Budgeting Current Affairs - 2020

RBI Syncs Financial Year with the Fiscal Year

On February 15, 2020, the board of Reserve Bank of India (RBI) decided to sync the Financial year of the bank with the Fiscal Year. The Fiscal Year begins in April and ends in March and the Financial year is between July and June

Highlights

The Central Board of Directors of RBI at the 582nd meeting recommended aligning of Fiscal and financial years. The alignment would change 8-decade practice of RBI.

Jalan Committee

The alignment was recommended by an expert committee led by Bimal Jalan. According to the committee, the central bank will be able to provide estimates of the surplus transfers better after the alignment. This will reduce the interim dividend that the RBI has to pay to the Government. However, the interim dividend will be restricted to extraordinary circumstances. It will also bring in cohesiveness with the reports and policy projections made by the RBI.

Why the move?

The Centre had been demanding for an interim dividend (between April to August) as its final balance sheet is prepared in August. This was mainly because RBI had a different accounting year.

Budget 2020-21 presented by Finance Minister: The Themes, GST Reforms

The Finance Minister Nirmala Sitaraman presented the Budget 2020-21 on February 1, 2020. The budget focused on enhancing purchasing power of citizens and boosting their incomes. It has also given importance to technology and innovation to increase employment of the youths.

The Budget 2020 has been framed on two main pillars namely Fundamental Structural Reforms and Inclusive Growth.

Structural Reforms

The structural reforms include recapitalization of banks through IBC (Insolvency and Bankruptcy Code). The debt of the country has been reduced from 52.2% of GDP in 2014 to 48.7% of GDP in 2019.

GST Reforms
  • Under GST, an average household saves 4% of its savings.
  • In the year 2019-20, 60 lakh new tax payers were added, 40 crores of returns filed, 800 crore invoices uploaded and 105 e-way bills have been generated. GST helped to reducing the turnaround time for trucks by 20%.
  • The Inspector Raj system has been vanished. Under this, the state and national permits including road tax, fitness certificate pollution certificate for trucks were removed.

Inclusive Growth

The Growth Rate was 4% in 1950s, 6% in 1980s and reached an average of 7.4% in 2016. The inflation for the period 2014-19 stood at 4.5%. Around 271 million people were brought out of poverty in 2006-16.

The Budget was presented on three themes.

Themes of the budget

The themes were

  • Aspirational India-Better standards for all sections of the society in terms of Health, Education and better jobs
  • Economic Development-Entails reforms across the economy by creating more space for the private sector
  • Caring Society.

Under Aspiration India the budget covered

  • Agriculture, Irrigation, Rural Development
  • Education
  • Water and Sanitation

Under Economic Development, the manufacturing sector, industries and skill development were focused. Under the Caring Society section, tourism, connectivity, vulnerable and old population were focused.