Budget 2020-2021

February 02, 2020

Budget 2020-2021

Budget 2020-2021
Speech of
Nirmala Sitharaman
Minister of Finance
February1, 2020
Hon’ble Speaker,
I rise to present the Budget for the year 2020-2021.
Introduction
In May 2019, Prime Minister Modi received a massive mandate to
form the government again. With renewed vigour, under his leadership, we
commit ourselves to serve the people of India, with all humility and
dedication.
2. People of India have unequivocally given their jan-aadesh for not
just political stability and also reposed faith in our economic policies. This is
the Budget to boost their incomes and enhance their purchasing power.
Only through higher growth we can achieve that and have our youth
gainfully and meaningfully employed. Let our businesses be innovative,
healthy and solvent with use of technology.
3. For today’s youth born at the turn of the century, for every member
of Scheduled Castes and Scheduled Tribes who seeks a better life, for every
woman wishing to stand up and get counted, for every individual from the
minority sections of our society – this Budget aims to have your aspirations
and hopes addressed.
4. We wish to open up vistas for a vibrant and dynamic economy with a
gentle breeze of new technology. This vibrant India shall be a caring society
which shall attend to its weak, the old and the vulnerable among its citizens.
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5. During 2014-19, our government brought in a paradigm shift in
governance. This shift was characterised by a twin focus: fundamental
structural reform and inclusive growth.
6. Fundamentals of the economy are strong and that has ensured
macroeconomic stability. Inflation has been well contained. Banks saw a
thorough cleaning up of accumulated loans of the past decade and then
they were recapitalized. Companies were provided an exit through the IBC.
Several steps on the formalisation of the economy were taken up.
7. Of the structural reforms, the Goods and Services Tax (GST) has
been the most historic in our country. Its chief architect is not with us
today. I pay homage to the visionary leader late Shri Arun Jaitley ji. At the
time of roll out of GST, he had said and I quote:
“It will be an India where the Centre and States will work harmoniously
towards the common goal of shared prosperity. The unanimity of the
Constitutional amendment and the consensus of the GST Council highlights
that India can rise above narrow politics for the nation’s interest. With the
GST, neither the state nor the Centre loses its sovereignty. In contrast, they
will pool their sovereignty on decisions on indirect taxes.”
8. True to this vision for the historic structural reform, the Goods and
Services Tax has been gradually maturing into a tax that has integrated the
country economically. It has consolidated numerous taxes and cesses to one
tax and facilitated formalization of economy. It has resulted in the efficiency
gains in logistic and transport sectors. The turnaround time for trucks has
witnessed a substantial reduction to the tune of 20% due to abolition of
check posts in GST. The dreaded Inspector-Raj has also vanished.
9. It has also led to significant benefits to MSME by way of enhanced
threshold and composition limits. The effective tax incidence on almost
every commodity came down substantially. Through several rate
reductions, an annual benefit of `one lakh crore has been extended to
consumers. It amounts to 10% reduction in overall tax incidence. An
average household now saves about 4% on its monthly spends on account
of reduced GST rates.
10. During this phase of maturing, GST did face certain challenges. This
was natural as transition was daunting. GST Council has been proactive in
resolving issues during transition. In the last two years we have added
more than 60 lakh new taxpayers, a total of about 40 crore returns were
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filed, 800 crore invoices were uploaded, and 105 crore e-way bills were
generated. There has been extensive engagement with stakeholders. A
simplified new return system is being introduced from April 1, 2020.
11. A former Prime Minister had once voiced a concern that the fruits of
the welfare schemes were not reaching the intended citizens – the common
and deserving citizen was only receiving 15 paisa of every rupee sent for
him. Guided by “SabkaSaath, SabkaVikas, SabkaVishwas”, our government
and our Prime Minister added manifold speed and scaled up the
implementation of schemes and programmes that directly benefitted the
poor and the disadvantaged. I wish to list out only a few as examples: (a)
welfare schemes with Direct Benefit Transfer (DBT) embedded in them; (b)
sanitation and water as provision of basic needs and as a measure of
preventive healthcare; (c) healthcare, through Ayushman Bharat; (d) clean
energy through Ujjwala and solar power; (e) financial inclusion, credit
support, insurance protection to vulnerable sections and pension scheme;
(f) digital penetration with broadband and UPI;(g) Affordable Housing for all
through PMAY.
The milestones achieved are unprecedented, globally recognised
and benchmarked against international indices.
12. This strategy, changed the established order of a few individuals
cornering most of the benefits and was appreciated by the people. This had
immensely positive outcomes. We have moved on from a growth rate of
just over 4% in 1950s to 6% in 1980s and1990s. However, during 2014-19
we clocked growth of 7.4% on average with inflation, averaging around
4.5%. It is worthwhile to note that inflation was close to 9% in the last two
decades of the last millennium and ranged 10.5% during 2009-14. Between
2006-16, India was able to raise 271 million people out of poverty, which we
all should be proud of.
13. We are now the fifth largest economy of the world. India’s foreign
direct investment got elevated to the level of US$ 284billion during 2014-19
from US$ 190billioin that came in during the years 2009-14. The Central
Government debt that has been the bane of our economy got reduced, in
March 2019, to 48.7% of GDP from a level of 52.2%in March 2014.
14. With this backdrop, our government shall work towards taking the
country forward so that we can leapfrog to the next level of health,
prosperity and well-being. We shall strive to bring Ease of living for every
citizen.
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15. I am mindful of presenting this budget in the backdrop of two crosscutting
developments:
a) Proliferation of technologies, specially analytics, machine learning,
robotics, bio-informatics and Artificial Intelligence; and
b) The number of people in the productive age group i.e. 15-65 years in
India, being at its highest.
16. This combination is special to contemporary India. Across the world,
if there is a shrinking of globalisation, equally, there is a debate on the
efficacy of monetary policy too. The efforts we have made in the last five
years and the energy, enthusiasm and the innovation of our youth are the
ignition required to push forward. The Indian spirit of entrepreneurship
which weathered several storms over the centuries inspire and motivate us.
We recognise the need to support and further energise this spirit.
17. This budget is woven around three prominent themes:
One: Aspirational India in which all sections of the society seek
better standards of living, with access to health, education and better jobs.
Two: Economic development for all, indicated in the Prime
Minister’s exhortation of “SabkaSaath, SabkaVikas, SabkaVishwas”. This
would entail reforms across swathes of the economy. Simultaneously, it
would mean yielding more space for the private sector. Together, they
would ensure higher productivity and greater efficiency.
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Three: Ours shall be a Caring Society that is both humane and
compassionate. Antyodaya is an article of faith.
18. The digital revolution which has placed India in a unique leadership
position globally will see the next wave. We shall aim:
 To achieve seamless delivery of services through Digital
governance
 To improve physical quality of life through National Infrastructure
Pipeline
 Risk mitigation through Disaster Resilience
 Social security through Pension and Insurance penetration.
Each one of these initiatives and their components would be benchmarked
to international standards and the indices would be announced
soon.
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19. To Summarize my introductory remarks, this Budget Speaker Sir, is
dedicated to provide “Ease of Living” to all citizens. As mentioned, a little
earlier, the details under the three broad themes – Aspirational India,
Economic Development and Caring India are the flowers in the bouquet that
is Ease of Living. Holding this bouquet together are two hands – one,
Corruption free, policy-driven good governance and two, clean and sound
financial sector.
20. The three themes described earlier form the basis of my subsequent
presentation. They are the flowers of the bouquet that underline the overall
concept of “Ease of Living” and need to uplift Governance, as pronounced
by our Prime Minister Shri Narendra Modi. The chapter on Finances and
subsequent Part B on Taxes provide the necessary underpinning to the
Budget that lays the guide map for next year and beyond.
Before, I move to elaborate on each of the three themes, I wish to
recite a small verse in Kashmiri:
SaunWatanGulzarShalamaarHyur
Dal ManzPholvunPamposhHyuv
Navjavan-an-hund, VushunKhumaarHyuv
MyonWatan, ChyonWatan
SaunWatan, NundbonyWatan
(Everything that we do, all of us do, is for this beautiful country)
Poem by Pandit Dinanath Koul
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Aspirational India
21. I shall cover programmes and plans related to: (1) Agriculture
Irrigation and Rural development (2) Wellness, Water and Sanitation and (3)
Education and Skills
Agriculture, Irrigation and Rural Development
22. Our government is committed to the goal of doubling farmers’
incomes by 2022. We have provided energy sovereignty through KUSUM
and input sovereignty through Paramparagat Krishi Vikas Yojana. We have
provided resilience for 6.11 crores farmers insured under PM Fasal Bima
Yojana. Focus on cultivation of pulses, expansion of micro-irrigation through
Krishi Sinchai Yojana, have raised the self-reliance of the country. Provision
of any annual supplement of the income to the farmer, directly is done
through PM-KISAN. Connectivity through PMGSY, financial inclusion have
helped raise farm incomes.
