The Analysis of the Budget. My Article Appeared in Free Press Journal on 2nd Feb 2019.

1. Growth Driven Budget
The budget has met the expectations of a most segments of the population. Lots of sops for
farmers, Salaried and the workers in the unemployed sector. There is an increase in outlay for Rural
employment scheme to Rs.60,000 cr. Overall, the budget is likely to put more money in the hands of
the common man. When more money is available, the people from Mid income and Low income
tend to spend more and the growth of GDP from personal consumption will increase.
More than Rs.120,000 cr is likely to be put in the hands of the final customers on implementation of
the budget proposals. The companies which are having a large presence in Rural areas and having
business model based on consumption are likely to benefit in a big way. Rs.20,000 cr for
compensation to farmers has been budgeted in this fiscal and this money will be disbursed before
March 19.
The budget is very good for stock markets and many companies will improve their financial
performance and able to come up with good quarterly and annual results. The companies can focus
on rural markets and increase their presence in rural markets.
Apart from giving a waiver of payment of income tax for those who are earning Rs.5 Laks per
annum, which will benefit more than 3 crore tax payers, there was no change in tax rates. The
purchasing power of tax payers will rise and the exemption alone is going to put more than Rs.25,
000 cr in the hands of tax payers, if additional benefits ,they will avail be taken into account.
The total receipts of the government is likely to rise to Rs.24.50 Lakh cr, a rise of 14.72% over the
previous year. The projection for FY 20 is Rs.27.84 Lakh cr , a projected increase of 13.31% over the
previous year. Tax revenue for the centre in FY 19 increased by 19.47% to Rs. 14.84 Lakh cr. In FY 20,
it is projected rise to Rs.17.05 Lakh cr , a rise of 14.86%
Corporate tax will rise by 17.47% to Rs6.71 Lakh cr and in FY 20 , it is expected to rise by 13.26% to
Rs.7.60 Lakh cr. Income tax collection will rise by 22.80% to Rs. 5.29 Lakh cr and the projection for FY
20 is Rs.6.20 Lakh cr, growth of 17.2%. This is despite, 3 cr people who will stop paying taxes as per
the tax waiver announced.
Since the trade growth was very tepid, the collections from customs is likely to rise by less than once
per cent to Rs.1.30 Lakh cr in FY 19 but in FY 20, they are expecting a rise in revenue of 11.8% at
Rs.1.45 Lakh cr. Excise duties are likely to rise by only 0.07% to Rs. 2.59 Lakh cr in FY 19 and it is
likely to remain at the same level as in FY 19.
There will be a shortfall in GST collection of Rs. 1 Lakh cr at Rs.6.43 Lakh crore in FY 19. It will rise to
Rs.7.61 Lakh cr in Fy 20 , a rise of 18.22%.
In the year FY 18, dividends and taxes received by the Central government was at Rs.91,360 cr. In FY
19, they expect to collect Rs.1.19 Lakh cr, a sharp rise of 30.54% . In FY 20, the revenue from
Dividends is projected to rise by 14% to Rs.1.36 Lakh cr. To achieve this target, there is a need to
improve the performance of PSUs and there has to be a strategy to monetise the assets of PSUs in
India.

2. Disinvestment receipts in FY 18 were at Rs.100,045 cr. In FY 19 , it is likely to be at Rs.80,000 cr and
in FY 20, they are planning to divest Rs.80,000 cr. They are showing an item of Strategic
disinvestment of Rs.93,155 cr in FY 19 and the projection for FY 20 is Rs.102,507 cr.
Non tax revenue in FY 19 is likely to rise to Rs.2.45 Lakh cr, a rise of 27.2% over FY 18. In FY 20, it is
likely to rise to Rs.2.72 L cr, a rise of 11.16%. Capital receipts in FY 19 likely to be Rs.7.27 Lakh cr, a
rise of only 2.94% over the previous year. But in FY 20, it is likely to rise to Rs.8.06 Lakh cr, a rise of
Rs;10.85%. On capital receipts, the main source will be Borrowings. In FY 19 , borrowings are likely to
be at Rs.6.24 Lakh cr, a rise of 7.33% over the previous year. In FY 20, it will rise to Rs.7.04 Lakh cr, a
rise of Rs.10.97 %. The Fiscal deficit is projected at 3.4% for FY 19 and it is likely to remain at the
same level at 3.4%. The budget defict is likely to be mainly funded by borrowings. Government will
be the largest borrower in the market in FY 20.
On the expenditure side, Total revenue expenditure is likely to rise to Rs.21.40 Lakh cr, a rise of
13.93% and it is likely to rise by 14.36% to Rs.24.47 Lakh cr. Interest payments in FY 19 , on the total
expenditure is likely to be at 23.9% and it is likely to be at 23.88% of the projected receipts.
Revenue deficit in Fy 19 is likely to be at Rs.4.10 Lakh cr. 2.2%. In budget , the ratio is kept at the
same level at 2.2% for Fy 20. Since no new measures were announced for raising further taxes, most
of the incremental expenses are likely to be met by other sources including Disinvestment, Strategic
sale of assets and asset monetisation. It will be supported by borrowings by the government.
R.Kannan
Head – Corporate Performance Monitoring and Research
Hinduja Group
https://www.freepressjournal.in/business/budget-2019-exercise-in-driving-growth/1450212