Edelman India Analysis Standing in for Mr Arun Jaitley, Finance Minister (FM), Piyush Goyal presented the Union Budget of India earlier today. Highlighting achievements of various Government schemes, Mr Goyal stated that the Government led by Prime Minister Modi has been the most decisive and transformational in executing structural reforms. Focused on rural and inclusive development over the next 5-10 years, the Budget included significant announcements ahead of the General Elections while also outlining ten dimensions of the Government’s Vision for India’s development by 2030. The launch of, “Pradhan Mantri Kisan Samman Nidhi (PM-KISAN),” which aims to supplement rural income, captured the limelight of this year’s budget. The middle class has also benefited with higher gratuity, broadening of the tax-exempt bracket and waivers on income tax on notional rent. A mega pension scheme for workers in the unorganised sector was also announced along with health coverage under the ‘Ayushman Bharat’ scheme. The Government has budgeted for overall expenditure of INR 27.8 trillion in 2019-20, an increase of 13% over the previous year’s estimates, while targeting a fiscal deficit of 3.4% in 2019-20 and 3% in 2020-21.

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UNION
Budget2019 - 2020
Contact the PA practice:
Medha Girotra, Head - Delhi and Public Affairs Lead
Medha.Girotra@Edelman.com
Edelman India Private Limited
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@EdelmanIndiaPA
UNION
Budget2019 - 2020
Medha Girotra
Head - Delhi &
Public Affairs Lead
Amid thumping applause, Finance Minister Piyush Goyal presented the interim budget for 2019-20 in the Lok
Sabha today. As soon as the applause subsided, interesting quips started pouring in. While some said that it was an
“Account for Votes”, others called it the “Pradhan Mantri Re-election Yojana”.
All said and done, this budget was everything that an interim budget usually is – a populist precursor to the elections.
Following the same pattern, this year’s budget appealed to the segments that are key to the ruling BJP – farmers,
middle class, and small traders.
The key highlights of the budget included big ticket announcements for the farmers in the form of the PM-KISAN
programme; full tax rebate for individuals with taxable annual income up to INR 500,000; rise in standard deduction
for salaried people to INR 50,000 from INR 40,000, among others. Even the corporate sector found solace in the fact
that no additional taxes were imposed. For the first time, the budgetary allocation for defence crossed INR three
trillion. Surprisingly, this budget did not toe the expected line of loan waivers in the education sector as was widely
anticipated after the recent farm loan waivers.
Outlining the government’s vision for a ‘New India’ in 2030, the finance minister listed ten dimensions including ease of living, robust and digital
infrastructure, housing for all, healthy and clean environment, minimum government, maximum governance and making India a USD 10-trillion-econo-
my. These dimensions not only mark the government’s vision for the next ten years but also set the agenda for the BJP as far as the upcoming general
elections go.
Reacting positively to the budget, the BSE Sensex settled 0.59% higher at 36,469.43 points today while the Nifty 50 closed at 10,893.65 points signify-
ing a growth of 0.6%.
The budget speech had little information on how the government will fund these big-ticket programmes. Has it stepped into a financial landmine? Or
will the next general budget provide a clear roadmap for achieving this vision? The bigger question, however, is whether the voters will interpret this
interim budget positively as they gear up for the next general elections.

