Budget Part- A 2019-20

This was first budget of Nirmala Sitaraman. She is the finance minister, formerly was defense minister. So she was not coming as someone new but, someone who has proved herself. Finance Minister of all top 4 is very technical ministry. It is unlike any other ministry or depart of the government. So person heading this ministry needs to be qualified. Nirmala Sitaraman was indeed qualified having vast experience and expertise. She has doctorate in Economics and worked with BBC and PwC.

First let me tell you the thing I found striking in this budget. It was one of the best budget speech I have heard in past 10 years. It was informative, explanatory and despite all that she managed to keep it simple.

Finance Minister stated that she has not given numbers for expenditure on schemes. That was hallmark for all the past budgets. But she has put forth proposal. And there is lot to unpack. Every paragraph of her speech can be commented upon. Let’s dive into budget speech Part A:-

Her 6^th Paragraph titled “Vision for the decade”. This shows the mind-set of the government. Budget is not just annual exercise. It is implementing the vision for the year and also keeping the eyes on successive years.

Under this paragraph Nirmala Sitaraman described essential area for making India 5 trillion dollar economy in 5 years. Currently India is around USD 2.7 Trillion. So government is planning to double the size of economy. Shekhar Gupta has made a video stating how that will be possible.

Few very critical points out of 10 points listed are:-

1.    Pollution free Healthy India

2.    Start-up and MSME sector.

3.    Water & River Management.

Connectivity was highly talked about. And massive boost to Road and Waterways network was proposed in the speech. Freight corridor was discussed at par with Industrial corridor was also decent surprise. Finance Minister also highlighted Metro and Aviation schemes and how they are connecting India.

There was mention of One Nation One Grid. This being technical point in Electricity Distribution I am not going to comment on.

Para 27 & 28 Specially important for MSMEs had two major announcements. One being 350 crore allocated for Loan @2% interest subvention and automated payment platform of uploading of bills and payment process for MSMEs. This would further reduce bureaucracy and corruption.

Pradhan Mantri Karma Yogi Mandhan Scheme or PMKYMS Pension scheme launched for Retailers and shopkeepers who can enrol with Aadhar and Bank account is a great step forward.

This budget has surprised me with innovative ideas. One of this was Social Stock Exchange for Social Enterprises and Voluntary Organisations to raise funds under watchdog SEBI.

Cashing on success of ISRO New Space India Limited has incorporated as commercial arm of ISRO to explore opportunities of production of launch vehicles, transfer to technologies and marketing of space products. This is pretty bold move. This shows government is serious about space business and ready to provide it a boost in a global market with very few dependable players. But then again my criticism of this move is, this is taking India back to Nehruvian Socialism which doomed Indian Economy by 1990. Government would be better off by encouraging private players to co-operate with ISRO to take advantage of India’s growing expertise in this space.

An ambitious target was set for Pradhan Mantri Awas Yojana – Gramin (PMAY-G). 1.54 Crore homes were built in 2014-2019. And now additional 1.95 Crore homes are to be built during 2019-2022. These houses must be equipped with Toilets, Electricity and Gas.  This is such a great vision which is part of even more ambitious Housing for all plan.

Pradhan Mantri Gram Sadak Yojana (PMGSY) has also got major boost. Roads built under this scheme has already reached up to 97% of Habitation with all-weather connectivity. road constructed of 130 to 135 km per day in the last 1,000 days using Green Technology, Waste Plastic and Cold Mix Technology. PMGSY-III is envisaged to upgrade 1,25,000 kms of road length over the next five years, with an estimated cost of Rs. 80,250 crore. Now simple calculation will tell you that building road around 135 KM per day will achieve that target by 2.5 years. This I think as PM Narendra Modi promised that he will be giving stock of his work by the end of 2^nd year. The Minister who is tasked to achieve this is Nitin Gadkari known as Road-Kari in Maharashtra for his understanding and execution of road contracts.

The only mention specific to railways came in Para 59 of the speech and finds Mumbai Suburban mentioned before long-distance trains. FM Nirmala Sitaraman went on to say Railways will be encouraged to invest more in suburban railways through Special Purpose Vehicle (SPV) structures like Rapid Regional Transport System (RRTS) proposed on the Delhi-Meerut route. This certainly will be good news for Mumbaikars.

As India hoping to replace China as manufacturing hub, the biggest hurdle in the path are old-archaic labour laws which pertains to era of socialism and trade unions. And reforming them is complicated but some laws are subject matter of the State Government. Government in its first step releasing four model labour laws to stream line all the provisions and reduce confusion. We will have to wait and see how they are received by various stakeholders.

Announcement in Para 69 on TV program of Start-up by Start-ups for Start-ups will be nothing more than "Jumla". There is no standard format for any start-up. It is when they starts growing standardization kicks in. I don’t know why a TV program should find a mention in a budget speech of the nation.

While addressing women under title Nari tu Narayani FM Nirmala Sitaraman proposed Rs. 5,000 shall be allowed. One woman in every SHG will also be made eligible for a loan up to Rs. 1 lakh under the MUDRA Scheme. This will definitely help the Self Help Groups to grow and develop into SMEs.

Tourism is big industry and government developing 17 sites as a model for other tourist sites is another great idea. This will give us valuable data on developing tourist destination. We then can use it to draw solutions which will be uniquely Indian for our problems. I see this a big positive move.

Finally government has found cleaver work around to keep it’s holding in PSUs up to 51% and still go for disinvestment. Government has also decided to modify present policy of  retaining 51% Government stake to retaining 51% stake inclusive of the stake of Government controlled institutions. Which means earlier 51% shareholding was counted only of Government of India. Now 51% will be counted of Government of India + LIC + other government companies. This will give new push for disinvestment.