New Delhi: Finance Minister Arun Jaitley on Monday presented the Narendra Modi government's second full Budget in the Lok Sabha, which the Prime Minister later termed as pro-poor and pro-farmer.
While the focus on the rural and agriculture sector was clear in the Budget, there were also a slew of measures and a handsome allocation of funds for the infrastructure sector.
Besides, the FM also stuck to the proposed roadmap for reigning in the fiscal deficit at 3.5 per cent for the financial year 2016-17, a move that could boost investments with some assistance from the Reserve Bank of India in terms of monetary policy.
Jaitley started off by comparing the current GDP growth rate of 7.6% amid global headwinds to the lower growth rates witnessed during previous years
The important areas he plans to focus on are as follows:
- Heavy investment in national roads and railways along with national waterways.
- Digital literacy and education with higher computerisation of means of education and higher education financing.
- Allocation of money for medicines for senior citizens, 3,000 drugstores to be set up under the Aushadhi Yojana.
- 100 % village electrification of villages by May 1, 2018.
- Gas production from deep seas and high pressure areas along with wider distribution of power and LED bulbs.
- 10 public and private educational organisations to be made world class.
- Initiatives for roads including systems like a public utility arrangement for easier resolution of disputes in infrastructure.
- Allocation of Rs 1,700 crore for development of 1500 skill development centres.
- Doubling the income of farmers by 2022 and dealing with bankruptcy, insurance and ethics in farming and agriculture.
- 28.5 lakh hectares of land will be brought under irrigation under the Pradhan Mantri Krishi Sinchai Yojana
- Allocation of nearly Rs 36,000 crore for the farm sector, while raising the agri-credit target to Rs 9 lakh crore for the next fiscal
- Provision for development of new derivative products by market regulator Securities and Exchange Board of India in the Commodity Derivatives market.
- Rs 38,500 crore has been allocated for MNREGA - the job scheme in order to raise employment opportunities.
- 160 airport strips to be revived
- Direct Benefit Transfer introduced for LPG, to be extended to fertilisers on pilot basis
- Automation facilities in 3 lakh Fair Price Shops by March 2017.
- Closer association between states and districts, state culture, travel and tourism.
- 2017, the 70th anniversary of India's Independence marked as an important year, one that had a western beginning but will have an Indian ending - "Ek Bharat Shreshtha Bharat".
- Aimed at a total expenditure of Rs. 59.78 lakh crore, a planned increase of 5%. Distinction between plan/non-plan expenditure to be done away with from 2017-18.
- Focus on health, women, SC/STs and minorities.
- Revenue deficit aimed at 2.5% of GDP in RE 2015-16
- Fiscal expansion-contraction should be aligned with credit contraction.
- Rs 100 crore to be allocated for Deen Dayal Upadhyay and Guru Gobind Singh's date of birth anniversaries.
- New tax scheme to dig out domestic black money proposed to counter tax evasion and avoidance
- Revenue generation targeted at Rs 98,000 crore.
Recognising the role of the tax payer in social well being, FM Jaitley had several tax proposals providing relief to small tax payers:
1. Resource generation
2. Help Make In India
3. Improvement in the housing sector
4. Better Litigation.
5. Simplification and rationalisation of the tax system.
6. Improvement of technology for the tax system.
7. Limit of exemption on account of house rent hiked from Rs.24,000 to Rs.60,000
Two proposed changes in the manufacturing sector:
1. New manufacturing companies set up after March 1, 2016, will have an option of being taxed at 25% plus surcharge and cess, provided they do not avail profit/investment linked deductions and do not claim investment allowance and accelerated depriciation.
2. For small companies, i.e., enterprises with turnover under Rs 5 crore for the year ending March 2015, the government has proposed to lower the corporate income tax rate to 29% plus surcharge and cess
Other investment related measures announced during the Budget:
- Finance minister Arun Jaitley allowed 100% foreign direct investment (FDI) in asset reconstruction companies (ARCs) and allowed foreign portfolio investors (FPI) to invest into security receipts
- The FM also announced 100 per cent FDI in the marketing of processed food products made in India. This could provide a much-needed spur in the sunshine sector which is in need of foreign investment
- There were also a number of measures related to the real estate sector, particularly affordable housing.
This includes 100% deduction for profits to an undertaking from a housing project for flats up to 30 sq. metres in four metro cities and 60 sq. metres in other cities (under certain conditions).
Also, any distribution made out of income of SPV to the REITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax.
Taxation, cess related announcements
- The composition rate of service tax on single premium annuity (insurance) policies is proposed to be reduced from 3.5% to 1.4% of the premium charge
- Renaming the Clean Energy Cess as Clean Environment Cess, the Finance Minister proposed to raise the cess on coal, lignite and peat from the current Rs 200 a tonne to Rs 400 per tonne
- The tax rebate given to individuals with net income up to Rs 5 lakh under section 87A increased from Rs 2000 to Rs 5000.
- Infrastructure cess of 1% to be levied on small petrol cars and LPG, CNG cars.
- Excise duty of 12.5% with input tax credit imposed on articles of jewellery.
- For branded garments costing Rs.1,000 and above, excise duty has been raised from nil to 2% for manufacturers with input tax credit and from 6% to 12.5% for manufacturers without input tax credit.
- Excise duty on tobacco products to go up by 10-15%
- Krishi Kalyan Cess at 0.5% introduced on all taxable services w.e.f. June 1, 2016.
Jaitley ended with his speech with these stirring words: "Champions are made from something
they have deep inside of them- a desire, a dream, a vision"