22 (1). Prosperity to farmers can be ensured by making farming
competitive. For this, farm markets need to be liberalised. Distortions in
farm and livestock markets need to be removed. Purchase of farm produce,
logistics and agri-services need copious investments. Substantial support
and hand-holding of farm-based activities such as livestock, apiary, and
fisheries need to be provided for. Farmers desire integrated solutions
covering storage, financing, processing and marketing.
23. Adopting sustainable cropping patterns and bringing in more
technology are integral to our plan. All this and more can be achieved
through working with and in cooperation with the States.
The following 16 action points indicate our focus:
23 (1). We propose to encourage those State governments who undertake
implementation of following model laws already issued by the Central
government:
a) Model Agricultural Land Leasing Act, 2016
b) Model Agricultural Produce and Livestock Marketing
(Promotion and Facilitation) Act, 2017;, and
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c) Model Agricultural Produce and Livestock Contract Farming
and Services (Promotion and Facilitation) Act, 2018
23(2). Water stress related issues are now a serious concern across the
country. Our government is proposing comprehensive measures for one
hundred water stressed districts.
23(3). In the Budget speech of July 2019, I had stated that “annadata” can
be “urjadata” too. The PM-KUSUM scheme removed farmers’ dependence
on diesel and kerosene and linked pump sets to solar energy. Now, I
propose to expand the scheme to provide 20 lakh farmers for setting up
stand-alone solar pumps; further we shall also help another 15 lakh farmers
solarise their grid-connected pump sets. In addition, a scheme to enable
farmers to set up solar power generation capacity on their fallow/barren
lands and to sell it to the grid would be operationalized.
23 (4). Our government shall encourage balanced use of all kinds of
fertilizers including the traditional organic and other innovative fertilizers.
This is a necessary step to change the prevailing incentive regime, which
encourages excessive use of chemical fertilisers.
பூமி திருத்தி உண்
ஆத்திச்சூடி –82
BhumitiruthiUnn
- Wise, Old Tamil Woman Saint poet Aauvaiyar – Sangam Era
"Aaathichoodi" verse 81
The meaning of this saying is that one must “first tend to till one's
land and then eat”. One must eat only after work.
23 (5). India has an estimated capacity of 162 million MT of agriwarehousing,
cold storage, reefer van facilities etc. NABARD will undertake
an exercise to map and geo-tag them. In addition, we propose creating
warehousing, in line with Warehouse Development and Regulatory
Authority (WDRA) norms. Our government will provide Viability Gap
Funding for setting up such efficient warehouses at the block/taluk level.
This can be achieved, where States can facilitate with land and are on a PPP
mode. Food Corporation of India (FCI) and Central Warehousing
Corporation (CWC) shall undertake such warehouse building on their land
too.
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23 (6). As a backward linkage, a Village Storage scheme is proposed to be
run by the SHGs. This will provide farmers a good holding capacity and
reduce their logistics cost. Women, SHGs shall regain their position as
“Dhaanya Lakshmi”.
23 (7).To build a seamless national cold supply chain for perishables,
inclusive of milk, meat and fish, the Indian Railways will set up a “Kisan Rail”
– through PPP arrangements. There shall be refrigerated coaches in Express
and Freight trains as well.
23 (8).KrishiUdaan will be launched by the Ministry of Civil Aviation on
international and national routes. This will immensely help improve value
realisation especially in North-East and tribal districts.
23 (9). Horticulture sector with its current produce of 311million MT
exceeds production of food grains. For better marketing and export, we
propose supporting States which, adopting a cluster basis, will focus on
“one product one district”.
23 (10). Integrated farming systems in rainfed areas shall be expanded.
Multi-tier cropping, bee-keeping, solar pumps, solar energy production in
non-cropping season will be added. Zero-Budget Natural Farming
(mentioned in July 2019 budget) shall also be included. The portal on
“jaivikkheti” – online national organic products market will also be
strengthened.
23 (11).Financing on Negotiable Warehousing Receipts (e-NWR) has crossed
more than`6000crore. This will be integrated with e-NAM.
23 (12). Non-Banking Finance Companies (NBFCs)and cooperatives are
active in the agriculture credit space. The NABARD re-finance scheme will
be further expanded. Agriculture credit target for the year 2020-21 has
been set at ` 15 lakh crore. All eligible beneficiaries of PM-KISAN will be
covered under the KCC scheme.
23 (13). Our government intends to eliminate Foot and Mouth disease,
brucellosis in cattle and also peste des petits ruminants(PPR) in sheep and
goat by 2025. Coverage of artificial insemination shall be increased from
the present 30% to 70%. MNREGS would be dovetailed to develop fodder
farms. Further, we shall facilitate doubling of milk processing capacity from
53.5 million MT to 108 million MT by 2025.
23 (14). Blue Economy: Our government proposes to put in place a
framework for development, management and conservation of marine
fishery resources.
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23 (15).Youth in coastal areas benefit through fish processing and
marketing. By 2022-23, I propose raising fish production to 200 lakh
tonnes. Growing of algae, sea-weed and cage Culture will also be promoted.
Our government will involve youth in fishery extension through 3477
SagarMitras and 500 Fish Farmer Producer Organisations. We hope to raise
fishery exports to ` 1 lakh crore by 2024-25.
23 (16).Under DeenDayal Antyodaya Yojana for alleviation of poverty, 58
lakh SHGs have been mobilised. We shall further expand on SHGs.
24. Now, for the fund allocation for the 16 different steps mentioned
above, they are being stated under two different categories:
For the sector comprising of Agriculture and allied activities,
Irrigation and Rural Development an allocation of about `2.83 lakh crore has
been made for the year 2020-21 . Its divided, inter-alia;
a) For Agriculture, Irrigation & allied activities - ` 1.60 lakh crore
b) For Rural development &Panchayati Raj - ` 1.23 lakh crore
Wellness, Water and Sanitation
Under Aspirational India, I shall now speak about Wellness, Water and
Sanitation.
25. We have a holistic vision of healthcare that translates into wellness
of the citizen. Mission Indradhanush has been expanded to cover 12 such
diseases, including five new vaccines. FIT India movement is a vital part of
fight against Non communicable diseases coming out of life style issues. A
very focused safe water (Jal Jeevan Mission) and comprehensive sanitation
program (Swachch Bharat Mission) have been launched to support the
health vision. That would reduce the disease burden on the poor.
26. Presently, under PM Jan Arogya Yojana (PMJAY) ,there are more
than 20,000 empanelled hospitals. We need more in Tier-2 and Tier-3 cities
for poorer people under this scheme.
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26 (1). It is proposed to set up Viability Gap funding window for setting up
hospitals in the PPP mode. In the first phase, those Aspirational Districts will
be covered, where presently there are no Ayushman empanelled hospitals.
This would also provide large scale employment opportunities to youth.
Proceeds from taxes on medical devices would be used to support this vital
health infrastructure
26 (2). Using machine learning and AI, in the Ayushman Bharat scheme,
health authorities and the medical fraternity can target disease with an
appropriately designed Preventive regime.
27. “TB Harega Desh Jeetega” campaign has been launched. I propose to
strengthen these efforts realise our commitment to end Tuberculosis by
2025.
28. I propose to expand Jan Aushadhi Kendra Scheme to all districts
offering 2000 medicines and 300 surgicals by 2024.
I have provided for the health sector about `69,000 crores that is
inclusive of ` 6400 crores for Prime Minister Jan Arogya Yojana (PMJAY)
29. Our government is committed to ODF Plus in order to sustain ODF
behaviour and to ensure that no one is left behind. Now, more needs to be
done towards liquid and grey water management. Focus would also be on
Solid waste collection, source segregation and processing.
Total allocation for Swachh Bharat Mission is about `12,300 crore in
2020-21.
30. Aiming to provide piped water supply to all households, Prime
Minister announced from the Red Fort the Jal Jeevan Mission. Our
government has approved `3.60 lakh crore for this Mission. This scheme
also places emphasis on augmenting local water sources, recharging existing
sources and will promote water harvesting and de-salination. Cities with
over a million population will be encouraged to meeting this objective
during the current year itself.
During the year 2020-21the scheme would be provided budget of
`11,500crore.
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Education and Skills
The third and the final item under Aspirational India is Education
and Skills.
31. By 2030, India is set to have the largest working-age population in
the world. Not only do they need literacy but they need both job and life
skills. Dialogues have been held with State Education Ministries, Members
of Parliament and other stake-holders about Education policy. Over 2 lakh
suggestions were also received. The New Education Policy will be
announced soon.
32. It is felt that our education system needs greater inflow of finance to
attract talented teachers, innovate and build better labs. Therefore steps
would be taken to enable sourcing External Commercial Borrowings and FDI
so as to able to deliver higher quality education.
