Will Modi 2.0's Full Budget Fulfill The Expectations Of The Aam Admi?
Jun 26, 2019

Author: Divya Grover

(Image source: Image by Mary Pahlke from Pixabay)

After the rousing victory of PM Narendra Modi at the general elections 2019, all eyes are now on the new Finance Minister Ms Nirmala Sitharaman as she readies to present her first Budget speech on July 5, 2019.

[Read: Will Modi 2.0's New Cabinet Have A Positive Impact On Your Portfolio?]

Like every year, each segment of the country has a different wish-list for the finance minister (FM) which they want fulfilled in the Budget. The interim budget presented by Mr Piyush Goyal on February 1, 2019, a few weeks before the elections, brought cheers to the common man as it proposed to leave a higher disposable income in their hands and encouraged savings.

Some of the steps that were taken in the budget were as follows-

  • Full tax rebate for individual taxpayers having taxable annual income of up to Rs 5 lakh was proposed. The standard deduction for salaried person was also raised from Rs 40,000 to Rs 50,000.

  • Ceiling limit for tax deducted at source for the interest earned on bank/post office deposit was raised from Rs 10,000 to Rs 40,000.

  • TDS threshold under Section 194I for deduction of tax on rent increased from Rs 1.8 lakh p.a. to Rs 2.4 lakh in a financial year.

  • Exemption of levy of income tax on notional rent on a second self-occupied property.

  • Benefit of the roller of capital gains under Section 54 be increased from investment in one residential house to two residential houses for a taxpayer having capital gains up to Rs 2 crore. This benefit can be availed once in a lifetime.

  • Benefits under Section 80-IBA to be extended for one more year, i.e. to the housing projects approved till 31st March 2020 to increase the number of homes available under affordable housing.

  • `Pradhan Mantri Shram-Yogi Maandhan', a mega pension schemes for workers in the unorganised sector with monthly income of Rs 15,000 to be launched.

  • Direct income support of Rs 6,000 per year for farmers having cultivable land up to 2 hectares under PM KISAN programme. This programme has now been extended to cover all the farmers.

  • Interest subvention of 2% for farmers affected by natural calamities and 3% for timely payment. 2% interest subvention for farmers pursuing animal husbandry. Separate department for fisheries to be created.

[Read: Has The Interim Budget 2019 Left You Smiling And Happy?]

The new FM has her task cut out; which includes reviving the GDP growth, tackling liquidity crisis, and maintaining the fiscal target, among many others.

While the budget may not serve everyone's expectations, Ms Sitharaman may consider the ones, mentioned below, that the common man has from the budget...

Individual taxpayers

Revision in tax slab/basic exemption - It is expected that the basic exemption limit for income tax will be increased from the current Rs 2.5 lakh to Rs 3 lakh to leave higher disposable income in the hands of the people. Additionally, the income tax for people in the 20% and 30% tax bracket has not been revised since 2014. It is expected that the government will bring down the existing slab rate for such individuals.

Increase deduction limit - It is hoped that the limit for deduction under Section 80C be raised from Rs 1.5 lakh to Rs 2 lakh.

These two measures of increase in deduction limit and basic exemption limit in turn will reinvigorate economic growth as they channelise these savings into investment.

Furthermore, the limit for deduction under Section 80D could be increased keeping in mind the rising cost of medical expenses.

Higher HRA - House rent has increased significantly in many cities. Therefore, it is expected that government provide higher HRA exemptions for individuals residing in such cities.

Home buyers

Deduction for home loan interest - Home loan EMI forms a major part of outgo for many salaried individuals. Increasing deduction on home loan interest under Section 24(b) from Rs 2 lakh to Rs 2.5 lakh will provide many home buyers some relief.

Funding for stalled projects - Home buyers' body, the Forum for People's Collective Efforts (FPCE), has demanded that the government create a Rs 10,000 crore fund in the upcoming budget to complete stalled real estate project across the country and provide relief to over 5 lakh people who have booked properties.

[Read: Should You Invest In Real Estate After Full Budget 2019?]


The long-term capital gain (LTCG) tax was reintroduced last year by the then FM, Arun Jaitely on gains over Rs 1 lakh arising from transfer of equity shares and was taxed at 10%. Many investors were not happy with the decision as tax is already paid in the form of securities transaction tax (STT). Since it was only reintroduced last year, it is unlikely that the government will do away with it. However, they may consider reducing the rate to 5% or increasing the limit to Rs 2 lakh.

[Read: What The Mutual Fund Industry Expects From Modi 2.0's July Budget]


The agricultural growth shrunk to -0.13% in March 2019 quarter. Delayed monsoon may further dampen the growth prospects. Clearly the agricultural sector is ailing and needs a substantial boost from this budget. Increased expenditure in areas like irrigation, seeds, warehousing, and other reforms to ensure that farmers get better compensation are needed to enhance farm productivity.

Limitations the finance minister faces...

The consumption growth has shown slowdown in the past few years which is reflected in the slowing auto and FMCG sales (including some of the basic goods). Increase in exemption limit and change in tax slab may leave a higher disposable income in the hands of the people and boost consumption.

However, the income tax collection for the previous year has been lower than the target and as the NDA government is looking to increase tax base and increase revenue from tax, it will have to be seen how the FM will achieve both the targets.

Reforms for agriculture, health, drinking water, education, and other welfare areas will require the government to increase expenditure. This is likely to intensify the pressure on the government to meet its fiscal target.

Driving the economy back on track will be a major challenge and it's now up to the FM to decide the areas that deserve a higher priority in the full Budget 2019.

Editor's note: Get the benefits of super investing, wealth building and tax saving and become a smart investor. PersonalFN is offering three of its premium reports in an all-in-one offer.

These research reports will guide you to select worthy mutual fund schemes for SIP, the ones that have the potential to provide BIG gains, and the ones for your tax planning this year. Click here for PersonalFN's recommendation and subscribe now.

Add Comments

Daily Wealth Letter

Fund of The Week

Knowledge Center

Money Simplified Guides (FREE)

Mutual Fund Fact Sheets

Tools & Calculators