India’s budget is released yearly at the start of every financial year. On 1 February 2020, for the second time in her position, India’s Finance Minister Nirmala Sitharaman released the country’s budget for the 2020-2021 financial year. In her speech, the very able finance minister announced the launching of a fresh personal income tax regime. According to Ms. Nirmala Sitharaman, this regime is aligned to help even the middle-class in their efforts to save tax while at the same time reducing dividend distribution tax. The Finance minister, who is also the minister for the country’s corporate affairs, presented the Union Budget 2020 in the Lok Sabha.
Prominent themes in India’s 2020 Budget
The budget is based on the theme of:
- An aspiring India where the society in its entirety seeks to achieve better living standards (education, health, and employment)
- All-inclusive economic prosperity for improved productivity and efficiency
- Achieving a caring society
Critical consideration in budget development
Considerations important to modern India were useful in coming up with the budget. The correlation between globalization and monetary policies were the main determinants in structuring the budget for the 2020-2021 financial year.
- Technological development
Including analytics, machine learning, robotics, bio-informatics, and Artificial Intelligence
- Number of people within the productive age bracket
Constituting of citizens between 15 and 65 years of age in the country
Components Detailed in the Budget
- Calling out for political and economic stability
The budget is inspired by the desire to boost the income of the people while at the same time enhance their purchasing power. Challenged by the people’s open desire for a politically stable and their dissatisfaction with the prevailing economic policies, the 2020 budget is intended to make things better particularly for the people. With the belief that higher growth is the only enabler to improving the lives of people, the budget highlights the need for ensuring the youth are employed in a way that is both meaningful and gainful and calls upon business owners to embrace innovation, healthy and solvent businesses where technology is upheld.
- Improving the living standards of the people
The budget is also cognizant of present-day youth and individual men and women who constantly fight for better lives. Giving a voice to every citizen and making sure that they are empowered, the budget takes account of the visions and goals of everyone.
- Creation of a socially responsible India
In the budget, the role of technology is articulated, which is expected to serve as an enabler for empowering the weak in the society, including but not limited to the old and vulnerable members of the society.
- Formalization of the economy
Important structural reforms and inclusive growth, as envisioned in the past five years to introduce a paradigm shift in governance is also reiterated in this year’s budget characterizing the government’s new direction. The role of these two focuses on promoting the macroeconomic stability of the country cannot be overstated. The budget appreciates the fact that following the structural reforms, the government has been able to manage inflation with financial institutions being cleaned up of all overdue loans, which were then used to achieve recapitalization.
- Shared prosperity by pooling power on matters indirect taxes
Acknowledging the late Shri Arun Jaitley Ji’s historic sentiments and works concerning the Goods and Service Tax (GST), the budget follows in line by proving that the Centre and States work in unison towards what is good for all; outgrowing narrow politics and embracing the interest of the nation. Results include reduction of turnaround time for trucks by 20% by reducing the number of check posts, efficiency benefits in logistics and transport sectors and the much-needed consolidation of multiple taxes to a single tax and the facilitation of formalization of the economy.
- Enhanced threshold and composition limits of MSME
The budget brings out the fact that taxes have been reduced for most products courtesy of rate reductions that have resulted in a yearly benefit of the extension of a lakh crore to consumers. With a 10% decrease in overall tax incidence, individual households have benefitted a monthly 4% save on expenses.
- Introduction of a simpler return system
The budget highlights the introduction of a system to solve the challenges, which faced the GST system transition. This is meant to support what has been achieved through stakeholder consultations, increasing taxpayers, among other efforts and strategies put in place.
- Implementation of schemes and programs
These are meant to ensure that the common deserving citizen gets what is rightfully theirs while at the same time accommodating the interests of the poor and vulnerable in society. The schemes include Direct Benefit Transfer (DBT), water and sanitation, healthcare, clean energy, financial inclusion, credit support, insurance cover, pension benefits, digital accessibility and affordable housing. In actualizing these programs, significant steps have been made that have made India a pacesetter for other countries.
- Reduction of government debt
Owing to the nation’s structures and strategies, India has taken the fifth position in the world economy rankings with her foreign direct investment going up by US$94 billion while the country’s GDP increased by 5%.
- Health, prosperity, and wellness
The budget strives to bring ease to the lives of every citizen of the country through structures and provisions that will help the country’s development.
Initiatives of the Budget
- Achievement of thorough delivery of services through digital governance
- Improvement of people’s living standards through the National Infrastructure Pipeline
- Mitigation of risks using disaster resilience
- Pension and insurance protection for social security
India’s budget, which is dedicated to providing ease of living to all her citizens, is founded upon the desire to create an aspirational and caring India where there is economic development for everyone. Grounded upon these noble themes, the very able Finance Minister proposes 1) good governance that is policy-driven and corruption-free and 2) financial sector that is clean and sound, to be the flag hoisted by every compatriot.