33. Students in the general stream (vis-à-vis services or technology
stream) need their employability improved. About 150 higher educational
institutions will start apprenticeship embedded degree/diploma courses by
March 2021.
34. The government proposes to start a programme whereby urban
local bodies across the country would provide internship opportunities to
fresh engineers for a period up to one year.
35. In order to provide quality education to students of deprived section
of the society as well as those who do not have access to higher education,
it is proposed to start degree level full-fledged online education
programme. This shall be offered only by institutions who are ranked within
top 100 in the National Institutional Ranking framework. Initially, only a few
such institutions would be asked to offer such programmes.
36. India should be a preferred destination for higher education. Hence,
under its “Study in India” programme, Ind-SAT is proposed to be held in
Asian and African countries. It shall be used for benchmarking foreign
candidates who receive scholarships for studying in Indian higher education
centres.
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37. A National Police University and a National Forensic Science
University are being proposed in the domain of policing science, forensic
science, cyber-forensics etc.
38. There is a shortage of qualified medical doctors, both general
practitioners as well as specialists. In order to meet this requirement;
38 (1). It is proposed to attach a medical college to an existing district
hospital in PPP mode. Those states that fully allow the facilities of the
hospital to the medical college and wish to provide land at a concession,
would be able to receive Viability Gap Funding. Details of the scheme would
be worked out.
38 (2). National Board of Examination imparts PG medical qualifications ;
Diploma and fellow of National Board (DNB/FNB). The Government will,
therefore encourage large hospitals with sufficient capacity to offer resident
doctors DNB/FNB courses under the National Board of Examinations.
39. There exists a huge demand for teachers, nurses, para-medical staff
and care-givers abroad. However, their skill sets, many a time, do not
match the employer’s standards and therefore need to be improved. I
propose that special bridge courses be designed by the Ministries of Health,
Skill Development together with professional bodies to bring in equivalence.
Language requirements of various countries need also to be included. All
these should be achieved through special training packages.
Our Government proposes to provide about ` 99,300 crore for
education sector in 2020-21 and about ` 3,000 crores for skill development.
Economic Development
Industry, Commerce and Investment
The guilds of Saraswati-Sindhu civilization & the Harappan seals are
remarkable. They belong to 3300 BCE.Words from the Indus Scripthieroglyphs
have been deciphered. Commerce and trade related words
show how India for a millennia is continuing as richin skills,metallurgy, trade
etc. “Takara Kolimi=Tin smithery”, “ Sreni “= Guild,” Sethi”= wholesale
merchant, “Poddar”= Assayer of metal into treasury.
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40. Entrepreneurship has always been the strength of India. Even today,
young men and women have given up greener pastures elsewhere to
contribute to India’s growth. They are risk-taking and come up with
disruptive solutions to festering challenges. Equally, established old
industries are resetting themselves in a changing global and domestic
situation. We recognise the knowledge, skills and risk-takingcapabilities of
our youth. He is no longer the job seeker. He is creator of jobs. Now we
wish to create more opportunities and remove road-blocks from his path.
I propose to set up an Investment Clearance Cell that will provide
“end to end” facilitation and support, including pre-investment advisory,
information related to land banks and facilitate clearances at Centre and
State level. It will work through a portal.
41. There is a case for maximising the benefits of three separately
developing economic activities: (1) the upcoming economic corridors; (2)
revitalisation of manufacturing activities; and (3) Technology and the
demands of aspirational classes. We have to benefit from their
convergence. Hence, it is proposed to develop five new smart cities in
collaboration with States in PPP mode. Such sites would be chosen that
offer the best choices in terms of aforementioned principles.
42. India needs to manufacture Networked products. That will make it a
part of global value chains. This in turn gets more investment and generates
more employment for our youth.
42 (1). Electronics manufacturing industry is very competitive and India has
shown its cost advantages. The potential of this industry in job creation is
immense. India needs to boost domestic manufacturing and attract large
investments in the electronics value chain. Here, I propose a scheme
focussed on encouraging manufacture of mobile phones, electronic
equipment and semi-conductor packaging. Details would be announced
later.
42(2). With suitable modifications, this scheme can be adapted for
manufacture of medical devices too
43. India imports significant quantity of technical textiles worth US$ 16
billion every year. To reverse this trend and to position India as a global
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leader in Technical Textiles, a National Technical Textiles Mission is
proposed with a four-year implementation period from 2020-21 to 2023-24
at an estimated outlay of ` 1480 crore.
44. From the Red Fort, our Prime Minister spoke about quality and
standards when he spoke of “Zero Defect-Zero Effect” manufacturing. In
September last year, I had called for a time-bound adoption by industry of
all necessary, mandatory technical standards and their effective
enforcement. All Ministries, during the course of this year, would be issuing
quality standard orders.
45. To achieve higher export credit disbursement, a new scheme, NIRVIK
is being launched, which provides for higher insurance coverage, reduction
in premium for small exporters and simplified procedure for claim
settlements.
46. It is proposed to digitally refund to exporters, duties and taxes levied
at the Central, State and local levels, such as electricity duties and VAT on
fuel used for transportation, which are not getting exempted or refunded
under any other existing mechanism. This Scheme for Reversion of duties
and taxes on exported products will be launched this year.
47. It is the vision of the Prime Minister that each District should
develop as an export hub. Efforts of the Centre and State governments are
being synergised and institutional mechanisms are being created.
48. Government e-Marketplace (GeM) is moving ahead for creating a
Unified Procurement System in the country for providing a single platform
for procurement of goods, services and works. It offers a great opportunity
for Medium, Small and micro Enterprises(MSMEs). 3.24 lakh vendors are
already on this platform. Its proposed to take its turnover to ` 3lakh crores.
I propose to provide about `27,300 crore for development and
promotion of Industry and Commerce for the year 2020-21.
Under the theme “Economic Development”, the second focus is on
Infrastructure.
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Infrastructure
49. Hon’ble Speaker, Sir, in his Independence Day speech 2019, Prime
Minister had highlighted that ` 100 lakh crore would be invested on
infrastructure over the next 5 years. As a follow up measure, I had launched
the National Infrastructure Pipeline on 31st December 2019 of ` 103 lakh
crore. It consists of more than 6500 projects across sectors and are
classified as per their size and stage of development.
These new projects will include housing, safe drinking water, access
to clean and affordable energy, healthcare for all, world-class educational
institutes, modern railway stations, airports, bus terminals, metro and
railway transportation, logistics and warehousing, irrigation projects, etc.
The National Infrastructure Pipeline envisions improving the ease of living
for each individual citizen in the country. It’s also will bring in generic and
sectoral reforms in development, operation and maintenance of these
infrastructure projects.
A huge employment opportunity exists for India’s youth in
construction, operation and maintenance of infrastructure. National Skill
Development Agency will give special thrust to infrastructure-focused skill
development opportunities.
50 (1). I propose to set up a project preparation facility for infrastructure
projects. This programme would actively involve young engineers,
management graduates and economists from our Universities.
50 (2). It is also proposed to direct all infrastructure agencies of the
government to involve youth-power in start-ups. They will help in rolling
out value added services in quality public infrastructure for citizens.
51. A National Logistics Policy will be released soon. Inter alia; it will
clarify the roles of the Union Government, State Governments and key
regulators. It will create a single window e-logistics market and focus on
generation of employment, skills and making MSMEs competitive.
52. Accelerated development of highways will be undertaken. This will
include development of 2500 Km access control highways, 9000 Km of
economic corridors, 2000 Km of coastal and land port roads and 2000 Km of
strategic highways.
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Delhi-Mumbai Expressway and two other packages would be
completed by 2023 . Chennai-Bengaluru Expressway would also be started.
53. FASTag mechanism encourages us towards greater
commercialisation of our highways so that NHAI can raise more resources. I
propose to monetise at least twelve lots of highway bundles of over 6000
Km before 2024.
54. In carrying out its duty, the Indian Railways performs a service to the
nation.
a) Within 100 days of assumption of this government, it has
commissioned 550 wi-fi facilities in as many stations.
b) Eliminated unmanned crossings
c) Aims to achieve electrification of 27000 Km of tracks.
This will call for optimisation of costs. Railways has small operating
surplus. About Indian Railways, there are five measures, among others, that
I wish to highlight:
 Setting up a large solar power capacity alongside the rail tracks, on
the land owned by the railways. A proposal is under consideration.
 Four station re-development projects and operation of 150
passenger trains would be done through PPP mode. The process of
inviting private participation is underway.
 More Tejas type trains will connect iconic tourist destinations.
 High speed train between Mumbai to Ahmedabad would be actively
pursued.
