Union Finance Minister Arun Jaitley presented the Union Budget 2018-19 in Parliament on 1st February,2018. In this article we bring to you Union Budget 2018 Highlights.
Union Budget 2018 Highlights
This budget, is the last full budget of this NDA government before India goes to polls for the General Elections due to take place in 2019. This is the first budget after big-ticket economic reforms such as the Goods and Services Tax (GST), dynamic fuel pricing, mega PSU bank recapitalisation and more. The Union Budget 2018 also includes the Railway Budget, the latter was presented separately till it was decided to present a joint annual budget in 2017. This budget session kicked off on January 29,2018 , when Chief Economic Adviser Arvind Subramanian tabled the Economic Survey 2017-18 in the Lok Sabha. The survey predicted India’s economy to revive after the slowdown of 2017 and pegged India’s GDP growth rate forecast at 7-7.5 per cent. From 2014-15 to 2017-18, the average GDP growth rate was 7.3 per cent. The survey also found that the tax net widened in the 2017 fiscal with a huge increase in individual taxpayers, rollout of GST and demonetisation.
Fiscal situation and targets
GST revenue will be collected for 11 months and that would impact balance sheets. Rs 21.57 lakh crore transferred in the form of net GST against the predicted Rs 21.47 lakh. Government aims for 2018-19’s fiscal deficit target of 3.3 per cent of GDP. Revised fiscal deficit for 2017-18 was Rs 5.95 lakh crore or 3.5 per cent of GDP.
Agriculture and rural economy
- The government’s emphasis will be on generating higher incomes for farmers, by helping them produce more with lesser cost, and in turn, earn higher income for their produce.
- Arun Jaitley stressed on the fact that India’s agricultural production is at a record high level today. 275 million tonne foodgrains and 300 million tonne fruits and vegetable have been produced in the country.
- The FM said the government wants farmers to earn 1.5 times the production cost, and the Minimum Selling Price (MSP) for the Kharif Crops has been set at 1.5 times the produce price. Arun Jaitley said the Centre will work with states to ensure that all farmer get a fair price.
- Agricultural market and infra fund of Rs 2000 crore fund will be set up to strengthen the market connectivity.
- A sum of Rs 500 cr will be allocated for Operation Green to be launched. It will promote agricultural products.
- Extend the facility of Kisan credit card to fisheries and for animal husbandry .
- Rs 10,000 crore set aside for Fisheries and Aquaculture Development Fund .
- Rs 10,000 crore set aside for animal husbandry infra fund .
- Propose to launch a restructured bamboo mission with a fund of Rs 1200 crore . “Bamboo is green gold,” Arun Jaitley said.
- Agricultural credit target increased from Rs 8.5 lakh crore to Rs 11 lakh core
- Special scheme to manage crop reduce in Haryana, Punjab and Delhi to reduce pollution
- 8 crore poor women will get new LPG connections.
- PM Saubhagya Yojana: 4 crore poor people will get power connection.
- The government will spend Rs 16,000 crore on this scheme.
- Govt plans to construct 2 crore toilets in next fiscal year under Swach Bharat Mission .
- Government target house for all by 2022. 51 lakh houses have been constructed affordable houses in rural and further 50 lakh houses in urban areas.
- 1 cr houses to be built under Pradhan Mantri Awas Yojana in rural areas .
- National livelihood scheme gets Rs 5,750 crore .
- In 2018-19, ministries will be able to spend Rs 14.34 lakh crores for creation of livelihood in rural areas.
- Govt gives Rs 9,975 crore for social security schemes for the next fiscal year.
- The government proposes no change in personal income tax rates for salaried class. Jaitley said in his speech that there has been a 12.6% growth in direct taxes in 2017-18; 18.7% growth in indirect taxes in 2017-18. As many as 85.51 lakh new taxpayers filed their tax returns in 2017-18, as against 66.26 lakhs in 2016-17. The number has increased from 6.47 crore in 2016-17 to 8.27 crore by end of 2017.
- FM proposed liberalisation of presumptive income schemes for small businesses with income below Rs 2 crore, similar schemes for professionals with income below Rs 50 lakh. Rs 90,000 crore additional income tax collection was seen in 2016-17 and 2017-18.
- Corporate tax reduced has been reduced from 30 per cent to 25 per cent for companies with turnover up to Rs 250 crore, move to boost MSME sector. The finance minister has proposed revision in monthly emoluments of President of India at Rs 5 lakh,, Rs 4 lakh for vice president and Rs 3.5 lakh for governors.
- Standard deduction of Rs 40,000 for salaried taxpayers was announced. In terms of capital gains tax, long-term capital gains are proposed to be taxed at 10 per cent on investments over Rs 1 lakh. Short term capital gains tax to remain unchanged at 15 per cent.
- For senior citizens, FM proposed exemption of interest income on bank deposits raised to Rs 50,000 for senior citizens as well as exemption of Rs 10,000 on income from Bank FDs and post offices. The budget proposes 10 per cent tax on distributed income by equity-oriented mutual funds as well as 100 per cent deductions for cooperative societies.
