FM Sitharaman's budget banks on public expenditure for economic revival, risks 7% GDP growth for FY20
It's another question how the government will spend Rs 20 lakh crore per annum on infrastructure alone when its annual earning is around Rs 20 lakh crore.
- Jul 5, 2019,
- Updated Jul 5, 2019 10:22 PM IST
If Piyush Goyal's Interim Budget of February 2019 was all about the farmer and to an extent the middle class, Nirmala Sitharaman's first Budget revolves around business. One needs to look at both the Budgets together to see the whole picture.
However, coming in the backdrop of a decelerating economy, declining consumption, slowing agriculture, services economy and global trade, Sitharaman had little room to manoeuvre. Hence, Budget 2019 is all about give-and-take. In fact, it may have taken more than it has given.
Sitharaman's debut Budget may not aide the revival of the consumption cycle as it has not added to the consumer's disposable income. As a result, it will defer the economic revival until the public expenditure can turn around the economy by itself. And by focusing on FDI, the Budget appears to be relying on foreign investment to revive growth rather than domestic private investment.
'Tax' was mentioned the most, 53 times, in Sitharaman's speech, according to the India Today TV data cloud. So if FM gave with one hand, she took some with the other.
The biggest blow is in the form of an additional Re 1 per litre road and infrastructure cess and another Re 1 per litre special additional excise duty on both petrol and diesel which has resulted in a Rs 2.60 per litre hike in petrol and Rs 2.30 in diesel. This impacts every individual and also has a direct impact on inflation on goods transported.
High-income individuals will now pay a higher surcharge of 3% for income between Rs 2-5 crore and 7% on income of Rs 5 crore and above.
The hike in import duty on gold from 10% to 12.5% will raise gold prices for the consumer, hitting the world's biggest gold market domestically.
In its effort to encourage digital transaction, government will now tax all cash withdrawals exceeding Rs 1 crore a year with a 2% TDS. Excise duty hike on cigarettes and tobacco will hurt the cigarette industry.
The give-and-take may not have addressed everyone, but it has surely balanced the government's accounting.
If Piyush Goyal's Interim Budget of February 2019 was all about the farmer and to an extent the middle class, Nirmala Sitharaman's first Budget revolves around business. One needs to look at both the Budgets together to see the whole picture.
However, coming in the backdrop of a decelerating economy, declining consumption, slowing agriculture, services economy and global trade, Sitharaman had little room to manoeuvre. Hence, Budget 2019 is all about give-and-take. In fact, it may have taken more than it has given.
Sitharaman's debut Budget may not aide the revival of the consumption cycle as it has not added to the consumer's disposable income. As a result, it will defer the economic revival until the public expenditure can turn around the economy by itself. And by focusing on FDI, the Budget appears to be relying on foreign investment to revive growth rather than domestic private investment.
'Tax' was mentioned the most, 53 times, in Sitharaman's speech, according to the India Today TV data cloud. So if FM gave with one hand, she took some with the other.
The biggest blow is in the form of an additional Re 1 per litre road and infrastructure cess and another Re 1 per litre special additional excise duty on both petrol and diesel which has resulted in a Rs 2.60 per litre hike in petrol and Rs 2.30 in diesel. This impacts every individual and also has a direct impact on inflation on goods transported.
High-income individuals will now pay a higher surcharge of 3% for income between Rs 2-5 crore and 7% on income of Rs 5 crore and above.
The hike in import duty on gold from 10% to 12.5% will raise gold prices for the consumer, hitting the world's biggest gold market domestically.
In its effort to encourage digital transaction, government will now tax all cash withdrawals exceeding Rs 1 crore a year with a 2% TDS. Excise duty hike on cigarettes and tobacco will hurt the cigarette industry.
The give-and-take may not have addressed everyone, but it has surely balanced the government's accounting.