 148 km long Bengaluru Suburban transport project at a cost of
` 18600 crore, would have fares on metro model. Central
Government would provide 20% of equity and facilitate external
assistance up to 60% of the project cost.
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55. Our sea-ports need to be more efficient. Technology has to used to
improve performance. A governance framework keeping with global
benchmarks needs to be put in place.
This government would consider corporatizing at least one major
port and subsequently its listing on the stock exchanges.
56. Inland Waterways received a boost in the last five years. The Jal
Vikas Marg on National Waterway-1 will be completed. Further, the 890 Km
Dhubri-Sadiya connectivity will be done by 2022.
Developing waterways has its impact on the eco-system on both the
banks of the river. Our Prime Minister has conceptualised “Arth Ganga”.
Plans are afoot to energise economic activity along river banks.
57. Air traffic has been growing rapidly in the country as compared to
global average. One hundred more airports would be developed by 2024 to
support Udaan scheme. It is expected that the air fleet number shall go up
from the present 600 to 1200 during this time.
I propose to provide about ` 1.70 lakh crore for transport
Infrastructure in 2020-21.
58. Taking electricity to every household has been a major achievement.
However, the distribution sector, particularly the DISCOMS are under
financial stress. The Ministry intends to promote “smart” metering. I urge
all the States and Union Territories to replace conventional energy meters
by prepaid smart meters in the next 3 years. Also, this would give
consumers the freedom to choose the supplier and rate as per their
requirements.
Further measure to reform DISCOMs would be taken.
I propose to provide about ` 22,000 crore to power and renewable
energy sector in 2020-21
59. In the upstream sector of oil and gas, the Open Acreage Licensing
Policy (OALP) is a success having awarded 1,37,000 sq km for exploration to
private sector and to the CPSEs. City gas distribution rights are also
awarded.
18
60 (1). Further, it is proposed to expand the national gas grid from the
present 16200 km to 27000 km, and
60 (2). To deepen gas markets in India, further reforms will be undertaken
to facilitate transparent price discovery and ease of transactions.
New Economy
61. The new economy is based on innovations that disrupt established
business models. Artificial intelligence, Internet-of-Things (IoT), 3D printing,
drones, DNA data storage, quantum computing, etc., are re-writing the
world economic order. India has already embraced new paradigms such as
the sharing economy with aggregator platforms displacing conventional
businesses. Government has harnessed new technologies to enable direct
benefit transfers and financial inclusion on a scale never imagined before.
62. It is now a cliché – “data is the new oil” and it is true that Analytics,
Fintech and Internet of Things (IOT) are changing the way we deal with our
lives. To take advantage of this, I propose:
62 (1). To bring out soon a policy to enable private sector to build Data
Centre parks throughout the country. It will enable our firms to skilfully
incorporate data in every step of their value chains.
62 (2). Our vision is that all “public institutions” at Gram Panchayat level
such as Anganwadis, health and wellness centres, government schools, PDS
outlets, post offices and police stations will be provided with digital
connectivity. So, Fibre to the Home (FTTH) connections through Bharatnet
will link 100,000 gram panchayats this year.
It is proposed to provide ` 6000 crore to Bharatnet programme in
2020-21.
63. We need to expand the base for knowledge-driven enterprises.
Intellectual property creation and protection will play an important role.
Several measures are proposed in this regard, which will benefit the Startups.
19
63 (1). A digital platform would be promoted that would facilitate seamless
application and capture of IPRs. Also, in an Institute of Excellence, a Centre
would be established that would work on the complexity and innovation in
the field of Intellectual Property.
63 (2). Knowledge Translation Clusters would be set up across different
technology sectors including new and emerging areas.
63 (3). For designing, fabrication and validation of proof of concept, and
further scaling up Technology Clusters, harbouring such test beds and small
scale manufacturing facilities would be established.
63 (4). Mapping of India’s genetic landscape is critical for next generation
medicine, agriculture and for bio-diversity management. To support this
development, we will initiate two new national level Science Schemes, to
create a comprehensive database.
63 (5). The government proposes to provide early life funding, including a
seed fund to support ideation and development of early stage Start-ups.
64. Quantum technology is opening up new frontiers in computing,
communications, cyber security with wide-spread applications. It is
expected that lots of commercial applications would emerge from
theoretical constructs which are developing in this area.
It is proposed to provide an outlay of ` 8000 crore over a period five
years for the National Mission on Quantum Technologies and Applications.
Caring Society
In our third theme we focus on Women &Child, Social Welfare;
Culture and Tourism and also on Environment and Climate Change.
Women & Child, Social Welfare
65. I am pleased to inform the House that “Beti Bachao Beti Padhao”
has yielded tremendous results. Gross enrolment ratio of girls across all
levels of education is now higher than boys. At elementary level, it is 94.32
% as against 89.28% for boys. At Secondary level, it is 81.32 % as compared
to 78 %, At higher secondary level girls have achieved a level of 59.70 % as
compared to 57.54 % for boys.
20
66. Health of mother and child are closely corelated. Nutrition is the
critical component of health. To improve the nutritional status of children
(0-6 years), adolescent girls, pregnant women and lactating mothers, our
Prime Minister launched a “Poshan Abhiyan” in 2017-18. More than six
lakh anganwadi workers are equipped with smart phones to upload the
nutritional status of more than 10 crore households. The scale of these
developments is unprecedented.
67. Women’s age of marriage was increased from fifteen years to
eighteen years in 1978,by amending erstwhile Sharda Act of 1929. As India
progresses further, opportunities open up for women to pursue higher
education and careers. There are imperatives of lowering MMR as well as
improvement of nutrition levels. Entire issue about age of a girl entering
motherhood needs to be seen in this light. I propose to appoint a task force
that will present its recommendations in six months’ time.
I propose to provide `35600crore for nutrition-related programmes
for the financial year 2020-21.
68. In continuing with our government’s commitment to the welfare of
women, this budget provides for about ` 28,600crore for programs that are
specific to women.
69. Our government is determined that there shall be no manual
cleaning of sewer systems or septic tanks. Suitable technologies for such
tasks have been identified by the Ministry of Housing and Urban Affairs. The
Ministry is working with urban local bodies for the adoption of these
technologies. We will now take this to its logical conclusion through
legislative and institutional changes. Financial support for wider acceptance
of such technologies will be provided.
70 In furthering this government’s commitment towards the welfare of
Scheduled Castes and Other Backward classes, I propose a budget provision
of about`85,000crore for 2020-21.
71. In furthering development and welfare of Scheduled tribes, I provide in
the Budget for the year 2020-21 an amount of about `53,700crore.
21
72. This government is mindful of the concerns of senior citizens and
Divyang. Accordingly, an enhanced allocation of about `9,500 crore is being
provided for 2020-21.
Culture & Tourism
73. Our government proposes to establish an Indian Institute of
Heritage and Conservation under Ministry of Culture; it shall have the status
of a deemed University to start with. Acquisition of knowledge in disciplines
such as museology and archaeology are essential for collecting and
analysing scientific evidence of such findings and for dissemination through
high quality museums. Currently lack of trained man-power is a handicap
for both these disciplines. This also affects tourism.
74. Five archaeological sites would be developed as iconic sites with onsite
Museums. They are: Rakhigarhi (Haryana), Hastinapur (Uttar Pradesh)
Shivsagar (Assam), Dholavira (Gujarat) and Adichanallur (Tamil Nadu).
75. Our Prime Minister in January 2020 announced re-curation of the
Indian Museum in Kolkata, which is the oldest in the country.
75 (1). In the historic Old Mint building Kolkata, a museum on Numismatics
and Trade will also be located. Four more museums from across the
country shall be taken up for renovation and re-curation so that a world
class experience can be offered to visitors. Our government shall also
support setting up of a Tribal Museum in Ranchi (Jharkhand).
75 (2). A maritime museum would be set up at Lothal- the Harrapan age
maritime site near Ahmedabad, by Ministry of Shipping.
I propose to provide ` 3,150crore for Ministry of Culture for
2020-21.
76. India has moved up from rank 65 in 2014 to 34 in 2019 in the Travel
& Tourism Competitive Index (World Economic Forum). Foreign exchange
earnings grew 7.4% to `1.88 lakh crores for the period January to November
2019 from `1.75 lakh crores
22
Growth of tourism directly relates to growth and employment.
States have a critical role to play. I expect the State governments to develop
a roadmap for certain identified destinations and formulate financial plans
during 2021 against which specified grants will be made available to the
States in 2020-21.
For purpose of tourism promotion, I propose to allocate ` 2,500
crore for 2020-21.
