Budget 2020 Highlights: FM Nirmala Sitharaman presents Union Budget to 'fulfil aspirations' of all Indians

Amid heightened expectations of bold reforms to revive India’s economic growth, Finance Minister Nirmala Sitharaman presented the Union Budget 2020-2021, which she said was based on three prominent themes: aspirational India, economic development for all, and creation of a caring society.

“This is the Budget to boost people’s income and enhance their purchasing power. Let our businesses be healthy, solvent, and tech-led. Our people should be gainfully employed, our businesses should be healthy, for all minorities, women and people from SCs and STs. This Budget aims to fulfil all their aspirations,” Nirmala Sitharaman said.

The ‘bahi khata,’ which debuted last year, was back again this year as the Finance Minister once again ditched the traditional leather briefcase of her predecessors, opting instead for the more traditional Indian ‘bahi khata’ or ledger.

Here are the top highlights from Nirmala Sitharaman's Budget Speech: 

• The Union Budget is designed on three core themes: aspirational India, economic development for all, and “ours shall be a caring society that is both humane and compassionate.”

• “Our government brought a paradigm shift in governance - structural reform and inclusive growth.” 

• “Fundamentals are strong, ensuring macroeconomic stability. Inflation was contained, banks cleaned up and recapitalised. Companies provided exit through IBC. Steps for formalisation of economy were taken up. GST has been the most historic.”

GST

• Pays homage to visionary leader Arun Jaitley for GST reform; calls GST the most historic economic structural reform and highlights GST impact on MSMEs, consumers, etc.
• An average household now spends four percent less of its monthly expenditure on account of GST
• Rs 1 lakh crore benefit extended to consumers because of reduced GST rates  

Economic reforms

• Scaled up implementation of pro-poor schemes and welfare benefits
• India’s FDI elevated to $284 billion from $192 billion between 2014 to 2019. The government's debt has reduced to 47 percent of GDP from over 52 percent. 
• Digital revolution has placed India in a unique leadership position globally, and we shall now see seamless delivery of governance services digitally

Taxation

• New personal tax regime- IT rates will be reduced
• Income up to Rs 5 lakhs: No tax
• Income Rs 5 lakh – Rs 7.5 lakhs: Will pay reduced tax 10 percent
• Income Rs 7.5 lakhs to Rs 10 lakhs – Will pay reduced tax of 15 percent
• Income to Rs 10 – Rs 12.5 lakh - Will pay reduced tax of 20 percent
• Income between Rs 12.5 lakhs to Rs 15 lakhs – Will pay reduced tax of 25 percent   
• Income above Rs 15 lakhs – Will continue pay taxes at 30 percent  
• Companies will no longer be required to pay DDT (Dividend distribution tax). Increasing turnover limits for startups from Rs 25 crore to Rs 100 crore

Entrepreneurship, startups, and New Economy

• Startups have emerged as an engine of growth for the economy
• Currently ESOPs are taxable... this leads to cash flow problems. In order to give a boost to the startup ecosystem, the finance minister proposes to ease the burden for employees by deferring tax payments to five years or till they leave the company.
• 3D Printing, data storage, quantum computing, IoT are changing the face of the world
• India has embraced the new sharing economy displacing conventional businesses
• Indian government is looking at new technologies for DBT (Direct Benefit Transfer) 
• Data is the new oil
• Analytics and fintech changing the way we are dealing with our lives
• There will be a policy to build data-center parks throughout the country
• High speed broadband connection to be linked to 100,000 gram panchayats, an outlay of Rs 6000 crores to connect Optical fibre to these networks
• A digital platform will be set up for seamless application submission for IPs
• Knowledge transfer centers to be set up across new emerging sectors
• Mapping of India’s genetic landscape is important, two national level science schemes to create a database of India’s genetic landscape
• Early-stage funding to be provided for Indian startups by the government
• Outlay of Rs 5000 crore for five years for quantum-technologies related computing and other applications 

