Budget 2019-20 Key Highlights

India on a Path Towards $5 Trillion Economy

Introduction

In this aticle, we are going to discuss Budget 2019-20 key highlights. Finance Minister Nirmala Sitharaman today, has presented the union budget 2019-20 with a vision for $5 Trillion economy in few years. The main focus is on investment-led growth and reforms including – the Infrastructure, Foreign investment, Aviation, NBFCs and Start-ups etc.

Let us discuss the key highlights of today’s budget 2019-20 in detail.

Budget 2019-20 Key Highlights

Economy

• Target is to become a $3 trillion economy in FY20 and $5 trillion in a few years
• Government has proposed the changes to kick-start domestic and foreign investment
• Will create blueprint for gas grids, water grids and regional airports etc.
• Government enhanced disinvestment target of Rs.1,05,000 crore in FY20 as against Rs.90,000 crore set in the Interim Budget
• Also Government will start raising part of its gross borrowing programme in external markets in external currencies
• Import of defence equipment is being exempted from basic customs duty

Infrastructure

• Roads : Upgradation of 1.25 Lakh Km road length over next 5 years under Phase-III of ‘Pradhan Mantri Gram Sadak Yojana’.
• ‘Housing For All’ Scheme : Under this scheme, already 1.55 Crore houses have been built in Phase-I. Now, in Phase-II, the number of houses proposed to build is 1.95 Crore.
• Railways : Railway Station Modernization Programme is proposed. In this, high investment in sub-urban railways through Special Purpose Vehicle (SPVs) like Rapid Region Transport System (RRTS).
• Investments in Agriculture Infrastructure is also covered.
• For the faster Infrastructure development, a Public-Private partnership is planned to be established.

Banking

• Recapitalisation of Public Sector Banks (PSBs) : Capital provision of Rs.70,000 Crore to PSBs to boost credit improvement in order to offer the momentum to the economy.
• NPAs have come down by Rs.1 Lakh Crore over the last year.
• Proposed Interoperability : Government to initiate steps to empower account holders to have control over deposit of cash by others in their accounts.
• Government has planned to undertake the steps to improve governence of Public sector banks.

NBFCs

• Government will provide one time 6-months partial gaurantee to public sector banks for the first loss up to 10%, for the purchase of high-rated pooled assets of financially sound NBFCs.
• Housing Finance Companies (HFCs) will be regulated by RBI instead of National Housing Board (NHB) to ensure robust regulation.
• NBFCs are required to maintain DRR (Debenture Redemption Reserves) for raising funds in public issues.
• Fundamentally sound NBFCs can get funds from Banks, Mutual Funds.
• Government is going to take necessary steps to allow NBFCs to directly participate on the Trade Receivable (TReD) platform.

Aviation & Space Power

1. Aviation Industry
   • Government has proposed to enter into the Aviation Financing and Leasing.
   • Development of MRO Industry (Maintainence, Repair and Overhaul)
   • Blueprint for Regional Airports
   • Will re-initiate privatisation of Air India
2. Space Power
   • India has emerged as a major space power.
   • To harness India’s space ability commercially, a public sector enterprise, New Space India Limited (NSIL) has been incorporated to tap benefits of the ISRO (Indian Space Research Organisation)

Electric Vehicle

• FAME II scheme aims to encourage faster adoption of electric vehicles through the right incentives and charging infrastructure. 
• Upfront incentives on the purchase on Electric Vehicles (EVs).
• Tax exemption of Rs.1.5 Lakh will be offered on the purchase of EV.
• Building the infrastructure for EV charging points is also proposed.

Micro, Small & Medium Enterprises (MSMEs)

• There is a need of high investment in MSMEs and job creation.
• Interest Sunvention Scheme : 2% interest subvention on allocation of Rs.350 Crore for all the GST registered MSMEs.
• Creation of payment paltform for MSMEs.

Start-ups

• Start-ups will not be subject to any scrutiny on valuation of share premiums to resolve ‘Angel Tax’ issue.
• Government has proposed TV program exclusively for the Star-ups.
• ‘Stand Up India’ Scheme to be continued up to 2025.
• Relaxation in conditions for carry forward and set-off losses.
• Exemption of capital gains arising from sale residential house for investment in Start-ups, extended up to March 31, 2021.

Foreign Investments (FDI/FPI)

• 100% FDI is proposed in Insurance intermediaries.
• Government to examine for opening FDI in Aviation, Media, Animation.
• Local sourcing norms eased in Single Brand Retail Sector.
• Merging of NRI portfolio routes with FPI routes.
• Government is to execute the action plan to deepen corporate debt market and long-term bonds and to allow FPIs/NRIs to subscribe to listed debt papers of REITs and InvITs.