2. UNION BUDGET 2019-20 2
MAJOR
Highlights
AGRICULTURE
RURAL DEVELOPMENT
TAXATION
INDUSTRY
SOCIAL SECTOR
HEALTHCARE
INFRASTRUCTURE
`
• Pradhan Mantri KIsan Samman Nidhi (PM-KISAN)
to provide direct income support of INR 6000 per
year to each farmer with less than 2 hectares of
land. Scheme to benefit 120 million small and
marginal farmer families. Outlay of INR 750 billion
for PM-Kisan in 2019-20
• MSP of all 22 crops fixed at minimum 50% more
than the cost
• Separate Department of Fisheries
• Benefit of 2% interest subvention to farmers
pursuing animal husbandry and fisheries activities,
through Kisan Credit Card; to get an additional 3%
interest subvention for timely loan repayment
• Farmers affected by natural calamities to get 5%
interest subvention
• Income up to INR 500,000 - No tax
• Standard deduction raised to INR 50,000 from
INR 40,000
• TDS threshold on interest from bank deposits,
postal savings raised to INR 40,000 from INR 10,000
• TDS threshold on rental income raised to
INR 240,000 from INR 180,000
• Capital gains from residential property sale will be
eligible for exemption under Section 54 for 2
properties
• No income-tax on notional rent on second
self-occupied home
• Government e-Marketplace (GeM) platform now
being extended to all CPSEs
• Scheme for loans of upto INR 10 million in 59 minutes
launched for MSMEs
• GST-registered SME units to get 2% interest rebate
on incremental loan of INR 10 million
• SMEs sourcing by Government enterprises increased
to 25%; at least 3% from women owned SMEs
• National Programme on 'Artificial Intelligence' to be
launched; National Centre of AI to be established
along with a national AI portal
• 22nd AIIMS announced in Haryana; 14 out of 21
have been announced in last 4 years
• Ayushman Bharat Programme to provide medical
treatment to nearly 500 million people; close to 1
million patients have benefited with free treatment
till now, resulting in INR 30 billion savings
• Allocation of INR 190 billion under Pradhan Mantri
Gramin Sadak Yojana (PMGSY); construction of rural
roads tripled
• Allocation of INR 600 billion under MNREGA;
additional amount will be provided if required
• Setting up of "Rashtriya Kamdhenu Aayog";
allocation for Rashtriya Gokul Mission to INR 7.5 Billion
• Allocation of INR 1.3 trillion for SC and ST
welfare
• 100,000 digital villages to be set up over next five
years
• Capital support of INR 645.87 billion to Railways
• 100 operational airports with commissioning of the
Pakyong airport in Sikkim
• Fastest highway developer globally – 27 km of
highways built everyday
• North East allocation up 21% to INR 581.16 million
• Mobile monthly data increased by over 50 times in last
5 years; mobile & mobile component manufacturing
companies increased from 2 to 268
• Mega INR 5 billion pension scheme 'Pradhan Mantri
Shram-Yogi Maandhan' for the 100 million unorganised
sector workers with monthly income up to INR 15,000;
assured monthly pension of INR 3,000 to be provided
from the age of 60 years
• Gratuity limit increased from INR 1 million to 2 million
• 98% rural sanitation coverage achieved; 545,000 villages
declared "Open Defecation Free"
• Allocations under Swachh Bharat reduced from
INR 169.78 Billion to INR 127.50 Billion for FY2019-20
• 1.43 billion LED bulbs provided leading to consumer
savings of INR 500 billion per year in power bills
• EPFO membership increased by nearly 20 million in
two years
• 10 million youth trained under
Pradhan Mantri Kaushal Vikas Yojana
• 75% of woman beneficiaries under PM Mudra Yojana

3. UNION BUDGET 2019-20 3
TOTAL EXPENDITURE
27.8
DEFENSE
3000
PMKY
750
RAILWAYS
646
MGNREGS
600
N-E
DEVELOPMENTS
582
UREA SUBSIDY
502
ROAD WORKS
489
NATIONAL
EDUCATION
MISSION
386
NATIONAL
HEALTH
MISSION
323
DIRECT
BENEFIT
TRANSFER
295
AMRUT &
SMART
CITIES
139
SCHEDULED
CASTE & TRIBE
1300
TRILLION
ALLFIGURESININRBILLION
Revised Estimates
FY 18-19
Budget Estimates
FY 19-20
FISCAL DEFICIT
REVENUE DEFICIT
GROSS TAX REVENUE
3.4% 3.4%
2.2% 2.2%
22.5INR TRILLION
25.5INR TRILLION
“ This is not merely an
Interim Budget, but a
medium of the country's
development journey.
