Know more about the Finance bill and the highlights of the Budget

Finance Minister Nirmala Sitharaman, clad in a bright yellow sari with a light green border, delivered the longest Union Budget speech ever. Her first Budget speech, in July 2019, went on for around 137 minutes.

The government aims to raise India’s fishery exports to ₹1 lakh crore by 2024-25, Finance Minister Nirmala Sitharaman said on Saturday. By 2022-23, the government also proposes to raise fish production to 200 lakh tonnes, Sitharaman said while presenting the Union Budget for 2020-21 in the Parliament.

Sensex nosedives 900.29 points to 39,805.61, Nifty sinks 276.85 points to 11,685.25.

Nirmala Sitharaman's second Budget clearly caters to the demand side of the economy by trying to put more money in the hands of individuals. Her Budget had three themes -- aspiring India, economic development, caring society.

While some see it as giving more goodies to the corporates by doing away with dividend distribution tax (DDT) and extending the restructuring window for MSMEs by a year, others point out that she has also brought in much needed reforms in deposit insurance as well as outlining a 16 point action plan to push agriculture and the rural economy.

Read more: Budget 2020: pushes for economic growth through fiscal expansionary route; LIC to be taken public

Read more on the income and expenditure of Budget 2020 at a glance

Read Finance Minister Nirmala Sitharaman's Budget speech here

Read the highlights of Budget 2020

Health cess on imported medical equipments: FM

Sensex down over 500 points , Nifty by 200 points

Simplified GST  underway

 FM says GST returns to be further simplified from April 2020. So much has been done with GST returns already, very hard for actual return filers to keep track of the changes, especially if they are a small business or MSME: FM

Tax payers' charter: Contents to be introduced soon, says FM.

PAN Card to be issued instantly based on Aadhaar details, she says.

Direct taxes are lowest, simplest and smoothest, says FM

Govt taken various measures to reduce litigation in taxes. FM proposes scheme to reduce litigation in direct taxes. In the 'Vivad se Vishwas’ Scheme, people will only pay the disputed amount. Those who pay by 31, March 2020, will not pay more than the due amount. Post that, untill 30/6/20, little penalties apply

Tax payers can use this scheme to get relief.

Tax holiday for affordable housing projects extended by another year says FM

To boost startup Taxes on ESOP deferred by five years, says FM Sitharaman.

Currently, MSME's with turnover of Rs 1 crore are required to be audited by an accountant. FM proposes to increase the threshold required for audit to Rs 5 crore.

Tax holiday on profits earned by developers of affordable housing projects approved by March 31, 2020. Proposal to extend date of approval of affordable projects for availing tax holiday by one year.

The markets are not happy, BSE Sensex is down by over 100 points.

FM proposes to remove DDT, dividend will be taxed at the hands of the recipient at applicable rates, says FM.

Revenue loss of Rs 25,000 cr because of doing away with DDT, says FM

Concessional tax rate of 15 pc extended to power generation companies

Direct taxes

To make sure India stays a favoured destination for investments, tax rate for existing companies brought down to 22%. New companies, tax rate reduced to 15%: FM

FM proposes new simplified individual tax regime, for who those forego deductions and exemptions.

For those in the Rs 5-7.5 lakh slab, the tax rate at 10%. For income between Rs 7.5-10 lakh, tax rate is 15%. For income between Rs 10-12.5lakh, tax at 20%. For Rs 12.5-15 lakh income, tax rate at 25%. Those earning above Rs.15 lakh to continue to pay 30%. The new income tax is optional, without exemptions.

Govt will have to forego Rs.40,000 crore as a consequence of income tax rate tweaking.

70 out of the 100 tax exemptions in the simplified tax regime, says FM, adding that the Govt will review and rationalise more in the future.

Revised estimates

Nominal GDP growth rate for 20-21 pegged at 10%, says FM, adding that the RE expenditure for FY20 at Rs 26.99 lakh cr, receipts at Rs 19.32 lakh cr.

