On Saturday, Indian Finance Minister, Nirmala Sitharama presented the Union Budget 2020/ 21 in the Lok Sabha. After returning to the power for the second time, this is the 2nd budget that the NDA (National Democratic Alliance) government has presented the budget.
This year, the Union Budget concentrates on three areas – Economic Development, Aspirational India, and A Caring Society. In Financial Year (FY) 2021, the central government will invest Rs. 99,300 crore in the educational sector and new educational policies will come out soon, according to Sitharaman.
While presenting the Union Budget, Sitharaman gave relief to the citizens of India as the budget cuts down income tax rates and even lower the slabs. However, the new income tax rates are optional, if a person wants to follow the new tax system, he/ she will have to let go of various exemptions and deductions that he/ she was getting in the earlier tax rates.
As per the Economic Survey, the economic growth rate will bounce back and reach 6% – 6.5% in the upcoming FY that will begin from the 1st April 2020.
Without further ado, let us jump right into the highlights of the Indian Union Budget 2020.
Highlights of Union Budget 2020
The New Income Tax Slabs In Union Budget
Nirmala Sitharama, Finance Minister, while presenting the Budget 2020 in the Lok Sabha brought relief to individuals as she spoke of the new income tax slabs that can be subscribed by people.
In the new income tax, people earning between Rs. 5 lakh and Rs. 7.5 lakhs a year will now have to pay only 10% tax, it was 20% earlier. Subsequently, people earning between Rs. 7.5 lakh and Rs. 10 lakh will now pay only 15% tax. People earning between Rs. 10 lakh and Rs. 12.5 lakh will now pay 20% tax, while earlier they paid 30%. People earning between Rs. 12.5 lakh and Rs. 15 lakh will pay 25% tax. The tax rate for people earning Rs. 15 lakh and above will continue to pay the same tax of 30%.
This new tax rates are optional and can be subscribed by an individual if he/ she wishes to. The reason why this new tex system was brought is that many people could not invest their money in saving instruments like Pension Schemes, Insurance, Provident Fund, Interest on loans, and etcetera as they could not save money to do so, for deductions in Income tax.
New Income Tax Slab 2020
- Rs. 2.5 lakh or below: No Income Tax
- Rs. 2.5 lakh – Rs. 5 lakh: 5%
- Rs. 5 lakh – Rs. 7.5 lakh: 10% (earlier it was 20%)
- Rs. 7.5 lakh – Rs. 10 lakh: 15% (earlier it was 20%)
- Rs. 10 lakh – Rs. 12.5 lakh: 20% (earlier it was 30%)
- Rs. 12.5 lakh – Rs. 15 lakh: 25% (earlier it was 30%)
- Rs. 15 lakh and above: 30% (unchanged)
Nirmala Sitharaman said that the personal income tax is the lowest of all time. This income tax slab will help those who could not use the relief of deductions and exemptions in the earlier tax slabs.
Union Budget For Railways
- The Indian railways will get the budgetary allocation of Rs. 70,000 crore and Rs. 1.61 lakh crore as the outlay for capital expenditure.
- A Public – Private – Partnership (PPP) will be done for the redevelopment of 4 stations and operations of 150 passenger trains.
- On the land owned by India railways, along the railway tracks, solar panels will be installed and a budget has been proposed for the same.
- More Tejas like trains will be introduced into the system which will connect more iconic destinations.
Union Budget For Manufacturing
- New schemes will be introduced which will be focused on the manufacturing of electronic pieces of equipment, mobile phones, and semiconductor packaging. The schemes will be such which will encourage manufacturers to invest more.
- Similar things will be done to encourage the private sector for building Data Centre Parks at various places in the country.
- By 2025, Milk processing capacity will be doubled.
- Investment of Rs. 8,000 crore ($ 1.1. billion) will be done for Quantum technology and its applications.
Union Budget For Subsidies
- In 2020/ 21, the food subsidy will be Rs. 1.15 lakh crore ($ 16.18 billion).
- In 2020/ 21, the petroleum subsidy will be at Rs. 41,000 crore ($ 5.76 billion).
- Coming to fertiliser subsidies, for 2020/ 21, it will be at Rs. 71,300 crore ($ 9.97 billion).
Union Budget For Infrastructure
- Rs. 27,300 crore ($ 3.81 billion) will be invested to promote industry and commerce.
- Rs. 100 lakh crore will be invested in the next 5 years in infrastructure.
- Over 6,500 projects will be launched across different sectors which will be classified according to the size and stage of development.