MSMEs & Manufacturing

• National Technical Textiles Mission to be introduced, with a four-year implementation period, with an outlay of Rs. 1,480 crore
• Scheme focussed on encouraging manufacture of mobile phones, electronic equipment and semiconductor packaging to be introduced
• To achieve higher export credit, a new scheme being launched which provides higher insurance cover, reduced premium for small exporters and simplified procedure for claim settlements
• Nirmala Sitharaman stressed on the aspiration to make every district an export hub. In keeping with this, she announced the Nirvik scheme for export tax disbursement, which aims to make loans easier to access for exporters and also simplify the lending process
• The minister mentioned creating a unified procurement system on public procurement portal government e-marketplace. “This will create a great opportunity for MSMEs. There are 3.24 lakh vendors already on the GeM platform and we are targetting Rs 3 lakh crore turnover,” she said.
• Last year in September, it was reported that GeM is working on a series of steps, including a mechanism for timely payment to registered small businesses and MSMEs, and rating buyers and sellers to promote its growth
• Sitharaman said a digital platform will be set up for seamless application and capture of Intellectual Property Rights (IPR)

Agriculture, Fisheries & Allied Activities

• Government is committed to doubling growth of farmer incomes by 2022. For this, farm markets need to be liberalised
• Rs. 2.83 lakh cr allocated for agriculture and allied activities, irrigation, and rural development
• Water stress related issues are a serious concern across the country. Government is proposing comprehensive measures for 100 water-stressed districts
• 20 lakh farmers to set up standalone solar pumps with help from government.  A scheme to help farmers to set up solar power generation units in their shallow or barren lands, so that they can make a living out of it
• Government will ensure balanced use of all kinds of fertilisers -- traditional and innovative -- to change the current incentive regime which encourages excessive use of chemical fertilisers
• A village storage scheme proposed to be run by self-help groups (SHGs)
• Indian railways will set up a Kissan Rail through PPP arrangement. Refrigerated coaches to be installed in express trains and freight trains so that perishable goods can be easily transported.
• The NABARD refinance scheme to be further expanded
• Agricultural credit target for 2020-21 has been set at Rs 15 lakh crore
• By 2022-2023, proposes raising fish production to 200 lakh tonnes
• Milk processing capacity to be doubled by 2025

Healthcare

• Announces an additional Rs 69,000 cr for the health sector
• FM proposes to expand Jan Aushadhi Kendras in all districts of country to provide medicines at affordable rates
• Rs 3.6 lakh cr for Jai Jeevan Mission
• Promotion of artificial intelligence (AI) and machine learning (ML) in healthcare to help acquire data on chronic illnesses and help in diagnosis of diseases like Tuberculosis. #TBHaaregaDeshJeetega
• A medical college to be attached to a district hospital in PPP mode; viability gap funding to be set up for setting up such medical colleges

Education

• New education policy to be announced soon 
• Announces Rs 99,300 cr outlay for education sector in 2020-2021 and Rs 3,000 crores for skill development
• Announces degree-level full-fledged online education programme to be offered by the top 100 institutions in the country
• More internship opportunities and diploma courses by 2021
• External commercial borrowings and FDI to be leveraged to improve the education system

Infrastructure, Social, Civic

• Rs 27,300 crore for development of industry and commerce
• Total allocation for Swachh Bharat is around Rs 12,300 crore for this year
• Rs 1.7 lakh crore to be provided for transport infrastructure in the coming financial year
• National Logistics Policy will soon be released, creating single window e-logistics market
• Project Preparation Facility to be set up for preparation of infrastructure projects, actively involving young engineers and management graduates
• Rs 9,000 crore for senior citizens
• Rs 53,700 crore for development and welfare of Scheduled Tribes
• Rs 85,000 crore in 2020-21 for welfare of SC and other backward classes

Energy and Renewable Sector

• Rs 22,000 crore to be provided to power and renewable energy sector in 2020-2021
• Urge all states and Union territories to replace conventional energy meters with pre-paid smart meters in three years. This will give consumers the freedom to choose supplier and rate as per their requirements
• Large solar power capacity to be set up alongside rail tracks, on land owned by Railways

(With inputs from Rekha Balakrishnan, Sindhu Kashyap, Debolina Biswas, Tenzin Norzom, Thimmaya Poojary, Aishik Purkait, Sampath Putrevu, Dipti Nair, Payal Dechamma, Sujata Sangwan, Tarush Bhalla, Trisha Medhi)

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