Net market borrowings would be Rs 4.99 lakh cr in FY 20; Rs 5.36 lakh cr in next fiscal: FM

We estimate a fiscal deficit of 3.8% for FY20 and 3.5% for FY21, says FM. Govt to take deviation of 0.5% of fiscal deficit.

All flagship schemes of govt are provided for in Budget, says FM.

Govt accepts recommendations of interim report of 15th Finance Commission, final report to be submitted later: FM

LIC stake sale

She further said that the listing brings in more financial discipline among the entities. The government proposes to sell a part of its holding in LIC through initial public offer, she said while unveiling Budget 2020-21.

Currently, the government owns the entire 100 per cent stake in Life Insurance Corporation of India.

Financial sector

Clean, reliable and robust financial sector is critical, says FM.

Rs 3.50 lakh cr infused as capital in public sector banks in past years: FM. Recently merged banks will be made more competitive, some to access capital markets for additional capital, she says. PSBs to be encouraged to go to capital markets, she adds.

Insurance cover for deposits will be increased from Rs 1 lakh to 5 lakh, says FM.

Government stake in IDBI Bank to be divested to retail investors through the market.

A mechanism to provide liquidity to NBFCs and housing finance companies, says FM

Focus on MSME

MSMEs to get subordinate debt from banks, says FM, adding that this will count as quasi-equity.

More than 5 lakh MSMEs have benefited from restructuring of debt in the last one year. Scheme could be extended till March 31, 2021.

Pharmaceuticals, will have hand-holding support, says FM

Focus on financial markets

Certain categories to be available to  non-resident investors, along with domestic investors says FM

FM Nirmala Sitharaman says FPI investment limit in corporate bonds increased from 9 per cent to 15 per cent

International bullion exchange to be set up in GIFT city, says FM

Fiscal deficit target revised to 3.8 per cent of GDP, says Nirmala Sitharaman, adding that fiscal deficit target for FY20 revised to 3.8 per cent. "For the FY21 the target has been revised to 3.5 per cent," she says.

Good governance

FM says that the 5 jewels, or flowers, are held by two hands, one of them is governance  and the other is financial sector, she says. 

Tax payer's charter to become a part of our laws, FM says. Tax harassment cannot be tolerated, she adds.

Govt to reform recruitment for non-gazetted officers. FM says private an independent body to be appointed to conduct common eligibility test for govt jobs and new test centres at every district.

India will host G20 Presidency in 2022. Rs 100 crore has been allocated for hosting the G-20 Summit: FM

FM Nirmala Sitharaman says Rs 5900 cr provided for development of newly formed Union territory of Ladak

FM quotes Thiruvalluvar, says that for a good country, there should be five jewels: There should be no epidemics, it should have wealth, it should have good yield, people should have happiness and security and safety.

FM says that the Modi government has provided these to the people. Opposition members register their protests.

Focus on environment and climate change

Govt to allocate Rs 4400 crore for clean air.

FM says Govt will stick to commitments of Paris Climate Accord.

There are thermal power plants which are old, carbon emissions are high, advised to close those, which have emissions over permissible norms , says FM

Tourism

FM shifts focus to tourism sector. She says  that the  Govt will set up and institute for heritage and tourism to benefit archeology, and history

5 sites to developed as "Iconic sites" with in-site  museums, They are: Rakhigadi (Haryana), Hastinapur (UP), Shiv Sagar (Assam), Dholaveera (Gujarat) and Adichanallur (TN).

FM also proposes Tribal museum in Ranchi and Maritime Museum at Lothal, the artificial dockyard of Harappan Civilisation (3000 BC to 2000 BC).

Caring society

'Beti bachao, Beti padhao' has been successful, says FM. Opposition leaders mark their disapproval.

The enrollment of girls overtakes that of boys, says FM. At elementary level,  it is 94.32 per cent (89.28 per cent); at Secondary level 81.32 per cent (78 per cent ); Higher Secondary 59.70 per cent (57 per cent).

More than 6 lakh anganwadi wokers are quipped with smartphones to upload nutritional status of more 10 crore households: FM Nirmal Sitharaman

Rs 85, 000 cr is allocated for uplifting for SCs and Rs 53,700 for uplifting STs.

