FM Goyal Presents Populist Budget to Lure Every Section of Society

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(Interim Budget – 2019-2020) – Key highlights pertaining to Infrastructure Development, Customs and Trading across Border reforms, MSMEs and Traders, GST & Digital India revolution

Piyush Goyal, acting Finance Minister presented interim budget of the year 2019-2020 on February 01, 2019 in the parliament and claimed that the Narendra Modi government has brought the country out of policy paralysis by undertaking transformational structural reforms in its tenure. Prime Minister Narendra Modi in the post budget speech termed the interim budget as ‘Sarvavyapi’ (Omnipresent), ‘Sarvasamaveshi’ (Incomprehensible) and ‘Sarvasparshi’ (All-sided) and asserted the budget will infuse new energy in 130 crore citizens of India to achieve targets of a ‘New India’.

According to political pundits, the interim budget was more a populist budget and was orchestrated by keeping the general elections of 2019 in a view, hence the government tried to reach each and every section ranging from  farmers, labors, defense personnel, middle class, youth to small businessmen by announcing attractive policies and incentives. Logistics Insider brings you the key highlights of the interim budget pertaining to Infrastructure Development, Customs and Trading across Border reforms, MSMEs and Traders, GST, Digital India revolution and will try to ascertain how the budget will be proven beneficial for the logistics industry.

Glance on the state of Indian economy    

India has become the fastest growing economy in the world with an annual average GDP growth during last five years higher than the growth achieved by any Government since 1991. The country has become the 6th largest economy in the world by containing double-digit inflation and restoring fiscal balance. The fiscal deficit has been brought down to 3.4 per cent from high of approximately 6 per cent seven years ago. The current account deficit (CAD), against a high of 5.6 per cent six years ago, is likely to be only 2.5 per cent of GDP this year. During the last 5 years, Foreign Direct Investment (FDI) amounting to $239 billion came in India and the period also witnessed a rapid liberalization of the FDI policy, allowing most FDI to come through the automatic route.

On the Infrastructure front

There is no denying to the fact that the infrastructure is considered as a backbone of any nation’s development and it also contributes in escalating quality life of people. Goyal claims that India has become the fastest highway developer in the world by building 27kms highway each day. Projects stuck for decades like the Eastern Peripheral Highway around Delhi or the Bogibeel rail-cum-road bridge in Assam and Arunachal Pradesh have also been completed.

Under ‘UDAAN Scheme’, the number of operational airports has crossed 100 mark with the commissioning of the Pakyong airport in Sikkim. Domestic passenger traffic has doubled during the last five years which also led to the employment creation in the sector.  The people of North East have also received significant benefits of infrastructure development. Arunachal Pradesh came on the air map recently and Meghalaya, Tripura and Mizoram have come on India’s rail map for the first time. Allocation for the North Eastern Areas is being proposed to be increased by 21 per cent to`58,166 crore in 2019-20 over 2018-19.

Several ports are being developed under Sagarmala – Government’s flagship programme for faster handling of import and export cargo.  For the first time, container freight movement has started on inland waterways from Kolkata to Varanasi. The Government has been planning to introduce container cargo movement to the North East as well, by improving the navigation capacity of the Brahmaputra River.

A gift to the middle class

Individual taxpayers having taxable annual income up to Rs 5 lakhs will get full tax rebate and therefore will not be required to pay any income tax. As a result, even persons having gross income up to Rs 6.50 lakhs may not be required to pay any income tax if they make investments in provident funds, specified savings, insurance etc

Digitalization of Export/Import transactions

Customs procedures have been rationalized in order to promote ‘Make in India’ initiative of the government and duties on 36 capital goods have also been abolished. A revised system of importing duty-free capital goods and inputs for manufacture and export has been introduced, along with introduction of single point of approval under section 65 of the Customs Act. Indian Customs is introducing full and comprehensive digitalization of export/import transactions and leveraging RFID technology to improve export logistics.

Strengthening MSMEs

Government has undertaken many effective steps to strengthen MSME sector, which provides employment to crores of people. Recently, a scheme of sanctioning loans up to 1 crore in 59 minutes has been launched. GST-registered SME units will get 2% interest rebate on incremental loan of 1 crore. The requirement of sourcing from SMEs by Government enterprises has been increased to 25%. Of this, the material to the extent of at least 3% will be sourced from women owned SMEs.

Government e-Market place (GeM), created by the Government two years ago, has transformed public procurement by making it fully transparent, inclusive and efficient. MSMEs have an opportunity to sell their products through GeM. Transactions of over 17,500 crore have taken place, resulting in average savings of 25-28%. The GeM platform is now being extended to all CPSEs.

Relaxation in GST rates 

GST was introduced with an aim to benefit small traders, manufacturers and service providers of the country. Exemption limit from GST for small businesses has been doubled from Rs 20 lakh to Rs 40 lakh. Further, small businesses having turnover up to Rs 1.5 crore have been given an attractive composition scheme where in they pay only 1% flat rate and have to file one annual return only.

Similarly, small service providers with turnover up to Rs 50 lakh can now opt for composition scheme and pay GST at 6% instead of 18%. More than 35 lakh small traders, manufacturers and service providers are expected to be benefitted from the trade friendly measures. Soon, businesses comprising over 90% of GST payers will be allowed to file quarterly return.

In spite of such major rate reductions and relaxations, revenue trends are encouraging. The average monthly tax collection in the current year is Rs 97,100 crore per month as compared to Rs 89,700 crore per month in the first year.

National Programme on ‘Artificial Intelligence’

In order to take the benefits of Artificial Intelligence and related technologies to the people, a National Programme on ‘Artificial Intelligence’ has been envisaged by the Government. This would be catalysed by the establishment of the National Centre on Artificial Intelligence as a hub along with Centres of Excellence. Nine priority areas have been identified. A National Artificial Intelligence portal will also be developed soon.

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