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Special PDF 2019

Overview of Union Budget 2019-20 & Economic Survey 2018-19 PDF

Overview of Union Budget 2019-20.................................................................................................................. 1
Overview of Economic Survey 2018-19.......................................................................................................... 10

Overview of Union Budget 2019-20

On July 5, 2019, Union Minister for Finance and Corporate Affairs Nirmala Sitharaman made her
maiden Budget Speech and presented the Union Budget 2019-20 in the Lok Sabha. She broke away
from the tradition when she replaced the conventional leather briefcase with a bright red cloth bag to
carry the Budget papers to the Parliament House. “Gaon, Garib and Kisan” (Village, Poor and Farmer)
was the centre of all policies of the Modi 2.0 Government.
Total expenditure for 2019-20 is budgeted at Rs 2,786,349 crore (US$ 417.95 billion), an increase of
14.09 per cent from 2018-19 (budget estimates).
Key Highlights of the Budget 2019-20:-
Overview of the economy
• India was a US$ 1.85 trillion economy in 2014 and it has reached US$ 2.7 trillion in five years,
the fastest growing major economy and the sixth largest economy in world, compared to 11th
largest in 2013-14.
• Metro rail network of 657 km has become operational in the country.
• India target to become US$ 5 trillion economy in the next five years and might become a US$ 10
trillion economy in the next eight years thereafter.
• The Indian economy grew at 6.8 per cent in 2018-19 and fourth quarter growth slumped to 5.8
per cent which was a 17 per cent quarter low.
• Govt cut its fiscal deficit target to 3.3% of GDP (Gross Domestic Product) in 2019-20 against 3.4%
estimated earlier.

Major Expenditure Items

• Total capital expenditure will be Rs 876,209 crore (US$ 131.43 billion) for 2019-20.
• Centrally sponsored schemes have been allocated Rs 331,610 crore (US$ 49.74 billion) in
• Defence budget is Rs 305,296 crore (US$ 45.79 billion) for the first time in 2019-20.
• Amount of Rs 174,300 crore (US$ 26.14 billion) has been approved for pension in the budget
• The government has allocated Rs 184,220 crore (US$ 27.63 billion), Rs 79,996 crore (US$
11.99 billion) and Rs 37,478 crore (US$ 5.62 billion) for Food, fertiliser and Petroleum
subsidies respectively.
10-point Vision for the decade
• Building Team India with Jan Bhagidari: Minimum Government Maximum Governance.
• Achieving green Mother Earth and Blue Skies through a pollution-free India.
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• Making Digital India reach every sector of the economy.

• Launching Gaganyan, Chandrayan, other Space and Satellite programmes.
• Building physical and social infrastructure.
• Water, water management, clean rivers.
• Blue Economy.
• Self-sufficiency and export of food-grains, pulses, oilseeds, fruits and vegetables.
• Achieving a healthy society via Ayushman Bharat, well-nourished women & children, safety of
• Emphasis on MSMEs, Start-ups, defence manufacturing, automobiles, electronics, fabs and
batteries, and medical devices under Make in India.
Tax Slabs
Income Slabs Individuals below 60 years
Up to Rs 2.5 lakh Nil
Rs 2. 5 Lakh to Rs 5 5% of (Total income minus Rs 2,50,000) + 4% cess
Rs 5 Lakh to Rs 10 Rs 12,500 + 20% of (Total income minus Rs
Lakh 5,00,000) + 4% cess
Rs 10 Lakh and Rs 1,12,500 + 30% of (Total income minus Rs
above 10,00,000) + 4% cess
Income Slabs Senior Citizens (60-80 years)
Up to Rs 3 lakh Nil
Rs 3 lakh to Rs 5 5% of (Total income minus Rs 3 lakh) + 4% cess
Rs 5 lakh to Rs 10 Rs 10,000 + 20% of (Total income minus Rs 5
lakh lakh) + 4% cess
Rs 10 lakh and Rs 1,10,000 + 30% of (Total income minus Rs 10
above lakh) + 4% cess

Income Slabs Super Senior Citizens (Above 80 years)

Up to Rs 5 lakh Nil
Rs 5 lakh to Rs 10 20% of (Total income minus Rs 5 lakh) + 4% cess
Rs 10 lakh and Rs 1 lakh + 30% of (Total income minus Rs 10
above lakh) + 4% cess

Key Changes introduced in Tax Regime

• Surcharge on individuals having taxable income from Rs 2 crore to Rs 5 crore and Rs 5 crore
and above was enhanced so that the effective tax rates for these two categories would increase
by 3 percent and 7 percent respectively.
• Effective tax rate for individuals having taxable income above Rs 2 crore (US$ 0.30 million) has
been increased.
• Relief in levy of Securities Transaction Tax (STT) to be provided.
• Businesses with an annual turnover of over Rs 50 crore will offer low-cost digital payments. No
charges or Merchant Discount Rate (MDR) will be levied on customers and merchants. RBI will
bear these expenses.
• Additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase
• To boost affordable housing, an additional deduction up to Rs. 1.5 lakh was provided for
interest paid on loans borrowed up to 31st March, 2020 for purchase of house valued up to Rs.
45 lakh. Overall benefit of around Rs. 7 lakh over loan period of 15 years was announced.