Digital push

FM says digital refund of duties and taxes of Centre, states and local bodies to exporters from this year.

The govt proposed new data centre parks for post offices and police stations.

1,00,000 gram panchayats to be linked through BharatNet, Rs 6,000 cr allocated  for the programme, says FM.

₹8000 crore for five years for studying commercial applications of quantum technology, says FM, adding that India would be only the third nation to do so.

Second aspect of economic development: Infrastructure

National Infrastrustructure Pipeline: Rs 103 lkh crore will be spent over next five years on: Housing, Safe drinking water, healthcare, education inst, railway stations, airport, logistics, warehouse and irrigation projects: FM

Rs 100 lakh crore to be invested in infrastructure, FM Nirmala Sitharaman says.

National Logistics policy soon, says FM, will spell out the role of regulators.

FM says single-window clearance for logistics in the offing.

FM Nirmal Sitharaman says Chennai Bengaluru express will be started soon and the Delhi-Mumbai Expressway to be completed by 2023.

The FM also proposes to provide ₹1.7 lakh cr for transport infrastructure in 2020-21

State govts need to replace conventional electricity meters with prepaid smart meters in 3 yrs: FM.

Railways:

Setting up of large solar power capacity

FM proposes  redevelopment of four stations via PPP model.

More Tejas like trains to connect tourist destinations in the country says FM

FM propses a 40 km-long Bengaluru Suburban Transport Project, worth Rs 18, 600 crore.

Economic development

Entrepreneurship has always been the strength of India, says FM.

FM proposes a portal-based Investment Clearance Cell that offers end-to-end facilitation services at the Central and State level.

FM also proposes a New Scheme to promote electronic manufacturing (of mobile phones, medical equipment manufacturing).

Proposes National Technical Textiles Mission for a four-year period with a Rs 1,480 crore outlay: FM Nirmal Sitharaman

PM's vision to make every district a export hub, says FM, allocates Rs 27,300 cr allotted for the promotion of industry and commerce development.

FM also proposes starting of digital refund of state and central taxes to exporters.

Third aspect of Aspirational India: Education

New educational policy soon, says FM Nirmal Sitharaman, adding that more funding, ECB and FDI being allowed, new prog where urban local body to provide 1 yr intentionship for fresh engineers.

FM proposes full-fledged online degree programmes, says this will be given by the top-100 educational institutions initially.

IndSAT exams to be held abroad, notably in Africa to screen candidates for entry into Indian universities.

FM also proposes medical colleges attached to district level hospitals in PPP model, the Centre will provide 'viability gap funding' to States that offer land at concessional prices.

A National Police Institute and a National Forensic Institute being proposed in the Budget.

Second aspect of Aspirational India: Wellness

FM says Rs 69,000 crore is allocated for health in this Budget.

Govt looks to end TB by 2025. Govt to launch 'TB Harega, Desh Jeetega' programme.

FM proposes to expand Jan Aushadhi Kendras in all districts of country to provide medicines at affordable rates.

Proceeds from taxes on medical devices would be used to support setting up of hospitals, says FM.

Rs 12,300 crore allocated for SwachBharat for 2020-21, says FM

Jaal Jeevan mission: 3.65 lakh crore

Aspirational India

FM will focus on three aspects: Agriculture and farmer welfare, Wellness and Education and Skills.

FM says that the govt is keen to achieve aim of doubling farmers' income by 2022.

16 action points:

*Encourage State govts to follow the model agricultural laws framed by the Centre.

*Propose measure to address water issues in 100 water stressed districts.

*20 lakh farmers to be helped to set up solar power set: FM, adds, solar power, water pumps and solar power generation on barren land

*Scheme for organic fertilizers. Quotes Avvaiyar, a tamil poet.

*Focus on agri warehousing, govt to provide funds for setting up these warehouses at the block/taluk levels.

