Interim Budget 2019-20

Interim Budget was presented in Parliament on 1st February 2019 by Interim Finance Minister Piyush Goyal. Goyal was appointed as the interim finance minister & corporate affairs minister because of Arun Jetly's health issues. The government has presented the vote on account. It was the last budget of the Modi government 2019 before the general election. A full-fledged budget will be presented after the House reassembles after the general election. The Interim Budget mainly focused on supporting needy farmers, workers in the unorganized sector, and salaried employees. An Interim Budget is a presented in the election year when the government is about to face general elections.

Interim Budget 2019 Highlights

Farmers

• Under Pradhan Mantri Kisan Samman Niddhi (PM-KISAN), Farmer families with cultivable land of up to two hectares will be given direct income support of Rs 6,000 per year in three equal installments.

• This initiative will benefit around 120 million small and marginal farmers.

• The annual outlay for the programme is Rs 75,000 crore for FY 2019-20.

• Rashtriya Kamdhenu Ayog will be set up to enhance cow resources.

• New separate Department for Fisheries will be created.

• Farmers pursuing animal husbandry and Fisheries activities, who avail credit under the Kisan Credit Scheme (KCC) will be eligible for 2% interest subvention for Animal husbandry and Fisheries activities and 3% subvention on timely repayment.

• Interest subvention of 2% during the disaster will be provided for the entire period to farm loan takers.

Economy

• India is currently the fastest growing economy and now the 6th largest economy in the world.

• India will be a US$ 5 trillion economy in the next five years and might become US$ 10 trillion economies in the next eight years.

• Inflation has been brought down to 4.1%, the average inflation rate stands at 4.6%.

• The government has revised the fiscal deficit target to 3.4% in FY19. Fiscal deficit for 2019-20 estimated at 3.4% of GDP.

• Government's stated commitment earlier was to bring down the fiscal deficit to 3.1% of GDP by the end of March 2020 and to 3% by March 2021.

• Current account deficit at 2.5% of the GDP.

Workers

• New pension scheme 'Pradhan Mantri Shram Yogi Maandha' will be launched for unorganised sector workers with income up to Rs 15,000 per month, the government allocates Rs 500 crore for the scheme. This would provide them assured monthly pension of 3000 rupees per month with a contribution of Rs 100 per month after 60 years of age.

• This will benefit around 10 crore workers in the unorganised sector & become the world's biggest pension scheme for the unorganised sector in five years.

MGNREGA

• Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has been allocated Rs 60,000  crore for 2018-19.

Education Sector

• National Education Mission allocation increased by about 20% to Rs 38,572 crore in BE 2019-20.

• 10% reservation for the poor in educational institutions and government jobs.

• 25% additional seats in educational institutions to meet the 10% reservation for the poor.

Health Sector

• The 22nd AIIMS will set up in Haryana.

• There are 21 All India Institute of Medical Sciences (AIIMS) functioning currently in India.

Railway

• Railway will get capital support of Rs 64,587 crore for FY20.

• Railway's operation ration is expected to improve 95% in 2019-20.

• Railway's capex for FY20 is set at a record Rs 1.6 lakh crore.

Defense

• The defense budget for the Financial Year 2019-20 hiked to over Rs 3 lakh crore.

• Under One Rank One Pension (OROP) scheme government has already disbursed Rs 35,000 crore.

Entertainment 

• Single window clearance for film shootings to be made available, Earlier, It was available only for foreign filmmakers.

North East Region

• Allocation to be increased by 21% to Rs 58,166 crore in BE 2019-20 over 2018-19.

Micro, Small and Medium Enterprises & Traders

• Small and Medium-sized businesses registered under the GST will get 2% interest subvention on loan amount of Rs 1 crore.

• Over 90% of businesses paying goods and services tax (GST) will soon be able to file quarterly returns.

• Department of Industrial Policy and Promotion (DIPP) will be renamed as the Department for Promotion of Industries and Internal Trade.

Tax Proposals

• No tax for those whose annual income is less than Rs 5 lakh.

• Individual with gross income up to 6.5 lakh rupees will not need to pay any tax if they make investments in provident funds and prescribed equities.

• Standard deduction for salaries persons is being increased from Rs 40,000 to Rs 50,000.

• Threshold for tax deducted at source (TDS) for rent increased from 1.8 lakh to 2.4 lakh.

• Interest Income up to Rs 40,000 in post offices and banks made tax free.

• TDS Threshold for interest on bank and post office deposits to be raised from Rs 10,000 to Rs 40,000.

• The Benefit of rollover capital gains up to Rs 2 crore will be increased from investment in one residential house to two houses.

• Income tax on notional rent for a second self-occupied house will be exempted.

• Income tax relief on notional rent on unsold houses extended from 1 year to 2 years.

What is Interim Budget or Vote-on-Account?

A vote on account, also known as interim Budget. An Interim Budget is a presented in the election year when the government is about to face general elections. There will not much more great changes on a current budget but the priority may change as per the new government policies so only it called as interim budget. And the interim budget is a complete set of accounts including the receipts and expenditure of the year. Since the budget proposes the major financial allocation and receipt for the next financial year and since there is uncertainty as to who'd be in power to implement it, the interim budget has certain specialties that distinguish it from 'normal budget'. The interim budget does not purpose any major changes in taxes and expenditure. This is to ensure that if there is a change in power after elections, the new government do not have to live with a budget not formed according to their priorities. It also ensures continuity in government policies. Though the Constitution doesn't bar a government to present a regular budget in its fifth year, as per the parliamentary convention governments in the past too have presented interim budgets.

Difference between Interim Budget and Full Budget. 

• Interim Budget is treated as a formal matter and passed by Lok Sabha without discussion, But Full Budget is passed only after proper discussion and voting on demand for grants.

• The Interim Budget is normally valid for two months, But a full budget is valid for 12 months (a financial year)

• Interim Budget deals only with the expenditure side of the government's budget, But Full Budget deals with both expenditure and revenue side.