India Union Budget 2019: This interim budget provides one last opportunity to Prime Minister Modi to make some big announcements to woo voters ahead of national election in April-May.
Budget 2019: This interim budget provides one last opportunity to Prime Minister Modi to make some big announcements to woo voters ahead of national election in April-May. And the government will have to offer something to every important section – farmers, youth, middle class, salaried class, women, rural labourers, small entrepreneurs and small & medium scale industries that are important for job creation and exports.
There is a demand for some kind of universal basic income for poor and unemployed. There are strong indications that the government may come up with a fixed income support for farmers on the lines of Telangana’s Ryuthu Bandhu scheme and Odisha’s Krushak Assistance for Livelihood and Income Augmentation (KALIA) scheme.
In addition to wooing these two sections – youth and farmers, Modi government may also tweak the income tax rates. There is a strong possibility that the government may increase the exemption limit for personal income tax or increase the deductions including standard deductions.
Corporates have demanded a cut in corporation tax rate on the lines of relaxation given to smaller companies in last year’s budget. Almost every stakeholders is expecting something for itself in this year’s budget as the government will try to please all the sections before the elections.
What was expected last year and what actually happened
In the run up to the last year’s budget, there were media reports that finance minister Arun Jaitley would enhance the exemption ceiling from Rs 2.5 lakh a year, however, it did not happen directly. Jaitley gave a standard deduction of Rs 40,000 a year that in a way helped the salaried class people and reduced the requirement for paperwork.
He also increased exemption limit for interest income on deposits with banks and post offices from Rs 10,000 to Rs 50,000 and also increased the deductions under section 80D of the Income Tax Act on payment of health insurance premium from Rs 30,000 to Rs 50,000.
In case of corporation tax, he reduced the corporate tax rate to 25% on the companies with a turn over of less than Rs 250 crore in a financial year.
Allocation for flagship schemes like MGNREGA were kept at the level of revised estimates for FY 2017-18.
The allocation for other flagship schemes also did not increase significantly except for food security. Jaitley also reiterated his pledge to rein in fiscal deficit. He was also criticised for not making big and newsy announcements in the budget, except Prime Minister Modi’s ambitious healthcare scheme called Ayushman Bharat.