Outlook for investment in energy & infrastructure segment
Resilient growth in investments likely to continue in energy & infra segment with renewables and roads & highways set to be the focus
GST Impact & Cost of Operations
Introduction of GST for the capital goods market has been a positive or eventual pressure is resulting on cost of operation especially for OEMs
Benefits for the end consumers
Will the announcements of more schemes like SAUBHAGYA, SHRISTI UJJALA & UDAY be done or be kept at bay?
Budgetary allocations for infrastructure sector this year likely to stick to last FY levels. Meanwhile 10% expenditure growth in augmenting transmission and distribution segment in power sector is anticipated in this budget. Also, bulk of the allocations shall continue to be with roads & highways, railways and power sector only.
Given the reduction of market size for the domestic manufacturing for both the conventional & wind power the cost of operation may be on rise with PMP being introduced as well, especially for the foreign players having established manufacturing units in India
The benefits for end consumers from such existing schemes shall further get a fillip from the Government. However, any new policy or scheme announcement may not be adapted by the Government given chances of the same perceived as populist moves.
The corporate tax rate especially for the smaller business unit felicitating the unorganized players at large is likely to remain at the same levels as was there for last year. Also, some announcements which may serve as a boon to the start-ups under energy and infrastructure segment for reduction in burden of angel tax might be done.
The capacity addition plans for the energy & infrastructure segment is most likely to be at 2018 levels and any significant capacity addition plans may not be observed, given this being an interim budget which permits limited room for Government.
Government most likely shall push the disinvestment announcements following the issues of finances with PSU’s under energy & infrastructure segment, which shall aid the players like IL&FS, BSNL, MTNL etc. Further, like in the banking sector the consolidation plan in E&I sector can also be bolstered in this year’s budget.
Corporate Tax Rate
Will the interim budget factor any variance in the tax rates. Especially for the start-ups will Angel Tax witness a reduction?
Capacity Addition Plans & Likely Announcements
Will Government follow the trend of an interim budget with no major initiatives or be the first to keep the momentum for capacity additions as could have been in a full budget?
Taking cues from the very ethos of “success planning” enincon through its dedicated team of sector consultants and industry specialist would be doing a round up on India Budget 2019-20 with live feeds, structured surveys and quality polls to offer unmatched point of view to all clients.
India Budget 2019 - Vision 2030 - Announcement
- To build next-gen infrastructure - physical as well as social - for a 10 trillion dollar economy and to provide.
- To build a Digital India that reaches every citizen, our youth will lead us in this, by creating innumerable startups and jobs.
- Clean and Green India - an India that drives electric vehicles, with renewables becoming major source of energy, bringing down import dependence and increasing energy security for our people
- Expanding rural industrialization using modern industrial technologies, based on MakeInIndia approach, using grassroot MSMEs and startups across the country
- Clean Rivers - with safe drinking water to all Indians, sustaining and nourishing life, using micro-irrigation techniques; long coastline can be pivotal for the economy, using strength of blue economy and SagarMala
- Oceans and coastlines is the sixth dimension
- India becoming launchpad of the world, placing an Indian astronaut in space by 2022
- Self-sufficiency in food and improving agricultural productivity with emphasis on organic food
- Healthy India, with distress-free and comprehensive wellness system for all is the ninth dimension of our vision for 2030
- Minimum Government, Maximum Governance with proactive, responsible and friendly bureaucracy, electronic governance
India Budget 2019 - Defence - Announcement
- 35,000 Crore disbursed for soldiers under OROP
- OROP Pending for last 40 years, has been implemented
- Transactions of more than 17,500 crore rupees on government e-market portal, resulting in savings of 25%-28%
- Govt increases defence budget to over Rs 3 lakh crore. Govt will provide additional funds for Defence, if needed.
- Govt disbursed Rs 35,000 crore under OROP scheme in the last few years
India Budget 2019 - Agriculture - Announcement
- In place of rescheduling of crop loans, all farmers severely affected by severe natural calamities will get 2% interest subvention and additional 3% interest subvention upon timely repayment
- Increased allocation for Rashtriya Gokul Mission to 750 crore in current year
- Pradhan Matri Kisan Samman Nidhi will benefit 12 crore small and marginal farmers, at an estimated cost of Rs. 75,000 crore, this will enable farmers to earn a respectable living
- Under Pradhan Mantri Kisan Samman Nidhi, 6000 rupees per year for each farmer, in three installments, to be transferred directly to farmers' bank accounts, for farmers with less than 2 hectares land holding
- For welfare of farmers and for doubling their income, historic decision taken to increase MSP by 1.5 times the production cost for all 22 crops
India Budget 2019 - Taxation - Announcements
- Individual taxpayers having annual income upto Rs 5 lakhs will get full tax rebate. Individuals with gross income up to 6.5 lakh rupees will not need to pay any tax if they make investments in provident funds and prescribed equities
- Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to 2 crore rupees; can be exercised once in a lifetime
- Standard tax deduction for salaried persons raised from 40,000 rupees to 50,000 rupees.
