Full text of Finance Minister Nirmala Sitharaman's Union Budget 2019 speech

Budget 2019

Finance Minister Nirmala Sitharaman Friday announced a slew of measures in her maiden Budget 2019-20 speech in the Parliament today. Among key announcement, Sitharaman said the government will launch an inter-opearable ATM-like One Nation One Card for pan-India travel, new rental laws for affordable housing, interest subvention scheme for MSMEs and women.
Here's what Finance Minister Nirmala Sitharaman said in her Budget 2019 speech:
The recent election which brought us to this august House today, was charged with brimming hope and desire for a bright and stable New India. Like never before, India celebrated its democracy by coming out to vote in large numbers, like never before. Voter turnout was the highest at 67.9%. Every section – young, old, first time voters, voters since the first General Election, women – all turned up to stamp their approval of a performing Government. Through their unambiguous and firm mandate they have reaffirmed “putting the nation first”. The people of India have validated the two goals for our country’s future: that of national society and economic growth.
The first term of Hon'ble PM Narendra Modi-led-NDA-Government stood out as a performing Government, a Government whose signature was in the last mile delivery. Between 2014-19, we provided a rejuvenated Centre-State dynamic, cooperative federalism, GST Council, and a strident commitment to fiscal discipline. We had set the ball rolling for a New India, planned and assisted by the NITI Aayog, a broad based think tank. We have showed by our deeds that the principle “Reform, Perform, Transform” can succeed.

 Mega programmes and services which we initiated and delivered during those 5 years will now be further accelerated...Read More

Budget 2019: Key takeaways of Nirmala Sitharaman's maiden budget speech

Budget 2019
Finance Minister Nirmala Sitharaman on Friday said that the country is well within its capacity to become a $5 dollar economy in the next five years.
Here are the key takeaways:

• From $1.85 trillion in 2014, the economy has reached $ 2.7 trillion

• We are well within our capacity to reach $ 5 trillion in the next few years

• Economy will grow to become a $3 trillion economy in the current year itself

• Reform, perform, transform

• India Inc is India's job creators

•   Between 2014 and 2019, we provided a rejuvenated centre-state dynamics, cooperative federalism, GST council and strident commitment to fiscal discipline.

Economic Survey bats for a 'rationalised' tax regime to boost start-ups

Budget 2019

Acknowledging the contribution of start-ups in growth of the economy and job creation, the Economic Survey batted for a “rationalised” tax regime and “predictability of policy action” for them in order to spur innovation and attract private investment.
The policy document, which was tabled in Parliament on Thursday, said the “outlook of the Indian economy appears bright with prospects of a pick-up in growth in 2019-20 on back of the pick up in private investment and robust consumption growth". It said the government is playing a proactive role in investment promotion through a liberal foreign direct investment (FDI) policy. During 2018-19, total FDI equity inflow stood at $44.36 billion as compared to $44.85 billion during 2017-18. According to government data, start-ups raised $7.5 billion in 2018, a majority of which was foreign capital, an increase of 74 per cent over the previous year. India now has 10 unicorn start-ups, collectively valued at over $35 billion, it said.
The Survey said that in order to further catalyse the growing ecosystem, taxation for start-ups must be rationalised.
“Tax policy and its implementation for start-ups must be rationalised to foster innovative investments in the Indian economy. Countries across the world recognise the need to evolve a tax system that can foster innovation.”

 It also suggested a re-look at capital gains tax, levied on profits from the sale of shares in unlisted companies. The high rate of capital gains tax in India — 30 per cent (for short-term holding) and 20 per cent (long-term holding) — has pushed some Indian start-ups to shift their headquarters abroad, mainly in Singapore where capital gains tax is nil. In this case, investors and promoters of these start-ups skip paying capital gains to India, resulting in a loss to the exchequer. It is also a deterrent to local M&As...Read More

Economic Survey 2019: Aadhaar-linked payments checked leakages

Budget 2019
In a bid to rev up the economy, the government might enhance the Start-Up fund in the Budget 2019-20.
According to highly-placed sources, the government is likley to come good on its poll promise of enhancing the fund to Rs 20,000 crore.
The Start-up India programme had created the 'Fund of Funds for Startups (FFS)' with a corpus of Rs 10,000 crore to provide support for Start-ups, over a period of XIV and XV Finance commission cycles.
The Fund was set up with the approval of Union Cabinet in June 2016 and is managed by Small Industries Bank of India (SIDBI) and contributes to the corpus of Alternate Investment funds (AIFs) for investing in equity and equity linked instruments of various start-ups.
Even the Economic Survey which was presented on Thursday highligthed the importance of the segment.
It recommended that the government rationalise the tax policy and its implementation for start-ups to foster innovative investments in the Indian economy.