Environment & Climate Change
77. In September 2019, the Prime Minister has launched the Coalition
for Disaster Resilient Infrastructure (CDRI) with its Secretariat in Delhi. This
global partnership is the second such international initiative after the
launch of International Solar Alliance in 2015. This Global Partnership will
help in addressing a number of Sustainable Development Goals (SDGs), as
also the aims of Sendaiframework. It will enhance climate change
adaptation with a focus on disaster resilient infrastructure
78. India submitted its Nationally Determined Contribution, under the
Paris Agreement in 2015 on a “best effort” basis, keeping in mind the
development imperative of the country. Its implementation effectively
begins on 1st January 2021. Our commitments as action will be executed in
various sectors by the Departments/Ministries concerned through the
normal budgeting process.
79. There are yet, thermal power plants that are old and their carbon
emission levels are high.
For such power plants, we propose that utilities running them would
be advised to close them, if their emission is above the pre-set norms. The
land so vacated can be put to alternative use.
80. In large cities having population above one million, clean air is a
matter of concern. The government proposes to encourage such States that
are formulating and implementing plans for ensuring cleaner air in cities
above one million. Parameters for the incentives would be notified by the
Ministry of Environment, Forests and Climate change. Allocation for this
purpose is `4400 crore for 2020-21.
23
நல்ல நாடு
பிணியின்மம, செல்வம் விமைவின்பம் ஏமம்
அணிசயன்ப நாட்டிவ் மவந்து.
குறள்- 738
(The meaning of this kural is that Freedom from illness, wealth, produce,
happiness and protection (to subjects); these five, are the ornaments of a
kingdom).
Governance
81. Hon’ble Speaker, Sir, all the while I have explained the colour and
composition of the bouquet of flowers – schemes and programmes. They
were grouped under Aspirational India, Economic Development and Caring
India. Now I speak about the two hands that will hold them. One such hand
is Governance – clean, corruption-free, policy driven and good in intent and
most importantly trusting in faith. Trusting every citizen, the aspirational
youth, the hard-working women, the risk-taking entrepreneur, the ever
hopeful and untiring farmer or the wise and old senior citizen. Many among
them are taxpayers. Others may not be taxpayers today. Our Prime
Minister has laid before us Ease of Living as a goal to be achieved on behalf
of all citizens. An important aspect of both ease of living and ease of doing
business is fairness and efficiency of tax administration. We wish to
enshrine in the statutes a “taxpayer charter” through this budget. Our
government would like to reassure taxpayers that we remain committed to
taking measures so that our citizens are free from harassment of any kind.
82. There has been a debate about building into statutes, criminal
liability for acts that are civil in nature. Hence, for Companies Act, certain
amendments are proposed to be made that will correct this. Similarly, other
laws would also be examined, where such provisions exist and attempts
would be made to correct them.
83. The Government intends to introduce major reforms in recruitment
to Non-Gazetted posts in governments and public sector banks. At present,
candidates have to appear for multiple examinations conducted by multiple
agencies at different points of time, for similar posts This places enormous
burden on time, effort and cost of young people. To mitigate their hardship
24
faced, it is proposed to set up a National Recruitment Agency (NRA) as an
independent, professional, specialist organisation for conduct of a
computer-based online Common Eligibility Test for recruitment to Non-
Gazetted posts. A test-centre in every district, particularly in the
Aspirational Districts would be set up.
84. For speedy disposal of commercial and other disputes, Government
has constituted various Tribunals and specialised bodies. It is proposed to
evolve a robust mechanism for appointment including direct recruitment to
these bodies to attract best talents and professional experts.
85. A stable and predictable business environment is a key objective of
this government. There is also a strong argument for ensuring that
contracts are honoured. India has a sound framework related to Contracts
Act. We shall deliberate upon strengthening it.
86. There is a growing need for the Indian Statistical system to meet the
challenges of real time monitoring of our increasingly complex economy.
Data must have strong credibility. The proposed new National Policy on
Official Statistics would use latest technology including AI. It would lay down
a road-map towards modernised data collection, integrated information
portal and timely dissemination of information.
87. I am happy to inform that India will host G 20 presidency in the year
2022- the year of 75th anniversary of independence of Indian Nation. During
this presidency, India would be able to drive considerably the global
economic and development agenda. For this historic occasion, I allocate a
sum of ` 100 crore to begin the preparations.
88. North Eastern region has a very high priority in Government’s
Developmental agenda. Government is ensuring smooth access to financial
assistance from multilateral and bilateral funding agencies to help introduce
innovative and global best practices. Central Government has effectively
used an online portal to reduce gestation period of online. This has
improved the flow of funds to the northeast region.
89. The Government is fully committed to supporting the all-round
development of the newly formed Union Territories of J&K and the Union
Territory of Ladakh. Accordingly, an amount of `30,757 crore has been
25
provided for the Financial Year 2020-21. An amount of `5,958 crore has
been provided for the Union Territory of Ladakh.
Financial Sector
90. If Governance was described as one of the pair of hands holding the
bouquet consisting of Aspirational India, Economic Development and Caring
India, the other is the Financial Sector. A clean, reliable and robust financial
sector is critical to the economy. In our efforts to achieve the USD 5 trillion
economy, the financial architecture should keep evolving and move from
strength to strength.
91. We had earlier approved consolidation of 10 banks into four. In the
last few years, Government of India has infused about` 3,50,000 crore by
way of capital into Public Sector Banks for regulatory and growth purposes.
Governance reforms would be carried out in these banks, so that they
become more competitive.
A few among them will be encouraged to approach capital market to
raise additional capital.
92. I wish to inform this august House that robust mechanism is in place
to monitor the health of all Scheduled Commercial Banks and that
depositors’ money is safe.
Further, the Deposit Insurance and Credit Guarantee Corporation
(DICGC) has been permitted to increase Deposit Insurance Coverage for a
depositor, which is now `one lakh to `five lakh per depositor.
93. To strengthen the Cooperative Banks, amendments to the Banking
Regulation Act are proposed for increasing professionalism, enabling access
to capital and improving governance and oversight for sound banking
through the RBI.
94. The limit for NBFCs to be eligible for debt recovery under the
Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest (SARFAESI) Act 2002 is proposed to be reduced from ` 500
crore to asset size of ` 100 crore or loan size from existing ` 1 crore to ` 50
lakh.
26
95. In the last few years, the government has taken concrete steps to
bring our banking system to be robust. However, there is a need for greater
private capital. Accordingly, it is proposed to sell the balance holding of
Government of India IDBI Bank to private, retail and institutional investors
through the stock exchange.
96. There is a need to take further steps to bring in transparency and
greater professionalism in Public Sector Banks. The government will take
appropriate measures.
97. To help easy mobility while in jobs, we wish to infuse into the
Universal Pension coverage with auto enrolment; also, we wish to place
such mechanisms which can enable inter-operability and provide safeguards
for the accumulated corpus.
Regulating role of PFRDAI requires strengthening. Necessary
amendments would be carried out in Pension Fund Regulatory
Development Authority of India Act that will also facilitate separation of
NPS trust for government employees from PFRDAI. This would also enable
establishment of a Pension Trust by the employees other than Government.
I am confident that this will motivate citizens to plan for their old age.
98. MSMEs are vital to keep the wheels of economy moving. They also
create job, innovate and are risk takers. Several measures for the MSMEs
have been taken in the past few years. There are more steps proposed in
this budget also.
98(1). I propose to make necessary amendments to the Factor Regulation
Act 2011. This will enable NBFCs to extend invoice financing to the MSMEs
through TReDS, thereby enhancing their economic and financial
sustainability.
98(2). Working capital credit remains a major issue for the MSMEs. It is
proposed to introduce a scheme to provide subordinate debt for
entrepreneurs of MSMEs. This subordinate debt to be provided by banks
would count as quasi-equity and would be fully guaranteed through the
Credit Guarantee Trust for Medium and Small Entrepreneurs (CGTMSE). The
corpus of the CGTMSE would accordingly be augmented by the
government.
27
98(3). More than five lakh MSMEs have benefitted from restructuring of
debt permitted by RBI in the last year. The restructuring window was to
end on March 31, 2020. Government has asked RBI to consider extending
this window till March 31, 2021.
98(4). An app-based invoice financing loans product will be launched. This
will obviate the problem of delayed payments and consequential cash flows
mismatches for the MSMEs.
99. Many mid-size companies are successful domestically but not in
export markets. For selected sectors such as pharmaceuticals, auto
components and others, we propose to extend handholding support – for
technology upgradations, R&D, business strategy etc. A scheme of ` 1000
crore will be anchored by EXIM Bank together with SIDBI. Both these
institutions would contribute ` 50 crore each. This ` 100 crore would be
achieved towards equity and technical assistance. Debt funding of `900
crore from banks would be made available.
Financial Markets
100. Last year, in the budget speech, I had mentioned about deepening
the bond market. To achieve the aspirational growth rate,we would require
flow of capital in our financial system. A lot of work has been done on this in
consultation with the RBI.
Hon’ble Speaker, Sir, I am pleased to inform this House of the
developments:
100(1).Certain specified categories of Government securities would be
opened fully for non-resident investors, apart from being available to
domestic investors as well.
