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Budget 2019 India Expectations - What middle class, salaried people can expect from Union Budget Research Team | Posted On Thursday, January 24,2019, 01:26 PM

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Budget 2019 India Expectations - What middle class, salaried people can expect from Union Budget



The Halwa ceremony marks the launch of the formal printing of documents related to Union Budget 2019. Shiv Pratap Shukla who is the Minister of State for Finance and Pon Radhakrishnan who is Minister of State in the Ministry of Finance and Ministry of Shipping launched the Halwa ceremony and shared the Halwa with Ministry officials. The NDA Government will unveil the Interim Budget on February 1st 2019 as this is an election year.

You must have several expectations from the Union Budget 2019. Let’s see which of them come true.

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Budget 2019 India Expectations

1. Union Budget 2019 for MSMEs:

The Government has been focusing on Small Medium Enterprises or SMEs ever since GST, to get rid of the stress MSMEs face. This is important for the success of Pradhan Mantri Awas Yojana (Urban and Rural) or PMAY.

  • The Government has asked RBI for debt structuring of the Micro, Small and Medium Enterprises (MSMEs) and RBI has assigned new guidelines.
  • According to ICRA, more than Rs 10,000 Crores of loans to small businesses must be restructured. The Union Budget could see massive incentives for MSMEs.

Why are MSMEs in stress? NBFCs and HFCs are leading lenders to MSMEs. NBFCs are facing liquidity issues after the IL&FS crisis, where its rating was reduced to junk. NBFCs had high exposure to the IL&FS debt. The Government could support NBFCs and HFCs by giving them the priority sector for bank credit. This means banks will have to lend to NBFCs up to a certain percentage solving liquidity issues.

Creation of jobs: MSMEs are the backbone of the economy and job creators. PM Modi is using all possible measures to create jobs. Supporting and incentivizing MSMEs leads to job creation.

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2. Support for farmers:

Union Budget 2019 will be dedicated to the farmer. This is part of the Government plan to double farmer’s income by 2022. The Union Minister for Agriculture and Farmers Welfare, Radha Mohan Singh has said the Government is implementing several programmes to develop the agriculture sector in India.

  • The focus is on reducing cost of production for farmers, competitive remuneration for farmers produce and reducing wastage of agricultural produce. Measures are also being taken for alternative sources of income for farmers.
  • The Government might announce farm loan interest waiver on crop loans. There could be a farm loan waiver announcement.
  • Lowering crop insurance premium and income support could be on the cards.
  • The Government is looking at the "One Household One Incentive" policy. This includes directly paying Rs 10,000 each year to each deserving household to buy seeds, fertilizers and agricultural machinery.

Farmers want general loans and not just agricultural loans. Banks only give agricultural loans to farmers. This loan is used to pay off old loans availed to buy seeds, fertilizers and so on, in the previous year. Bank loans arrive too late for the current sowing season. Farmers want general loans from banks to start small businesses, as agriculture is subject to the vagaries of weather. The farmer could avail loans by mortgaging agricultural land to start a small business.

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3. Personal Finance:

  • Increasing the income tax exemption limit:  The middle class want income tax concessions. Economically Weaker Section or EWS is defined as any family whose household income is less than Rs 8 Lakhs a year. The Government may double the income tax exemption limit from Rs 2.5 Lakhs to Rs 5 Lakhs.
  • Section 80C Increase: The maximum Section 80C limit currently stands at Rs 1.5 Lakhs. This could be increased to Rs 2.5 Lakhs. Section 80C is overcrowded with a number of investments like PPF, NSC, ELSS and others enjoying a collective deduction up to Rs 1.5 Lakhs a year. Premiums paid on life insurance, EMI (Principal) on home loan, Tuition fees for children also fit in. Section 80C must be increased up to Rs 2.5 Lakhs to get more space.
  • Separate Section for Mutual Funds: A separate Section for mutual funds is a must. ELSS currently enjoys Section 80C deductions. ELSS along with debt and hybrid funds could be slotted under a separate Section. This would promote investments in mutual funds
  • Home loan interest tax deduction: If you avail a home loan to purchase a self-occupied residence, you enjoy tax exemptions on interest up to Rs 2 Lakhs a year. This could be increased to Rs 4 Lakhs as houses in metro cities cost upwards of a Crore.
  • The Union Budget 2018 had introduced Long Term Capital Gains (LTCG) Tax at 10% on gains of over 1 Lakh in a financial year. The Government should look to increase this limit (More than 1 Lakh) to encourage more people to invest in equity. 

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