New income tax rates for those opting to forego exemptions, move will bring down income tax outgo of those earning Rs 15 lakh a year by Rs 78,000 to Rs 1,97,000

New Delhi: Finance Minister Nirmala Sitharaman is presenting her second Union Budget. As she rises to reveal her answer to a frail economy, steps to boost consumer demand and revive growth will be watched closely. Beginning her presentation in parliament with a tribute to former Finance Minister Arun Jaitley who died last year, Sitharaman termed the GST “historic structural reform”. Saturday’s Union Budget, the third in a span of one year, will seek to kickstart an economy staring at the worst pace of expansion recorded since the 2008-09 global financial crisis.
The government is widely expected to raise spending on infrastructure and cut some personal tax to spur consumer demand and investment. The stock markets, which have been volatile ahead of the Budget day, will remain open for a special trading session.
The Finance Minister said the Budget 2020-21 is for boosting income and improving the purchasing power of people. “Only through higher growth can we have our youth gainfully and meaningfully employed,” said the Finance Minister, reiterating that the government is committed to Prime Minister Narendra Modi’s goal of making India a $5-trillion economy.
Stating that India is now the fifth largest economy in the world, the finance minister said: “Fundamentals of the economy are strong and that has ensured macroeconomic stability… and inflation well contained.” The central government’s debt has reduced to 48.7 per cent of GDP from 52.2 per cent in March 2014, MS Sitharaman said.
The Finance Minister said the fiscal deficit is estimated at 3.8 per cent (revised estimate for 2019-20) of the gross domestic product in the current financial year, and the government aims to lower it to 3.5 per cent (budget estimate for 2020-21) in the financial year ending March 2021.
With a view to simplify the direct taxation structure, the Finance Minister announced new income tax rates for individuals opting to forego exemptions, a move that will bring down the income tax outgo of those earning Rs 15 lakh a year by Rs 78,000 to Rs 1,97,000.
Nirmala Sitharaman said the fiscal plan is based around three main themes: an “aspirational India, economic development for all and a caring society”.
The government is committed to doubling farmers’ income by 2022, she said, as she proposed to allocate Rs 2.83 lakh crore for agriculture and rural sectors such as irrigation. The government has set a target of enhancing the availability of agriculture credit to Rs 15 lakh crore in 2019-20. Non-banking financial companies (NBFCs) – also known as shadow banks – will help in agriculture, Nirmala Sitharaman added.
Assuring the general public that their savings in bank accounts are safe, the Finance Minister proposed to increase the insurance cover on deposits to Rs 5 lakh from the existing Rs 1 lakh.
She proposed to allocate Rs 69,000 crore to the healthcare sector and Rs 12,300 crore to Prime Minister Narendra Modi’s flagship cleanliness programme Swachh Bharat Mission. The Finance Minister also earmarked another Rs 3.6 lakh crore towards the supply of piped water to households.
The government aims to make “every district an export hub”, Nirmala Sitharaman said, as she allocated Rs 27,300 crore for promotion of industry and commerce.
The government also set a target of electrifying 11,000 kilometres of railway tracks, and announced the construction of 2,000 kilometres of highways. It also announced a National Logistics Policy, which the Finance Minister said will be released soon.