*FM introduces Village Storage scheme. Govt will help in building storage capacities by women SHGs thorugh Mundra and Nabard schemes- to reduce logistics cost for farmers: FM

*Kisan Rail for transporting perishable goods

*Krishi Udaan for transporting goods in national and international routes

*Focus on Horticulture:  311 MT exceeds the production of food grains in India. It will help in better marketing and exports, adopting cluster basis, states that focus on one product one district to gain momentum

*Agricultural credit target set at Rs.15 lakh crore

* Foot and Mouth disease and other diseases in cattle by 2025.

*Focus on increasing artificial insemination.

*Increased focus on the 'blue economy'

*Fisheries processing: Raising fish production 200 lakh tonnes by 2023. Hope to engage rural youth in 500 far

*58 lakh SHE mobilised, more to be mobilised.

Funds allocated: Agri and allied ativites: 2.83 lakh crores.

FM highlights AI, machine learning and young population as two cross cutting streams - combination special to contemporary India.

The three themes of the Budget are Aspirational India, Economic development and Caring society, the FM says.

FM quotes a  Kashmiri poem.

Fundamentals of economy strong, inflation well contained, banks cleaned up accumulated loans, the FM says.

FM pays homage to Former Finance Minister Arun Jaitley, she calles him the 'Architect of GST'.

The GST has resulted in efficiency gains in logistics, says FM adding that turnaround of trucks has reduced by 20 per cent. The GST got rid of inspector raj, the FM says.

Rs 1 lakh crore benefit extended to consumers due to reduced GST rates .

FM says a household saves on an average 4 per cent on account of reduced GST rate

Union Finance Minister Nirmala Sitharaman tables 15th Finance Commission panel report.

This is the budget to boost people's income and purchasing power, the FM says, adding that the Budget is for the youth, for members of SC/ST, for every women and for the minorities.

During 2014-19, the government brought a paradigm shift in governance, the Finance Minister says.

She says that the fundamentals of the economy are strong and inflation has been well contained. She termed GST as a historic structural reform, saying it integrated the country economically

Sensex is up marginally.

Key terms

This Budget provides PM Narendra Modi a second opportunity in seven months to refresh policy priorities to support an economy on a downward spiral. Finance Minister Nirmala Sitharaman is set to outline fiscal steps that may include higher spending in rural areas and possible tax cuts when she delivers her second budget speech in New Delhi.

So, what should you watch for?

Healthcare in focus

The Modi government has focused on healthcare.  The govt introduced launched the Pradhan Mantri Jan Arogya Yojana, popularly known as Ayushman Bharat, which is aimed at making necessary interventions in primary, secondary and tertiary health-care systems, in a holistic fashion. It has also launched other insurance schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana.

Given the focus on health, what do patients want from the Budget?

India has ethnic, cultural, linguistic and religious diversity. This diversity is both a strength and a weakness. States formed on a linguistic basis have uneven natural endowments, and there is also an imbalance in the dispensation of resources from the Central government.

The government would do well to lend all support to these leading States and push the others through sustainable interventions in infrastructure, communications, transport and tourism without allowing for a partisan approach. All global investment opportunities should have an equitable spread.

Copies of the Union Budget documents being brought to Parliament.

Uptick in economy: CEA

In a press conference on Friday, Chief Economic Advisor Krishanamurthy Subramanian expressed optimism about green shoots such as uptick in Purchasing Manager Index of manufacturing and services.

The economy has hit the bottom and it will improve as GDP growth rate is expected to pick up during second half (October-March) of current fiscal.

The uptick in the second half of 2019-20 would be mainly due to ten positive factors such as pick up in Nifty India Consumption Index for the first time this year, an upbeat secondary market, higher FDI flows, build-up of demand pressure, positive outlook for rural consumption, rebound of industrial activity, steady improvement in manufacturing, growth in merchandise exports, higher build-up of foreign exchange reserves and positive growth rate of GST revenue collection.

What can taxpayers expect?

Individual taxpayers are harbouring high hopes from Budget 2020, especially after the generous tax breaks extended to corporates in September 2019.

Not many are willing to buy the argument that with a tight fiscal position, the Finance Minister’s hands may be tied. When the Centre can somehow spare money to help companies and businesses, why can’t it do so for individual taxpayers, goes the common refrain.

