STUDENT, AMITY LAW SCHOOL, NOIDA
Finance Minister Arun Jaitley delivered this governments fifth and final full Budget amid subdued economic growth, challenging fiscal growth and farm distress. What makes it all the more important is the upcoming elections in eight states this year and the General Elections next year, all of which puts tough demands on it. The following highlights will demonstrate how the FM has managed to balance populist demands, the need for economic growth and PM Modi’s focus on fiscal discipline and reforms:
Fiscal deficit is 3.5% of GDP at Rs 5.95 lakh crores in 2017-18. Projecting FD to be 3.3% of the GDP in the next fiscal year. Rs 21.57 lakh crores transferred as net GST to states against a projection of Rs.21.47 lakh crores.
85.51 lakh new tax payers filed income tax returns in FY'17. There were no income tax changes proposed in budget. Surcharge of 10% on income above Rs 50 lakh but less than Rs 1 cr to be continued next year; 15% on income above Rs 1 cr to also continue. 100% tax deduction to cooperative societies. Corporate Tax of 25% to companies with turnover up to Rs.250 cr in FY 2016-17. Incentives for senior citizens like exemptions in medical insurance returns and FDs in banks and post offices. Standard deduction of Rs 40,000 allowed for transport, medical reimbursement for salaried tax payers. The govt. to reduce hardships faced in realty deals.
Custom Duty on certain products such as mobile phones, televisions has been increased to provide a boost to ‘Make in India’. Social welfare surcharge of 10% on imported goods. The Central Board of Excise and Customs renamed as Central Board of Indirect Taxes and Customs. Customs duty on crude edible vegetable oils hiked from 12.5% to 30% and on refined edible vegetable oil from 20% to 35%. Customs Duty on sunglasses, cigarette lighter, toys, bus and truck tyres, selective furniture has also been increased. Import duty on LCD/LED/OLED panels, TV parts have been hiked to 15%; duty on smart watches, wearable devices, footwear doubled to 20%
The government’s emphasis will be on generating higher incomes for farmers, by helping them produce more with lesser cost. Jaitley stressed on the fact that India’s agricultural production is at a record level today. 275 million tone food grains and 300 million tone fruits and vegetable have been produced in the country. The Center will make sure the farmers get fair price and market connectivity will be strengthened by setting up agricultural market and infra fun of Rs 2000 crore. Operation Green which will promote agricultural products has been allocated Rs 500 cr. Funds allocated for aquaculture, fisheries and animal husbandry. Special scheme to deal with crop reduction in Haryana, Punjab and Delhi due to pollution and increase in agricultural credit.
Aadhar scheme may be extended to corporate. National Insurance Co., Oriental Insurance Co, and United Assurance Co to be merged into a single entity and listed. The government also revised to disinvestment target to Rs. 1 lakh cr for FY 18.
Allocation to Digital India Scheme doubled to Rs 3073 cr. 5 lakh WiFi HotSpots to provide Broadband access to 5 crore rural citizens, at the cost of Rs 10,000 cr. The govt will also take measures to stop the use of cryptocurrency circulation as it is not legal tender and explore the usage of Block chain technology.
Govt to take measures to strengthen environment for venture capitalists and angel investor. SEBI to consider mandating large corporations to meet 1/4th of their debt needs and 25% debt from bond markets. RBI norms to encourage companies to access bond markets for funds.
Rs. 3794 cr allotted to the MSME sector in the form of capital support and interest subsidy by 2022. Every block with more than 50% ST population will have Ekalvya schools at par with Navodaya Vidyalayas. Rs 4.6 lakh cr sanctioned under MUDRA scheme.
Petroleum/ Diesel Sector
Excise on unbranded diesel cut by Rs 2 to 6.33/litre and on unbranded petrol cut by 2 rupees as well to 4.48/litre
India needs an investment of Rs 50 lakh crore in this sector. Construction of a new tunnel in Sera Pass to promote tourism. 10 prominent tourists sites will be made iconic tourist destinations with an amalgamation of private funding, marketing and branding. The Govt to work on the “Bharatmala Project” and introduce pay-as-you-use system for toll payments.
Health and Education
Aayushman Bharat programme will be launched and Rs 1200 crore allocated to this scheme for setting up facilities. The world’s largest govt funded healthcare programme to be developed whereby benefits towards hospital care to families. Financial support to tuberculosis patients and setting up at least one medical college for every three parliamentary constituencies with upto 24 new govt medical colleges envisioned. For education sector, the govt to increase digital intensity in education. Technology shall be the biggest driver in improving quality of education.
The 3 main engines which fuel the Indian economy – exports, private investment and agriculture have been under severe distress. Exports are barely growing at 12% monthly and private investment announcements have halved since 2014-15 to around 8 lakh crore. In case of agriculture, it has been suffering due to the inability of the farmers to get a good remunerative price for their produce. Given that these three engines of the economy were not firing, the FM had limited options. In its singular focus on the vote bank. The govt has taken its eyes off pressing needs like export growth, job creation and reviving private sector investments. The FM had to ensure that the limited resources at his disposal were channeled in a focused manner to create every possible economic activity to revive the engines of the economy. That he managed to do so by focusing his resources towards infrastructural development, agriculture, social and healthcare sector was a very judicious use of his resources. PM Modi has truly handed a bagful of gifts to India.