The budget presented in the Lok Sabha by Finance Minister Nirmala Sitharaman set eyes on stimulating infrastructure and foreign investment with an immediate target to become a $3 trillion economy within a year.
“The Indian economy will grow to become a $3 trillion economy in the current year. It is now the sixth largest in the world. Five years ago, it was at the 11th position. In Purchasing Power Parity terms, we are in fact, the third largest economy already, only next to China and the USA,” the finance minister said.
“I wish to propose a number of initiatives as part of a framework for kick-starting the virtuous cycle of domestic and foreign investments,” she said in her two-hour long speech.
Stressing the need for investment-driven growth to catapult India to the next growth trajectory, Sitharaman said the country required Rs20 trillion worth investment per year.
She placed a big thrust on infrastructure sector, proposing to spend about Rs100 trillion in the next five years.
Prime Minister of India Narendra Modi said this budget is a roadmap for new India and is one of hope. It will transform agriculture sector of the country.
For overseas Indians, one of the most exciting proposals was the facility to get Aadhaar cards on arrival, without the mandatory waiting period.
“I propose to consider issuing Aadhar card for NRIs with Indian passports after their arrival in India without waiting for the mandatory 180 days,” Sitharaman said. Currently, NRI need to spend 180 days to be eligible for an Aadhaar card. Another step is the interchangeability of PAN (permanent account number) and Aadhaar card.
While there will be no changes in personal income tax rates, the budget proposes to levy an additional surcharge on the super-rich. The minister also sought to propel growth with reduction in corporate tax and sops to housing sector, start-ups and electric vehicles.
Other key proposals included digital payments getting cheaper, the government launching an ATM-like ‘One Nation One Card’ for pan-India travel and new model rental laws to promote affordable housing.
In other announcements, the finance minister said that the government would take substantial steps to promote rental housing and would make amendments in the existing rental laws.
The budget also proposes to liberalise foreign direct investment in aviation, media, animation and insurance intermediaries and to hike statutory limits for foreign investments in some companies. The finance minister also suggested the setting up of an expert committee to make recommendations on infrastructure finance.
In the labour front, Seetharaman proposed to streamline multiple labour laws into a set of four labour codes and promised to focus on training new age skills like AI, robotics, 3D printing.
New proposals include a surcharge on individuals having taxable income of Rs20 million to Rs 50 million; extension of pension benefit to three crore retail traders with an annual turnover less than Rs 15 million; railways to be encouraged to invest more in suburban rail network via special purpose vehicles (SPVs) and enhance metro rail network through public-private partnerships; finalise a model tenancy law and circulate to states; and propose steps for rental housing; setting up of 19.5 million houses; additional tax deduction of Rs150,000 on interest paid on home loans taken up to March 2020; state-run banks to get Rs700 billion capital to boost credit; new education policy to propose changes in school, higher education.
Other key takeaways include reforms to kick-start domestic and foreign investment; proposal to create blueprint for gas, water grids and regional airports; plan to expand Swachh Bharat to include solid waste management in every village; setting up enhanced disinvestment target of Rs1.05 trillion in FY20 as against Rs900 billion set in the Interim Budget; setting up of digital repository to preserve tribal heritage; investment linked tax benefit for manufacture of products like lithium batteries and solar chargers; import of defence equipment is being exempted from basic customs duty; government will start raising part of its gross borrowing programme in external markets in external currencies; and a new series of coins of Re1, 2, 5, 10 and 20 easily to be made available for public use.