Union Budget 2019: The government is likely to stick to a modest rise in defence spending in the 2019/2020 budget due on Friday because of government finances, officials said, further delaying a long-planned military modernisation programme.

India’s air force desperately needs hundreds of combat planes and helicopters to replace its Soviet-era aircraft while the navy has long planned for a dozen submarines to counter the expanding presence of the Chinese navy in the Indian Ocean.

The army, a large part of which is deployed on the border with traditional foe Pakistan, has been seeking everything from assault rifles to surveillance drones and body armour.

But these plans have been on hold for years because governments have not been able to set aside large sums and most of the defence expenditure goes on salaries and pensions for a 1.4 million standing military, the world’s second largest after China.

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Union Budget 2019: Economic Survey 2019, tabled in Parliament on Thursday, painted an optimistic picture of the Indian economy, projecting the country’s gross domestic product (GDP) would grow at seven per cent in 2019-20, against a five-year low of 6.8 per cent the previous year, with political stability aiding a pick-up in demand and investments. India would need to grow at 8 per cent annually to become a $5-trillion economy by FY25, the Survey estimated.

The forecast is the same as the Reserve Bank of India’s reading, which in June lowered its projection by 20 basis points from 7.2 per cent. A gloomy global outlook spawned by US-China trade tensions also prompted the central bank to cut interest rates three times this year, with the focus now shifting to the government’s Budget on Friday for measures to support the economy. The finance ministry said in its annual Economic Survey report that upside and downside risks to growth were evenly balanced, with monsoon rainfall seen tipping the scales. “The political stability in the country should push the animal spirits of the economy, while the higher capacity utilisation and uptick in business expectations should increase investment activity,” said the Survey, authored by Chief Economic Advisor Krishnamurthy Subramanian.

Prime Minister Narendra Modi’s government is widely expected to push up spending to spur economic growth through tax incentives to boost consumer demand and investment, officials of the Bharatiya Janata Party (BJP) said. Modi won a second term with a landslide victory in general elections held in April and May.

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Union Budget 2019: Prime Minister Narendra Modi’s government on Friday will unveil a budget that is expected to cut taxes on business and raise spending in a bid to shore up consumption and faltering economic growth.

Analysts say Modi, boosted by a sweeping election victory, hopes to use the budget to restart reforms and deal with a series of economic http://woes.In January-March, annual growth slumped to 5.8%, the slowest pace in 20 quarters. Growth for the financial year that ended in March was 6.8%, also a five-year low, and indicators such as plummeting industrial output and automobile sales have stoked fears of a deeper slowdown.

A shortfall in monsoon rains, pivotal for the farm sector that employs nearly half of India’s workers, has increased concerns of rural distress and strengthened the case for intervention, a leader of Modi’s ruling Bharatiya Janata Party (BJP) said.”The focus of the budget will be to boost domestic consumption, address the rural crisis and support small manufacturers,” Gopal Krishna Agarwal, BJP’s economic affairs spokesman, told Reuters.

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Budget 2019: The mutual fund (MF) industry has sent its Budget wish list to the finance ministry, seeking clarity on the tax treatment of toxic assets held under a segregated portfolio and asking for long-term capital gains (LTCG) tax exemption for equity-oriented schemes.

The LTCG tax was levied on equity-oriented funds last year. The industry body — Association of Mutual Funds in India (Amfi) — pointed out that the introduction of LTCG tax places MF products at a disadvantage vis-à-vis unit-liked insurance plans (ULIPs).

“With high commissions and incentive structure in the life insurance sector, retail investors could be lured away by the insurance agents as retail investors may not understand the distinction between a pure investment product like MF and an insurance product with equity exposure. This could also lead to mis-selling of ULIPs,” said Amfi.

“LTCG tax is not bringing in revenues that the government had envisaged. Meanwhile, it is creating a mental barrier for investors looking at MF products. It is cumbersome for investors calculating tax-liability on their realised gains,” added Jimmy Patel, chief executive officer of Quantum Asset Management.

