Finance Minister Arun Jaitley’s maiden Budget for a Modified India has all the hallmarks of a consummate lawyer – touching upon all relevant matters without committing to any – along with that of a small trader, budgeting little amounts across many things to impress.
Tax payers could save on their salaries and consumer goods like TVs, soap, footwear, processed food and computers will cost less as the Rs.18-lakh crore ($300-billion) maiden budget of Prime Minister Narendra Modi’s government promised to arrest price rise, boost investor mood, cut expenditure and restore India’s growth to 7-8 percent in three years.
During the 128-minute speech in the Lok Sabha, Finance Minister Arun Jaitley took a five-minute break allowed by Speaker Sumitra Mahajan after his request due to some discomfort. He went on to unveil a host of proposals, both welfare schemes and reformist policy measures, were unveiled aimed at a wide range of stakeholders — from the girl child to senior citizens; overseas investors to the defence forces.
At the same time, he accepted as a challenge — given the state of the flagging economy and rising prices — the task to cut fiscal deficit, which indicates the extent to which the government overspends, to 4.1 percent of GDP for this fiscal, and further to 3.6 percent and 3 percent over the next two years.
As high expectations ran high from the first budget of the Modi government, after voted to power with a landslide victory on promises of “happy days” for India’s 1.2 billion people, Jaitley also made it clear that putting the Indian economy back on rails remained a daunting task needing more than one dose of corrective action.
“The steps that I will announce in this budget are only the beginning of a journey towards a sustained growth of 7-8 percent or above within the next 3-4 years along with macro-economic stabilisation,” the finance minister said.
“Therefore, it would not be wise to expect everything that can be done or must be done to be in the first budget presented within 45 days of the formation of this government,” he added, setting the agenda for his speech.
“We are going in the right direction to overcome challenges faced in the last decade,” echoed Modi while congratulating Jaitley for the budget in which he provided a “new ray of hope for the poor and downtrodden sections of society.”
It was also in line with the “government’s vision to create a skilled and digital India,” the prime minister said.
One of the most appealing proposals for the average tax payer was the hike in the exemption limit for individuals below 60 years to Rs.250,000, and Rs.300,000 for senior citizens. Deductions under various heads such as investments in insurance, pension and house rent were also proposed to be raised by Rs.50,000 to Rs.150,000. Interest on housing loans will also get a higher exemption. This apart, the duty-free baggage allowance for Indians returning from abroad is also sought to be raised to Rs.45,000 from Rs.35,000.
Farmers will also stand to gain largely with Jaitley’s proposal for an integrated national market for agro-produce that will enable them to sell their crops directly to consumers and earn better prices. The subsidies to them, notably for soil nutrients, have been enhanced.
For industry, he assured that the pan-India goods and services tax will be introduced by the year-end and a fresh view taken on the direct tax code. Retrospective tax, which creates liabilities not planned for and has been a matter of much concern for both domestic and overseas investors, will not be imposed at random. Customs duties and excise rates were also rationalised for a host of sectors.
He also sought to remove the perception of policy inaction and a freeze on economic reforms by hiking foreign equity in insurance and defence equipment to 49 percent from 26 percent, but left for later the much-promised overhaul of the subsidy regime after constituting an expenditure management commission and getting its recommendations.
In his speech, Jaitley also touched upon areas which few finance ministers in the past have done. Such proposals included new schemes for conservation of sacred rivers, a sports university in Manipur, welfare fund for migrants from Kashmir, conservation of the Himalayas, support for organic farming and a 24X7 channel for northeast and protecting the heritage of the Andaman and Nicobar islands.
He also promised at least four institutions modeled on the premier All India Institute for Medical Sciences and Indian Institutes of Management, and said the union government will look positively at every similar proposal forwarded by states.
For the defence forces, he said the allocation was being raised by about 12 percent to Rs.229,000 crore (nearly $40 billion), besides Rs.5,000 crore ($830 million) for the modernisation of the 1.2 million-strong armed forces.
Other proposals, with enhanced monetary allocations, covered areas like education, urban renewal, transportation, malnutrition, minorities, infrastructure, food security, capital markets, banking, insurance, state-run enterprises, tourism, war and police memorials, interlinking of rivers, space, sports and bio-tech.
As Jaitley was unveiling his proposals, the stock markets swung both ways with a key index gaining more than 300 points at one point, then falling by some 250 points, before closing with an overall loss of around 70 points or 0.25 percent.
Industry, nevertheless, welcomed the proposals and said it laid down the requisite ground for a medium-term course correction to revive the Indian economy.
The Confederation of Indian Industry (CII) complimented the finance minister “on a pragmatic and extensive Budget that lays out a medium term vision for the economy and meets industry expectations on growth and employment creation.”
The Federation of Indian Chambers of Commerce and Industry (FICCI) also reacted in a similar vein and said the budget laid the ground for rejuvenating the economy. “There has been a mix of both short-term and long-term measures, geared towards boosting the confidence of all key constituents.”