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• Faceless Income Tax Assessment in electronic mode to be launched in 2019 in a phased

manner involving no human interface, to reduce taxpayer trouble
• Several Direct Tax Incentives to be provided to International Financial Services Centres
• Permanent Account Number (PAN) and Aadhaar made interchangeable for convenience of
taxpayers; Income Tax returns can be filed using Aadhaar number, if PAN card is not available
and vice-a-versa.
• Export duty rationalised on raw and semi-finished leather.
• Increase in Special Additional Excise Duty and Road and Infrastructure Cess each by Re 1 per
litre on petrol and diesel.
• Annual turnover limit for 25% corporate tax raised to Rs 400 crore from Rs 250 crore.
Taxpayers with an annual turnover of less than Rs 5 crore have to file only quarterly.
• Direct tax revenue was increased by 78% to Rs. 11.37 lakh crore.
• 2% TDS (Tax Deducted at Source) on withdrawals of Rs 1 crore in a year from bank accounts
for business payments.
• Appropriate class of persons exempted from the anti-abuse provisions of Section 50CA and
Section 56 of the Income Tax Act.
• Increase in Special Additional Excise Duty and Road and Infrastructure Cess each by Rs. 1 per
litre on petrol and diesel.
• Sabka Vishwas Legacy Dispute Resolution Scheme proposed for quick closure of service tax
and excise related litigations.
Aadhaar Card to Non Resident Indians (NRIs) holding Indian Passport
As per the current Aadhaar laws, every resident shall be entitled to obtain an aadhaar number by
submitting his demographic information and biometric information by undergoing the process of
enrolment. If a person has resided in India for more than 180 days even if he is a NRI or foreign
national, he will be eligible to apply for Aadhaar. But now, in the Union Budget, it has been proposed
that issuing Aadhaar card for non-resident Indians (NRIs) with Indian passports after their arrival in
India without waiting for the mandatory 180 days.
• Goods and Services Tax (GST) processes were simplified while adding that businesses with less
than Rs 5 crore annual turnover will need to file quarterly GST return.
• The threshold exemption limit for a supplier of goods was proposed to be enhanced from Rs 20
lakh to an amount exceeding Rs 40 lakhs.
• Merchant exporters have to pay nominal GST of 0.1% for procuring goods from domestic
suppliers for export.
Non-banking Financial Companies (NBFCs)
• Interest on certain bad or doubtful debts by deposit-taking as well as systemically important
non-deposit taking NBFCs to be taxed in the year in which interest is actually received.
• To allow Foreign Institutional Investors (FIIs) and Foreign Portfolio Investment (FPI) in debt
securities issued by NBFCs.
• Proposals for strengthening the regulatory authority of RBI over NBFCs to be placed in the
Finance Bill.
• The requirement of creating a Debenture Redemption Reserve will be done away with to allow
NBFCs to raise funds in public issues.
• Steps to allow all NBFCs to directly participate in the Trade Receivable Discounting System
(TReDS) platform.
International Financial Services Centre (IFSC)
Direct tax incentives proposed for an IFSC with:
• 100 % profit-linked deduction section 80-LA in any ten-year block within a fifteen-year period.
• Exemption from dividend distribution tax from current and accumulated income to companies
and mutual funds.

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• Exemptions on capital gain to Category-III Alternative Investment Funds (AIFs).

• Exemption to interest payment on loan taken from non-residents.
• To reduce Net Owned Fund requirement from Rs 5,000 crores to Rs 1,000 crore.

