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Budget 2020 Highlights: Nirmala Sitharaman announces tax cuts and an LIC stake sale!

Does the budget math add up? What is the impact? And will it rev up an economy in the throes of a slowdown? Live coverage and analysis.
Finance Minister Nirmala SItharaman. (Photo | EPS, Shekhar Yadav)
Finance Minister Nirmala SItharaman. (Photo | EPS, Shekhar Yadav)
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Tax cuts, for those who forego IT exemptions, and the selling of a part of the government's stake in the LIC were among the big announcements in Nirmala Sitharaman's second budget speech, which at two hours and forty minutes is now the longest ever. After reading the fine print, our consulting editor Gurbir Singh, though noted that the big growth stimulus, which was expected, is missing. So, what is the impact? And will it rev up an economy in the throes of a slowdown?

Find out with our live coverage and expert analysis of the Union Budget 2020:

Big announcement: Surprise! Surprise! Partial LIC disinvestment announced

 Government to sell part of its holding in LIC. The Finance Minister announces it a little before underlining that "every government must address the issue of fiscal deficit".

Expert Take: Welcome reach out to wealth creators and tax payers

The Finance Minister makes a significant bid to assuage ruffled feathers in the private sector. Her stating that wealth creators will be respected, announcement of the introduction of a taxpayers charter and the amendments proposed to decriminalise tax issues and end harassment are all welcome, Gurbir Singh states.

Finance Minister Nirmala Sitharaman unveils new scheme to provide subordinate debt to MSMEs

Debt restructuring

Over 5 lakh MSMEs have benefited from debt restructuring: Sitharaman

Deposit insurance coverage raised to Rs 5 lakh

A robust mechanism is in place to monitor the health of all scheduled commercial banks. The deposited money of individuals is absolutely safe. Insurance cover for each depositer has been raied Rs 5 lakh from current Rs 1 lakh: FM

Tax harassments

Would like to reassure taxpayers that we remain committed to taking measures to eliminate tax harassments, says FM
We wish to enshrine in the statue a taxpayers' charter, says Nirmala Sitharaman. Shankkar Aiyar quotes what the Tax Administration Reforms Commission had observed: "There is an urgent need to revisit the present citizen's charter to make it more meaningful and customer focused. The citizen's charter should be renamed the taxpayer's charter to focus on all categories of taxpayers."

National security is the top priority of the government: Nirmala Sitharaman

Expert take: Finance Minister is going the whole hog!

Agriculture, education, healthcare and the infrastructure sectors have all gotten their due. Looks like Nirmala Sitharaman is going the whole hog; no expenditure cuts so far, states Sunitha Natti

100 new airports by 2025

Finance Minister Nirmala Sitharaman on Saturday said 100 more airports will be developed by 2025 to support the UDAN scheme.

Finance Minister allocates Rs 9,000 crore for senior citizens

Tech push: Bharat Net arriving to 1 lakh villages

1 Lakh gram panchayats to be connected via 'Bharat Net'. Quantum technology push to see Rs 8,000 crore allocated for National Mission on Quantum Technologies and Applications

A snapshot of allocations so far

'Beti bachao beti padhao' a grand success: FM

Nirmala Sitharaman says that the ambitious Beti Bachao, Beti Padhao scheme has brought tremendous results. Opposition MPs disagree, interrupts Sitharaman's speech.

'Beti bachao beti padhao' a grand success: FM

Nirmala Sitharaman says that the ambitious Beti Bachao, Beti Padhao scheme has brought tremendous results. Opposition MPs disagree, interrupts Sitharaman's speech.

Expert take: Ideas worth the words from Budget 2020

Till now, these according to our columnist Shankkar Aiyar are the ideas worth the words from the decade's first budget:
* Internship for engineers at local bodies
* Viability gap funding for medical colleges
This is aimed at addressing the shortage of doctors. India currently has 11 lakh doctors for 135 crore people
* 5 new, repeat NEW smart cities

Gram panchayats

One lakh gram panchayats will be connected to the optical fibre programme: FM

Expert take: Huge infra push stays true to expectations

As expected, a huge push for infrastructure pipeline with Rs 103 lakh crore. To be spent on roads and highways, waterways and rail infrastructure, observes our consulting editor Gurbir Singh.Besides ease of living improvement, this is aimed at speeding up the economy and generating lakhs of jobs.
Snapshot of other allocations:

I propose to provide Rs 1.7 lakh crores for transport infrastructure in 2020-21

  • Accelerated development of highways will be undertaken

  • Propose to monetize 12 lots of highway bundles of over 6,000 km before 2024

  • Delhi-Mumbai expressway and two other projects will be completed by 2023

    • Manufacturing sector

    Finance Minister proposes a scheme focused on encouraging the manufacturing of mobile phones and electrical equipment(Photo | AFP)

    Education sector

    FM announces Rs 99,300 crore outlay for education sector in 2020-21 and Rs 3,000 crore for skill development.