* IT exemption limit for those below 60 raised from Rs.2 lakh to Rs.2.5 lakh; from Rs.2.5 lakh to Rs.3 lakh for senior citizens
* Investment limit under Section 80C of the Income Tax Act raised to Rs.1.5 lakh.
* Deduction limit on account of interest on loan in respect of self-occupied house property raised from Rs.1.5 lakh to Rs.2 lakh.
* No change in surcharge for corporates; education cess to continue
* Excise duty on cigarettes raised from 11 percent to 72 percent
* Allocation of Rs.150 crore to improve safety of women in larger cities
* Allocation of Rs.100 crore for “Beti bachao, beti padhao” (Protect the girl child, educate the girl child) programme
* Allocation of Rs.500 to support Kashmiri Immigrants for rebuilding their lives
* Total sanitation in every household by 2019
* Colour TVs to cost less on reduced customs duties
* Free baggage allowance raised from Rs.35,000 to Rs.45,000
* Excise duty on footwear halved
* Total expenditure in 2014-15 estimated at Rs.17,97,892 crore; plan expenditure estimated at Rs.12,19,892 crore
* Budget will lay down steps aimed at 7-8 percent growth in next few years; aim is “Sub ke saath, sub ka vikas” (With everyone, For everyone’s development)
* Government committed to achieve fiscal deficit of 4.1 percent in 2014-15, 3 percent by 2015-16 and 2 percent by 2016-17
* Defence allocated Rs.229,000 crore; modernisation gets Rs.5,000 crore over and above interim budget
* FDI in defence sector raised to 49 percent from 26 percent
* Allocation of Rs.1,000 crore for implementing One Rank One Pension scheme
* War Memorial and War Museum to be established at Princess Park in New Delhi; Rs.1,000 crore allocated
* Allocation of Rs.50 crore for National Police Memorial
* Allocation of Rs.2.037 crore for creating integrated Ganga conservation mission
* Jal Marg Vikas programme to be launched to promote navigation on Ganga from Allahabad to Haldia
* Ghat development at Kedarnath, Haridwar, Kanpur, Varanasi, Allahabad, Patna and Delhi gets Rs.100 crore
* Hastkala Academy to be set up with allocation of Rs.30 crore
* Six more textile clusters to be set up with allocation of Rs.200 crore
Allocation of Rs.200 crore for power reforms and Rs.500 crore for water reforms to make Delhi a truly world-class city
* E-visas to be introduced at nine airports
* Five new tourist circuits to be established; Rs.500 crore to be allocated for this
* World class convention centre to come up in Goa
* National sports academies to be set up for disciplines like shooting, wrestling and boxing; Jammu and Kashmir gets Rs.200 crore to upgrade sports facilities; Sports university to come up in Manipur
* Negative list for service tax reduced
* Thirteen more airports to get 24×7 customs facilities
* Excise duty to be cut to revive manufacturing
* Revenue loss of Rs.22,000 crore due to direct tax proposals
* Government committed to implement GST at the earliest; issues raised by states to be resolved
* Gas pipeline grid of 15,000 km needs to be doubled
* Six debt recovery tribunals to be set up
* Bharat Depository Receipt to be created
* Uniform KYC norms to be introduced across entire financial sector
* Steps to revive SEZs
* Sixteen new port projects to be taken up this fiscal
* Development of industrial corridors with emphasis on smart cities linked to transport connectivity
* Skill India to be launched to train the youth with emphasis on employability and entrepreneur skills
* Target of constructing 8,500 km of national highways in current fiscal
* Second Green Revolution to be launched with focus on protein revolution
* Sustainable growth of 4 percent in agriculture to be achieved
* Price Stabilisation Fund of Rs.500 Crore for mitigating risk of price volatility in agricultural produce
* Corpus of Rs.5,000 crore for long-term loans to farmers
* Kisan TV to be launched to disseminate information in real time
* Allocation of Rs.14,389 crore for rural roads
* Allocation of Rs.500 crore to provide 24×7 power in rural areas
* Allocation of Rs.8,000 crore to improve rural housing
* Allocation of Rs.100 crore for soil testing facilities
* Allocation of Rs.50 crore for breeding of indigenous cattle
* Allocation of Rs.500 crore to improve broadband connectivity in rural areas
* New scheme to provide assured irrigation
* Export promotion mission to be established to bring all stakeholders under one umbrella
* FDI limit in insurance sector raised to 49 percent
* Allocation of Rs.500 crore for 5 more IITs and 5 more IIMs
* All states to get AIIMS like institutions
* Allocation of Rs.100 crore to promote good governance
* Allocation of Rs.3,600 crore for drinking water schemes
* Allocation of Rs.4,000 crore for National Housing Bank
* To print currency notes with Braille signs
* Shares of PSU banks to be sold to retail investors
* CBDT to scrutinize all cases under 2012 law on retrospective tax cases
* Problem of black money to be fully addressed
* Expenditure Management Commission to be established this fiscal (IANS)