- On the 31st December 2019, various projects worth Rs. 103 lakh crore were launched.
- The old thermal plants, which are not following the emission norms will be shut down to cut down the carbon footprint and fight global warming.
- Rs. 4,428 crore ($ 619.11. million) will be invested in clean air initiatives in all the cities in India whose population is over 10 lakh.
- By the year 2020, 100 more airports will be developed under “Udaan Scheme”.
- 100% tax exemption on the Sovereign Wealth Funds’ when the investment comes in for infrastructure.
- At least 1 major port will be privatised.
- By the year 2024, the country will monetise highways covering over 6,000 kilometers in 12 parts.
- Focus on generating employment, incubating skills, and making the MSMEs (Ministry of Micro, Small and Medium Enterprises) competitive.
- Also, for MSMEs, the audit threshold has been raised by Rs. 4 crore to Rs. 5 crore.
- Investment of Rs. 1.7 lakh crore has been proposed for transport infrastructure in FY 20/ 21.
- The National Skill Development Agency will come up to provide a special thrust to the infrastructure focused on skill development.
- Project preparation facility was also proposed for infrastructure projects which will proactively involve young economists, engineers, and management graduates from various Universities.
- The infrastructure agencies of the government ask asked to involve youths in start-ups.
Union Budget For Custom Duty
- Walnuts will become expensive as Custome Duty reaches 100%, an increase of 70% from 30%.
- Autos and auto parts will also become expensive as Custom Duty increased by up to 10%.
- Nominal health cess of 5% will be provided on all imports of medical devices.
- Fans will become expensive as Custom Duty is doubled to 20%.
- Custom Duty raised to 12.5% from 10% on some goods used in Refrigerator and Air Conditioner.
- Platinum and Palladium will become cheaper for certain purposes as Custom Duty decreased to 7.5%, a drop of 5% from 12.5%.
Growth And Deficit Estimated In Union Budget
- In 2020/ 21, Nominal GDP (Gross Domestic Product) is expected to grow at 10%
- Fiscal Deficit for 2019/ 20 was seen at 3.8% of the GDP
- Fiscal Deficit for 2020/ 21 is expected at 3.5% of GDP
- Fiscal Deficit for 2021/ 22 is expected at 3.3% if GDP
- Fiscal Deficit for 2022/ 23 is expected at 3.1% of GDP
- The Revenvue Deficit for FY21 is expected 2.7% of GDP
- According to the Ola Mobility Institute, the Suburban Rail will help boost the multi-modal connectivity and will open new economic possibilities for areas in and around certain cities like Bengaluru.
National Logistics Policy In Union Budget
Nirmala Sitharaman, on Saturday, said that new National Logistics Policy will be released soon. Read on to know how will it affect you
A single window for the e-logistics market will be created.
To clarify the roles of Key Regulators, Union government, and the State Governments.
Union Budget For Dividends
The Dividend Distribution Tax (DDT) has been scrapped completely and now it will not be mandatory for the companies to pay the DDT. Now the dividends will only be taxed at recipients’ end at the applicable fees.
The DDT was entailing Rs. 20,000 crore in revenue losses.
Tobacco Products And Union Budget
- As the excise duty on tobacco products has increased, cigarettes and other products made of tobacco will become cheaper in the coming time.
- The duty will be increased to between 212% to 388% depending upon the size of the cigarette.
Union Budget For Senior Citizens And Reserved Categories
- During the 90th budget presentation, Nirmala Sithraman said that the central government will invest Rs. 9,000 crore for the welfare of the senior citizens.
- The government will also allocate Rs. 85,000 crore ($ 11.8 billion) for the welfare of Other Backward Classes (OBC, and Scheduled Caste (SC), in addition, the government will also invest Rs. 53,700 ($ 7.5 billion) crore for the betterment of the Scheduled Tribe (ST).
Health Sector In Union Budget
- The government said that it will invest Rs. 69,000 crore ($ 9.64 billion) in the healthcare sector in the country. Rs. 6,400 crore ($ 895 million) will be allocated to the Ayshman Bharat Yojana, also called, Pradhan Mantri Jan Arogya Yojana.
- Sitharaman proposed that the one medical college will be attached with one district hospital on PPP model.
- According to the Pradhan Mantri Jan Arogya Yojana, a poor family gets health assurance worth Rs. 5 lakh. Through this Yojana, 10 crore poor families will be helped and is already in action.
Other Key Investments In Union Budget
- Investment in Agriculture in FY21 will be 1.38 lakh crore.