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Budget 2019:Fintech firms and start-ups expect the government to usher in a new set of reforms in the upcoming full Budget for the current fiscal and hope for tax relief, funding access, and further push to digital economy.

It come at a time when the consumption demand is not growing fast enough, investment is tapering and exports are falling.

Finance Minister Nirmala Sitharaman will unveil the full budget 2019-20 on July 5.

The interim budget was presented on February 1, as the general elections were due in April and May to form the new government.

Loyalty programme firm PAYBACK Chief Executive Officer Gautam Kaushik said Prime Minister Narendra Modi’s second term with an even bigger majority provides an opportunity to be decisive on the policy front.

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Budget 2019: The upcoming Budget may hike the tax exemption limit for individuals from the current Rs 2.5 lakh and introduce a higher 40 per cent tax on those with income above Rs 10 crore, a KPMG survey said.

The pre-Budget survey 2019-20 conducted by KPMG (India) included responses from 226 respondents spanning across industries.

A whopping 74 per cent of the respondents felt that exemption threshold of personal income tax would be hiked from Rs 2.5 lakh, while 58 per cent said the government would consider a new 40 per cent tax slab for the ‘super rich’ — those earning above Rs 10 crore.

While only 13 per cent of respondents feel that inheritance tax would be brought back, 10 per cent felt there are chances of re-introduction of wealth tax/estate duty, the survey said.

To boost housing demand, 65 per cent of respondents felt the Budget may increase the tax deduction limit for interest on housing loan for self-occupied properties from the present Rs 2 lakh.

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Union Budget 2019: Given the slowdown in the economy and the possibility of oil prices moving north over the next few months on the back of likely supply cuts by Organization of the Petroleum Exporting Countries (OPEC), market experts expect the upcoming Union Budget to focus on reviving growth and yet maintain fiscal prudence.

That apart, re-capitalisation of banks is also a key monitorable. The government, they say, is likely to continue with the off-budget route for carrying out infra-related spending.

“We believe that the government will focus on maintaining continuity in policy and spending on schemes allocated per the interim budget. As such, we maintain our fiscal deficit estimate at 3.5 per cent of GDP (3.4 per cent of GDP as per the interim budget), since the government has introduced the farmer income support scheme and also recently increased its scope,” wrote analysts at Morgan Stanley in a recent co-authored report led by Ridham Desai, their India equity strategist. Read Complete Article

Union Budget 2019: The finance ministry has told the chief executives of all public sector banks (PSBs) to review credit facilities made available to micro, small and medium enterprises (MSMEs) and take ‘corrective’ measures to ensure the firms get adequate funds.

The finance ministry has told the PSB chief executives in an official communication to assign a chief general manager, or a general manager-level officer to “do an in-depth analysis of the progress made and issues in availability of credit, still being faced by the MSMEs”.

While taking “corrective actions” and doing the analysis, nodal general managers are supposed to submit details to the finance ministry of MSMEs taking credit from banks, non-performing MSME accounts, MSME accounts restructured following to the Reserve Bank of India’s (RBI’s) January scheme and the MSMEs still uncovered by it, among others.

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Union Budget 2019: Finance Minister Nirmala Sitharaman is set to present the Budget 2019 on July 5. This will be the first Budget of the Modi government after winning the Lok Sabha elections.

Union Budget is an annual financial statement of estimated receipts and expenditures of the Government of India. Under Article 112 of the Constitution of India, the central government is constitutionally bound to lay down the ‘annual financial report’ of the country. Budget document details how much money the Union government expects to raise in the coming financial year, and how and where it intends to spend that money.

The Budget is prepared by the Finance Ministry in consultation with other ministries. Officials from the ministry also hold talks with the private sector, non-governmental organisations and other stakeholders.

Union Budget history