100(2).The limit for FPI in corporate bonds, currently at 9% of outstanding
stock, will be increased to 15% of the outstanding stock of corporate bonds.
100(3).To improve investors’ confidence and to expand the scope of credit
default swaps, we propose to formulate a legislation, to be placed soon
before the House, for laying down a mechanism for netting of financial
contracts.
28
101. The Debt-based Exchange Traded Fund (ETF) recently floated by the
government was a big success. Government proposes to expand this by
floating a new Debt-ETF consisting primarily of government securities.
This will give retail investors access to government securities as
much as giving an attractive investment for pension funds and long-term
investors.
102. To address the liquidity constraints of the NBFCs/HFCs, post the
Union budget 2019-20, the government formulated a Partial Credit
Guarantee scheme for the NBFCs. To further this support of providing
liquidity, a mechanism would be devised. Government will offer support by
guaranteeing securities so floated.
Infrastructure Financing
103. Government’s commitment for investment in infrastructure was
reiterated when `103 lakh crore National Infrastructure Pipeline projects
were announced. I would also like to inform that about ` 22,000 crore has
already been provided, as support to Infrastructure Pipeline. This would
cater for equity support to Infrastructure Finance Companies such as IIFCL
and a subsidiary of NIIF. They would leverage it, as permissible, to create
financing pipeline of more than `1,00,000 crore. This would create a major
source of long term debt for infrastructure projects and fulfil a long
awaited requirement.
104. IFSC, GIFT city has the potential to become a centre of international
finance as well as a centre for high end data processing:
104 (1).GIFT IFSC has an approved Free Trade zone for housing vaults. It
already has 19 insurance entities, 40 banking entities. It has also provided
for setting up of precious metals testing laboratories and refining facilities.
With the approval of the regulator, GIFT City would set up an International
Bullion exchange(s) in GIFT-IFSC as an additional option for trade by global
market participants. This will enable India to enhance its position
worldwide, create jobs in India and will lead to better price discovery of
gold.
29
104 (2).In recent years there has been a surge in trading volumes of Indian
rupee in the offshore financial centres. The Government and RBI has taken
various measures to permit Rupee derivatives to be traded in the
International Financial Services Centre at GIFT city, Gujarat.
Disinvestment
105.Listing of companies on stock exchanges discipline a company and
provides access to financial markets and unlocks its value. It also gives
opportunity for retail investors to participate in the wealth so created. The
government now proposes to sell a part of its holding in LIC by way of Initial
Public Offer (IPO).
Fiscal Management
106. XV Finance Commission has given its first report pertaining to
Financial Year 2020-21. In the spirit of co-operative federalism, I am
pleased to announce that we have, in substantial measure, accepted the
recommendations of the Commission. The commission would submit its
final report to the President during the latter part of the year, for five years
beginning 2021-22.
107. It is decided to transfer to the GST Compensation Fund balances due
out of collection of the years 2016-17 and 2017-18, in two instalments.
Hereinafter, transfers to the fund would be limited only to collection by way
of GST compensation cess.
108. A fundamental overhaul of Centrally Sponsored Schemes and
Central Sector Schemes is necessary, to align them with emerging social and
economic needs of tomorrow, and to ensure that scarce public resources
are spent optimally.
109. Recently there has been a debate over transparency and credibility
of the projected fiscal numbers. Let me assure the House that the
procedure adopted is compliant with the FRBM Act. This is also consistent
with the practices hitherto followed.
However, for greater clarity, I have enumerated those central
Government debt that are not part of market borrowing and are used to
30
fund the expenditure at the annexes. Servicing of interest and repayment
of these debts as hitherto, are done out of Consolidated fund of India.
110. Revised Estimates of Expenditure for the Financial Year 2019-20 are
at a level of ` 26.99 lakh Crore and the receipts are estimated at `19.32lakh
crore.
We have estimated nominal growth of GDP for year 2020-21, on the
basis of trends available, at 10%. Accordingly, receipts for the year 2020-21
are estimated at ` 22.46 lakh cr and, keeping in mind commitment of the
Government towards various schemes and need for improvement in quality
of life, level of expenditure has been kept at ` 30.42 lakh crore.
During the year Government has unfailingly worked towards keeping
up the capital expenditure. Actually, there is substantial enhancement. All
the flagship schemes of the government have been fully provided for.
Details may be seen at the annexes to the printed copy of my speech.
111. Every budget must appropriately address the issue of fiscal deficit.
Recently Government has undertaken very significant tax reforms for
boosting investments. However, expected tax buoyancy will take time.
We estimate a fiscal deficit of 3.8% in RE 2019-20 and 3.5% for
BE 2020-21. This estimation is consistent with Government’s abiding
commitment to macroeconomic stability. It comprises of,
(a) 3.3% for year 2019-20, and 3% for the 2020-21 budget estimate;
(b) Section 4 (2) of the FRBM Act provides for a trigger mechanism for
a deviation from the estimated fiscal deficit on account of structural
reforms in the economy with unanticipated fiscal implications.
Therefore, I have taken a deviation of 0.5%, consistent with Section
4(3) of FRBM Act, both for RE 2019-20 and BE 2020-21.
Accordingly, the return path is being laid before the parliament as a
part of Medium Term Fiscal Policy cum Strategy Statement. This fiscal
path commits us to the path of fiscal consolidation without
compromising the needs of investment out of public funds.
31
Accordingly, net market borrowings for the year 2019-20 would be
` 4.99 lakh crore and for the year 2020-21, it would be `5.36 lakh crore.
112. A good part of the borrowings for the financial year 2020-21 would
go towards Capital expenditure of the Government that has been scaled up
by more than 21%. As, I had previously mentioned another about ` 22,000
crore have been allocated for equity to fund certain specified infrastructure
finance companies, who would leverage it manifold and provide much
needed long-term finance to Infrastructure sector. That should spur growth
impulses in the economy.
I would, now, move to Part B of my speech.
32
PART B
Direct Tax
113. Mr Speaker, Sir, our Government has spearheaded radical
fiscal measures to ensure that India’s economy continues to tread the
path of high growth. These are times when countries are competing
with each other like never before to become the most attractive
destination for doing business. Therefore, to make sure that India
stays globally competitive and a favoured destination for investment,
we took a bold historic decision of reducing the corporate tax rate for
new companies in the manufacturing sector to an unprecedented
level of 15%. Similarly, for the existing companies, the rate has also
been brought down to just 22%. As a result, our corporate tax rates
are now amongst the lowest in the world. This will enable companies
to expand their businesses and make fresh investments in the coming
future. Though we will have loss of substantial revenue due to these
measures in the short-run, I am certain that our economy will reap
huge returns on this score in due course.
प्रजानामेवभूत्यर्थंसताभ्योबलिमग्रहीत्।
सहस्रगुणमुत्स्स्रष्टुमादत्तेलहरसंरलविः॥
Surya, the Sun, collects vapour from little drops of water. So
does the King.
They give back copiously. They collect only for people’s
wellbeing.
[Verse 18, Sarga 1 Raghuvamsa by Kalidasa]
114. In continuation of the reform measures already taken so far,
the tax proposals in this budget will introduce further reforms to
stimulate growth, simplify tax structure, bring ease of compliance, and
reduce litigations.
115. Personal Income Tax and simplification of taxation
 In the interim Budget of 2019, our government exempted
individuals having income up to ` 5 Lakh from paying any
income tax. Presently, an individual pays 20% on income
33
between ` 5 Lakh to ` 10 Lakh and 30% on income above ` 10
Lakh. Further, currently the Income Tax Act is riddled with
various exemptions and deductions which make compliance by
the taxpayer and administration of the Income Tax Act by the
tax authorities a burdensome process. It is almost impossible
for a taxpayer to comply with the Income-tax law without taking
help from professionals.
 In order to provide significant relief to the individual taxpayers
and to simplify the Income-tax law, I propose to bring a new
and simplified personal income tax regime wherein income tax
rates will be significantly reduced for the individual taxpayers
who forgo certain deductions and exemptions.
 Under the new regime, an individual shall be required to pay
tax at the reduced rate of 10% for income between ` 5 Lakh
to ` 7. 5 Lakh against the current rate of 20%.
 For income between ` 7.5 Lakh to ` 10 Lakh he will pay at the
reduced rate of 15% against the current rate of 20 %.
 Similarly for the income between ` 10 Lakh to ` 12.5 Lakh the
taxpayer will pay at the reduced rate of 20% against the
current rate of 30 %.
 The income between ` 12.5 Lakh to ` 15 Lakh will be taxed at
the reduced rate of 25% against the existing rate of 30 %.
Incomes above ` 15 lakh will be continued to be taxed at the
rate of 30 %.
