Budget 2019 seeks to shift terms of trade in favour of agriculture

A hbags.ru day after Nirmala Sitharaman took oath and assumed office as the finance minister in New Delhi’s stately North Block on Raisina Hill, a team of top bureaucrats briefed her about the state of the economy to bring her up to speed with the prevailing policy and fiscal architecture.

Nothing unusual about it. Only that it was just a week after the Bharatiya Janata Party’s (BJP) replica hermes bags landslide election victory to win a second term and about a month before the presentation of the Union Budget. The task: strike an equilibrium between fiscal realism and soaring expectations.

As a trained economist, Sitharaman may well have been reminded of constrained optimisation’, a commonly used concept in economics that replica birkin bag characterises finding the best set of solutions when confronted with a variety of challenges. As it turns out, Sitharaman’s first Budget is a smart piece of work on fiscal trade off that seeks to marry welfare economics with expansionary objectives.

At Rs 3,34,234.57 crore, central subsidies for 2019 20 stood at 11.9 percent of total expenditure. This compares creditably with last year, when subsidies as a proportion of total central expenditure stood at 12.1 percent.

Hermes Belt Replica Since 2014, there has been an evident emphasis on cutting back revenue expenditure. A central piece of the strategy to achieve this is to keep subsidies at well below 2 percent of GDP. For 2019 20, subsidy expenses stand at 1.6 percent of the projected nominal hermes replica handbags GDP of Rs 2,10,07,439 crore, compared to 1.4 percent last year. Hermes Belt Replica

Effectively, of every Rs 100 worth of goods and services produced in the country, only Rs 1.6 will be spent on anti poverty programmes or handouts that help keep food, fertilisers and some fuel prices affordable for the poor.

Replica Hermes Bags This is despite the sharp rise in minimum support prices (MSPs) for 14 summer sown kharif crops last year. A state supported MSP mechanism acts a cushion, cuts the dependence on private wholesale buyers, and helps fix a minimum floor price that farmers are almost guaranteed to get even if markets are swamped by an abundant harvest collapsing mandi rates. Replica Hermes Bags

Hermes Handbags The government has set the MSP at a minimum of 1.5 times the cost of cultivation, a proposal made in the Budget for 2018 19, based on Commission on Agricultural Costs and Prices (CACP) calculations. This was the biggest increase in the Narendra Modi government’s first tenure, which has pushed up the food subsidy bill by 7.5 percent to Rs 1,84,220 crore in 2019 20 from Rs 1,71,298 crore last year. Hermes Handbags

Sitharaman probably was also deeply conscious of the need to force public investment, particularly at a time of depressed private investment. She did not wield the knife on the Centre’s capital expenditure, pencilled in Rs 3,36,293 crore for spending on productive assets with multiplier effects, higher by 6.2 percent over last year’s Rs 3,16,623 crore, a sign that public investment will gather speed in coming months.

Another big constraint was the critical need to accelerate household spending, which accounts for more than half of India’s GDP. India’s gross domestic product (GDP) grew 5.8 percent in January March, and 6.8 percent in 2018 19, lower than previous year’s 7.2 percent. The growth in GDP was slowest since 2014 15.

Slowdown has been visible since last year with deceleration signs that were emanating from a slew of shop end data such as car and consumer goods sales, replica hermes mini bag often seen as proxy indicators to gauge trends in household spending.

The tricky bit, however, is how not to slide down a fiscal slope. The cost of a universal cash transfer scheme of Rs 6,000 a year for all farmers hbags reviews under PM Kisan will cost an additional Rs 12,000 crore in 2019 20, from the previously estimated Rs 75,000 crore when the scheme was limited only to farmers owning only up to 2 hectares of land.

Hermes Replica Bags How does the government hope to find money for all of these? The finance ministry expects to collect Rs 13.35 lakh crore from individuals and corporates, a growth of 11.25 per cent over the orange birkin replica previous year, but still lower by 3 per cent compared to Rs 13.82 lakh crore set in the interim budget. Hermes Replica Bags

The revenue growth is also based on 14.1 percent projected growth in corporate income tax, predicated on 12 percent nominal GDP growth for 2019 20. The actualisation of healthy corporate income tax assumptions will critically depend on two known unknowns: how rapidly the broader economy turns around, and how quickly consumption spending picks up.

Four big variables in Sitharaman’s fiscal maths compared to February 1, 2019 and now is: dividends from the RBI and banks, as also from public sector enterprises (PSEs), earnings from telecom spectrum and licence fee; and disinvestment receipts.

The government has projected to earn Rs 1,06,041.56 crore as dividends from RBI and banks in 2019 20, up 43 percent from Rs 74,140.37 crore in the previous year. Equally, the government now expects central PSEs to pay dividends worth Rs 57,486.88 crore in 2019 20, 27 percent higher than last year.

Hermes Replica Handbags Communication revenues, primarily licence fee at 8 percent of the Adjusted Gross Revenue (AGR) and spectrum, is set to yield Rs 50,519.81 crore in 2019 20, up 29 percent from the Interim Budget estimates of Rs 39,245.00 crore. This could well visit this web-site be a sign that the government intends to quickly move hermes replica 2424 bag on 5G spectrum sales in coming months. Hermes Replica Handbags

Also, the government now expects to earn Rs 1.05 lakh crore in 2019 20 through disinvestment, selling stake in state owned companies. This is higher by 16 percent than what it had projected in the Interim Budget.

The robust tax revenue growth assumptions mirror the government’s optimism about the economy’s fundamentals, but it hbags.ru reviews is the borrowing plan that the bond and equity markets are looking with a bit of anxiety. The welfare necessities still have not forced the finance minister to cede on consolidation goals to peg the fiscal deficit at 3.3 percent of GDP for 2019 20, lower by 0.1 percentage points of 3.4 percent estimated in February. What if the revenue assumptions turn awry? How will the government then plug the gap? These are questions floating in the markets.

Hermes Replica For now, though, Sitharaman has made it abundantly clear that Discover More the time to decisively shift the terms of trade in https://www.hbags.ru/hermes-evelyne-c-37/ favour of farmers has come. Plunging food prices have meant farmers’ incomes have remained flat or slump, even when non food items they buy and consume continue to get costlier. Hermes Replica

The 2019 20 Budget may well be remembered for making a pivotal shift in the India’s policy making attitude of looking at the farm economy from a mindset of deficit to that of hermes belt replica approaching it through a prism of surplus.