Banking and Financial Sector

• Non Performing Assets of commercial banks reduced by over Rs. 1 lakh crore in 2018-19.
• Record recovery of over Rs. 4 lakh crore affected over the last four years.
• Provision coverage ratio at its highest in seven years.
• Domestic credit growth increased to 13.8%.
• Rs 70,000 crore proposed to be provided to Public Sector Banks to boost credit.
• Return of regulatory authority from National Housing Bank to RBI proposed, over the housing
finance sector.
• 100 lakh crore investment in infrastructure intended over the next five years. Committee
proposed to recommend the structure and required the flow of funds through development
finance institutions.
• Steps to be taken to separate the National Pension Scheme Trust from Pension Fund
Regulatory and Development Authority (PFRDA).
• Government to offer an investment option in ETFs on the lines of Equity Linked Savings
Scheme (ELSS).
• Government to meet public shareholding norms of 25% for all listed PSUs and raise the foreign
shareholding limits to maximum permissible sector limits for all PSU companies which are part
of Emerging Market Index.
• New series of coins of One Rupee, Two Rupees, Five Rupees, Ten Rupees and Twenty Rupees,
easily identifiable to the visually impaired to be made available for public use shortly.
Central Public Sector Enterprises (CPSEs)
• Target of Rs. 1,05,000 crore of disinvestment receipts set for the FY 2019-20.
• Government to reinitiate the process of strategic disinvestment of Air India, and to offer more
CPSEs for strategic participation by the private sector.
• Government to consider going to an appropriate level below 51% in PSUs where the
government control is still to be retained, on a case to case basis.
• The present policy of retaining 51% Government stake to be modified to retaining 51% stake
inclusive of the stake of Government controlled institutions.
Digital Payments
TDS of 2% on cash withdrawal exceeding Rs. 1 crore in a year from a bank account.Business
establishments with annual turnover more than Rs. 50 crore shall offer low cost digital modes of
payment to their customers and no charges or Merchant Discount Rate shall be imposed on customers
as well as merchants.
Mega Investment in Sunrise and Advanced Technology Areas
Scheme to invite global companies to set up mega-manufacturing plants in areas such as Semi-
conductor Fabrication (FAB), Solar Photo Voltaic cells, Lithium storage batteries, Computer Servers,
Laptops, etc was proposed. Investment-linked income tax exemption will be provided along with
indirect tax benefits.
Towards 5 Trillion Dollar Economy
Indian economy will become a 3 trillion dollar economy in 2019-20 and Government aspires to make
India a 5 trillion dollar economy in the coming years.
Ease of Doing Business
India’s Ease of Doing Business ranking under the category of ‘paying taxes’ jumped from 172 in 2017
to 121 in 2019.
Relief for Start-ups
• Capital gains exemptions from the sale of residential house for investment in start-ups
extended till FY21.

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• In terms of Angel Tax Issue, startups and their investors who file requisite declaration &
provide information in their return will not be subjected to any kind of scrutiny in valuation of
share premiums.
• E-verification mechanism for establishing the identity of the investor and source of funds.
• Special administrative arrangements for pending assessments and grievance redressal.
• No scrutiny of valuation of shares issued to Category-II Alternative Investment Funds.
• Relaxation of conditions for carry forward and set off of losses.
Small businesses/MSMEs
• Centre will create a payment platform for MSMEs for payment of bills
• Hundred new clusters will be set up in 2019-20 to enable 50,000 artisans to come into the
economic value chain
• It will set up 10,000 new farmer producer organisations.
• 350 crore allocated for FY 2019-20 for 2% interest subvention (on fresh or incremental loans)
to all GST-registered MSMEs, under the Interest Subvention Scheme for MSMEs.
• Payment platform for MSMEs to be created to enable filing of bills and payment thereof, to
eliminate delays in government payments.
• The government proposes to extend pension benefits to three crore retail traders with an
annual turnover less than Rs 1.5 crore under Pradhan Mantri Karam Yogi Man Dan Scheme.
• A separate portal will provide up to Rs1 crore loan in 59 minutes for MSMEs (Micro, Small &
Medium Enterprises).
• India’s first indigenously developed payment ecosystem for transport, based on National
Common Mobility Card (NCMC) standards, launched in March 2019.
• Inter-operable transport card runs on RuPay card and would allow the holders to pay for bus
travel, toll taxes, parking charges, retail shopping.
• Massive push given to all forms of physical connectivity through Pradhan Mantri Gram Sadak
Yojana, Industrial Corridors, Dedicated Freight Corridors and Bhartamala and Sagarmala
projects, Jal Marg Vikas and UDAN Schemes.
• Navigational capacity of Ganga to be enhanced via multi modal terminals at Sahibganj and
Haldia and a navigational lock at Farakka by 2019-20, under Jal Marg Vikas Project.
• Four times increase in the next four years estimated in the cargo volume on Ganga.
• The transport sector has been allocated enhanced outlay of Rs 83,000 crore.
New Space India Limited (NSIL)
To harness India’s space ability commercially, incorporated as a new commercial arm of Department
of Space called New Space India Limited (NSIL). It has been incorporated to tap the benefits of
Research & Development carried out by ISRO like commercialization of products like launch vehicles,
transfer to technologies and marketing of space products.
• Budget allocation for the Department of Space for the year 2019-20 has gone up to Rs.
12,473.26 crore.
• 50 lakh crore investment needed in Railway Infrastructure during 2018-2030.
• Public-Private-Partnership proposed for development and completion of tracks, rolling stock
manufacturing and delivery of passenger freight services.
• 657 kilometers of Metro Rail network has become operational across the country.
• Ministry of Railways has been allocated Rs 94,071 crore (US$ 14.11 billion) in 2019-20.

Rural India
• Ujjwala Yojana and Saubhagya Yojana have transformed the lives of every rural family,
dramatically improving ease of their living.
• Electricity and clean cooking facility to all willing rural families by 2022.

