The interim budget for the year 2019 presented by the acting Finance Minister Piyush Goyal included a range of comprehensive measures encompassing all sections of the society with the aim to set the country on a robust growth trajectory. The salient features of the interim budget 2019 reinforce the government’s firm commitment to provide enhanced investment in Social, Education, Health, Defence and Agriculture sectors.
Farmers with land holdings less than 2 hectares were offered with a new scheme- PM Kisaan Sammaan Nidhi Yojana which offers them a guaranteed Rs 6000 of yearly income directly transferred to their bank accounts. A provision of a mega pension scheme for workers in the unorganised sector was included in the budget. For the middle class, a full tax rebate of income tax for income up to ₹5 lakh was announced. Apart from these, welfare schemes being extended to nomadic and semi-nomadic tribes augmented Defence expenditure and increased funds outlay for OROP implementation were declared. While rolling out the interim budget 2019 in the parliament today, Piyush Goyal also laid down 10 important dimensions for ‘Vision 2030’, the reforms the government would implement that could build a developed India by 2030.
Now, let us delve into the economics of the budget 2019 and how the government of India will fulfil the promises and declarations it made in the budget speech:
The Receipts and Expenditure are the most significant parameters in determining the implementation of the policies outlined by the government of India in the budget. The figures of Receipts and Expenditure aid us in arriving at other significant factors such as Fiscal Deficit (FD), Revenue Deficit (RD), Effective Revenue Deficit (ERD), and the Primary Deficit (PD). These parameters play a vital role in setting strict guidelines for the government to plan its upcoming budget and apprises it of the funds available for the government to spend on different sectors to drive the economy.
- GDP for BE 2019-2020 has been projected at Rs 21007439 crores assuming 11.5% growth over the estimated GDP of Rs 18840731 crores for 2018-19 (RE).
- Individual items in this document may not sum up to the totals due to rounding off.
- Figures in parenthesis are as a percentage of GDP.
As per the above table, the Revenue Receipts estimates for the fiscal year 2019-2020 stands at Rs 1977693 crores which include Tax Revenue as well as non-Tax revenue. Revenue generation from Capital receipts are expected to be around Rs 806507 crores, that takes the Total receipts to Rs 2784200 crores.
The total expenditure presented in the budget 2019 is Rs 2784200 crores which is Rs 3,26,695 crores more than the previous year’s Rs 2457235 crores indicates the government’s pledge to grant substantial investment to spur growth in the country while maintaining the fiscal prudence with Fiscal Deficit 3.4% of the GDP. With the Revenue Deficit of Rs 470214 crores, it is slated to be maintained at 2.2% of the GDP.
Where does the money come from?
The above-mentioned pie-chart describes in detail the distribution of the source of money the government of India receives. The biggest source of income for the government is GST and Corporation-Tax which are both estimated at 21% each of the total receipts. The government hopes to secure 19% of the investments through Borrowings and 17% of it from the Income Tax Treasury. The other sources of receipts include Customs, Union Excise Duties, Non-debt capital receipts and Non-Tax Revenue.
How is the money spent?
Looking at the chart, a major part of the expenditure goes into paying the States’ share of taxes and duties pegged at about 23%. The GoI will spend 9% of the total expenditure on Central Sponsored Schemes such as ‘PM Kisaan Samman Yojana’. About 8% of the expenditure will be spent in the defence sector, while a large chunk of the expense is consumed by paying up the Interest Payments. 8% is allocated to miscellaneous expenditure, in case any revision is required in the current estimates.
Around Rs. 1,66,883 crores will be transferred to states under states’ share of duties and taxes. Rs 3,05,296 crores allocated to the Defence sector, for development of North-East Rs 3000 crore has been assigned. Education sector gets a boost with an investment of Rs 93848 crore by the government. Strengthening its commitment to sustainable sources of Energy, the Modi government has allocated Rs 44,101 crores to the Energy sector. External Affairs get Rs 16,062 crores while Finance gets Rs 19812 crores. Rs 49,337 crores have been earmarked for carrying out Social Welfare activities while a reserve of Rs 1,38,962 is kept for Rural Transformation.
Health sector gets a whopping Rs 63,538 crores of investment. The Agriculture and allied activities sector will get funds worth Rs 1,49,981 crores to address growing farm distress. The commerce industry gets Rs 27660 crores while the Home Affairs has been allocated Rs 1,03,927 crores. The Interests to be paid up by the government is about Rs 6,65,061 crores. The government has dished out Rs 21,549 crores to the IT and Telecom sector while assigning Rs 26,237 crores to the Scientific Department. Transport sector gets Rs 1,56,187 crores and the Tax administration is allocated Rs 1,17,285 crores. The Urban Development has been allocated Rs 48,032 crores and Rs 15042 crores to Union Territories. For miscellaneous, remaining Rs 75822 crores have been pledged. The total expenditure amounts to Rs 27,84,200 crores.
The above table and charts explain in detail how the government plans to utilise the funds available at its disposal to fulfil the commitments laid out by Union Minister Piyush Goyal in his budget 2019 speech. The entire report can be read here.
The Interim Budget presented by the Acting Finance Minister Piyush Goyal has certainly managed to deliver on the growing farmer distress, rising middle-class concerns, as well as the soaring Defence sector demands. It also succeeded in assuaging fears among Small businesses by offering them a plethora of concessions. The budget also endeavoured to include sections of society hitherto ignored in the previous budgets such as nomadic and semi-nomadic tribes.