On 1st February 2019, the government on India will present the interim budget. The Budget is one of the most important documents, not just for the Government but for us as well. Think of it as the nation’s financial planning for the next year. It determines how much money we’ll lose in taxes, whether or not our train and roads will get an upgrade, what will be the interest on my personal loan, etc.
Interim Budget vs. Union Budget
Interim budget is a report card on the income and expenses made last year by the government and the proposed expenses which are to be made in the next few months until the new government takes over.
Union budget is the annual financial statement of the estimated receipts and expenditures of the government for that year. It keeps the account of the finances of the government from 1st April to 31st March. Union budget is divided into Revenue and Capital budget.
This year as well the budget of 2019 will be put forward on the 1st of February, as said by an official. There is a focus on an ambitious expenditure programme. The government would be sticking to a routine and publishing an Economic Survey, essentially the economic report card for 2018-19.
Things you should know about the Budget
An interim budget happens for 2 reasons. One, if the government doesn’t have time to present a Union budget, or if the elections are near.
The Economic Survey represents the review of annual economic development of India. But in 2019, the government has decided not to present the Economic Survey 2019 on the table before the interim budget 2019. This is a huge decision the Modi government has taken before the elections.
Piyush Goyal is ready to present the 6th Budget in February 2019. The expectations are building up as the government may take measures to woo the electorate and to gain votes from the rural and middle-class sectors.
Arun Jaitley will not be able to present the budget as he is undergoing surgery in the US.
This years budget will also include announcements from the railways.
The new government will present a full budget after the interim budget. This happened last time in 2014 and was followed by a full budget.
Don’t worry; these decisions are made after much calculation and deliberation
Since the general elections are near, the Parliament passes a vote-on-account which allows the present government to meet their expenses till a new full budget is passed.
The budget is discussed in detail by both the houses of Parliament (i.e.: all our representatives!) and then needs to be passed by both the houses before it comes into effect from 1st April, the start of India’s financial year.
What can we expect from the 2019 Budget?
- The middle-class people are hoping and expecting that they will have some income tax benefits for them, from this year’s budget. The maximum tax exemption currently under Section 80c is 1-1.5 lakhs through the investments that e make in PPF, provident fund, and equity. But due to the inflation in the market and an increase in income, the limit is low and an increase in the limit, to 2-2.5 lakhs, would encourage more investment in the markets.
- The government is going to do something about the farming sector which needs some structural reforms. To do so, the PM has already ruled out loan waivers. There can be a cash transfer instead of subsidies. There can also be an income support system and there can be a change in the crop insurance scheme. There can be an increase in agricultural credit flow as well as an increase in spending on rural infrastructure.
- The threshold for the 25% tax may be increased on the corporate part of taxes. As of now, 25% tax is applicable to those firms with revenue less than Rs.250 crore, which may be hiked up to Rs.500 crore.
- When it comes to direct taxes, the Government is trying to improve it with the current large population of the upper middle class in the society. The scenario that can happen is changing the tax from 2.5lakhs to Rs 5 lakh. Also, there could be an increase in exemptions for senior citizens.
- There can also be an outline given by the Government on the Universal Basic Income which may not be implemented this year but will surely be a huge part when it comes to the election speeches.
- When it comes to infrastructure, the budget is going to be more than last years and is focused on flagship initiatives like housing, water, and sanitation needs. It also focuses on Bharatmala and Sagarmala. There can be electrification and modernization of railways and has passenger safety.
Overall, we expect the budget to be expansionary and can have a delicate balance and not break the bank this year. But we can expect disinvestment at a faster rate as they will need to raise revenues.