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• 10,000 new Farmer Producer Organizations to be formed, to ensure economies of scale for
• Government to work with State Governments to allow farmers to benefit from e-
NAM(National Agriculture Market).
• Promotion of “Zero Budget Natural Farming (ZBNF)” to reduce the cost of production of
farmers and thereby double their income.
• In the proposed Budget 2019-20, Mahatma Gandhi National Rural Employment Guarantee
Scheme (MGNREGS) was allocated Rs 60,000 crore.
Pradhan Mantri Awas Yojana – Gramin (PMAY-G)
• It aims to achieve “Housing for All” by 2022. Eligible beneficiaries to be provided 1.95 crore
houses with amenities like toilets, electricity and LPG connections during its second phase
(2019-20 to 2021-22).
Pradhan Mantri Matsya Sampada Yojana (PMMSY)
• A robust fisheries management framework through PMMSY to be established by the
Department of Fisheries. There is a need to address critical gaps in the value chain including
infrastructure, modernization, traceability, production, productivity, post-harvest
management, and quality control.
• It has allocated an estimated Rs 3,737 crore for the newly carved out Ministry of Fisheries,
Animal Husbandry and Dairying.
Pradhan Mantri Gram Sadak Yojana (PMGSY)
• Target of connecting the eligible and feasible habitations advanced from 2022 to 2019 with
97% of such habitations already being provided with all weather connectivity. 30,000
kilometers of PMGSY roads have been built using Green Technology, Waste Plastic and Cold
Mix Technology, thereby reducing carbon footprint. 1,25,000 kilometers of road length to be
upgraded over the next five years under PMGSY III with an estimated cost of Rs. 80,250 crore.
Scheme of Fund for Upgradation and Regeneration of Traditional Industries’ (SFURTI)
• Common Facility Centres (CFCs) to be setup to facilitate cluster based development for making
traditional industries more productive, profitable and capable for generating sustained
employment opportunities. 100 new clusters to be setup during 2019-20 with special focus on
Bamboo, Honey and Khadi, enabling 50,000 artisans to join the economic value chain.
Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship’ (ASPIRE)
• 80 Livelihood Business Incubators (LBIs) and 20 Technology Business Incubators (TBIs) plan
to be setup in 2019-20. 75,000 entrepreneurs will be skilled in agro-rural industry sectors.
India’s water security
• New Jal Shakti Mantralaya to look at the management of our water resources and water
supply in an integrated and holistic manner.
• Jal Jeevan Mission to achieve Har Ghar Jal (piped water supply) to all rural households by
• 1592 critical and over exploited Blocks spread across 256 District being identified for the Jal
Shakti Abhiyan. Compensatory Afforestation Fund Management and Planning Authority
(CAMPA) fund will be used for this purpose.
Swachh Bharat Abhiyan
• 6 crore toilets were constructed since Oct 2, 2014.
• 5.6 lakh villages have become Open Defecation Free (ODF).
• Swachh Bharat Mission to be expanded to undertake sustainable solid waste management in
every village.
Pradhan Mantri Gramin Digital Saksharta Abhiyan
• Over two crore rural Indians made digitally literate.
• Internet connectivity in local bodies in every Panchayat under Bharat-Net to bridge rural-
urban divide.

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• Universal Obligation Fund under a PPP arrangement to be utilized for speeding up Bharat-Net.
Urban India
• More than 95% of cities were declared Open Defecation Free (ODF).
• Almost 1 crore citizens have downloaded Swachhata App.
• Target of achieving Gandhiji’s resolve of Swachh Bharat to make India ODF by 2nd October
2019. To mark this occasion, the Rashtriya Swachhta Kendra to be inaugurated at Gandhi
Darshan, Rajghat on 2nd October, 2019. Gandhipedia being developed by the National Council
for Science Museums to sensitize youth and society about positive Gandhian values.
• Railways to be encouraged to invest more in suburban railways through SPV structures
like Rapid Regional Transport System (RRTS) proposed on the Delhi-Meerut route.
Pradhan Mantri Awas Yojana – Urban (PMAY-Urban)
• Over 81 lakh houses with an investment of about Rs. 4.83 lakh crore sanctioned of which
construction started in about 47 lakh houses.
• Over 26 lakh houses completed of which nearly 24 lakh houses delivered to the beneficiaries.
• Over 13 lakh houses so far constructed using new technologies.
• New National Education Policy to be brought.
• The National Research Foundation (NRF) was proposed.
• 400 crore provided for “World Class Institutions”, for FY 2019-20,
• ‘Study in India’ proposed to bring foreign students to study in Indian higher educational
• Draft legislation to set up Higher Education Commission of India (HECI), to be presented.
• Khelo India Scheme to be expanded with all necessary financial support.
• National Sports Education Board (NSEB) for development of sportspersons to be set up under
Khelo India, to popularize sports at all levels
• Stand-Up India Scheme to be continued for the period of 2020-25. The Banks to provide
financial assistance for demand-based businesses.
Ease of Living
Pradhan Mantri Shram Yogi Maandhan Scheme
About 30 lakh workers joined the Pradhan Mantri Shram Yogi Maandhan Scheme which provides Rs.
3,000 per month as pension on attaining the age of 60 to workers in unorganized and informal
UJALA Yojana
Approximately 35 crore LED bulbs distributed under UJALA Yojana leading to cost saving of Rs.
18,341 crore annually.
Naari Tu Narayani/(Woman you are a Goddess)
A Committee proposed with Government and private stakeholders for moving forward on Gender
Self Help Groups (SHGs)
Women SHG interest subvention program proposed to be expanded to all districts.
Overdraft of Rs. 5,000 to be allowed for every verified women SHG member having a Jan Dhan Bank
One woman per SHG to be eligible for a loan up to 1 lakh under MUDRA Scheme.
India’s Soft Power
• Mission to integrate traditional artisans with global markets proposed, with necessary patents
and geographical indicators.
• 18 new Indian diplomatic Missions in Africa approved in March, 2018, out of which 5 were
already opened. Another 4 new Embassies intended in 2019-20.
• Revamp of Indian Development Assistance Scheme (IDEAS)
• 17 iconic Tourism Sites being developed into model world class tourist destinations.
Faster Adoption and Manufacturing of Hybrid and Electric vehicles (FAME) scheme