Finance Minister Nirmala Sitharaman arrives at Parliament.

Provide a healing touch: Congress on Budget

The Congress on Saturday expressed hope that the Union Budget would provide relief to the salaried class through tax cuts and invest in rural India besides providing a healing touch to the common man and industry facing “hardship” since demonetisation.

Congress chief spokesperson Randeep Surjewala said the last budget led to crashing consumption levels, soaring unemployment and falling GDP. “Budget 2019= Consumption crashed, Unemployment soared, Farm distress surged, Incomes declined, Investments slumped, Public spending fell, GDP nose dived!,” Surjewala tweeted, adding, “Yet, Modiji gave Corporate Tax Cuts of Rs 1,45,000 crore. Let Budget 2020 give tax cuts to Salaried Class and invest in Rural India,” he said

Rajasthan Chief Minister Ashok Gehlot hoped the budget fulfils expectations of the common people. “Budget 2020 is the time for NDA government to provide a healing touch to common people and industries facing hardships since noteban. Hope the budget fulfils expectations of common people and provide relief across sections,” Gehlot said.

-PTI

FM Sitharaman, along with Minister of State for Finance Anurag Thakur and other officials, at North Block.

FM Sitharaman, MoS Anurag Thakur and other officials at North Block.

Know more about the Finance Minister's team: Meet the officials working behind the scenes

Crop insurance was proposed as a scheme for stabilising the net farm income, and was based on the value of the crop rather than its quantity. The indemnity was equivalent to two-thirds of the farmer’s average income, if the total rainfall during a season was less than a specified percentage. The area units were to be small and compact, over which the average annual amount of rainfall and its distribution were fairly uniform. The premium was to be equivalent to the land tax, and long-term contracts of five or ten years were preferred.

Currently, crop insurance is the third-largest portfolio in the non-life insurance industry. The premium outgo at a gross level for 2016-17, 2017-18 and 2018-19, respectively, was approximately ₹22,015 crore, ₹26,065 crore and ₹29,065 crore. Gross loss ratios were at 78 per cent, 89 per cent and 100 per cent respectively. In 2018-19, the total number of farmers covered was 56.4 million, with a gross cropped area coverage of about 30 per cent. Further, the premium for 2019-20 is estimated at ₹31,500 crore, with the gross claims ratio being over 100 per cent for kharif crop.

The Union Budget is an event that is more hope and hype than it ought to be. Budgets ought not to be a method to tinker fiscal policy with, but they often do, writes J Mulraj, India Head — Finance Asia/Haymarket.

Read:Bud-get or Bud-give?

Sensex slumps 235 points at open

Stock market indices slumped tracking global weakness  led by losses in heavyweights such as Tata Steel, HDFC Bank, HCL Tech, Infosys, TCS, Reliance, HeroMotoCorp as they fell between 1 per cent and 3 per cent. The Budget may provide some impetus to weak market and investors expect some favourable proposals that could alter the weak sentiment.

Global markets extended losses as China took more drastic steps to combat the coronavirus.

It is going to be an incredibly tough balancing act for Finance Minister Nirmala Sitharaman, as she presents her second Budget against the backdrop of a plunging economy. There are challenges galore, both on the domestic and external front.

As estimated by the Economic Survey 2019-20, output growth is likely to hit a decadal-low of 5 per cent this fiscal, and it shall be an arduous task to attain the growth target of 6-6.5 per cent in the next fiscal. Gross fixed capital formation as a share of the GDP has been steadily falling, and at 28.1 per cent in FY20. Further, as the advance estimates released by the government this month suggest that the investment growth, at just 1 per cent, is going to be the slowest in 17 years. Several attempts to boost growth via the investment channel has unfortunately not yielded the desired results.