 "Several studies have also suggested that capital gains tax can have significant economic consequences for individual investors in terms of its lock-in effects and associated deterring incentives to use capital gains into riskier investments," the survey said...

Investment-driven growth model must have aggressive export strategy: Survey

Budget 2019

Any investment-driven growth model must have an aggressive export strategy, the government said in its Economic Survey of 2018-2019.
The onus of rescuing economic growth has been placed squarely on exports, since the share of consumption in gross domestic product (GDP) remains constrained by a high level of savings, the Survey said. Goods exports rose 8.8 per cent in 2018-19, after a 10 per cent rise in the previous year.
However, it mentioned weak exports growth in 2019-20 as a key downside risk to the economy, taking note of continuing heightened US-China trade tensions. The Survey sounded a stark warning that prospects of export growth remain weak for 2019-20 if status quo is maintained.
The World Economic Outlook in its April 2019 issue had projected growth in world output at 3.3 per cent in 2019, down from 3.6 per cent in 2018.
Rupee devaluation
The Survey pointed out that the desired export growth required to deliver the 8 per cent real GDP growth rate may require a depreciation in the real effective exchange rate. "But we emphasise export growth stemming from increases in productivity rather than currency depreciation," the Survey countered. However, the government stressed that a higher growth rate for exports has been seen in Rupee terms due to the depreciation of the currency, while that of imports declined in 2018-19.

 In view of the demand by industry to re-assess India's existing free trade agreements (FTA), the Survey noted that India's imports from FTA nations have been on the rise, accounting for 52.0 per cent of India’s total imports. On the other hand, exports continue to trail. Outbound trade with trade partners accounted for 36.9 per cent of total exports.

Govt my enhance start-up fund to Rs 20,000 cr in Budget 2019: Sources

Budget 2019

In a bid to rev up the economy, the government might enhance the Start-Up fund in the Budget 2019-20.
According to highly-placed sources, the government is likley to come good on its poll promise of enhancing the fund to Rs 20,000 crore.
The Start-up India programme had created the 'Fund of Funds for Startups (FFS)' with a corpus of Rs 10,000 crore to provide support for Start-ups, over a period of XIV and XV Finance commission cycles.
The Fund was set up with the approval of Union Cabinet in June 2016 and is managed by Small Industries Bank of India (SIDBI) and contributes to the corpus of Alternate Investment funds (AIFs) for investing in equity and equity linked instruments of various start-ups.
Even the Economic Survey which was presented on Thursday highligthed the importance of the segment.
It recommended that the government rationalise the tax policy and its implementation for start-ups to foster innovative investments in the Indian economy.

 "Several studies have also suggested that capital gains tax can have significant economic consequences for individual investors in terms of its lock-in effects and associated deterring incentives to use capital gains into riskier investments," the survey said.

Indian fund managers see earnings revival, eye opportunity in consumption

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Budget 2019

Indian wealth and alternative investment managers expect the next federal budget to propose measures that will improve consumption and bolster infrastructure to revive economic growth.
Newly appointed Finance Minister Nirmala Sitharaman will present her first budget on Friday. Growth slowed to a five-year low of 5.8 per cent in the first three months of 2019, amid a liquidity crunch at non-banking financial companies. That’s put pressure on recently re elected Prime Minister Narendra Modi to deliver on a stimulus plan.
Here’s a roundup of views from fund managers on current opportunities in the market:
Nalin Moniz, chief investment officer, alternative equity, Edelweiss Asset Management Ltd.
Liquidity conditions are slowly normalizing; the cash squeeze should normalize in 1-2 quarters.
Expect to see a broad-based revival in earnings in the latter half of FY20.
Sees opportunities in consumption, exports and financial services sectors on a 5-year horizon.
Over the longer term, both consumer goods and discretionary consumption are expected to boom as the Indian economy grows from $2.7 trillion toward $5 trillion.Nifty’s current valuations are incomparable to the past, as index’s composition has shifted from manufacturing toward financials.
Vijay Krishna Kumar, head of liquid alternative investment, IDFC Asset Management Co.