    Safe drinking water

    We have approved Rs 3.6 lakh crore for Jal Jeevan Mission to provide safe drinking water to rural India: Sitharaman.

    Steps will be taken to deliver higher quality education: FM

    Fulfilling 'Aspirational India' left largely to states?

    Finance Minister Nirmala Sitharaman's Aspirational India theme in Budget 2020 has several moving parts; but the onus is more on states, notes Sunitha Natti.

    India to have world's largest working age population

    By 2030, India is set to have the largest working age population in the world, says Finance Minister For representational purpose. (File Photo)

    Online education programme

    Finance Minister says degree-level full-fledged online education programme will be offered by the top 100 institutions in the country.

    16-point action plan to revamp farm sector

    Focus on farm sector with a 16-point action program outlined, notes Gurbir Singh.
    Includes
    1. Turning around 100 water-stressed districts
    2. Boosting solar-linked pump sets.
    3. Encouraging use of traditional fertilizers instead of chemical fertilizers
    4. Increasing cold-chain warehousing through Kisan Rail coaches and by building airline capacity
    5. Rural credit pegged at Rs 15 lakh crore

    I propose to raise fish production to 200 lakh tons: Nirmala Sitharaman

    Agriculture

    Intergrated farming in rain fed areas to be expanded Balanced use of fertiliser will bring about change in prevailing regime of providing incentive for use of chemical fertiliser.States asked to adopt 3 central model laws on agriculture land leasing, marketing and contract farming.Government proposes plans to help farmers use proper manure and little water, encourage balanced use of fertilizers.(File Photo)

    Doubling farmers' income by 2022 remains an aim...

    The Finance Minister says the government remains committed to doubling farmers' incomes by 2022. Nice to see a reiteration of the goal, but are we any nearer to it than when the announcement was first made?

    Use of solar energy in the farming sector

    We shall help 15 lakh farmers solarize their grid-connected pumpsets, says Sitharaman

    Tax cuts in the offing?

    Budget to boost the income of people and enhance their purchasing power, notes the Finance Minister. Does this indicate that tax cuts are in the offing? We will have to wait and see.

    Goal is to double farmers' income by 2020

    "We are committed to the goal of doubling farmers' income by 2020" says FM Sitharaman underscoring government's ambition to make farming sector competitive. "We want to encourage state governments to implement model agricultural laws passed by central government" she added.(Photo | Express photo service)

    "India is now fifth largest economy in the world," says FinanceMinister Nirmala Sitharaman.

    Expert Take: No mention of demonetisation a first!

    Our consulting editor Gurbir Singh notes: Significantly, in the backdrop to the budget, demonetisation was not mentioned as a contributor to the economy. This is a first

    Budget woven around three prominent themes

    This Budget is woven around three prominent themes - Aspirational India to boost the standard of living; economic development for all; and building a humane and compassionate society

    Between 2006-16, India was able to pull 271 million people out of poverty: Finance Minister

    Expert take: GST leading to savings of 4% in household budgets, but how?

    Our consulting editor Gurbir Singh notes: Government estimates that GST implementation is contributing a savings of 4% in household budgets through lower costs. No sources on where this math is derived from, though

    The milestones achieved under Modi government have been unprecedented and were globally recognized: FM

    16 lakh new tax payers

    We have 16 lakh new tax payers now, revealed Sitharaman. A total of 40 crore GST returns filed this fiscal, she said.

    GST a historic reform

    GST has been the most historic reform, it has formalised the economy: FM

    Budget aims to give wings to your aspirations

    For every member of the schedule caste and schedule tribe, for every women, for every individual from minority section of the society, this budget aims to give wings to your aspirations says FM

    This Budget is to boost the income of people and enhance their purchasing power: Finance Minister

    PM Modi's massive mandate

    In May 2019, PM Modi received a massive mandate again. We commit ourselves to serve the people of India with all humility and dedication, says Sithraman.

    Watch the live budget presentation here

    Finance Minister Nirmala Sitharaman begins Budget 2020-21 presentation at the parliament

    Economic Survey 2019-20 sees rebound, celebrates wealth creators

    India needs capitalists. So, the government should embrace free-market principles and follow laissez-faire economics to stem the sagging growth, says Chief Economic Adviser K V Subramanian. (Click here to read more)

    A quick recap of the Economic Survey

    (Source: PIB_India Twitter)

    Budget will show how much BJP cares for Delhi: Kejriwal

    Delhi Chief Minister Arvind Kejriwal on Saturday said the Union Budget will show how much the BJP cared about Delhi, saying the city should get more in view of the elections.

