Analysis of the 2019 Indian Union Budget: A Balanced Measure with Room for Improvement
The 2019 Indian Union Budget, commonly referred to as the Union Budget or 'Bahi Khata', laid down a roadmap for the nation to reach a GDP of 5 trillion USD by 2024-25. While the budget presented a strategic plan to boost economic growth, it also raised several concerns regarding its implementation and potential impacts.
Overall, the budget can be classified as a balanced document that aimed to address multiple fronts, from growth and infrastructure to corporate taxes and social welfare. It provided a forward-looking view of the economy, highlighting key sectors such as small and medium-enterprises (SMEs), as well as sustainability measures like the promotion of electric vehicles.
What the Budget Did Right
Infrastructure and SME Sector Support: The budget earmarked Rs 100 lakh crore for infrastructure over five years, a considerable boost for the construction and steel industries. Additionally, the turnover limit for start-ups under the income tax exemption was raised to Rs 400 crore, which will ease the burden on several small businesses.
PSU Banks and Ease of Doing Business: The infusion of Rs 70,000 crore into public sector banks was a welcome move to address liquidity issues. However, the increase in surcharges and the implementation of new tax measures may not significantly contribute to ease of doing business, especially with measures like the 2% TDS rate on cash withdrawals and increased TDS on life insurance payouts.
Areas of Concern
Stock Market Impact and Buyback Tax: One of the more controversial elements of the budget was the decision to reduce promoter shareholding in companies to less than 65%, leading to a significant panic in the stock market. This change was abrupt and could have been phased in over a period of two years.
New Taxes and Surcharges: The introduction of new surcharges on the income of the rich, corporate tax changes, and new deductions for electric vehicle loans all contribute to the overall tax burden. While these measures are aimed at making super-rich individuals and corporations pay more, they may not equate to the real support needed for smaller entities and the everyday consumer.
Liquidity Crisis and Technological shift: Measures aimed at moving the economy toward a cashless platform are ambitious but may not be practical given the current technological and infrastructural limitations in India.
Conclusion
The 2019 Union Budget, wrapped in traditional red cloth, aimed to balance various economic requirements and long-term goals. It was a step in the right direction for promoting sustainable growth and supporting key sectors. However, the implementation of certain measures, such as the surcharge on the rich and the reduction of promoter shareholding, created panic and may need to be reconsidered in the long term.
In summary, while the budget provides hope and direction for achieving the nation's economic targets, it also highlights the need for a more phased and thoughtful approach to ensure broad-based economic benefits.