Budget 2020 – Detailed Analysis

Budget 2020 – Detailed Analysis

Did you miss the Live coverage of Budget 2020 by Finance Minister of India, Nirmala Sitharaman? If yes, here we have covered all you need to know with “Budget 2020 – Detailed Analysis”.

In the longest budget speech ever, finance minister presented the budget demarcated into three main themes – Aspirational India; Inclusive Economic Development & A Caring Society”

Budget 2020 – Fund Allocation

First of all, the total budgeted expenditure to be incurred in FY20-21 is pegged at INR 30.42 Lac Crore. The fiscal deficit target for FY 20-21 is set to be 3.8% while for FY 21-22 it has been set to 3.5%. In the backdrop of slowing Indian economy and global slowdown, budget 2020 aims to make structural investments and boost consumer demand.

The expenditure is planned according to heads shown below –

Budget Head Amount (INR Lac Crore)
Transfer to states2.00
Tax Administration1.53
Home Affairs1.14
IT & Telecom0.59
Social Welfare0.54
Urban Development0.5
Scientific Developments0.3
Commerce & Industry0.27
External Affairs0.17
Planning & Statistics0.06
North East0.03

If we convert the above numbers by percentage allocation, you get the chart below. Almost 50% of the budget allocation is covered by interest, subsidies, defense & pensions.

Segment 1 – Aspirational India (Budget 2020)

Under the aspirational theme, budget 2020 aims to increase the income levels of poor & low income masses in India.

Government has aimed to double the farmer’s income by 2022 with contract farming, new land leasing regulations & provision of solar pumps. Government intends to reduce over-use of fertilizers and support barren land owners with solar projects. Also, budget aims to support women self groups for village storage scheme and encourage horticulture with a mission to promote one product per district.

Additionally, the target for agricultural credit has been pegged at INR 15 Lac crore.

The government aims to increase the production of fisheries to 200 lakh tonnes by 2022-23.

Around Rs 12300 crore has been allocated under the Swachh Bharat Abhiyan while Rs 69000 crore has been attributed to the health sector.

Rs 99,300 crores has been kept for the education sector with another Rs 3000 Crore being attributed to skill India mission.

Segment 2 – Inclusive Development & Growth for all (Budget 2020)

Budget 2020 aims to ensure employment generation and economic development by supporting startups and business with an online portal. This portal shall provide support for land clearances & investment advisory.

Government plans to encourage export sector with a new scheme called “NIRVIK” with reduced taxes & duties.

A National technical textile mission & a scheme for manufacturing of electronics has also been proposed.

Rs 27,300 crore has been allocated for development of Industry & Commerce.

Chennai- Bangalore Expressway, Suburban Rail project for Bangalore has also been proposed. Along with this, budget aims to provide for a large solar power project along side Indian railway tracks and build 100 airports by 2024.

Prepaid smart electric meters will replace the old energy meters. This shall be implemented with the support from states.

Rs 6000 crore has been allocated for Bharat Net program & Rs 8000 Crore has been reserved for Quantum technologies and allocations.

Segment 3 – Building a caring society (Budget 2020)

Specific budget allocations have been done for developments of SC, OBC, ST, Senior Citizens and persons with disabilities. The allocations for the same are as follows –

Programmes Allocation in Rs Crore
SC & OBC development85000
ST development53700
Senior Citizen & person with disabilities9000
Nutrition related programs35600
Ministry of Culture3150
Clean Air & Environment4400

Further, government plans to reduce it stakes in LIC with an IPO and sell its stake in IDBI Bank.

As a relief to the citizens of India, the deposit insurance with banks has been increased from current Rs 1 Lakh to Rs 5 Lakhs.

Further, the new tax slabs announced with a rider of no exemptions and deductions, would ease of tax calculations, filing and may remove the tax burden for certain sections.

The budget has proposed a new scheme for debt to MSMEs and is constituting a National Recruitment Agency for non-gazetted posts in public sector banks.

Concluding remarks on Budget 2020 – detailed analysis

With a limited room from fiscal stimulus point of view & global slowdown, budget seems to set the stage for a U-shaped recovery. The economic recovery from the current slowdown shall be gradual. And the budget allocation under different heads as shown above, seems to lay the ground for economic empowerment of poor strata of the society.

The execution of budget schemes for agriculture, fisheries, entrepreneurship, environment, infrastructure , education, banking & technology will be the key for economic revival.

The impact of new tax regime on saving habits, spends on housing sector & investments in schemes like PPF, PF & ELSS options for mutual funds will be watched out for in the coming years.

Investment in infrastructure like highways, railways & aviation will have long term positive impact on economic development and progress. However the pace of implementation of current infrastructure projects across India is yet to be encouraging.

No specific announcements were made regarding National Logistics Policy, On-going Public Sector Di-vestments, credit to Real Estate Developers & injection of fresh capital into Public Sector Banks.

In the subsequent posts, we will unravel the impact of various policy measures announced in the budge & review the key facets for India to achieve the USD 5 trillion economy by 2024.

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Post Author: Fintox_India

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