Budget 2019-20 – Employment: Small Businesses

Finance Minister has presented 2019-20 Budget which is growth oriented, touching concern areas, attempting to ease bottlenecks and yet trading on fiscal conservation path. Economy is facing severe head winds, such as slowdown in growth, falling consumption demand, dearth of private investment, rising unemployment, rural distress, etc. At this background, the market was expecting big bang fiscal stimulus to kick start falling economy. While avoiding fiscal stimulus route, adhering to fiscal consolidation path, Finance Minister has come out with slew of measures which would ensure growth and employment in next 5 years. The Finance Minister has estimated fiscal deficit at 3.3% instead of 3.4% for 2019-20. We will summarize some of the proposed steps which would attempt to help economy to bring it on growth track.

The Government has proposed to spend Rs. 100 lakh crores on infrastructure development during the next 5 years – in roads, ports, power, waterways, telecom, etc. Though the budgetary support for these investments could be miniscual, a major contribution would be coming from Debt, FDI, PPP Contributions, etc. Such a huge spend would help boost economic growth and support employment generation in big way. Railways alone would be spending about Rs. 50 Lakh Crores for next 10 years, these would be also ensured through PPP, Debt, FDI, etc. besides budgetary support. While the Government attempted to boost economy, through infrastructural spend during last 5 years, the other vital leg of economy, private capital investment has been negligible. There were many legacy issues in the sector, such as over leveraged balance sheets, NPAs, excess capacity, etc. Since attempts have been made to alleviate these issues during the last 5 years, now the things are looking up. For private capital investment, few essential things need be there as facilitators- availability of liquidity in the system and low interest rates. Budget has provided Rs 70,000 Crores for banks’ capitalizations, which would take care of regulatory capital required and at the same time will provide growth capital which would facilitate banks to deploy about Rs. 4 lakh crores through lending, to corporates, MSMEs and agriculture in next 2-3 years.