Budget 2019-20 Key Highlights

Budget 2019 Key Highlights

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

Budget 2019 Key Highlights
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.

4 Comments on "Budget 2019-20 Key Highlights"

    […] Stock markets took a hit after Finance Minister Nirmala Sitharaman dashed hopes of any tweaks in the Finance Bill to ring-fence foreign portfolio investors (FPIs) from the effects of the “super-rich” tax proposed in the Union Budget 2019. Finance Minister has said “FPIs registered as trusts will have to pay the new tax surcharge. FPIs should consider the option of structuring themselves as companies rather than trusts to avoid paying the increased surcharge in Budget 2019“. […]

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