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• Outlay of Rs 10,000 crore for 3 years approved for Phase-II of FAME Scheme.
• Only advanced-battery-operated and registered e-vehicles to be incentivized under FAME
Cross subsidy surcharges, undesirable duties on open access sales or captive generation for industrial
and other bulk power consumers will be removed under Ujjwal DISCOM Assurance Yojana (UDAY).
Infrastructure financing
• Credit Guarantee Enhancement Corporation to be set up in 2019-2020 to enhance sources of
capital for infrastructure financing.
• Action plan to be put in place to deepen the market for long term bonds with a focus on
Market & Investment
• Stock exchanges will be enabled to allow AA rated bonds as collateral.
• Electronic fund raising platform under the regulatory ambit of SEBI.
• SEBI to consider raising the threshold for minimum public shareholding in listed companies
from 25% to 35%.
• Government to supplement efforts by RBI to get retail investors to invest in government
treasury bills and securities, with further institutional development using stock exchanges.
• Government to organize an annual Global Investors Meet in India, using National
Infrastructure Investment Fund (NIIF) as an anchor to get all three sets of global players
(pension, insurance and sovereign wealth funds).
• Statutory limit for FPI investment in a company is proposed to be increased from 24% to
sectoral foreign investment limit. Option to be given to the concern corporate to limit it to a
lower threshold.
• FPIs to be permitted to subscribe to listed debt securities issued by ReITs and InvITs.
• NRI-Portfolio Investment Scheme Route is proposed to be merged with the Foreign Portfolio
Investment Route.
• FDI limit on insurance intermediaries increased to 100% from 49%.
PAHAL Scheme
There have been estimated savings/benefits of Rs. 59,599 crore for the Government upto March,
2019 under the Direct Benefit Transfer of LPG (DBTL) or PAHAL(Pratyaksh Hanstantrit Labh) scheme
of the Ministry of Petroleum and Natural Gas. The Budget Estimates provide an amount of Rs. 37478
crore as Petroleum subsidy for the 2019-20, compared to Rs. 24833 crore in revised estimates of
2018-19. Out of the above, Rs. 32989 crore are earmarked for LPG subsidy while Rs. 4489 crore have
been allocated for kerosene subsidy.
Allocations to Ministries
• Ministry of Home Affairs (MHA)- Rs 1,19,025 crore.
• The fertiliser subsidy allocations have seen a hike of around Rs 10,000 crore from Rs 70,090.35
crore (Budget Estimates 2018-19) to Rs 79,996 crore (Budget Estimates 2019-20).
• Ministry of Development of North Easter Region- Rs 3,000 crore.
• Department of Atomic Energy (DAE)- Rs 16,925 crore
• Women and Child Development Ministry- Rs 29,000 crore
• Ministry of External Affairs- Rs 17,800 crore
• Defence- Rs 3.18 Lakh Crore.
• Ministry of skill development – Rs 2989 crore
Costlier & Cheaper Items
List of Costlier Items include
• Petrol
• Diesel
• Gold, silver (Import duty at 12.5%)
• Cigarettes, hookah

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• Fully imported cars

• Automobile parts
• Optical fibre cable
• Digital camera
• Cashew
• Synthetic rubber
• Vinyl flooring
• Imported books (5% Customs duty)
• Split air-conditioners
• Loudspeakers
• Digital video recorders
• CCTV cameras
• Imported plastics
• Raw materials for the manufacture of soap
• Tiles
• Imported stainless steel products
• Newsprint
• Mountings for furniture
• Camera module and charger of mobile phones
List of Cheaper Items include
• Electric vehicles
• Leather items
• Defence equipments
• Purchasing of Home upto Rs. 45 Lakh
• Mobile Phone
• Electronic goods
• Set-top box
Achievements during 2014-19
• 1 trillion dollar added to Indian economy over the last 5 years (compared to over 55 years
taken to reach the first trillion dollar).
• India is now the 6th largest economy in the world, compared to 11th five years ago.
• Indian economy is globally the 3rd largest in Purchasing Power Parity (PPP) terms.
• Strident commitment to fiscal discipline and a rejuvenated Centre-State dynamic provided
during 2014-19.
• Structural reforms in indirect taxation, bankruptcy and real estate carried out.
• Average amount spent on food security per year almost doubled during 2014-19 compared to
• Patents issued more than trebled in 2017-18 as against the number in 2014.
• Ball set rolling for a New India, planned and assisted by the NITI Aayog.
About Budget:
According to Article 112 of the Indian Constitution, the Union Budget of a year, also referred to as the
annual financial statement, is a statement of the estimated receipts and expenditure of the
government for that particular year.