We have given a decisive
leadership, whose intent
is clear, policy is transparent
and integrity is resolute ”

4. UNION BUDGET 2019-20 4
While there haven’t been specific announcements for the social sectors,
the 10 dimensions for Vision 2030 for India outlined is slated to be driven
by NextGen technologies for social and infrastructure development,
including Artificial Intelligence, Electric Vehicles and electric storage devic-
es, thereby reducing the nation’s import dependence and ensuring energy
security. These dimensions of growth would also include digital infrastruc-
ture and economy, rural industrialization, clean rivers and inland waterway
development, space, farm productivity, distress-free healthcare, and
responsible governance and bureaucracy. On one hand, it is laudable that
the government is adopting an integrated and systemic approach to devel-
opment as a whole. While on the other, it also indicates heavy reliance on
capital-intensive investments and technologies. We see that consecutive
governments’ long term vision documents are well conceived, but imple-
menting them efficiently, with accountability has been the biggest
challenge.
Shalabh Srivastava
Country Director, RTI International India
VISION 2030 IS
CAPITAL INTENSIVE:
SUBOPTIMAL ENERGY
SECURITY FOCUS:
The focus on electric vehicles and storage devices for energy sector may not be enough to address India’s energy
security. The government should also look at investing in other Cleaner Energy Security measures such as coal to
methanol economy; waste to energy systems and microgrid technologies for the energy-dark pockets that still
exist in India today. Even the focus on thermal and wind energy have missed the required push in the budget.
Investment in research and innovations is integral to improving the competitive advantage of nations and compa
nies. This becomes even more relevant in today’s world, where globalization and the advent of the 4th Industrial
Revolution coupled with innovative technologies and business models actively impact the socio-economic
landscape of a country.
• India spends only 0.69% of its GDP on R&D, compared to the 2.0% spent by China and 4.3% spent by
Republic of Korea.
• India filed only 11 patents per million people in 2017. As a country, India ranks far behind its peers,
especially leading global economies like China (899) and USA (902).
The R&D expenditure as a percentage of GDP needs to increase with focus shifting towards a two-pronged invest
ment in technology and sustainability, specifically Clean Energy Security. Further, emerging segments such as
robotics, AI, blockchain, nanotechnology and bio-medical engineering are key areas of research & development in
order to create a competitive advantage relative to other countries and drive economic growth for the country.
India, with its myriad development requirements, needs an increase in R&D investment particularly in the area of
sustainability.
R&D AMISS AGAIN:

5. UNION BUDGET 2019-20 5
In this year’s Interim Budget, the Government has made a number of major political
statements, which is understandable in an election year. Interestingly, the Budget
has outlined not only short-term schemes but a long-term vision and outlook.
Outlining long-term statements are seen very positively, and I feel they should be
vigorously debated in detail, rather than stated as a communication of intent.
Another feature of long-term planning – it usually quantifies resource allocation and
investment numbers, which were lacking here. It will also be interesting to see how
the subsequent government will propose to modify any of these measures, if at all.
However, one of the very promising features within this Budget is the proposal of
tax reform on which the Government is clearly on a strong wicket. An anonymised
system of tax returns, which is completely free of the intervention of tax officials, is
not only more efficient, but can also mean less corruption. A matter of questionable
fiscal prudence, but also understandable in a pre-election budget, is the compari-
son of Revised Estimates from the previous year with a subsequent Budget
Estimates for the current and next year. Budgetary allocations are normally made at
Y.K. Alagh
Indian Economist &
Former Union Minister,
Government of India
THOUGHTS ON THE
INTERIM BUDGET
a higher number and revised down to a lower number (as Revised Estimates) because of considerations made to maintaining
and reducing fiscal deficit. BEs in principle must be compared with BEs and not REs.
