Union Finance Minister Smt. Nirmala Sitharaman on February 1, 2020 presented the Union Budget for Financial Year 2020-21. The Union Budget has proposed followings:
NIRVIK scheme: NIRVIK scheme will provide high insurance cover for exporters and reduce premium for small exporters. To achieve higher export credit disbursement, a new scheme NIRVIK is being launched which provides for high insurance cover, reduction in premium for small exporters and simplified procedures for claim, settlement, said the Finance Minister while presenting Budget 2020-21. The Scheme is being prepared by the Commerce and Industry Ministry. Under the Scheme, also called the Export Credit Insurance Scheme (ECIS), the insurance guarantee could cover up to 90% of the principal and interest.
Tourism: To make India an attractive destination for both international and domestic tourists, the Finance Minister proposed to allocate Rs 2,500 crores in 2020-21 for the tourism sector. Besides tourism, Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman also proposed to allocate Rs 3,150 crore for Ministry of Culture. The Union Finance Minister proposed 5 Archeological sites to be set-up/developed as Iconic Sites with on-site Museums at the following locations:
- Rakhigarhi (Haryana)
- Hastinapur (Uttar Pradesh)
- Shivsagar (Assam)
- Dholavira (Gujarat)
- Adichanallur (Tamil Nadu)
Support for setting up Tribal Museum in Ranchi (Jharkhand) will be provided. Numismatics and Trade Museum to be located in the historic Old Mint Building in Kolkata. Maritime Museum to highlight Harappan Age at Lothal, Ahmedabad, by Ministry of Shipping.
Deposit Insurance and Credit Guarantee Corporation (DICGC): The Minister announced that Deposit Insurance and Credit Guarantee Corporation (DICGC) has been permitted to increase Deposit Insurance coverage to Rs. 5 lakh per depositor from Rs. 1 lakh previously. She emphasized that a robust mechanism is in place to monitor the health of all Scheduled and Commercial Banks, and thereby ensure safety of depositor money.
LIC IPO: In order to provide greater access to financial markets, unlock true value and induce market discipline, the Government has proposed sale of a part of its holding in LIC by way of Initial Public Offer (IPO). This shall also be an opportunity for retail investors to participate in the wealth so created.
Kisan Rail and Krishi Udaan: and To build a seamless national cold supply chain for perishables, inclusive of milk, meat, Indian Railways will set up Kisan Rail-through PPP arrangements. There shall be refrigerated coaches in express and freight trains as well”. To help improve value realization especially in North-East and tribal districts Krishi Udaan will be launched by the Ministry of Civil Aviation.
Expansion of PM-KUSUM: With the aim of doubling farmers income by 2022, Smt. Sitharaman in her budget speech proposed to expand PM-KUSUM to 20 lakh farmers for setting up stand alone solar pumps and help another 15 lakh farmers solarise their grid connected pump sets.
Study in India” programme: On Education and Skill front, the Finance Minister said Rs 99,300 crore is being allocated in 2020-21 and Rs 3000 crores for skill development. New Education Policy will be announced soon. About 150 higher educational institutions will start apprenticeship embedded degree/diploma courses by March 2021. Degree level full-fledged online education programme to be started. Under its “Study in India” programme, an Ind-SAT is proposed to be held in Asian and African countries. A National Police University and a National Forensic Science University are being proposed in the domain of policing science, forensic science, cyber-forensics etc. It is proposed that special bridge courses be designed by the Ministries of Health, Skill Development.
National Technical Textiles Mission: A scheme to encourage manufacture of mobile phones, electronic equipment and semi-conductor packaging is also proposed. A National Technical Textiles Mission would be set up with a four-year implementation period from 2020-21 to 2023-24 at an estimated outlay of Rs 1480 crore to position India as a global leader in Technical Textiles.
