Union finance minister Nirmala Sitharaman announced a slew of measures in her maiden union budget 2019 and laid a ‘vision for the decade’, focussing on areas such as infrastructure, Digital India, Make in India, health care, taxation, and more.
While tabling the budget document, Sitharaman said the Indian economy will grow to become a $3 trillion economy in the current year and unveiled structural reforms.
To decode the union budget and answer queries, CNBC-TV18 with its Partners in this initiative, Banking Partner - IDFC FIRST Bank and Advisory Partner - Dhruva, respectively, held The Budget Townhall 2019 where architects of the budget spoke about policies and rationale behind budgetary allocations.
V Vaidyanathan, MD and CEO, IDFC FIRST Bank said, “This was not the budget only for this year, it is a blueprint for 2020 and as far as railways are concerned, a blueprint for 2030. It gives us a longer picture and makes us feel that this is one part of a larger story.”
During the discussion, policymakers spoke about disinvestment, taxation, GST, aviation, etc.
"Through the years I have been watching budgets, this was one of those rare budgets where somebody spoke for two hours without being interrupted by the opposition benches, without even stopping for a minute… and more importantly, she repeated points which were absolutely necessary, clarity, absolutely well-delivered,” said Dinesh Kanabar, CEO, Dhruva Advisors.
Here are the highlights:
The union budget pegged GDP growth at 12 percent for FY19-20. The projection created confusion as the figure was different from Economic Survey that projected the growth at 11 percent.
Krishnamurthy Subramanian, the chief economic adviser, clarified that the difference was due to different base figures.
“The projection given in the economic survey was for 11 percent. The difference comes because of using actuals vs the RE numbers. We have done the calculation and found the two numbers, 11 percent vs 12 percent, they work out to be almost the same,” said Subramanian.
Strategic disinvestment of select central public sector enterprises (CPSEs) is a priority area of Modi 2.0 government. The NITI Aayog has drafted a disinvestment roadmap with a list of PSUs, out of which 35 have got Cabinet’s nod.
Talking about the time frame, due diligence and competitiveness, NITI Aayog CEO Amitabh Kant said it was time for revival for the animal spirit of the private sector.
“The greenfield investments and FDI will take a minimum of 3-4 years. The fastest route is to get public sector disinvestment cracking and getting asset monetisation. We have recommended close of 55 PSUs for disinvestments… 35 of them have already been approved by the Cabinet, and that shows the political will is surely there,” said Kant.
He also discussed Brownfield projects that attracted the private sector.
Meanwhile, the government is looking at strategic disinvestment of Air India and examining suggestions on further opening up of FDI in aviation.
When asked whether the FDI limit would go beyond 49 percent or not, Ramesh Abhishek, secretary, DPIIT, said, “There are a couple of restrictions. One is in the aircraft rules that there has to be Indian control, which is sectorial. While we have provided for 100 percent FDI but we have to examine the aircraft rules as well."
Goods and Services Tax (GST) collections
In the full budget, the GST collection projections were moderated to around Rs 1 lakh crore, a shift from the Interim Budget.
Ajay Bhushan Pandey, revenue secretary, projected 14 percent growth rate in GST collection for FY20.
"While making the budget, we have moderated GST collection figure as compared to what we projected in the interim budget because the actual collection of the GST collection and also the kind of economy because the GST collection also reflect at what rate our economy is growing and based on that we made an assessment and scaled-down the GST projections for this year,” said Pandey.
Tax and dispute redressal
Moderation in tax targets was welcomed by all. Experts said the budget numbers were realistic.
Subhash Chandra Garg, finance secretary, said, "As compared to the advanced estimates which were about Rs 188 lakh crore, this year’s projected GDP at Rs 211 lakh crore is about 12 percent. In the meantime, we have got the provisional numbers that are closer to actuals to FY18-19… that is about Rs 190 lakh crore. The projection for this year is only 11 percent.”
The finance minister also launched a tax dispute resolution scheme ‘sabka vishwas legacy dispute resolution scheme’, to resolve and settle legacy cases of Central Excise and Service Tax. The proposed Scheme covers past disputes of taxes which have got subsumed in GST namely central excise, service tax and cesses.
PK Das, chairman, CBIC, said, “The scheme is basic and we have given the contour. It will also take care of the pending investigations because, in case of wilful suppression or cases where five-year clause can be invoked, we thought it’s the right time and we can go ahead.”
Meanwhile, PC Mody, chairman, CBDT, said there was already a system in place for direct tax dispute resolution.
“We have had schemes on dispute resolution in the past, we’ve had a scheme called ‘kar vivaad samadhan’ scheme. We should try to reduce litigation by other means, we have already raised the monetary limits and the legacy appeals that are there with us, I don’t think any legislation was called for that,” said Mody.
Sitharaman also announced various schemes and programmes to boost growth in the rural sector and envisioned to achieve desired goals in ‘New India’
Girish Chandra Murmu, expenditure secretary, said, "There is some shift as you see the vision in this budget. The shift is towards investment, growth and rural sector. We have already provided (funds) in the pension scheme to kickstart it."
Budget for New India
The policymakers said the union budget 2019 would put India on the growth trajectory and the country will attain its goals.
Rajiv Kumar, the vice-chairman, Niti Aayog, said, “The two biggest ideas are in the budget. One is the zero-emission mobility and Niti Aayog is working very much on it, and I think this is a very big breakthrough for the economy. The other one is the zero budget natural farming."