The new proposed Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) gives direct annual income support to farmers with a
land holding of two hectares, supporting the government’s stated goal of doubling farmer income. The consolidated figure
should however be based on a cost concept that includes rent and on-farm investments. It is true that in a Ricardian sense
rent is unearned income from a scarce asset: land. But surplus unearned income from scarce resources is allowed in other
sectors such as scarce imports by corporates, so it should be allowed in agriculture.
rent is unearned income from a scarce asset: land. But surplus unearned income from scarce resources is allowed in other
Prof. Geethanjali Nataraj
Professor of Applied Economics, Indian
Institute of Public Administration
POLL YEAR BUDGET:
ON EXPECTED LINES
Amidst huge expectations from the middle class, the farming community, and
corporates, the Union government today delivered its last interim budget before
the general elections. It was a challenge for the Government to not only control the
fiscal deficit, but also ensure that the budget gave a much-needed boost to the
economy in crucial sectors such as agriculture and Infrastructure. The budget was
very much on these lines.
The middle class received much-needed relief as the government declared full tax rebate of up to Rs. 5 lakhs annual income
after all deductions. In fact, the government’s tax reforms were one of the budget’s highlights. These include electronic tax
assessment; processing of income tax returns within 24 hours; increase in standard deduction from Rs. 40,000 to Rs. 50,000,
and exemption on tax on second self-occupied house.
Defence expenditure and infrastructure spending were also increased with special emphasis on highways, railways and the
Sagarmala project. A flagship program of the Government, the Sagarmala project aims to enhance the performance of
India’s logistics sector and unlock the potential of its waterways and coastlines. Further, an outlay of Rs.5.35 lakh crore has
been announced for phase 1 of the Bharatmala project, which focus on road infrastructure.
To address agrarian distress, the budget has given much-needed attention to the agriculture sector. Under the Pradhan
Mantri Kisan Samman Nidhi scheme, the government will give Rs. 6,000 per year to farmers with less than two-hectare
landholding. With an allocation of Rs. 75,000 crores, the scheme is expected to benefit over 12 crore farmers. With stakes
high for the Modi government in the election year, it is important to note that it has maintained a commendable fiscal deficit
of 3.4% of GDP.
In sum, the budget has addressed economic issues such farmer distress, increased allocation for defence, social and physical
infrastructure, and implemented tax reforms. These will sustain the economy’s growth till a full-fledged budget is announced
by the next government.

6. UNION BUDGET 2019-20 6
This was a budget the Government was not meant to present. What was
expected was a simple statement of accounts. Instead, a full-fledged
budget was delivered to a lively Lok Sabha.
The recent bonhomie between the PM and Bollywood was evident. The
Finance Minister announced single-window clearance for Indian filmmak-
ers, which was previously available only to foreign filmmakers. This was
followed by a proposal to introduce an anti-camcording provision in the
Cinematography Act and reduction of GST on cinema hall tickets.
This was a budget for the middle class, as evidenced by the exemption for
TDS for rental income below INR 240,000 a year; exemption of INR 40,000
on interest earned on deposits; the proposal for two houses instead of one
for offsetting long term capital gains, and a rebate to those earning less
than INR 500,000. The beauty of this move is that it does not impact reve-
nues in a big way, as the sum total will not exceed INR 100 billion .
AMIR ULLAH KHAN
Economist & Adjunct Professor
MCRHRD Institute
MISSING A TRICK
With the dominant civil society narrative aggressively highlighting rising inequality, there was a danger that
the government would seek to strike against the India Inc. Instead, along with no new announcement of cess
or tax, more disposable income for the middle class should stimulate the currently dormant state of consump-
tion.
In the light of concessions given to the middle class, an automatic corollary would have been a corresponding
increase in taxes for the super-rich. Now we must wait to identify where the revenue replenishment will come
from.
