Union Budget And Its Impact On The Indian Economy

Introduction

According to article 112 of the Indian Constitution, the union budget of a year also known as the annual financial statement, is a statement of the estimated receipts and expenditure of the government for that particular year.

Union Budget keeps the accounts of the government’s finances for the fiscal year that runs from 1^stApril to 31^stMarch. Union budget is classified into revenue budget and capital budget.

Revenue Budget includes the government’s revenue receipts and expenditure. There are two kinds of revenue receipts- Tax and non-tax revenue. Revenue expenditure is the expenditure incurred on day to day functioning of the government and on various services offered to citizens. If revenue expenditure exceeds revenue receipts, the government incurs a revenue deficit.

Capital budget include capital receipts and payments of the government. Loans drom public , foreign governments and RBI form a major part of the governments’s capital receipts. Capital expenditure is the expenditure on the development of machineries, equipment , building and health facilities, education etc. Fiscal deficit is incurred when the government’s total expenditure exceeds its total revenue.

 

Impact of Union Budget on the Indian Economy

1. Employment Generation

The budget announced a national programme on artificial intelligence.DIPP to be renamed for department for promotion of industries and internal trade, with government projects now being required to source 25% of requirements from SMEs. A new department, that of fisheries, to be created to push rural job creation.

Advantages- though the interim budget does not make many announcements related to employment but it does solves the issue via incentives and concessions to several major sectors of the economy such as infrastructure, real estate and agriculture. Take agriculture, Indias economy is labour-intensive, accountion for millions of jobs. Growing it through direct income support and easy loan schemes and interst subvention measures can generate rural development, apart from building prosperity.

• Infrastructure

Amidst taunts by opposition MPs, Goyal outlined a vision statement that he said would guide the government for next 10 years. The list was topped by the infrastructure sector. The first dimension of this vision will be to build physical as well as social structure. It also sets highest budget for rail, road and infrastructure, upgrading 600 railway stations. Dedicated funding for affordable housing; one crore houses to be built under pradhan mantra yojana. It also targets to build 100 smart cities with an emphasis on solar facilities. Two crore more toilets to be constructed in rural areas and also increased budget for education and health infrastructure.

Advantages- Incentives to the real sector not only create jobs, they are also a step towards housing for all. Incentives include exemption of income tax on national rents on a second self-occupied home and increase the rollover of capital grains from investing in one residential house to two for capital grains upto 2 crore, though only once in the lifetime of a tax payer.

• Farm Sector

There is a need for providing structured income support to poor landholding farmer families. A new direct income support scheme for farmers under which an amount of Rs.6000 will be deposited in the bank accounts of every farmer family owning cultivable land upto to 2 hectares. The scheme will cost the government a sum of 75000 crore. It is touted to benefit around 12 crore small and marginal farmer families. Additionally, farmers engaged in animal husbandry and fisheries who have availed of loans through kisan card but have been affected by natural calamities will get a 2% subvention. A new scheme has been introduced for the sustainable genetic upgradation of cow resources and to enhance production and productivity of cows. In a new initiative, a separate department of fisheries will be created to support the livelihood of about 1.45 crore people indulged in this sector.

Advantages – The budget was clearly alert to the need for rural job creation. This is apparent from budgetary support through interest subsidies. Alongside, the annual grant of  Rs.6000 to be paid in three equal installments to small and marginal farmers under the newly launched PMKSY as it provides some security against nature’s fury and crop failures. It may seem a paltry amount but it is a good beginning. Building rural prosperity, i.e. creation of more disposable rural incomes, will push demand for manufactured goods and services. This will lead to capacity creation as well as new investments, in the manufacturing sector. Higher capital formation in the hinterland will push economic growth.

Conclusion

One criticism that has been continuing over the fast few years relates to job creation and employment; but after the government has taken  initiative to create more job oppurtunites , the issue is solved .The clarity of level of success in this sector is very low because there is no official data on the state of employment or unemployment has been released in recent years and according to me this can be resolved if the government keeps the data transparent .Coming to  infrastructure, the government did not left any sector under this in terms of development, it includes rails, roads, sanitation and housing etc. They have also planned to make around 100 smart cities, which is a great development in infrastructure sector. They are also providing many incentives and concession to real sector which will not only generate jobs but also housing for all. And the last farm sector, so according to me there are no as such hindrances and it a great initiative to help the needy because they are the ones who suffer the most during natural calamities, and because of that government is providing the farmers with a kisaan card so that if they had taken any loan from government with that particular card, they will get 2% subvention if they are affected by natural calamities, So I think that’s a really  good initiative. And not only this they have planned to deposit an amount of Rs. 6000 in every farmer’s account those who have cultivable land upto two hectares. 

References

https://www.tomorrowmakers.com/personal-finance-news/budget-2019-impact-economy-macro-level-research-article

https://www.thehindu.com/business/budget/budget-2019-20-equities-shed-early-gains/article28298090.ece

https://economictimes.indiatimes.com/union-budget