- Individuals with gross income up to 6.5 lakh rupees will not need to pay any tax if they make investments in provident funds and prescribed equities.
- Individual taxpayers with annual income up to 5 lakh rupees to get full tax rebate
- Both tax collection and tax base have shown significant increase due to government initiatives in recent years, government have moved to a moderate tax regime, with high collection.
- Amendments proposed to ensure streamlined system for levy of stamp duties, to be imposed and collected at one place, seamlessly.
- 56,619 crore made in BE 2018-19 for welfare of SCs and STs, increased to 62,474 crore in RE 2018-19 has been further increased to 76,800 crore in BE 2019-20
- Capital expenditure - 3.36,292 lakh crore for FY 2019-2020
- Expenditure to rise by 13% from RE 2018-19 to BE 2019-20
- Anti blackmoney measures taken have brought undisclosed income of about 1.30 lakh crore rupees to the surface; 3.38 lakh shell companies deregistered.
- 18% increase in direct tax collections in 2017-18, 1.06 crore people included in tax base; more than 1 crore citizens filed IT returns for the first time, after demonetization.
- Capital expenditure - 3.36,292 lakh crore for FY 2019-2020
- Gratuity limit increased from 10 lakh to 30 lakh rupees
- Businesses with less than Rs.5 crore annual turnover, comprising over 90% of GST payers, will be allowed to return quarterly returns
- GST collections in January 2019 has crossed 1 lakh crore rupees
- 14% growth in state tax collections was guaranteed and underwritten by Government of India
- Group of Ministers examining how prospective house buyers can benefit under GST
- GST has been continuously reduced, resulting in relief of 80,000 crore rupees to consumers
- Through tax consolidation, India became one common market
- Along with completion of fiscal deficit consolidation program, government to focus on debt-to-GDP ratio consolidation
- 99.54% returns have been accepted without any scrutiny
- Direct tax collections from 6.38 lakh crore rupees in 2013-14 to almost 12 lakh crore rupees; tax base up from 3.79 crore to 6.85 crore
- Direct tax reduced and tax interface made simpler and faceless to make life easier; resulting in increase in tax collections and return filings
- Simplification of direct tax system to benefit taxpayers
India Budget 2019 - Energy, Infrastructure sector - Announcements
- 6 crore free LPG connections provided under Ujjwala yojana
- Installed solar generation capacity has increased 10 times in last five years
- India is the fastest highway developer in the whole world, 27 kms of highways built each day, projects stuck for decades completed
- PMGSY allocated 19,000 crore rupees in 2019-20(BE)
- To ensure cleaner fuel and health assurance, government embarked on @PMUjjwalaYojana, a program to give 8 crore free LPG connections to rural households, 6 crore connections given already
- Budgetary allocations for infrastructure sector this year likely to stick to last FY levels. Meanwhile 10% expenditure growth in augmenting transmission and distribution segment in power sector is anticipated in this budget.
India Budget 2019 - Railways sector - Announcement
- Railway capex for FY20 set at record Rs 1.6 lakh crore
- All unmanned level crossings on broad gauge network of railways have been completely eliminated
- Vande Bharat Express will provide speed, service and safety to citizens and will give a boost to
Budget 2019-20 Round-up – Industry Expectations
Will the interim Budget 2019-20 depart from the interim budget’s trend of dishing out populist moves and be more towards strengthening economy?
“Balanced budget requirement seem more likely to produce accounting ingenuity than genuinely balanced budget”
– Thomas Sowell
This was quest of most of the industry stakeholders and frankly they anticipate that this time it shall be no different either. However, in so far the Government spend over infrastructure sprucing and on energy projects have been on the scaled up side which shows that intent may be carried on as well in the interim budget. Despite of the fact that last year not much was mentioned for anticipated investment under oil & gas exploration and production coupled with conventional sources of power generation, this year also the trend is likely to persist.
On the contrary the infrastructure expenditure has seen a jump of close to 2.5 times the 2013-14 levels to 2018-19. For instance, annual budgetary allocation for the national highway authority of India has gone up from about INR. 27,000 crore in 2013-14 to about INR. 70,000 crore now. Likewise, this government’s focus on providing access to electricity to rural households is well known. There have been new schemes such as the Sahaj Bijli Har Ghar Yojana (SAUBHAGYA), which has progressively seen more funds being allocated. Hence, under this budget there may not be superlative funds put across under these flagship program's but shall surely reflect upon the intent purely for the legacy it would like continue should it be voted back to power under general elections later this year. Also, focus on renewables is unlikely to waver and more capacity addition announcements may come to fore though pace of additions may arguably be at reduced pace considering the general elections. Hence, in this scenario it seems that legacy of “interim” budget is most likely to stay and any major announcements are likely to be kept at bay following general elections with silver lining of introduction to any such plans.
Increasing NPA posing a threat to loans for utilities, however the steps to prevent NPA's are prudent & appreciable which might be a lasting effect upon banking systems. The banking system & public system banks anticipate capital funding which shall enable lending to energy & infrastructure segment.
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