- Investment in Rural Development in FY21 will be Rs. 1.23 lakh crore.
- Investment in Education in FY21 will be Rs. 99,300 crore.
- Investment in Transport Infrastructure in FY21 will be Rs. 1.7 lakh crore.
- Investment in Agriculture and Rural Development in FY21 will be Rs. 2.83 lakh crore.
- Investment in Agriculture Credit in FY21 will target Rs. 15 lakh crore.
- Investment in healthcare in FY21 will be Rs. 69,000 crore.
Skill India In Union Budget
Rs. 3,000 crore ($ 419.6 million) will be invested in “Skill India” for providing the necessary skill set to the youth of India.
“There is a huge demand for teachers, paramedical staff and caregivers in foreign countries. However, their skills do not match in accordance to demand by employers. So, my government proposes ₹3,000 crore for skill development” said Nirmala Sitharaman.
Swachh Bharat Abhiyan In Union Budget
- Rs. 12,300 crore has been allocated the the Swachh Bharat Abhiyan in this budget.
- During the presentation, Sitharaman said that the government is “committed to Open Defecation Free (ODF) plus in order to sustain ODF behavior and to ensure no one is left behind”.
Union Budget In Transport Sector
The centre is planning on construction of:
- 9,000 kilometer of eco-development corridors
- 200 coastal and port roads
- 2,500 access control highways
- By 2023, 3 corridors including Delhi- Mumbai Expressway will be completed.
- 2,000 kilometre of strategic highways
- The Government will launch projects worth Rs. 18,600 crore in Bengaluru Sub-urban Transportation
- The Government will also offer 20% equity in the Bengaluru Sub-urban Transportation Raj
Union Budget In Education Sector
- Government will invest Rs. 99,300 crore in educational sector in Financial Year 2021.
- By March, 2021, 150 higher education institutes will offer apprenticeship diplomas.
- Not only the government will promote “Study In India” but also new education policies will be released.
- Sitharam said in the Budget presentation that “By 2030, India will have largest working age population in the world. This population needs both job and life skills. New education policy to be announced soon”.
Union Budget In Agriculture Sector
- Three schemes were announced by Sitharaman.
- “Krishi Udaan” will be launched by the Civil Aviation Ministry for exports.
- Agriculture credit is targeted at Rs. 15 lakh crore in FY21.
- Eligible PM KISAN (Pradhan Mantri Kisan Samman Nidhi) beneficiaries will be covered under the KCC (Kisan Credit Card) scheme.
- Strengthening of NABARD (National Bank for Agriculture and Rural Development) refinance scheme.
- The Government will increase the reach of “PM Kusum Scheme” to 20 lakh farmer and will set up solar pumps.
- The Government will focus on incentivising the use of organic fertilisers.
- Income coming in from farming will be doubled by 2022.
- 16 actionable plans laid down to increase the eearning of a farmer. Plans to liberalise the farmers’ market.
Other Highlights of Budget 2020
- The Government will sell its stake in the IDBI bank.
- Rs. 20,000 crore to be invested in the renewable energy sector.
- Rs. 5 lakh will the new deposit insurance coverage, earlier it was Rs. 1 lakh.
- The Government will sell shares in LIC via Initial Public Offering (IPO).
- Rs. 6,000 crore will be invested in the BharatNet Programme. Under the BharatNet Programme, the government plans to provide broadband connectivity to Gram Panchayats.
- By this year itself, 1 lakh Gram Panchayats will be linket through BharatNet.
- The debt of central government has dropped to 48.7% in March 2019 from 52.2% in March 2014.
- India is now the 5th biggest economy in all of the world, said Sitharaman.
- Rs. 1 lakh crore is the benefit that GST has provided to the customers.
- Sitharaman said that on an average, 1 household save almost 4% on its monthly spendings through GST.
- By April 2020, the government will roll out a new and simplified GST filing system.
- 16 lakh new taxpayers have joined the system.
- In the past 2 years, 60 lakh new taxpayers have joined the system.
In her second Budget presentation, Nirmala Sitharaman carried the documents in a “Bahi- Khata” wrapped in red cloth with golden coloured state emblem of India on it. Last year, Sitharaman broke the tradition of bringing the budget in a leather briefcase.
Krishnamurthy Subramanian, Chief Economic Advisor said, “Bahi-khata symbolises our departure from the slavery of Western thought”, during the presentation of Union Budget.
Nirmala Sitharaman started the presentation of Union Budget 2020 in lok Sabha by paying homage to Late Arun Jaitley, Former Finance Minister.