    Hope Budget would provide relief to salaried class: Congress

    The Union Budget should help the salaried class through tax cuts and invest in rural India besides providing a healing touch to the common man and industry facing "hardship" since demonetisation.

    Sensex slumps over 200 points, Nifty tests 11,900

    Market benchmark Sensex slumped over 200 points in opening session on Saturday ahead of the release of the Union Budget. 

    Growth has bottomed out: Economic Survey

    The Economic Survey released on Friday has projected economic growth will rebound and hit 6%-6.5% in the next financial year starting April 1, saying growth has bottomed out. (Click here to read more)

    Finance Minister reaches parliament

    Finance Minister Nirmala Sitharaman arrives in Parliament to present first Budget of new decade(Photo |Shekhar Yadav)

    "Budget didn't offer much to Maharashtra and Mumbai"

    The Budget didn't offer much to the "highest tax-payers" Maharashtra and Mumbai, the ruling Shiv Sena, NCP and Congress said.

    Government has given up on reviving economy, accelerating growth rate, creating jobs: P Chidambaram

    Government in complete denial that economy faces grave macro-economic challenge, growth rate has declined in six successive quarters: Congress leader P Chidambaram.(Photo | PTI)

    Budget to provide unprecedented relief to taxpayers: Amit Shah

    Union Home Minister Amit Shah said the Union Budget 2020-21 will contribute significantly in fulfilling the Modi government's resolve to double the income of farmers.
    I am shocked and appalled to see how central govt plans to ambush heritage and legacy of public insitutions: Mamata Banerjee on Budget.(Photo | PTI)

    Corporate tax cut and benefit derived by new companies, as well as improved GST collections will improve revenue generation and will pave way to bring down fiscal deficit next year, with disinvestment too improving, says Sitharaman.

    Defence budget sees marginal rise

    The government allocated Rs 4.7 lakh crore for defence, which is an increase of Rs 40,000 crore. This includes the money used for paying pensions to ex-servicemen.(Click here to read more)

    Step to create a tax charter is a very major one announced in this year's Budget, says FM.

    Changes on customs duty for different items

    Customs duty on tableware/kitchenware made of porcelain or China ceramic, clay iron, steel, copper doubled to 20%.

    Customs duty exemption on raw sugar, agro-animal based products, Tuna bait, skimmed milk, certain alcoholic beverages, soya fibre, soya protein withdrawn.

    Employees' unions oppose government plan to sell shares in LIC

    LIC employees' unions on Saturday opposed the Centre's plan to sell a part of its shares in the state-run insurance behemoth through an initial public offer (IPO), insisting that the move is "against the national interest".

    Finance Minister Nirmala Sitharaman said the LIC will be listed as part of the government disinvestment initiative.

    We want to bring the tax rates down and remove complications when it comes to compliance, says Finance Minister(Photo | PTI)

    Sensex nosedives after budget presentation

    Sensex nosedives 987.96 points to 39,735.53; Nifty sinks 392 points to 11,643.80 after Budget presentation.

    Finance Minister Sitharaman briefs media after Budget presentation

    Finance Minister Sitharaman briefs media after Budget presentation

    May be longest Budget speech in history but was 'hollow': Rahul Gandhi

    Soon after the presentation of Union Budget 2020-2021 by Finance Minister Nirmala Sitharaman, Congress leader Rahul Gandhi on Saturday called it "hollow" and "tactical stuff without any central idea".(Photo | PTI)

    Import of news print reduced to 5 per cent

    Expert take: Income tax cuts welcome, but fine print reveals growth stimulus is missing

    Our consulting editor Gurbir Singh in his first take on the budget had this to say:

    If we were hoping for a major stimulus in the budget to counter the slowdown and breathe some life in the markets, it is not there. In fact, the Budget speech, one of the longest in recent years, was sounding as tired as the Finance Minister by closing time. The spends on infrastructure projects by government and for the farm sector are not substantially higher than last year, in fact in agriculture there appear to be cut backs. This is not good for growth and jobs. Obviously, the first reactions from the markets were not positive with the Sensex going down by 700 points immediately after the conclusion of the finance minister's speech.

    The expected relaxation of income tax rates in slabs upto Rs 15 lakh has been a welcome boost to the overstretched middle class, as it will put more money in their pockets, and hopefully crank up demand to some extent. It however comes with ifs and buts, and taxpayers are not supposed to have taken any exemptions to qualify for these cuts. It is a Rs 40000 crore relief nonetheless and so is the abolishing of the Dividend Distribution Tax on companies, which were paying 15 percent currently.