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Overview of Economic Survey 2018-19

On July 4, 2019, The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman
presented the Economic Survey 2018-19. It was prepared by the Chief Economic Advisor
Krishnamurthy Subramanian. The Survey forecasts a growth rate of 7 per cent for FY20, as compared
to the growth rate of 6.8 per cent in FY19.It had a cover page in skyblue colour as it adopts an
unfettered approach in thinking about the appropriate economic model for India.
Highlights of the Economic Survey 2018-19
Private Investment as the Key Driver of Growth, Jobs, Exports and Demand
• As per the Economic Survey 2019, the pathways for drop opened up in the last five years; and
benefits of growth and macroeconomic stability reached to the bottom.
• Sustained real Gross Domestic Product (GDP) growth rate of 8% is needed for a $5 trillion
economy by 2024-25.
• Virtuous Cycle of savings, investment and exports supported by a favorable demographic
phase is required for sustainable growth.
• Private investment is the key driver for demand, capacity, labor productivity, new technology,
creative destruction and job creation.
• Survey views the economy as being either in a virtuous or a vicious cycle, and never in
Behavioral Economics of “Nudge”
• Decisions by real people deviate from impractical robots theorized in classical economics and
Behavioral economics provides insights to ‘nudge’ people towards desirable behavior.
• Use of the following insights from behavioral economics will help to create an aspirational
agenda for social change:
• From ‘Beti Bachao Beti Padhao’ to ‘BADLAV’ (Beti Aapki Dhan Lakshmi Aur Vijay Lakshmi).
• From ‘Swachh Bharat’ to ‘Sundar Bharat’.
• From ‘Give it up” for the LPG subsidy to ‘Think about the Subsidy’.
• From ‘Tax evasion’ to ‘Tax compliance’.
Reorienting policies for MSME Growth
• Survey focused on enabling MSMEs (Micro, Small & Medium Enterprises) to grow for achieving
greater profits, job creation and enhanced productivity.
• Dwarfs (firms with less than 100 workers) despite being more than 10 years old, account for
more than 50% of all organized firms in manufacturing by number. Contribution of dwarfs to
employment is only 14% and productivity is a mere 8%.
• Large firms (more than 100 employees) account for 75% employment and close to 90% of
productivity despite accounting for about 15% by number.
• Survey also focused on service sectors such as tourism, with high spillover effects on other
sectors such as hotel & catering, transport, real estate, entertainment etc., for job creation.
Ending Matsyanyaya to Ramp up Capacity in the Lower Judiciary
10 | P a g e
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• Delays in contract enforcement and disposal resolution are the single biggest hurdle to the ease
of doing business and higher GDP growth in India. There are around 87.5% of pending cases
are in the District and Subordinate courts.
• 100% clearance rate can be achieved by filling out the 2279 vacancies in the lower courts and
93 in High Courts.
• States of Uttar Pradesh, Bihar, Odisha and West Bengal need special attention. Productivity
improvements of 25% in lower courts, 4% in High Courts and 18% in Supreme Court can clear
Effect of economic policy uncertainty on Investment
Uncertainty dampened investment growth in India for about five quarters. Survey proposed a
reduction in economic policy uncertainty by way of:
• Consistency of actual policy with forward guidance.
• Quality assurance certification of processes in Government departments.
India’s Demography at 2040; Increase in retirement age
• Sharp slowdown in population growth expected in next 2 decades.
• National Total Fertility Rate expected to be below replacement rate by 2021.
• Working age population to grow by roughly 9.7mn per year during 2021-31 and 4.2mn per
year during 2031-41.
• Significant decline to be witnessed in elementary school-going children (5-14 age group) over
the next two decades. States need to consolidate/merge schools to make them viable rather
than build new ones.
• Policy makers need to prepare for ageing by investing in health care and by increasing the
retirement age in a phased manner.
Analysis of the Swachh Bharat Mission(SBM)
• 93.1% of households have access to toilets.
• 96.5% of those with access to toilets are using them in rural India.
• 100% Individual Households Latrine (IHHL) Coverage in 30 states and Union Territories.
• Financial savings from a household toilet exceeded the financial costs to the household by 1.7
times on average and 2.4 times for the poorest households.
• Environmental and water management issues need to be incorporated in SBM for sustainable
improvements in the long-term.
Enabling Inclusive Growth through Affordable, Reliable and Renewable Energy
• 2.5 times increase in per capita energy consumption needed for India to increase its real per
capita GDP by $5000 at 2010 prices, and enter the upper-middle income group.
• 4 times increase in per capita energy consumption needed for India to achieve 0.8 Human
Development Index score.
• India now stands at 4th in wind power, 5th in solar power and 5th in renewable power
installed capacity. The cumulative renewable power installed capacity (excluding hydro above
25 MW) was more than doubled from 35 GW on 31st March, 2014 to 78 GW on 31st March,
2019. The target is to achieve an installed capacity of renewable based power of 175 GW by the
year 2022.
• Rs 50,000 crore saved and 108.28 million tonnes of Carbon dioxide emissions reduced by
energy efficiency programmes in India.
• Share of renewable (excluding hydro above 25 MW) in total electricity generation increased
from 6% in 2014-15 to 10% in 2018-19.
• Thermal power still plays a dominant role at 60% share.
• Market share of electric cars only 0.06% in India while it is 2% in China and 39% in Norway.
MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Act)
• Survey says that efficacy of MGNREGS was increased with the use of technology in streamlining