Also interesting was a hefty increase in expenditure on fisheries, clearly targeting West Bengal, Orissa and
Andhra Pradesh. A special mention was made, in the form of a modest allocation to another scheme for the
cow, in the form of a Kamdhenu Aayog, i.e. a national cow board.
Despite prior large-scale criticism of poor Ayushman Bharat allocation, there was no new outlay for the
scheme. Instead, the FM only noted that a large number of citizens have benefitted, and several AIIMS are
coming up.
A big worry remains on the fiscal front. Where is the money for these schemes? GST collection should have
been at least 13 lakh crores by March 2019. With what has happened this financial year till now, we will clearly
be woefully short. Instead of increases in income tax rates or slabs, we have a downward revision and a rather
confusing rebate. The Government is clearly signalling that it intends to relax its stance on direct taxes and
depend more on indirect taxation for revenue mobilization. With GST rates as high as 18 percent for a bulk of
goods and services, demand will not grow sharply. And with new e-commerce and retail curbs, growth antici-
pated from middle-class consumption might not happen. Further, the budget speech completely ignored
unemployment, and praised demonetization, a subject that needs no further discussion.
Overall, the budget speech was along expected lines. The interesting announcements were on digital villag-
es, solar power and on urban infrastructure in villages. However, it is a mystery why the government did not
go all-out to woo India’s recalcitrant farmers. There is a 2 percent interest rate rebate, and 3 percent for
well-behaved borrowers, but this will only impact an insignificant ten percent that borrows from banks. Why is
this dole restricted to a mere INR 500 a month per farming household, and why only for those who have less
than 2 acres of land? What will this do to help farm distress? The guarantee of a reasonable income for all
farming household would have been a game-changer. However, Piyush Goyal missed a chance to be gener-
ous - and that is why the voter might not be impressed

7. UNION BUDGET 2019-20 7
“ This is not merely an
Interim Budget, but a
medium of the country's
development journey.
We have given a decisive
leadership, whose intent
is clear, policy is transparent
and integrity is resolute ”
Inland Waterway Development
10 DIMENSIONS OF VISION 2030
The interim Finance Minister, Mr. Piyush Goel presented a populist budget
today. With the aim of catapulting the nation into a 5 trillion-dollar economy
in the next 5 years, the FM laid down the 10 dimensions of the growth story
for India.
Acknowledging the contribution of the middle class and salaried tax payer
to nation building, various tax benefits have been introduced for them.
Taxpayers with taxable income upto INR 5 lakhs would not be paying taxes
now on account of the enhanced rebate. For taxpayers holding more than
one self-occupied house property, notional rent on second house property
would not be taxable. Standard deduction has been raised from INR 40,000
to INR 50,000 for salaried tax payers.
Minimum Government
& Maximum Governance
1
2
3
4
5
Satellites & Space Exploration
Farm Productivity
Health assurance & infrastructure
6
7
8
9
10
Physical & social infrastructure
Clean Rivers & Irrigation
Digital India
Electric Vehicles & Energy Storage
Rural Indutrialisation
A once in a lifetime benefit of rollover of long-term gain on sale of residential property has been introduced for
investment made in 2 residential houses if the gain is below INR 2 crores. Enhancing the threshold for TDS on
interest from banks and post office deposits to INR 40,000 and on rental payments to INR 2, 40,000 annually will
bring relief again for middle class taxpayers.
Anti-tax abuse moves like demonetization have increased tax filing base by 1.06 crore and also anti-black money
laws have got INR 1.30 lakh crore additionally into the tax net.
The Government continues to focus on use of technology to simplify overall tax process. Measures like process-
ing of tax return and refund in 1 day and fully automated e-asseements are steps in that directions.
Overall, interim-Budget 2019 is a welcome move from the Government.
Parizad Sirwalla
Partner & Head, Global Mobility Services-Tax,
KPMG in India

8. UNION BUDGET 2019-20
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