The budget will be another non-event accounting exercise.

Budget likely to raise military spending slightly, delaying modernisation

Budget 2019

The government is likely to stick to a modest rise in defence spending in the 2019/2020 budget due on Friday because of government finances, officials said, further delaying a long-planned military modernisation programme.
India's air force desperately needs hundreds of combat planes and helicopters to replace its Soviet-era aircraft while the navy has long planned for a dozen submarines to counter the expanding presence of the Chinese navy in the Indian Ocean.
The army, a large part of which is deployed on the border with traditional foe Pakistan, has been seeking everything from assault rifles to surveillance drones and body armour.
But these plans have been on hold for years because governments have not been able to set aside large sums and most of the defence expenditure goes on salaries and pensions for a 1.4 million standing military, the world's second largest after China.
In an interim budget announced in February before national elections, the government allocated Rs 4.31 trillion ($62.27 billion) for defence, a 6.6 per cent rise over the previous year, raising concern at the time it wouldn't be enough for modernisation.
But a finance ministry official told Reuters there was unlikely to be any change to that allocation when Finance Minister Nirmala Sitharaman presents the federal budget in parliament.

 "Defence is our major spending and we give it as much as the budget allows. But this year, a significant rise to what has already been allotted looks difficult," the official involved in the budget preparations said.

Budget 2019: Govt may cut taxes on biz, hike spending for economic growth

Budget 2019

Prime Minister Narendra Modi's government on Friday will unveil a budget that is expected to cut taxes on business and raise spending in a bid to shore up consumption and faltering economic growth.
Analysts say Modi, boosted by a sweeping election victory, hopes to use the budget to restart reforms and deal with a series of economic woes.In January-March, annual growth slumped to 5.8%, the slowest pace in 20 quarters. Growth for the financial year that ended in March was 6.8%, also a five-year low, and indicators such as plummeting industrial output and automobile sales have stoked fears of a deeper slowdown.
A shortfall in monsoon rains, pivotal for the farm sector that employs nearly half of India's workers, has increased concerns of rural distress and strengthened the case for intervention, a leader of Modi's ruling Bharatiya Janata Party (BJP) said."The focus of the budget will be to boost domestic consumption, address the rural crisis and support small manufacturers," Gopal Krishna Agarwal, BJP's economic affairs spokesman, told Reuters.
Shilan Shah at Capital Economics in Singapore said in a note "Given the recent economic slowdown, the finance minister is likely to announce more accommodative tax and spending measures."In February, then-Finance Minister Piyush Goyal presented an interim budget for the year beginning April 1, to maintain government functions while a weeks-long election was under way.
BIG INVESTMENT PLANS

 On Friday new minister Nirmala Sitharaman will present a full-year budget that Agarwal said could lower corporate taxes for small and medium-sized businesses as well as personal ones to revive consumption by the middle class that gave Modi a second term,while withdrawing some tax exemptions.

