02 Feb, 2020
- Booster Shot & Theme of Union Budget 2020-21 - Economy
- No more Double Taxation on Dividend - Economy
- Affordable Housing gets a leg up - Economy
- Steep Increase in customs duty to keep Chinese toys out of reach
- State's Tax share to stay at 42% - Economy
- FM proposes Taxpayers Charter to boost trust - Polity & Governance
- International bullion Exchange to be set up at IFSC - Economy
- Insurance cover on deposits raised to Rs. 5 lakhs - Economy
- Logistics Policy to be released soon - Economy
- Private players allowed to set up Data Parks - Governance
- A boost for Technical Textiles - Economy
- Allocation for MGNREGS slashed + Government bites the Fiscal Deficit Bullet - Economy
- No Fireworks - Editorial + An exercise bereft of macroeconomic vision - Lead Article - Economy
- Practice Questions
BOOSTER SHORT AND BUDGET THEME
The Union Budget 2020-21 envisaged Aspirational India, Economic Development and Caring Society as its prominent themes.
- Aspirational India
- Economic Development
- Creating a caring society
- Social sector
NO MORE DOUBLE TAXATION ON DIVIDENDS
Long standing demand of capital markets to remove Dividend Distribution Tax (DDT) has been accepted in this budget.
- About Dividend
- Dividend Distribution Tax
- 15% tax plus applicable surcharge and cess on the dividends
GOVT EXTENDS TAX HOLIDAY FOR AFFORDABLE HOUSING
Finance Minister has proposed to extend the date of loan sanction for availing this additional deduction by one more year till March 31, 2021.
- Affordable Housing
- Housing for All
- Tax Holiday for developers and buyers
STEEP INCREASE IN CUSTOMS DUTY TO KEEP CHINESE TOYS OUT OF REACH
Customs duty has been raised on a range of articles like household goods, electrical appliances, auto parts, footwear, furniture and some mobiles phone parts in the Union Budget.
- Steep increase in Customs Duty
STATE’S TAX SHARE TO STAY AT 42%
The Fifteenth Finance Commission, in its interim report tabled in Parliament has recommended maintaining States’ share in the divisible pool of tax collections at virtually the same level of 42% set by its predecessor for 2020-21.
- Fifteenth Finance Commission
- divisible pool of tax collections
- Jammu and Kashmir
- Amendment in Terms of Reference of 15th FC
TAX PAYER CHARTER
Just like Citizens Charter, Union Finance Minister has proposed a new ‘Taxpayer’s Charter’ aimed at boosting trust between citizens and authorities, in order to improve the efficiency of tax administration.
- Taxpayer’s Charter
- Boost Trust
- Between Citizens and Tax Officials
- Amendment of Income Tax Act, 1861
INTERNATIONAL BULLION EXCHANGE TO BE SET UP AT IFSC, SAYS FM
The government has proposed to set up an International Bullion Exchange at IFSC at GIFT City in Gujarat.
- International Bullion Exchange
- International Financial Services Centres
- International Financial Services Centres Authority Act, 2019
INSURANCE COVER ON DEPOSITS RAISED TO RS. 5 LAKHS
The government has decided to increase the insurance cover for bank deposits to Rs. 5 lakh from Rs. 1 lakh.
- Bank deposit insurance scheme
- bank failure
- 5 lakhs
- Deposit Insurance and Credit Guarantee Corporation (DICGC)
- Subsidiary of RBI
NATIONAL LOGISTICS POLICY SOON
The government will soon release a National Logistics Policy, which will clarify the roles of the Union Government, State governments and key regulators.
- National Logistics Policy
- single window e-logistics market
- make MSMEs competitive
- generate employment
- upgrade skills
IMPORTANCE OF DATA, DATA MANAGEMENT AND CONNECTIVITY
Finance Minister announced an allocation of Rs. 6,000 crore under the BharatNet programme to enhance broadband connectivity in rural areas.
- BharatNet programme
- Building Data Centre Parks
- Indian Statistical System
- National Policy on Official Statistics
NATIONAL TECHNICAL TEXTILE MISSION
The Government has announced a National Technical Textiles Mission, which is expected to give a thrust to production of a wide variety of textiles used in sectors such as healthcare, infrastructure, automobiles, defence, and agriculture.
- National Technical Textiles Mission
- Implemented from 2020-21 to 2023-24
- Anti-Dumping Duty on PTA - Purified Terephthalic Acid
- Stop import of technical textiles
ALLOCATION FOR MGNREGS SLASHED BY RS. 9,500 CRORE
Despite a slowdown in the rural economy and the need to stimulate rural demand, the Centre has slashed budgetary allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme by Rs. 9,500 crore.
- MGNREGA funds slashed
- Rural Economy
- MGNREGA ACT, 2005
GOVERNMENT BITES THE FISCAL DEFICIT BULLET
The Government has allowed fiscal deficit to go up to 3.8% of the GDP for the current financial year, compared with 3.3% projected in the previous year’s Budget.
- Fiscal Deficit
- FRBM Act
- Trigger Mechanism
- Section 4(3) – FRBM Act
AN EXERCISE BEREFT OF MACROECONOMIC VISION (LEAD ARTICLE) + NO FIREWORKS
Setting a target of 3.5%, invoking the escape clause, has meant that the budget is in line with the FRBM Act which indicates that the government has taken a middle path between conservative and expansionary.
- Criticism of Union Budget
- Middle Path for the Budget
- Need for increased spending
- Fiscal Management Principles
- Unrealistic Targets for revenue growth