 Those earning up to ` 5 lakhs shall not pay any tax either in the
old regime or in the new regime.
 The proposed tax structure will provide significant relief to
taxpayers and more so to those in the middle class.
Taxable Income
Slab (`)
Existing Tax
Rates
New Tax
Rates
0-2.5 Lakh Exempt Exempt
2.5-5 Lakh 5% 5%
5-7.5 Lakh 20% 10%
34
7.5-10 Lakh 20% 15%
10-12.5 Lakh 30% 20%
12.5-15 Lakh 30% 25%
Above 15 Lakh 30% 30%
 In the new tax regime, substantial tax benefit will accrue to a
taxpayer depending upon exemptions and deductions claimed
by him. For example, a person earning ` 15 lakh in a year
and not availing any deductions etc. will pay only `, 1,95,000
as compared to `, 2,73,000 in the old regime. Thus his tax
burden shall be reduced by 78,000 in the new regime. He
would still be the gainer in the new regime even if he was
taking deduction of ` 1.5 Lakh under various sections of
Chapter- VI-A of the Income Tax Act under the old regime.
 The new tax regime shall be optional for the taxpayers. An
individual who is currently availing more deductions &
exemption under the Income Tax Act may choose to avail them
and continue to pay tax in the old regime.
 The new personal income tax rates will entail estimated
revenue forgone of ` 40,000 crore per year. We have also
initiated measures to prefill the income tax return so that an
individual who opts for the new regime would need no
assistance from an expert to file his return and pay income
tax.
 In order to simplify income tax system, I have reviewed all the
exemptions and deductions which got incorporated in the
income tax legislation over the past several decades. It was
surprising to know that currently more than one hundred
exemptions and deductions of different nature are provided in
the Income-tax Act. I have removed around 70 of them in
the new simplified regime. We will review and rationalise
the remaining exemptions and deductions in the coming years
with a view to further simplifying the tax system and lowering
the tax rate.
35
116. Dividend Distribution Tax
 Currently, companies are required to pay Dividend Distribution
Tax (DDT) on the dividend paid to its shareholders at the rate
of 15% plus applicable surcharge and cess in addition to the
tax payable by the company on its profits.
 It has been argued that the system of levying DDT results in
increase in tax burden for investors and especially those who
are liable to pay tax less than the rate of DDT if the dividend
income is included in their income.
 Further, non-availability of credit of DDT to most of the foreign
investors in their home country results in reduction of rate of
return on equity capital for them. In order to increase the
attractiveness of the Indian Equity Market and to provide relief
to a large class of investors, I propose to remove the DDT and
adopt the classical system of dividend taxation under which the
companies would not be required to pay DDT. The dividend
shall be taxed only in the hands of the recipients at their
applicable rate.
 Further, in order to remove the cascading effect, I also propose
to allow deduction for the dividend received by holding
company from its subsidiary. The removal of DDT will lead to
estimated annual revenue forgone of ` 25,000 Crore.
 This is another bold move which will further make India an
attractive destination for investment.
117. Concessional tax rate for Electricity generation companies
 In order to give boost to the manufacturing sector, new
provisions were introduced in September 2019 offering a
concessional corporate tax rate of 15% to the newly
incorporated domestic companies in the manufacturing sector
which start manufacturing by 31st March, 2023.
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 In order to attract investment in power sector, I propose to
extend the concessional corporate tax rate of 15% to new
domestic companies engaged in the generation of electricity.
118. Tax concession for foreign investments
 In order to incentivise the investment by the Sovereign Wealth
Fund of foreign governments in the priority sectors, I propose
to grant 100% tax exemption to their interest, dividend and
capital gains income in respect of investment made in
infrastructure and other notified sectors before 31st March,
2024 and with a minimum lock-in period of 3 years.
 In order to make available foreign funds at a lower cost, I
propose to extend the period of concessional withholding rate
of 5% under section 194LC for interest payment to nonresidents
in respect of moneys borrowed and bonds issued up
to 30th June, 2023.
 I also propose to extend the period up to 30th June, 2023 for
lower rate of withholding of 5% under section 194LD for
interest payment to Foreign Portfolio Investors (FPIs) and
Qualified Foreign Investors (QFIs) in respect of bonds issued
by Indian companies and government securities.
 I further propose to extend the concessional rate of withholding
of 5% under section 194LD to the interest payment made on
the Municipal Bonds.
 In order to incentivise listing of bonds at IFSC exchange, I
propose to further reduce the withholding rate from 5% to 4%
on interest payment on the bonds listed on its exchange.
119. Start-ups
Start-ups have emerged as engines of growth for our
economy. Over the past year, our Government has taken
several measures to hand-hold them and support their growth.
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During their formative years, Start-ups generally use Employee
Stock Option Plan (ESOP) to attract and retain highly
talented employees. ESOP is a significant component of
compensation for these employees. Currently, ESOPs are
taxable as perquisites at the time of exercise. This leads to
cash-flow problem for the employees who do not sell the
shares immediately and continue to hold the same for the longterm.
In order to give a boost to the start-up ecosystem, I
propose to ease the burden of taxation on the employees by
deferring the tax payment by five years or till they leave the
company or when they sell their shares, whichever is earliest.
 Further, an eligible Start-up having turnover up to 25 crores is
allowed deduction of 100% of its the profits for three
consecutive assessment years out of seven years if the total
turnover does not exceed 25 crore rupees. In order to extend
this benefit to larger start-ups, I propose to increase the
turnover limit from existing ` 25 crore to ` 100 crores. Moreover,
considering the fact that in the initial years, a start-up may not
have adequate profit to avail this deduction, I propose to
extend the period of eligibility for claim of deduction from the
existing 7 years to 10 years.
120. Concessional tax rate for Co-operatives
 Co-operative societies play an extremely important role in our
economy in facilitating access to credit, procurement of inputs
and marketing of products to their members. These
cooperatives are currently taxed at a rate of 30% with
surcharge and cess. As a major concession and in order to
bring parity between the co-operative societies and corporates,
I propose to provide an option to cooperative societies to be
taxed at 22% plus 10% surcharge and 4% cess with no
exemption/deductions. Further, I also propose to exempt these
co-operative societies from Alternative Minimum Tax (AMT)
just like companies under the new tax regime are exempted
from the Minimum Alternate Tax (MAT).
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121. Medium, Small and Micro Enterprises (MSME)
 Currently, businesses having turnover of more than one crore
rupees are required to get their books of accounts audited by
an accountant. In order to reduce the compliance burden on
small retailers, traders, shopkeepers who comprise the MSME
sector, I propose to raise by five times the turnover threshold
for audit from the existing ` 1 crore to ` 5 crore. Further, in
order to boost less cash economy, I propose that the increased
limit shall apply only to those businesses which carry out less
than 5% of their business transactions in cash.
122. Affordable housing
 For realisation of the goal of ‘Housing for All’ and affordable
housing, in the last budget I had announced an additional
deduction of up to one lakh fifty thousand rupees for interest
paid on loans taken for purchase of an affordable house. The
deduction was allowed on housing loans sanctioned on or
before 31st March, 2020. In order to ensure that more persons
avail this benefit and to further incentivise the affordable
housing, I propose to extend the date of loan sanction for
availing this additional deduction by one more year.
 Further, in order to boost the supply of affordable houses in the
country, a tax holiday is provided on the profits earned by
developers of affordable housing project approved by 31st
March, 2020. In order to promote the affordable housing
projects, I propose to extend the date of approval of affordable
housing projects for availing this tax holiday by one more year.
123. Concession to real estate transactions
 Currently, while taxing income from capital gains, business
profits and other sources in respect of transactions in real
estate, if the consideration value is less than circle rate by
more than 5 percent, the difference is counted as income both
in the hands of the purchaser and seller. In order to minimize
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hardship in real estate transaction and provide relief to the
sector, I propose to increase the limit of 5% to 10%.
124. Charity institutions
 Acknowledging the important role played by the charitable
institutions in the society, the income of these institutions is
fully exempt from taxation. Further, donation made to these
institutions is also allowed as deduction in computing the
taxable income of the donor.
 Currently, a taxpayer is required to fill the complete details of
the donee in the income tax return for availing deduction.
 In order to ease the process of claiming deduction for donation,
it is proposed to pre-fill the donee’s information in taxpayer’s
return on the basis of information of donations furnished by the
donee. This would result in hassle-free claim of deduction for
the donation made by the taxpayer.
 Further, in order to claim the tax exemption, the charity
institutions have to be registered with the Income Tax
Department. In the past, the process of the registration was
completely manual and scattered all over the country.
 In order to simplify the compliance for the new and existing
charity institutions, I propose to make the process of
registration completely electronic under which a unique
registration number (URN) shall be issued to all new and
existing charity institutions. Further, to facilitate the registration
of the new charity institution which is yet to start their charitable
activities, I propose to allow them provisional registration for
three years.