National Infrastructure Pipeline : On Infrastructure sector as highlighted by the Prime Minister that Rs 100 lakh crore would be invested over the next 5 years, National Infrastructure Pipeline was launched on 31st December 2019 of Rs 103 lakh crore. It consists of more than 6500 projects across sectors and are classified as per their size and stage of development. She said that about Rs 22,000 crore has already been provided as support to Infrastructure Pipeline. Accelerated development of highways will be undertaken. This will include development of 2500 Km access control highways, 9000 Km of economic corridors, 2000 Km of coastal and land port roads and 2000 Km of strategic highways.
Bharatnet : Fibre to the Home (FTTH) connections through Bharatnet will link 100,000 gram panchayats this year. It is proposed to provide Rs 6000 crore to Bharatnet programme in 2020-21. Measures proposed to benefit the Start-ups include a digital platform for seamless application and capture of IPRs, Knowledge Translation Clusters to be set up across different technology sectors including new and emerging areas. For designing, fabrication and validation of proof of concept, and further scaling up Technology Clusters, harbouring test beds and small scale manufacturing facilities to be established. It is proposed to provide an outlay of Rs 8000 crore over a period five years for the National Mission on Quantum Technologies and Applications.
National Recruitment Agency (NRA): Dwelling on the issue of Governance as clean, corruption-free, policy driven and good in intent and most importantly trusting in faith, the Finance Minister announced setting up of a National Recruitment Agency (NRA) as an independent, professional, specialist organisation for conduct of a computer-based online Common Eligibility Test for recruitment to Non-Gazetted posts. A test-centre in every district, particularly in the Aspirational Districts would also be set up. It is also proposed to evolve a robust mechanism for appointment including direct recruitment to various Tribunals and specialised bodies to attract best talents and professional experts. Deliberation to strengthen the Contract Act is also on.
Deposit Insurance and Credit Guarantee Corporation (DICGC) : The Deposit Insurance and Credit Guarantee Corporation (DICGC) has been permitted to increase Deposit Insurance Coverage for a depositor, which is now Rs one lakh to Rs five lakh per depositor. The limit for NBFCs to be eligible for debt recovery under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002 is proposed to be reduced from Rs. 500 crore to asset size of Rs 100 crore or loan size from existing Rs 1 crore to Rs 50 lakh.
Dividend Distribution Tax (DDT) : Currently, companies are required to pay Dividend Distribution Tax (DDT) on the dividend paid to its shareholders at the rate of 15% plus applicable surcharge and cess, in addition to the tax payable by the company on its profits. In order to increase the attractiveness of the Indian Equity Market and to provide relief to a large class of investors, the Finance Minister has proposed to remove DDT, and adopt the classical system of dividend taxation, under which the companies would not be required to pay DDT.
‘Vivad se Vishwas’ scheme: Under the proposed ‘Vivad se Vishwas’ scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty, provided he pays by 31st March, 2020. Those who will avail the scheme after 31st March, 2020 will have to pay some additional amount. The scheme will remain open till 30th June 2020.
National Technical Textiles Mission: National Technical Textiles Mission to be set up: With four-year implementation period from 2020-21 to 2023-24, at an estimated outlay of Rs 1480 crore and to position India as a global leader in Technical Textiles.
Fiscal deficit: The Finance Minister identified the fiscal deficit for FY 2019-20 at 3.8% (RE) and pegged it at 3.5% (BE) for FY 2020-21. The Finance Minister proposed a 21% increase in capital expenditure for the FY 2020-21. The Budget further announced Rs. 22,000 crore for equity to fund certain specified infrastructure finance companies providing much needed long term finance to the sector.
Income Tax slabs: The proposed changes in tax slabs are listed in the following table:
Taxable Income Slab (Rs.) | Existing Tax Rates | New Tax Rates |
0-2.5 Lakh | Exempt | Exempt |
2.5-5 Lakh | 5% | 5% |
5-7.5 Lakh | 20% | 10% |
7.5-10 Lakh | 20% | 15% |
10-12.5 Lakh | 30% | 20% |
12.5-15 Lakh | 30% | 25% |
Above 15 Lakh | 30% | 30% |