Similarly, private consumption growth at 5.8 per cent, manufacturing growth at 2 per cent, and agricultural growth at 2.8 per cent are going to touch the lowest rates in the past seven, 15 and four years, respectively. On the other hand, headline inflation at 7.35 per cent in December 2019 (highest since July 2014) has already breached the upper band of the RBI’s inflation target. The unemployment rate has soared to an all-time high of 8.5 per cent in October 2019. India’s lack of export competitiveness has resulted in stagnant export earnings at around $300 billion, since 2011-12. Overall, the macroeconomic numbers portend a grim economic scenario indeed.

So what should the government do?

What to expect from the Budget?

Finance Minister Nirmala Sitharaman is likely to deliver a “growth oriented, capital market friendly and pragmatic” Union Budget with main thrust on increasing demand in the economy, especially in semi-urban and rural India.

With economy reeling under a sharp slowdown, the Finance Minister is expected to bite the fiscal bullet, and put off the fiscal consolidation targets by a year or two to stimulate economy.

Despite trimming of expenditure in big way in the recent months and expected carry forward of unpaid subsidy to the next year, there is going to be fiscal deficit slippage to the tune of about 50 basis points, above the 3.3 per cent (as percentage of GDP) estimated earlier for the current fiscal.

Sitharaman is expected to be guided by the Fifteenth Finance Commission’s report for 2020-21 in deciding the tax revenue targets for 2020-21. The softening trend in global oil prices is also expected to aid the economy in 2020-21.

The Economic Survey made out a strong case for the Centre to create additional fiscal headroom to revive growth in the economy. As if on cue, the government’s fiscal deficit upto December shot up to 132 per cent of the budgeted full-year target for FY20 (up from 115 per cent until November). The run rate for the fiscal deficit for the nine months, has been the highest in the last five years, led by significant growth in both revenue and capital expenditure. Fiscal deficit for the April-December period has been 87-144 per cent of full year target, in the previous four years.

The fiscal deficit usually shoots up in the first nine months, and is contained (at least optically) by sharp cut back in expenditure in the fourth quarter. But this time around, a sharp deviation from the budgeted 3.3 per cent fiscal deficit target for FY20, is a given. Even if the Centre reins in expenditure hereon, fiscal deficit is likely to slip by 0.4-0.5 per cent, implying 3.8 per cent fiscal deficit for FY20.

Slowdown, not a recession: IMF MD on economy

“The Indian economy indeed has experienced an abrupt slowdown in 2019. We had to revise our growth projections, downwards to four percent for last year. We are expecting 5.8 per cent (growth rate) in 2020 and then an upward trajectory to 6.5 percent in 2021,” Georgieva told a group of foreign journalists in Washington on Friday. “It appears that the main reason for this slowdown was the non-banking financial institutions experiencing a turbulence,” she said on the eve of Union Finance Minister Nirmala Sitharaman presenting the annual budget in Parliament on Saturday.

She said India had undertaken some important reforms that over the longer term would be beneficial for the country, but they do have some short-term impact. “For example, coming with the unified tax system, and the demonetisation that took place. These are steps that over time are beneficial, but of course they might, might be somewhat disruptive over short term,” Georgieva said in response to a question.

The Economic Survey makes a case for being pro-business, rather than promoting crony capitalism, i.e., cornering of returns by fewer people.

The use of political connections leads to pro-crony policies and rent-seeking behaviour, like manipulation of public policy to increase profits. Investors in these companies make extra return as a result of these pro-crony policies, benefiting “connected” ( i.e. politically connected) companies.

To explain this, the Survey makes use of brokerage house Ambit’s stock market index of 75 “connected” firms as a proxy for companies that benefited from pro-crony policies. It then uses the companies that form part of this index to measure the investor wealth generated by such companies.

These “connected” companies outperformed the BSE 500 index from 2007 to 2010 by at least 7 percentage points (CAGR). After the CAG’s reports on allocation of scarce resources revealed the extent to which benefits were being accumulated by these “connected” companies, the connected firms stopped outperforming the broader market.

Fewer women are working shoulder to shoulder with men, and more are busier attending to domestic duties. The latest Economic Survey reveals that gender disparity in India’s labour market has widened due to a decline in female labour force participation, especially in rural areas.