125. Faceless appeals
Our government is committed to bringing in transformational
changes so that maximum governance is provided with minimum
government. In order to impart greater efficiency, transparency and
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accountability to the assessment process, a new faceless
assessment scheme has already been introduced. Currently, most of
the functions of the Income Tax Department starting from the filing of
return, processing of returns, issuance of refunds and assessment
are performed in the electronic mode without any human interface. In
order to take the reforms initiated by the Department to the next level
and to eliminate human interface, I propose to amend the Income Tax
Act so as to enable Faceless appeal on the lines of Faceless
assessment.
126. No Dispute but Trust Scheme – ‘Vivad Se
Vishwas’Scheme
 Sir, in the past our Government has taken several measures to
reduce tax litigations. In the last budget, SabkaVishwas
Scheme was brought in to reduce litigation in indirect taxes. It
resulted in settling over 1,89,000 cases. Currently, there are
4,83,000 direct tax cases pending in various appellate forums
i.e. Commissioner (Appeals), ITAT, High Court and Supreme
Court. This year, I propose to bring a scheme similar to the
indirect tax SabkaVishwas for reducing litigations even in the
direct taxes.
 Under the proposed ‘Vivad Se Vishwas’ scheme, a taxpayer
would be required to pay only the amount of the disputed taxes
and will get complete waiver of interest and penalty provided
he pays by 31st March, 2020. Those who avail this scheme
after 31st March, 2020 will have to pay some additional
amount. The scheme will remain open till 30th June, 2020.
 Taxpayers in whose cases appeals are pending at any level
can benefit from this scheme.
 I hope that taxpayers will make use of this opportunity to get
relief from vexatious litigation process.
127. Losses of merged banks
 As a part of consolidation of the financial sector, our
Government has brought out schemes for merger and
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amalgamation of public sector banks. In order to ensure that
the amalgamated entities are able to take the benefit of
unabsorbed losses and depreciation of the amalgamating
entities, I propose to make necessary amendments to the
provisions of the Income-tax Act.
128. Taxpayer’s Charter
 Any tax system requires trust between taxpayers and the
administration. This will be possible only when taxpayer’s
rights are clearly enumerated. Towards this end, and with the
objective of enhancing the efficiency of the delivery system of
the Income Tax Department, I propose to amend the
provisions of the Income Tax Act to mandate the Central
Board of Direct Taxes (CBDT) to adopt a Taxpayers’ Charter.
The details of the contents of the charter shall be notified soon.
129. Instant PAN through Aadhaar
 In the last Budget, I had introduced the interchangeability of
PAN and Aadhaar for which necessary rules were already
notified. In order to further ease the process of allotment of
PAN, soon we will launch a system under which PAN shall be
instantly allotted online on the basis of Aadhaar without any
requirement for filling up of detailed application form.
130. Our Government brought in the GST as a historic reform of
the indirect taxes in 2017. We also took a path-breaking step of
simplifying and rationalising corporate tax in September, 2019. More
importantly, we offered a rate of corporate tax, which perhaps is the
lowest in the world. Continuing on this path, we have now put the
personal income tax at its lowest ever rate and totally removed DDT
at the company’s hands. Further, the direct taxes are now the lowest,
simplest, and smoothest. Direct tax on the Start-ups also has seen
many reformatory steps in quick succession. Even ease of
compliance is seeing unprecedented changes. Last but not the least,
personal interface with tax administration is at the minimum ever.
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Indirect Tax
131. As I mentioned earlier in Part A of my speech, reforms are
continuing in GST. A simplified return shall be implemented from the
1st April, 2020. This is under pilot run. It will make return filing simple
with features like SMS based filing for nil return, return pre-filling,
improved input tax credit flow and overall simplification.
132. Refund process has been simplified and has been made fully
automated with no human interface.
133. Electronic invoice is another innovation wherein critical
information shall be captured electronically in a centralized system. It
will be implemented in a phased manner starting from this month itself
on optional basis. It will facilitate compliance and return filing.
134. Several measures have been taken for improving compliance.
Aadhaar based verification of taxpayers is being introduced. This will
help in weeding out dummy or non-existent units. Dynamic QR-code
is proposed for consumer invoices. GST parameters will be captured
when payment for purchases is made through the QR-code. A
system of cash reward is envisaged to incentivise customers to seek
invoice. Deep data analytics and AI tools are being used for
crackdown on GST input tax credit, refund, and other frauds and to
identify all those who are trying to game the system. Invoice and
input tax credit matching is being done wherein returns having
mismatch more than 10 percent or above a threshold are identified
and pursued. Significant policy level changes have also been made.
GST rate structure is also being deliberated so as to address issues
like inverted duty structure.
135. On Customs side, a number of measures have been taken for
ease of doing business. India’s quantum leap in the Trading Across
Border parameter of Ease of Doing Business rankings by the World
Bank is a testimony to these efforts. India’s rank on this parameter
improved from 146 to 80 in 2018 and further to 68 in 2019. Measures
have also been taken for providing a level playing field to our
domestic manufacturers, particularly the MSME sector and for
securing borders.
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136. It has been observed that imports under Free Trade
Agreements (FTAs) are on the rise. Undue claims of FTA benefits
have posed threat to domestic industry. Such imports require
stringent checks. In this context, suitable provisions are being
incorporated in the Customs Act. In the coming months we shall
review Rules of Origin requirements, particularly for certain sensitive
items, so as ensure that FTAs are aligned to the conscious direction
of our policy.
137. We are also strengthening provisions relating to safeguard
duties which are applied when surge in imports causes serious injury
to domestic industry. Amended provisions shall enable regulating
such surge in imports in a systematic way. The provisions for
checking dumping of goods and imports of subsidized goods are also
being strengthened for ensuring a level playing field for domestic
industry. These changes are in line with the international best
practices.
138. Exemptions from customs duty have been given in public
interest from time to time. However, a number of these have outlived
their utility or have become outdated. On review, certain such
exemptions are being withdrawn. Remaining custom duty exemptions
shall be comprehensively reviewed by September, 2020 for taking a
view on their relevance. I propose to crowd source suggestions for
such reviews. Suggestions would also be invited in respect of the
Customs laws and procedures for aligning them with the needs of
changing times and ease of doing business.
139. Labour intensive sectors in MSME are critical for employment
generation. Cheap and low-quality imports are an impediment to their
growth. Special attention has been taken to put measured restraint on
import of those items which are being produced by our MSMEs with
better quality. Keeping in view the need of this sector, customs duty
is being raised on items like footwear and furniture.
140. Our policy of Make in India has started giving dividends. India
is now making world class goods and exporting such products. We
have made considerable progress in medical equipment too. Till few
years back we were dependent on imports for medical equipment.
Now, not only we are manufacturing medical equipment but also
exporting them in large quantities. This sector deserves further fillip.
Government has also been committed to provide health services to
all. Ayushman Bharat has made it possible. To achieve the twin
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objectives of giving impetus to the domestic industry and also to
generate resource for health services, I propose to impose a nominal
health cess, by way of a duty of customs, on the imports of medical
equipment keeping in view that these goods are now being made
significantly in India. The proceed from this cess shall be used for
creating infrastructure for health services in the aspirational districts.
141. Under Make in India initiative, well laid out customs duty rates
were pre-announced for items like mobile phones, electric vehicles
and their components. This has ensured gradual increase in
domestic value addition capacity in India. Customs duty rates are
being revised on electric vehicles, and parts of mobiles as part of
such carefully conceived Phased Manufacturing Plans.
142. In other changes, customs duty is being reduced on certain
inputs and raw materials while it is being revised upward on certain
goods which are being made domestically. In the previous budget,
basic custom duty of 10% was imposed on the news print and
lightweight coated paper. However, since then I have received
several references that this levy has put additional burden on print
media at a time when it is going through a difficult phase. I, therefore,
propose to reduce basic customs duty on imports of news print and
light-weight coated paper from 10% to 5%.
143. Chemicals are crucial feed stocks for downstream users. PTA,
for example, is a critical input for textile fibres and yarns. Its easy
availability at competitive prices is desirable to unlock immense
potential in textile sector which is a significant employment generator.
Therefore, in the larger public interest, anti-dumping duty on PTA is
being abolished.
144. As a revenue measure, I propose to raise excise duty, by way
of National Calamity Contingent Duty on Cigarettes and other tobacco
products. However, no change is being made in the duty rates of
bidis.
145. Finally, continuing the tax reform is an ongoing challenge and
we propose to pursue them with full vigour.
146. Details of my budget proposals relating to direct and indirect
taxes are in the Annexure to my speech.
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147. Mr. Speaker Sir, with these words I commend the Budget to
this august House.

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ARACKAN KADHAKAL

Budget 2020-2021

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