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• Significant reduction in delays in the payment of wages with adoption of National Electronic
Fund Management System (NeFMS) and Direct Benefit Transfer (DBT) in MGNREGS.
• Demand and supply of work under MGNREGS increased, especially in distressed districts.
• Vulnerable sections of the society viz. women, SC and ST workforce increased under MGNREGS
during economic distress.
Redesigning Minimum Wage System
• Survey proposed a well-designed minimum wage system as a potent tool for protecting
workers and alleviating poverty. 1 in every 3 wage workers in India are not protected by the
minimum wage law.
• Survey supports rationalization of minimum wages as proposed under the Code on Wages Bill.
• ‘National Floor Minimum Wage’ should be notified by the Central Government, varying across
five geographical regions.
• Minimum wages by states should be fixed at levels not lower than the ‘floor wage’ either on the
skills or on geographical region or on both grounds.
• Present minimum wage system in India has 1,915 minimum wages for a variety of scheduled
job categories across states.
• Survey proposed a simple and enforceable Minimum Wage System using technology.
• ‘National level dashboard’ under the Ministry of Labour & Employment for regular
notifications on minimum wages, proposed by the Survey.
State of the Economy
• India was still the fastest growing major economy in 2018-19.
• Growth of GDP moderated to 6.8% in 2018-19 from 7.2% in 2017-18.
• Inflation contained at 3.4% in 2018-19.
• Non-Performing Assets (NPA) as a percentage of Gross Advances reduced to 10.1% at end
December 2018 from 11.5% at end March 2018.
• Growth in fixed investment picked up from 8.3% in 2016-17 to 9.3% in 2017-18 and further
to 10% in 2018-19.
• Current Account Deficit (CAD) manageable at 2.1% of GDP.
• Fiscal deficit of the Central Government declined from 3.5% of GDP in 2017-18 to 3.4% in
• India’s foreign exchange reserves are placed at $422.2 billion in June 2019.
• The survey projects GDP to grow at 7% in 2019-20.
Fiscal Developments
• FY 2018-19 ended with fiscal deficit at 3.4% of GDP and debt to GDP ratio
of 44.5%(Provisional).
• As per cent of GDP, total Central Government expenditure fell by 0.3% points in 2018-19 p.a
over 2017-18- 0.4% point reduction in revenue expenditure and 0.1% point increase in capital
• The revised fiscal glide path envisages achieving fiscal deficit of 3% of GDP by FY 2020-
21 and Central Government debt to 40% of GDP by 2024-25.
• General Fiscal Deficit was pegged at 5.8% in FY 2018-19.
Money Management and Financial Intermediation
• Banking system improved as NPA ratios declined and credit growth accelerated.
• Insolvency and Bankruptcy Code led to recovery and resolution of significant amount of
distressed assets and improved business culture.
• Till March 31, 2019, the CIRP (Corporate Insolvency Resolution Process) yielded a resolution
of 94 cases involving claims worth Rs 1, 73,359 crore.
• As on 28 Feb 2019, 6079 cases involving Rs 2.84 lakh crores have been withdrawn.
• As per RBI reports, Rs 50,000 crore received by banks from previously non-performing
• Additional Rs 50,000 crore “upgraded” from non-standard to standard assets.
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• Benchmark policy rate first hiked by 50 bps and later reduced by 75 bps last year.
• Liquidity conditions remained systematically tight since September 2018 thus impacting the
yields on government papers.
• Financial flows remained constrained because of the decline in the equity finance raised from
capital markets and stress in the NBFC (Non-Banking Financial Sector) sector.
• Capital mobilized through public equity issuance declined by 81% in 2018-19.
• Credit growth rate year-over-year (YOY) of the NBFCs declined from 30% in March 2018 to 9%
in March 2019.
Prices and Inflation
• Headline inflation based on Consumer Price Index – Combined (CPI-C) continuing on its
declining trend for fifth straight financial year remained below 4.0% in the last two years.
• Food inflation based on Consumer Food Price Index (CFPI) also declined for fifth financial year,
remained below 2.0% for the last two consecutive years.
• Miscellaneous, housing and fuel and light groups are the main contributors of headline
inflation based on CPI-C during FY 2018-19.
• CPI rural inflation declined during FY 2018-19 over FY 2017-18.
Sustainable Development and Climate Change
• India’s SDG Index Score ranges between 42 and 69 for States and between 57 and 68 for UTs.
• Kerala and Himachal Pradesh are the front runners with a score of 69 amongst
states. Chandigarh and Puducherry are the front runners with a score of 68 and 65
respectively among the UTs.
• Namami Gange Mission was launched for achieving the SDG (Sustainable Development Goal) 6
with a budget outlay of Rs 20,000 crore.
• A comprehensive National Clean Air Programme (NCAP) was launched in 2019 as a pan India
time bound strategy for prevention, control and abatement of air pollution.
External Sector
• As per WTO (World Trade Organization), World trade growth slowed down to 3% in 2018
from 4.6% in 2017.
• India’s External Debt was $521.1 billion at end-December 2018, 1.6% lower than its level at
end-March 2018.
• The total liabilities-to-GDP ratio, inclusive of both debt and non-debt components, has declined
from 43% in 2015 to about 38% at the end of 2018.
• The Indian Rupee traded in the range of 65-68 per US$ in 2017-18 but depreciated to a range
of 70-74 in 2018-19.
• Composition of India’s exports and import basket in 2018-19(P):
• Exports (including re-exports): Rs 23, 07,663 Cr.
• Imports: Rs 35, 94,373 Cr.
• Top export items continue to be Petroleum products, precious stones, drug formulations, gold,
and other precious metals.
• Top import items continue to be Crude petroleum, pearl, precious, semi-precious stones and
• India’s main trading partners continue to be the US, China, Hong Kong, the UAE, and Saudi
• India has signed 28 bilateral/multilateral trade agreements with a various country/group of
countries. In 2018-19,
• Exports to these countries stood at US$121.7 billion accounting for 36.9% of India’s total
• Imports from these countries stood at US$266.9 billion accounting for 52% of India’s total
Agriculture and Food Management