- In the realty sector,Arun Jaitley proposed that were to be made when circle is at or below 5 per cent of sale consideration.
- In terms of revenue loss, Jaitley siad Rs 8,000 crore revenue was lost due to standard deductions for salaried employees. Also, Rs 7,000 crore forgone due to lower corporate tax on firms with turnover not exceeding Rs 250 crore. Rs 19,000 crore was lost last fiscal in terms of revenue from direct taxes.
Health Education and Social Protection
- Comprehensive social security program National social assistance program over Rs 9,000 crore. Education in country to be treated without segmentation from KG till class 12. Aim to move from black board to digital board with push for digital technology and e-education.
- By 2022, every block with over 20,000 tribals and over 50 per cent STs will have a special Eklavya school. As many as 10 crore people to get Rs 5 lakh health coverage for hospitalisation every year. Government aims to move towards universal health coverage. Allocation of Rs 600 crore has been proposed for tuberculosis patients who are undergoing treatment.
- Government proposes establishment of two new Schools of Planning and Infrastructure. To address brain drain issue in country, a new scheme to identify bright students studying B Tech in top engineering schools and allow them opportunity to study and do research in IITs and Indian Institute of Science.
- Selected students to get special fellowships and will be expected to teach in institutes of higher education, particularly in rural areas. Mudra Yojana lending target has been set at Rs 3 lakh crore. Aim to bring 60 crore bank accounts under Jan Dhan Yojana.
- Arun Jaitley proposes an integrated B.Ed programme for teachers for improving quality of teachers and education. A fund for social security and protection of widows and orphaned children is to be set up.
- Allocation of Rs 1 lakh crore has been proposed for revitalising and upgrading education sector. Arun Jaitley pushes for learning based outcomes and research. Government to set up 1.5 lakh centres under Aayushman Bharat programme to provide health facilities with an allocation of Rs 1,200 crore.
- In a major boost to healthcare and medical education, Arun Jaitley pledges to set up at least one medical college for every three parliamentary constituencies. Also, PM Jivan Bima Yojana gave benefits to 5.22 crore families. Under Jan Dhan Yojana, the entire lot of 16 crore accounts will be brought under micro insurance and pension plans.
- Arun Jaitley says 1.26 crore bank accounts opened under the Sukanya Samriddhi Scheme. Allocation of Rs 52 719 crore for social inclusion of scheduled castes is proposed in the budget.
- Total capital expenditure for Indian Railways set at Rs 1,48,528 crore. A special railway university will also be set up in Vadodara, Gujarat. In order to cut travel times and delays, Arun Jaitley proposed cutting 4,267 unmanned railway crossings. In a bid to overhaul the railway stations’ infrastructure, all station that have a footfall of 25,ooo passengers will now have escalators. To provide connectivity on the go, all trains will soon be equipped with CCTVs and WiFi.
- Allocations for Mumbai rail network was pegged at Rs 11,000 crore and for Bengaluru Metro, Rs 17,000 crore was allocated.
- Arun Jaitley said that there is a requirement of Rs 50 lakh crore for the infrastructure sector. He said that construction of a new tunnel at Sera Pass will also work in promoting tourism. A total 10 prominent tourist sites will be upgraded as iconic tourist destinations.
- In the flagship Bharatmala project that aims to connect India’s eastern and western ends with a 35,000 km highway and roads network, an outlay was announced to the tune of Rs 5.35 lakh crore under phase 1. For toll payments on highways, Arun Jaitley said that the government will introduce a new system called “pay as you use”.
- Customs duty on mobile phones, TVs hiked for providing fillip to Make in India initiative. Government also proposes 10 per cent social welfare surcharge on imports.
Budget for employees
- Government pledges contribution of 12 per cent in wages of new employees in all sectors for the upcoming 3 years under EPF scheme. Women contribution to EPF slashed for initial three years to 8 per cent.
- The total outlay for defence in budget 2018 is Rs 2.95 lakh crore, according to PTI, up from Rs 2.74 lakh crore last year. Arun Jaitley expressed his intention to boost manufacturing in defence sector and asserted the need to strike a balance between foreign procurements to meet immediate needs and Make in India initiative for defence sector.
- Arun Jaitley said that during the course of this government, emphasis was given on modernisation and enhancement of operational capabilities of the armed forces. Government will bring a new industry-friendly defence production policy 2018 for giving a boost to domestic production for private sector, public sector as well as MSMEs. Arun Jaitley said that the government will take measures to develop two defence industrial production corridors.
Markets, Finance and insurance
- Government to encourage a strong environment for VCs and angel investors. Meanwhile SEBI would make it mandatory for large corporations to meet a quarter of their debt needs from bond markets.
The disinvestment target for FY2019 has been set for Rs 80,000 crore. The disinvestment targets for the current fiscal have been set at Rs 1 lakh crore. Government would also evolve a scheme that would assign unique IDs for companies. The National Insurance Co, Oriental Insurance Co and United Assurance Co will be merged into one entity which will then be listed. For bank recapitalisation, Jaitley said it many set the path for public banks to lend an extra Rs 5 lakh crore