Budget 2019: The toughest balancing act for India's new finance minister

Budget 2019

India’s first female finance minister in almost five decades, Nirmala Sitharaman, has held a wide range of jobs: She rode aboard a fighter jet as defense minister. As head of the trade department she grappled with falling exports. She’s been a national spokeswoman for her party, and in younger days worked in London as a home decor saleswoman.
Now Sitharaman, 59, faces what might become one of the toughest balancing acts of her career. On May 31, within hours of her arrival at her new office in New Delhi, she was greeted with India’s worst economic news of the year: Unemployment had touched a 45-year high, and India had lost its tag of the world’s fastest-growing major economy to China in the last quarter of the fiscal year.
On July 5, Sitharaman makes her first major public appearance in her new role, presenting India’s budget at a time when she’s under pressure to spend more to reinvigorate the economy. She must find resources for welfare programs announced by Prime Minister Narendra Modi’s government, including 870 billion rupees ($12.6 billion) for a new measure to support farmers. And she must do all that while keeping the national deficit below 3.4% of GDP, a target credit rating companies are watching closely.
A surprise pick by Modi, the new minister remains a relatively unknown entity to the financial world. Her critics say there’s a risk she could simply become a figurehead, with polices shaped by the prime minister. Her supporters argue that her reputation for prudence and team spirit will help her work out a middle ground.

 “It is difficult to predict what Minister Sitharaman will do in her new role as finance minister,” said Richard Rossow, senior adviser at the Center for Strategic and International Studies in Washington. “She will need to balance fiscal prudence with Modi’s desire to continue expanding key social programs like subsidized cooking gas and electric power access.”

Budget wishlist: Scrap recycling sector seeks cut in import duty, GST

Budget 2019

The metal recycling industry has urged the government pare the import duty on metallic scrap, its sole raw material, to nil from the existing 2.5-5 per cent.It also wants a reduction in goods and services tax (GST) to five per cent from the existing 18 per cent, in order to provide a level playing field with domestic primary metal producers who enjoy duty-free import of finished products under the Free Trade Agreement (FTA) with various countries.
In a pre-Budget submission to Union Finance Minister Nirmala Sitharaman, the apex industry body, Metal Recycling Association of India (MRAI) president Sanjay Mehta, said, "Since India doesn't generate enough metal scrap, the demand for the same has to be met through import. Most countries in the world Sri Lanka, Nepal, Thailand, Malaysia, Indonesia, Japan etc. have reduced import duty on imported scrap to nil. India remains the only country with an import levy of 2.5-5 per cent on metallic scrap despite the fact that its import conserves domestic natural resources, saves energy and also generates employment."
While import of iron and steel, copper and aluminium scrap currently attracts import duty of 2.5 per cent, brass and zinc scrap suffers five per cent of import tax in India.
At the same time, the government has encouraged primary producers by exempting copper concentrate, the raw material, from import duty. Apart from that, finished products of these ferrous and non-ferrous metals are also imported duty-free under the free trade agreements (FTAs) signed with ASEAN and other countries to boost regional and bilateral co-operation.

 India being deficient in copper concentrate but rich in bauxite for aluminium production, the government has encouraged primary producers in both metal segments at the cost of secondary producers, who contribute nearly half of India's overall non-ferrous metal demand...Read More

Budget 2019: After election, it's Modi's key chance to spur waning economy

Budget 2019

Prime Minister Narendra Modi has his first chance since a decisive election win to spur an economy that’s quickly lost its status as the world’s fastest-growing major one.
Newly appointed Finance Minister Nirmala Sitharaman is expected to boost spending and provide tax relief to consumers in her maiden budget on Friday. That will probably widen the budget gap to 3.5% of gross domestic product in the year started April 1 from 3.4% targeted in February’s interim spending plan, according to a Bloomberg News survey.
Growth slowed to a five-year low of 5.8% in the first three months of 2019 -- well below China’s 6.4% expansion -- putting pressure on Modi to deliver on a stimulus plan to kickstart consumption, a bedrock of the economy. With the global outlook turning gloomy amid heightened trade tensions, and the Reserve Bank of India already cutting interest rates three times this year, the focus is shifting to the government to play its part.
“For the next budget exercise, the development goal might supersede the rigid objective of fiscal austerity,” said Soumya Kanti Ghosh, group chief economic adviser at State Bank of India in Mumbai. “Sticking to a particular fiscal number is not that important in the current scenario.”Sitharaman will need to balance allowing the budget deficit to widen without risking a credit-rating downgrade and rattling bond markets. Key to that will be finding additional revenue to finance higher spending and keeping borrowing under control.
Here are other key things to watch for in the budget:

Taxes : Revenue from consumption taxes and customs levies undershot targets last year, and Sitharaman will need to find additional resources to fund welfare programs without increasing the tax burden on individuals.