The Union Interim Budget 2019-20 presented on February 1, 2019 contained elements that are aimed at benefiting three major segments of the population – farmers, informal workers and salaried taxpayers – with announcements of an income support scheme for the first, an insurance scheme for the second, and tax exemptions for the third one.
Union Finance Minister Piyush Goyal, in his budget speech, announced the creation of a Pradhan Mantri Kisan Samman Nidhi Scheme, which aims at providing income support to vulnerable landholding farmers.
No income tax up to ₹5 lakh; ₹6000 per annum for farmers with less than 2 hectares of land; and a mega pension scheme for the organised sector workers top the announcements made by Union Finance Minister Piyush Goyal in his Budget speech on February 1, 2019.
“Under this programme, vulnerable landholding farmer families, having cultivable land up to 2 hectares, will be provided direct income support at the rate of ₹ 6,000 a year,” Mr Goyal said.
“This income support will be transferred directly into the bank accounts of beneficiary farmers, in three equal instalments of ₹ 2,000 each. This programme will be funded by the Government of India and will entail an annual expenditure of ₹75,000 crores
The government further said the gross tax revenue as a per cent of GDP is expected to increase to 12.1 per cent of GDP in 2019-20 and stabilise at that level in 2020-21 before climbing up to a level of 12.2 per cent of GDP.
Fiscal deficit in 2019-20 is budgeted to be 3.4 per cent of GDP and is projected to adhere to the Fiscal Responsibility and Budget Management (FRBM) Act’s targeted value of 3 per cent in 2020-21 and continuing at that level, it added.
Primary Deficit is another indicator which has been included in the medium term fiscal policy statement from 2019-20. Primary deficit refers to the deficit left after subtracting interest payments from fiscal deficit. In BE 2018-19, primary deficit is calculated at Rs 48,481 crore which is 0.3 per cent of GDP. Primary deficit in RE 2018-19 is expected to be Rs 46,828 crore which works out to be 0.2 per cent of the GDP.
The reduction of primary deficit is a positive sign as it shows reduced usage of borrowed funds to pay for existing liabilities, the document said. It also said there has been a slight decrease in gross tax revenue estimates for 2018-19 to the tune of about Rs 23,067 crore mainly on account of lesser than anticipated collection of GST. The government further said the gross tax revenue as a per cent of GDP is expected to increase to 12.1 per cent of GDP in 2019-20 and stabilise at that level in 2020-21 before climbing up to a level of 12.2 per cent of GDP.