Demerits of Union Budget 2020

The annual event of the Budget announcement is the most important event in the country’s financial calendar. All the citizens look forward to the schemes, proposals and announcements that the budget brings, along with the taxation brackets and policies. The Union Budget of India, also referred to as the Annual Financial Statement sets the tone for spending in various sectors like health, education, agriculture etc.

In the year 2020, the Budget held even greater importance as the financial ecosystem of the country is in need of a boost. While there were many insights to draw from the Budget overall, there have been plenty of drawbacks and disappointments to go with it as well. Let’s have a look at the places and provisions where the Budget could have served the citizens better.

The revamp of the taxation mechanism

One of the key announcements made by finance minister Nirmala Sitharaman was about the new taxation regime. The revised figures look something like this: a 10% tax on income between Rs 5 and Rs 7.5 lakh, 15% on income between Rs 7.5 lakh to Rs 10 lakh and 20% for those earning between Rs 10 lakh and Rs 12.5 lakh. Those earning between Rs 12.5 lakhs to Rs 15 lakhs will fall under the tax bracket charged at  25%. It was also announced that if you are earning beyond Rs 15 lakh, there are no changes i.e you will continue to pay the tax at the current rate of 30%.

The new tax system is, however, optional. This means that as an individual taxpayer, you can choose whichever taxation system is more befitting – either go for the old regime with exemptions or the new one with revised tax rates for the brackets. The new regime provides no tax exemptions.

For those who engage in tax planning through exemptions and deductions, this could be a major lost opportunity.

Healthcare budget not up to mark

The target of spending on healthcare is 2.5% of GDP. However, the Budget falls short of this target. The Union Budget 2020 allocated Rs 69,000 crore for the sector, of which Rs 6,400 crore are funds labelled for the Ayushman Bharat Yojna. This amount is currently just 1% of the GDP. This has cut down on funds across sub-sectors, including mental healthcare at a time when the country statistics hint at a mental health crisis.

The conspicuous lack of impetus to the agricultural sector

One key element of the Budget announcement that people look forward to is the pay-outs given to different segments of the population under various schemes. The Budget 2020 announcement did not bring any pleasant news as the farm leaders and outfits were hoping for an increase in the pay-outs to farmers under the PM Kisan scheme. The budget allocation for the scheme stayed at Rs 75,000 crore, like the previous year.

The rationale was that with the Budget providing more money to farmers, there would be more rural demand generated. As a result of the rural demand, the consumption would rise and that would also push the GDP up. It could have helped boost the economy and not just the farmer’s condition. So the disappointment of this year’s budget is rooted in the fact that it is the same as the previous year, which means there is not much impetus or room for growth. In fact, instead of encouragement, the fertilizer subsidy has been slashed from Rs 79,996 crores to Rs 70,139 crores. While this move comes in response to the increasing price of fertilizers in the domestic and international market, its repercussions on the Indian farmer and his work are plenty. And they are not positive.

Moreover, while the agriculture budget allocation is higher, the funds to the Food Corporation of India (FCI) which controls the Public Distribution System (PDS) have been slashed. This is bad news for the farmers as well as others who rely on the PDS for their requirements. The lack of funds can press the FCI for resources. The procurement and distribution operations could be curtailed or hampered.

Other allocations that have been curtailed include the Pradhan Mantri Annadata Aay SanraksHan Abhiyan, Monthly Income Scheme, Price Support Scheme, and most importantly the MNREGA. MNREGA plays a crucial role in providing rural income for those involved in agricultural labour.

Budget 2020 leaves many questions around the financial inclusion and financial stability of the farmers. There are also apprehensions about how the small and marginal farmers can avail credit from formal structures like scheduled commercial banks. It remains to be seen how the farmers’ incomes can be doubled in light of these budgetary changes.


Budget 2020 has plenty of hits and misses as discussed above. It remains to be seen how this will impact the various sections of society and how the nation will fulfil the promises of development.