Around 60 per cent of women in the productive age group (30-59) are now engaged in full-time domestic duties. As opposed to this, only 0.37 per cent males in the same age group are out of work to attend to domestic duties.

Editorial: Economic Survey advocates further ‘economic freedom’

 A stand-out feature of the Economic Survey 2019-20 is its accent on micro-economic solutions — and not public finance — to problems of the day. It suggests a return to the Modi government’s original slogan of ‘minimum government, maximum governance’, at a time when sections of the industry have expressed discomfiture over ‘tax terrorism’. The Survey’s broad theme, wrapped around the idea of free markets, is that easing up constraints in setting up a business — the Survey informs that setting up a restaurant is more difficult than buying a gun — will go a long way to spur the economy. It cites in detail the logistics constraints faced by electronics, carpets and apparel exports. It is hoped that the Survey’s message of furthering ‘economic freedom’ is implemented by the Centre in all seriousness.

However, the Survey is short on detail in terms of the credit constraints faced by small units, even as it regards entrepreneurship as the key driver of the economy. Wealth creation, à la Ayn Rand or Horatio Alger’s rags-to-riches stories, calls for ‘equality of opportunity’ as spelt out by the Survey, but this pre-requisite could have been elaborated upon — in other words, providing universal access to education and skill development, as well as the development of financial markets in a manner that allows equal access, irrespective of background. The Survey also makes a useful suggestion when it says that assets slated for disinvestment can be parked into a separate entity, like Singapore’s Temasek Holdings, so that sales can be made at the right time. It has, however, underplayed the present slowdown, making an optimistic growth projection of 6-6.5 per cent for 2020-21. Besides advocating strategic sales for the benefits that are expected to accrue to the entity, it does not point to any public finance path to steer the economy. As for Make in India, it builds on themes raised in earlier Surveys such as focussing on labour-intensive products, adding that network items used in the electronics and computer sectors hold potential; these expand the scope to ‘Assemble in India’, which is a more realistic stance than expecting global businesses to move manufacturing to India.

However, an institutional framework is missing, as a result of which subjects such science and technology, climate change and higher education do not get the space they deserve. The role of capital markets in propelling an economy has been viewed in rather linear, simplistic terms. The dynamic challenge of regulating markets in the consumer interest, an ever-present problem in our times, has been overlooked. The Survey could have examined the performance of key policies such as affordable housing, corporate tax cuts, Fasal Bima and PM-Kisan. On the whole, it is overcautious.

Even though the growth in agriculture was estimated to be lower in 2019-20 at 2.8 per cent as compared to 2.9 per cent in the previous year, the share of agriculture in the overall pie moved up to 16.5 per cent from 16.1 per cent in 2018-19, indicating that the bigger malaise is experienced by the other segments of the economy.

In 2019-20, the gross value added (GVA) of agriculture and allied sectors in current prices is expected to be ₹30.47 lakh crore against ₹27.76 lakh crore in 2018-19, according to the Economic Survey on Friday.

It pointed to a need for bringing in a shift in focus in agriculture to commercial farming from subsistence farming as India has long addressed concerns associated with food security. In this regard, the Survey called for increasing mechanisation of farming in the country. While China and Brazil have achieved farm mechanisation of 57 per cent and 75 per cent, respectively, the use of farm machinery in agriculture is languishing at 40-45 per cent.

The buzz is that Finance Minister Nirmala Sitharaman will be addressing the demand side of economy — how to give consumers more money to spend while not cutting back on government expenditure on social schemes.

Expectations range from re-jigging personal income tax rates, scrapping dividend distribution tax, and recasting the long-term capital gain tax to increasing rural and infrastructure spending.

But will she be able to do all of these given the limited headroom available to the government? “The final call will be the Prime Minister’s and the Finance Minister’s,” said a senior BJP member.

Click here to read the key highlights of Economic Survey 2019-20

While any change in the income tax structure will benefit just 3.4 per cent of the people, change in dividend distribution tax and long-term capital gains will benefit a handful of investors. So, will she focus on a small section of the people or on the rural sector to boost consumer demand?

Click here to read the Budget expectations of various sectors

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