July 5, 2019 / 6:12 AM / a month ago

India unveils budget aimed at boosting infrastructure and foreign investment

NEW DELHI (Reuters) - India on Friday unveiled a budget aimed at boosting infrastructure and foreign investment, the first since the Bharatiya Janata Party led by Prime Minister Narendra Modi returned for a second term in power.

India's Finance Minister Nirmala Sitharaman arrives to present the 2019 budget in Parliament, New Delhi, India July 5, 2019. REUTERS/Adnan Abidi

Here are the highlights of Finance Minister Nirmala Sitharaman’s budget for the 2019/20 fiscal year that began April 1:

DEFICIT

- Fiscal deficit for 2019/2020 seen at 3.3% of GDP

BORROWING

- Govt to borrow a gross 7.1 trn rupees via bonds in 2019/20

- Govt to borrow a net 4.73 trn rupees via bonds in 2019/20

- Short term borrowing seen at 250 bln rupees in 2019/20

- Govt to buy back 500 bln rupees of bonds in 2019/20

REVENUES/RECEIPTS

- Dividends from state-owned firms seen at 574.87 bln rupees in 2019/20

- Gross tax revenue seen at 24.6 trn rupees in 2019/20

- Net tax revenues seen at 16.49 trn rupees in 2019/20

TAXATION

- Will levy tax deduction at source of 2% for cash withdrawals exceeding 10 mln rupees per year

- Proposes relief in securities transaction tax

- All companies with annual turnover of 4 bln rupees will now be under the 25% tax bracket

- Customs duty on steel raised to 7.5% from 5%

- To increase customs duty on gold and precious metals to 12.5%

EXPENDITURE

- Total government spending seen at 27.86 trn rupees in 2019/20

- Govt to spend 1.74 trn rupees on pensions in 2019/20

- Govt to spend 6.6 trn rupees on interest payments in 2019/20

ECONOMY

- India will become a $3trn economy in the current fiscal year, and a $5trn economy in the next few years

- India to invest heavily in infrastructure and job creation

- Government will raise part of its gross borrowing in external markets in foreign currencies

INVESTMENT

- India will ease foreign direct investment restrictions in single-brand retail

- Proposes further opening up of FDI in aviation, insurance, media and animation sectors

- Important to get retail investors to invest in treasury bills

- Will allow foreign investors to buy debt of listed real estate investment trusts

- Government aiming for $14.5 bln target for disinvestment proceeds in FY20

BANKING

- State-owned banks proposed to be provided 700 bln rupees of additional capital

- Will strengthen central bank’s authority over shadow banks

- There is a need to give tax parity to non-banking finance companies

INFRASTRUCTURE

- The government will upgrade 125,000 kilometres of roads over the next five years at a cost of $11.6 bln

- Railway infrastructure will need an investment of $72bln between 2018 and 2030

- Govt to encourage global companies to set up large manufacturing plants

- India will enter into aircraft financing and leasing activities

Reporting by Alasdair Pal; Editing by Sanjeev Miglani

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