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• Gross Value Added (GVA) in agriculture improved from -0.2% in 2014-15 to 6.3% in 2016-17
but decreased to 2.9% in 2018-19.
• Gross Capital Formation (GCF) in agriculture declined to 15.2% in 2017-18 as compared to
15.6% in 2016-17.
• Women’s participation in agriculture increased to 13.9% in 2015-16 from 11.7% in 2005-06.
• 89% of groundwater extracted is used for irrigation.
• Policies should focus on Dairying as India is the largest producer of milk; Livestock
rearing; Fisheries sector as India is the second largest producer.
Industry and Infrastructure
• India’s ranking improved by 23rd to 77th position in 2018 among 190 countries assessed by
the World Bank Doing Business (DB) Report 2019.
• Road construction grew at 30 km per day in 2018-19.
• Rail freight and passenger traffic grew by 5.33% and 0.64% respectively in 2018-19.
• Total telephone connections in India touched 118.34 crores in 2018-19. The telecom industry’s
contribution to GDP is estimated to reach 8.2% by 2020.
• Public-Private Partnerships (PPP) are ideal for addressing infrastructure gaps.
• Building sustainable and resilient infrastructure was given due importance with programmes
such as SAUBHAGYA (Pradhan Mantri Sahaj Bijli Har Ghar Yojana ) scheme, PMAY (Pradhan
Mantri Awas Yojana) etc.
• To achieve the target of USD 10 trillion economy size by 2032, a robust and resilient
infrastructure system is required, supported by adequate private investments.
Services Sector
• The services sector contributed more than half of the Gross Value Added (GVA) growth in
• IT-BPM (Information Technology- Business Process Management) industry grew by 8.4% in
2017-18 to $167 billion.
• The services sector growth declined marginally to 7.5% in 2018-19.
• The sectors that saw growth were Financial services, real estate and professional services.
• The sectors that saw decline were Hotels, transport, communication and broadcasting services.
Social Infrastructure, Employment and Human Development
• Government expenditure on Health increased to 1.5% in 2018-19 from 1.2% in 2014-15.
• Government expenditure on Education increased to 3% in 2018-19.
• Affordable and quality healthcare being provided through National Health Mission and
Ayushman Bharat scheme.
• Substantial progress in both quantitative and qualitative indicators of education was reflected
in the improvements in Gross Enrolment Ratios, Gender Parity Indices and learning outcomes
at primary school levels.
• Net employment generation in the formal sector was higher at 8.15 lakh in March, 2019 as
against 4.87 lakh in February, 2018 as per Employees’ Provident Fund Organisation (EPFO).
• Around 1, 90, 000 km of rural roads constructed under Pradhan Mantri Gram Sadak Yojana
(PMGSY) since 2014.
• About 1.54 crore houses completed under Pradhan Mantri Awas Yojana (PMAY) as against a
target of 1 crore pucca houses with basic amenities by 31st March, 2019.
Smart City Mission
The Survey showed that projects worth over Rs 2.05 lakh crore are proposed in 100 cities under the
Smart Cities Mission and significant progress has been made in terms of implementation of these
About Economic Survey:
Economic Survey is an annual document prepared by the government reviewing the economic
developments over the past year.

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