    On fiscal planning, by holding the deficit at 3.8% of GDP, the government has kept things under control, but one can see little in the Budget that will ease the current difficult times.

    One for the record books from Nirmala Sitharaman...

    Like we mentioned already, it was the longest budget speech ever at two hours and forty minutes. Interestingly, it could have been longer. It has now emerged that the Finance Minister had cut short her speech after feeling unwell towards the fag end.

    2 hours and 40 minutes: Sitharaman sets new record

    Finance Minister Nirmala Sitharaman cuts short her Budget speech after feeling unwell towards the fag end. However, in her second budget, she broke her own record of 2 hours and 17 minutes which she set in 2019.

    Markets strangely unhappy after India's longest budget, but why?

    Like we mentioned earlier, Nirmala Sitharaman's second budget, which lasted a record two hours 40 minutes, saw tax cuts, big spending and the selling of a part of the government's stake in the LIC. But the markets are still seeing red. What red flags have they spotted?

    Sensex slumps!

    Health cess

    Finance Minister announces health cess on import of medical equipment.

    Big relief for taxpayers

    Expert Take: No relief for stressed housing sector

    Expected boost for housing sector does not arrive. The only concession seems to be the Rs 1.5 lakh on purchase of home being waived for IT computation and the tax holiday for builders for affordable housing projects being extended by one more year, notes Gurbir Singh.

    Custom duty raised on footwear and furniture: Finance Minister

    Scheme for direct tax payers

    FM announces 'Vivad se Vishwas' scheme for direct tax payers whose appeals are pending at various forum.

    To ease allotment of PAN

    New process of instantly allotting PAN online through Aadhaar will be brought: Finance Minister(File Photo)
    Date of approval of affordable housing projects for availing tax holiday on profit earned by developers extended by 1 year: FM

    Tax breaks for affordable housing extended by one year

    Expert Take: Removal of dividend distribution tax a major boost for corporates

    Removal of dividend distribution tax which is now at 15% is a major boost for corporates. Now tax will be on the dividend in the hands of the investor. This earlier was a major grouse that foreign corporations had, observes Gurbir Singh.

    In a boost to MSMSEs, turnover threshold for audit raised to Rs 5 crore from Rs 1 crore: FM

    In a boost to MSMSEs, turnover threshold for audit raised to Rs 5 crore from Rs 1 crore: FM

    Tax on Employee stock ownership plan (ESOPs) to be deffered by 5 years: FM

    Government proposes 100 per cent tax concession to sovereign wealth funds on investment in infrastructure projects: FM

    Dividend Distribution Tax shifted to individuals instead of companies, says Sitharaman

    Rs 40,000 crore per annum will be revenue foregone from new income tax rates for individuals, says FM

    Expert Take: Tax cuts expected, aimed at boosting spending

    As expected, personal tax rates for the middle class have been been cut for those earning up to Rs 15 lakh annually, with the rider that they have to forgo exemptions . This is to put more money in the hands of a large section of the population and to boost spending and crank up demand. A step to combat the slowdown that has been dragging down the economy, says Gurbir Singh.

    On a lighter note, our columnist Shankkar Aiyar shares this on twitter as Gurbir was sharing his take:

    No income tax for those earning up to Rs 5 lakh

    FM introduces five tax slabs with lower rates for those ready to forego exemptions

    New simplified personal income tax regime announced.
    New tax rates for those ready to forgo exemptions will be as follows:
    Rs 5-7.5 lakh slab: 10%
    Rs 7.5-10 lakh slab: 15%
    Rs 10-12.5 lakh slab: 20%
    Rs 12.5-15 lakh slab: 25%
    Above Rs 15 lakh - Stays at 30%

    To provide significant relief to individual taxpayers, I propose to bring a new simplified personal income tax regime wherein I-T rates will be decreased: FM

    Corporate tax lowered

    Corporate tax lowered to 15 per cent. It is the lowest in the world, says FM.

    Expert Take: Revised fiscal deficit numbers for FY20 spells further trouble

    Importantly, fiscal deficit for current FY2020 has been revised from 3.3% to 3.8%. This means debt borrowing will go up to Rs 4.99 lakh crore. Expect significant inflationary pressure, warns Gurbir Singh.

    Fiscal deficit

    Fiscal deficit for financial year 2021 estimated at 3.8 per cent, says FM

    GDP nominal growth has been estimated at 10 per cent: FinanceMinister Sitharaman

    Union budget
    Tax
    Nirmala Sitharaman
    Budget 2020
    Union Finance Minister

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