Finance Minister Arun Jaitley will unveil the interim budget for 2019-20 on 1 February 2019. The full-fledged Union Budget for the next fiscal will be presented by the new government.
This will be the sixth consecutive budget to be presented by Jaitley.
The Union Budget is the most comprehenseive report of the government's finance in which revenues from all sources and outlays for all activities are consolidated. The budget also contains estimates of the Government's accounts for the next fiscal year called budgeted Estimates.
"Since the general election of the Lok Sabha is likely to be held in April/May, 2019, this year the central government will likely present the interim budget 2019-20 on 1st Feb, 2019. After the presentation of interim Budget 2019-20, it is proposed to seek a vote on account to cover the government's requirement of funds for the first four months (April to July) of the next financial year (excluding expenditure on New Service items)," the Finance Ministry said in a statement.
This will be the last budget of the current BJP-led NDA government before the General Elections.
The interim budget is a vote-on-account. It is a grant made in advance by Parliament for expenditure for a part of the next financial year. It is a complete set of accounts, including both expenditure and receipts, like a full budget.
The last interim budget was presented on 17 February 2014 by the then finance minister P Chidambaram.
Earlier, the Budget was presented at the end of February. The Narendra Modi-led government scrapped this colonial-era tradition.
Another tradition that has been done away by the government is the separate announcement of the Railway Budget. Ending a nearly century-old practice of having a separate budget for railways, from 2016 the government merged it with the general budget to be presented by finance minister Jaitley on 1 February.
Jaitley became the first one finance minister to present a combined Union Budget in 2017.
The budget being presented earlier in February allows for the funds budgeted to be allocated to ministries from the start of the financial year beginning April. It also gives government departments more leeway to spend as well as allow companies time to adapt to business and taxation plans.
Know the Budget
Seeking to educate the general public about the budgetary process, the finance ministry started a series on Twitter last week providing definitions of various terms used in the budget.
The 'Know Your Budget' series, which explains the importance of Union Budget and its making, would continue for about a fortnight.
Direct and indirect taxes
Taxes are the most looked forward to in the budget. Speculation is on whether there would be regular tax cuts but then, uncertainty is the leitmotif, said Madhavan Narayanan in an earlier piece in Firstpost. There is too much up in the air out there as the NDA gets set to present the Budget for 2019-20, but this much is clear, fiscal deficit measurement is only for the academically inclined. The big one to watch out for would be how much the exchequer bets on the Ayushman Bharat scheme to bring affordable health insurance for the masses and do something to correct its anti-farmer image painted by Opposition parties.
Now, there are direct and indirect taxes. Direct taxes are the one that fall directly on individuals and corporations. For example, income tax, corporate tax, etc. Indirect taxes are imposed on good and services. They are paid by consumers when they buy goods and services. These include excise duty, customs duty, etc
— Ministry of Finance (@FinMinIndia) January 16, 2019
In the last 12 interim budgets since Independence, outgoing governments have held-back from announcing big schemes in order to make it easier for the incoming government to pass the full budget.
Not just Vote-on-Account, hints Jaitley
On 17 January, Jaitley said the government could break with convention and make the 1 February exercise more significant than a vote-on-account. He was speaking through video conferencing at CNBC-TV18’s Indian Business Leader awards. Jaitley is currently undergoing treatment in New York.
"The convention has always been that the election year budget normally is an interim budget and ordinarily there should be no reason why we should move away from that convention. But then the larger interest of the economy always dictates what goes into the interim budget and that is something which cannot be discussed or disclosed at this stage," said a report quoting Jaitley.
Jaitley hinted at a farm relief package in the interim budget. He underlined that there have been precedents of interim budgets containing major policy announcements to tackle an urgent situation. "Our farmers have increased productivity and we have moved into a surplus area. Management of the surplus is constituting a challenge for us for the last several years.. The prices have fallen," he said.
The fall in food prices in the last few months indicated the poor income farmers are making, Jaitley said.
"Situations like calamity, drought, stress..(spending to tackle them) can't be considered as populist expenditure," he said, exuding confidence that markets can distinguish between a populist measure and something driven by a compelling situation.
Stating that the government has notched up success in many areas but is also facing challenges, he said some of them need urgent action.
"Some of those challenges really can't afford to wait. Therefore, obviously, there will be a necessity to address some of them. It has happened in the past. Therefore, we intend working within the parameters of the conventions that exist," he said.
Jaitley, however, refrained from shedding more light on the government's plans ahead of the budget.
The government has been moving on "a glide path" on the fiscal consolidation front, unless some "unsual situation" demanded something, he said.
It can be noted that as per the data available till November, the government has already breached its budgeted fiscal deficit target of 3.3 percent. Economists have raised fear that the government may announce populist measures ahead of elections, which may lead to a higher fiscal deficit.
--With inputs from agencies
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Updated Date: Jan 21, 2019 15:45:49 IST