Finance Minister Nirmala Sitharaman presented her second budget wherein a grand attempt has been made to aim at a revival from slowdown of the economy which was seen consecutively during the last four or five quarters. Agreeably, there were larger expectations from this budget that a take-off was imperative from a dip in the annual growth, an investment scenario which was not as per expectations and a financial system which was found somewhat under a strain. The ways to resolution of these big challenges decidedly was not that easy in this budget in the backdrop of the global slowdown. The immediate task was to attempt how best demand and investment could be given a boost and verily for that purpose, it has been envisaged in the budget how there was more money to generate consumer spending and generate a demand push to accommodate the glut of supply .
Against the backdrop of a shortfall in actual tax revenue in comparison to estimates made is on the average at 10 per cent while the new tax structure rather option for the middle income brackets was going to cost another Rs. 40000 crores annually. Partially, this was going to be offset by increasing customs duty on nearly 100 products like electric goods , costly furniture, footwear, fans, coolers , tricycles, largely imported from China as this move besides raising revenues would address the distress of domestic small businesses which is reeling under the Chinese goods flooding our markets. The option of lower rates of Income Tax was definitely going to result in , what the FM said as “substantial tax benefits” as a person with an income of Rs. 15 lakh annually but not claiming any exemptions, now stood to gain nearly Rs.78000 crore annually and so on. Such gains at micro levels could expectedly infuse a spirit of push in the demand. A vision, a course and a path is chosen to pursue and follow for the next five years. The FM declaring that wealth creators were respected generated a hope in the corporate world and recognised its role not only in creating opportunities, producing commodities and offering services but brushing aside the charge of the opposition that the corporate world enjoyed at the cost of the poor- the usual rhetoric of the select opposition looking at everything with an obsolete Marxian angle. By abolishing of dividend distribution tax (DDT) on companies, the relief to companies would send signals of not being neglected in terms of their role in contributing to the economy especially in providing employment opportunities.
Looking to mounting NPAs in banks and strain on their incomes portfolio, many banks had to face lot of problems to the extent of sending panic waves among the depositors. The FM has taken a very timely step aiming at assuaging the depositors by increasing the insurance cover of their deposits from Rs.1 lakh to Rs.5 lakh. However, India continues to spend comparatively less on its defence requirements from out of its GDP as compared to China and even Pakistan and there is no significant increase in budget outlay for our defence as from Rs. 3.18 lakh crore last year, it is marginally increased to Rs.3.37 lakh crore this fiscal.
The focus on agriculture Rs.17.83 crore and infrastructural sectors has been with an aim to address rural distress and generate employment opportunities respectively although on employment front, at the moment a substantial improvement is not imminent excepting in the near future filling in nearly two million or so jobs in the Government owned departments, PSUs and even in Railways which have so far been left in the inertial mode although a definite assurance from the Finance Minister was not made in her budget speech. To help local business engaged in manufacturing of finished goods, the Government has proposed to reduce import tariffs on several inputs and items of raw material. The Government has certain challenges to face in that how the current account deficit was put below 3.5 per cent and how fiscal expansion was pursued.
In respect of newly created UTs of J&K and Ladakh, Government has seemingly appeared to keep its promise to put the UTs on a fast track of growth and development. The FM in her budget speech announced a major financial grant of Rs.30757 crore for J&K UT and Rs 5958 crore for Ladakh UT. Vital sectors like Power, Rural Development, Public Works, Civil Aviation and Tourism are proposed to get enhanced outlays. Since there was no elected Government in power in the UT, the annual Budget of Jammu and Kashmir was going to be presented by the Union Home Minister and passed in the current Budget Session of the Parliament .The recommendations of the 14th Finance Commission by virtue of which Jammu and Kashmir was slated to get 0.85 per cent of the divisible pool of taxes was expected to be revised to 1 per cent to meet the special needs especially on security related expenses.
The notable feature is allocation of Rs. 2192 crore provision for assisting Industrial Units by providing budgetary support during the financial year 2020-21 in Jammu and Kashmir, and states of the North East. Investment development and production avenues were likely to improve of the Industrial Units. Besides, 354 villages were to get mobile services, engaging youth, relief and other measures for migrants, provision for monetary relief for martyrs and fire victims are other highlights in funds allocated for Jammu and Kashmir.
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