots in the tax department under check.
4. Budget for competition among discoms: Prepaid electricity meters
The finance minister proposed changing the electricity meters across the country. She said that in the coming months, prepaid meters will be installed all over the country.
This may be seen as a step towards service portability in this age of private-sector discoms. During the 2015 Delhi election campaign, Prime Minister Narendra Modi had promised service portability for electricity consumers. Although the BJP did not win that election, the idea remains consumer-friendly. But to implement it, people need pre-paid as much as postpaid connections so that they can evaluate which discom is charging higher per unit of electricity consumption.
5. New GST regime from 1st April
Sitharaman said that from 1 April, the government will implement the new simplified return regime of GST.
The finance minister said that in the last two years, two lakh new taxpayers had been added to GST and 40 crore returns had been filed.
6. Government stake in LIC to be reduced
The finance minister announced that the government would sell part of Life Insurance Corporation (LIC), moving the disinvestment process forward.
The state stakes in IDBI Bank will also be sold.
An IPO will be issued for LIC. Sitharaman did not reveal how much of the LIC shares the government would sell. The socialist opposition expectedly did not like this announcement.
7. Budget for those who save in banks
Sitharaman made a big announcement about customers’ bank deposits. She said that customers would henceforth get a guarantee of up to Rs 5 lakh on bank deposits.
That is, in the unfortunate event where the bank sinks, Rs 5 lakh out of all the amount you had saved there will be absolutely safe.
8. How government plans to double farmers’ income
The finance minister said in her budget speech that the government was committed to the goal of doubling the income of farmers by 2022. The government will provide financial assistance to 20 lakh farmers to install solar pumps.
A detailed plan will be brought for 100 districts affected by the water crisis.
9. Railway network enhancement
The finance minister said that 27,000 km of railway tracks will be electrified.
As many as 150 trains will be launched via public-private partnerships. This means more Tejas routes and Tejas-like trains will run on the tracks.
Sitharaman said that the government plans to connect famous destinations with Tejas trains.
10. Boost to health and education in budget
The finance minister allocated Rs 69,000 crore for the health sector. There is a proposal of Rs 6,400 crore for PM Jan Arogya Yojana.
The mission Indradhanush has been expanded to include 12 diseases. Five vaccines have been added to it.
Hospitals will be built on PPP mode in Tier-2 and Tier-3 cities for the beneficiaries of Ayushman Bharat. In the first phase, this will be started in 112 districts. These hospitals will be constructed with money collected as tax from the business of medical equipment.
Finance Minister Sitharaman said that a new education policy would be announced soon.
By March 2021, 150 higher educational institutions will be started in which skilled training will be given.
Online degree programmes will be launched for quality education.
The finance minister proposed the setting up of a National Police University and a National Forensic Science University.
Sitharaman said that, to overcome the shortage of doctors, a medical college would be built in every district hospital.
The finance minister allocated in the budget Rs 99,300 crore for education. She set aside Rs 3,000 crore for skill development.
Sirf News gave live commentary on Union Budget 2020-21 earlier today.