Reaching out to a large electorate ahead of the Lok Sabha polls, the Narendra Modi government on Friday announced a cash dole for small farmers, a mega pension scheme for the unorganised sector and doubled the threshold income tax exemption limit, with the clear aim of winning over votes.
Presenting the interim 2019-20 Union Budget in Parliament, Finance Minister Piyush Goyal said Rs 6,000 per year cash support will be given to small and marginal farmers that will cost the exchequer Rs 75,000 crore annually, in a bid to provide relief to the distressed farm sector. Under the scheme called ‘Pradhan Mantri Kisan Samman Nidhi’, Rs 6,000 will be transferred into bank accounts of farmers holding up to 2 hectares of land in three equal instalments.
Goyal said it would benefit 12 crore farmers and will be implemented from this fiscal itself. He said Rs 20,000 crore have been provided for current fiscal and also announced allocation of Rs 75,000 crore for the next fiscal. Unveiling the mega pension yojna for the unorganised sector workers that will benefit 10 crore people, Goyal said they would get assured monthly pension of Rs 3,000 after reaching the age of 60 years.
“We are launching the Pradhan Mantri Shram Yogi Mandhan today. The scheme will provide assured monthly pension of Rs 3,000, with contribution of 100 rupees per month, for workers in unorganised sector after 60 years of age,” Goyal said.
Goyal, who is standing in for Arun Jaitley undergoing treatment in the US, informed the House that the government would also provide a matching contribution of Rs 100 for every unorganised worker covered under the scheme.
“The scheme would benefit 10 crore workers in unorganised sector, may become the world’s biggest pension scheme for unorganised sector in five years”. In a major relief for the middle class, Goyal proposed to double the threshold income tax exemption limit to Rs 5 lakh and increased the standard deduction from the existing Rs 40,000 to Rs 50,000. The announcement was greeted with thumping of desks by Prime Minister Narendra Modi and members of the treasury benches.
The proposal will benefit 3 crore middle class tax payers, Goyal said. Doubling the threshold exemption limit is expected to cost the exchequer Rs 18,500 crore. Goyal further said an individual having an income of Rs 6.5 lakh per annum will not be required to pay any tax provided he invests in the specified tax saving schemes of the government. The TDS threshold on interest from bank, post office deposits was also raised from Rs 10,000 to Rs 40,000. “This is not just an Interim Budget, this is a vehicle for the developmental transformation of the nation,” Goyal said. He also announced a hike in the defence Budget to over Rs 3 lakh crore.
Goyal also allotted Rs 190 billion for building of roads in the countryside where two-thirds of Indians live.
The fiscal deficit in 2018/19 would be 3.4 per cent of gross domestic product (GDP), slightly higher than the targeted 3.3 per cent, acting finance minister Piyush Goyal told the Lok Sabha.
The deficit was widely expected to be higher than targeted due to a combination of revenue shortfalls and increased spending ahead of the election.
The benchmark 10-year bond yield fell 3 basis points to 7.46 per cent once the new fiscal deficit estimate was revealed as investors showed relief that it wasn’t worse.
“India is solidly back on track and marching towards growth and prosperity,” Goyal said as Modi and lawmakers from the ruling Bharatiya Janata Party thumped their desks in appreciation.
The budget is interim and is likely to be followed by a full one in July.