India likely to let budget deficit rise as tax receipts fall short

The government is likely to overshoot the budget deficit target previously set for the current fiscal year, three officials have warned, as a slowing economy creates a big shortfall in tax collections and prompts new stimulus plans. Budget 2019

New Finance Minister Nirmala Sitharaman presents her first budget on July 5, for the fiscal year ending March 2020. It is also the first budget of Prime Minister Narendra Modi’s second term after his government was returned in a landslide election win last month.

Since becoming prime minister in 2014, Modi succeeded in improving public finances, trimming the fiscal deficit to 3.4% of gross domestic product (GDP) from 4.5% in 2013/14, mostly through subsidies cuts and fuel taxes.

He is now, however, under pressure to loosen the purse strings to follow through on election promises such as increased spending on roads and housing and tax cuts for companies and individuals.

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Budget 2019 wishlist: Here are the key challenges for oil and gas sector

Declining domestic crude production: Most of the producing fields (in Cambay, Assam-Arakan and Mumbai Offshore) are maturing or have already matured. Due to inadequate new oil and gas discoveries and subsequent development, India is witnessing a decline in crude production.

Large crude import bills: In 2018-19, India imported more than 80% of its crude consumption and spent in excess of $110 billion. Union Budget 2019

Inadequate transmission & distribution infrastructure: India needs to invest heavily in midstream and downstream sector to overcome infrastructure constraints in LNG, gas pipelines and CGD.

Technology constraints: The country needs investment in exploring and developing Category-2 and Category-3 basins. However, Indian operators do not have the requisite technology and experience in this area. Low share of MNCs: Despite being one of the largest consumers of energy, India has a low share of MNCs in the domestic market.

Environmentally friendly fuels: India continues to rely heavily on coal and petroleum products to meet its energy needs.

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Govt may raise income-tax threshold in Budget to revive economy

The Centre is considering increasing the personal income taxthreshold in next month’s budget, according to people familiar with the matter, as authorities seek to kickstart consumption in the economy.

Finance Minister Nirmala Sitharaman may raise the tax exemption limit for working-age individuals to Rs 300,000 ($4,316) of their annual income, up from the current Rs 250,000, the people said, asking not to be identified as they aren’t authorised to speak publicly about the proposals. The tax measures haven’t been finalised yet. Any tax exemptions will add stimulus to an economy that’s slowed sharply this year, with growth reaching a five-year low of 5.8 per cent in the first three months of the year.

The proposed tax move would put at least Rs 2,500 more in the hands of each of India’s 50 million taxpayers. It could also add to pressure on the budget deficit, which is pegged at 3.4 per cent of gross domestic product for the current fiscal year that began on April 1.

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Know the Union Budget: What is a Finance Bill and why is it important?

When a piece of legislation is yet to be passed as a law by the Houses of Parliament, it is termed a Bill. A Finance Bill is a Bill that, as the name suggests, concerns the country’s finances — it could be about taxes, government expenditures, government borrowings, revenues, etc. Since the Union Budget deals with these things, it is passed as a Finance Bill.

Rule 219 of the Rules of Procedure of Lok Sabha states: ‘Finance Bill’ means the Bill ordinarily introduced in each year to give effect to the financial proposals of the Government of India for the following financial year and includes a Bill to give effect to supplementary financial proposals for any period.

BUDGET 2019

There are different kinds of Finance Bills — the most important of them is the Money Bill. The Money Bill is concretely defined in Article 110. A Money Bill is certified by the Speaker as such — in other words, only those Financial Bills that carry the Speaker’s certification are Money Bills.

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PM Narendra Modi starts pre-Budget meets to brainstorm on economy

In the run-up to the Union Budget, Prime Minister Narendra Modi has lined up a string of meetings spread across days. He began the exercise on Tuesday with a meeting of top bureaucrats in finance and other key ministries to finalise the government’s priorities. The focus is clearly on reviving the economy and creating jobs, officials in the know said.

Next, the PM will interact with economists, bankers and sectoral experts through the week to brainstorm on pressing issues such as agriculture, reforms and effective implementation of signature schemes and projects.

Tuesday’s meeting at the PM’s residence, attended by all the five secretaries in the finance ministry besides top officials of other economic ministries and NITI Aayog, cleared a five-year vision plan for the government to make India a $5-trillion economy by 2024, it is learnt. Also, the future course of PM’s pet projects like doubling farmers’ income, PM-Kisan, Pradhan Mantri Awas Yojana, piped water for all, and electricity for all came up for discussion.

The focal point of the interaction was drawing a road map for reforms across departments leading up to the ease of doing business and economic growth. GDP growth, which has been a controversial issue recently due to doubts raised over government data, was discussed too. Stepping up government revenues while carrying out reform to push GDP growth, which slipped to a five-year low of 6.8 per cent in 2018-19, also figured in the meeting, sources said.

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