ECONOMIC SURVEY
Here are the highlights of the report:
GROWTH
* 2017/18 GDP growth seen between 6.75 and 7.5 percent year on year
* GDP growth rate at constant market prices for the current year 2016/17 is placed at 7.1 percent
* The federal statistics office’s estimate of 7.1 percent growth for 2016/17 likely to be revised downwards
* Service sector is estimated to grow at 8.9 percent in 2016/17
* Industrial growth rate expected to moderate to 5.2 percent in 2016/17 from 7.4 percent in 2015/16
* The agriculture sector is estimated to grow at 4.1 percent in 2016/17 as opposed to 1.2 percent in 2015/16
FISCAL DEFICIT
* Implementation of wage hike, muted tax receipts to put pressure on fiscal deficit in 2017/18
* Need for fiscal prudence for both centre and states for fiscal health of the economy
* Fiscal windfall from low oil prices to disappear in 2017/18 – TV channels
INFLATION
* The average consumer price index (CPI) inflation rate declined to 4.9 percent in 2015/16 from 5.9 percent in 2014/15
* CPI-based core inflation has remained sticky in the current fiscal year averaging around 5 percent
* Oil prices, seen rising by one-sixth in 2017/18 over 2016/17 prices, could dampen India’s economic growth
DEMONETISATION
* Remonetisation will ensure that the cash squeeze is eliminated by April 2017
* Supply of currency should follow actual demand and not be dictated by official estimate of desirable demand
* Government windfall arising from unreturned notes should be deployed towards capital spending
MONETARY POLICY
* Sharp rise in prices in 2017/18 may cap monetary easing headroom – ET NOW on Twitter
* Market interest rates seen lower in 2017/18 due to demonetisation – ET NOW on Twitter
GOVERNMENT DEBT
* Government debt to GDP ratio in 2016 seen at 68.5 percent down from 69.1 percent in 2015
BANKING
* Suggests setting up public sector asset rehabilitation agency to take charge of large bad loans in banks
* Central agency with government backing could overcome coordination and political issues on bad loans
Black money/NPA: No cash transactions above Rs 3 lakh; Govt to seize assets of defaulters fleeing country
TAXATION
* Income tax rates and real estate stamp duties could be reduced
* Timetable for reducing corporate tax rate could be accelerated
UNIVERSAL BASIC INCOME
* Universal Basic Income (UBI) proposal a powerful idea, but not ready for implementation
* UBI an alternative to plethora of state subsidies for poverty alleviation; UBI would cost between 4 and 5 percent of GDP.
Major part of our economy belongs to middle class so we should keep a checklist what will be cheaper for the common man and what will be costlier, lets have a look on checklist.
WHAT GOES UP
Excise duty on un-manufactured tobacco raised to 8.3 per cent from 4.2 per cent.
Excise duty on pan masala (gutkha) hiked to 9 per cent from 6 per cent.
Excise duty on cigar, cheroots hiked to 12.5 per cent or Rs 4006 per thousand, whichever is higher, from 12.5 per cent or Rs 3,755 per thousand.
Parts used for manufacturing LED lights will attract basic Customs Duty of 5 per cent and CVD of 6 per cent.
Customs Duty on printed circuit board for manufacture of mobile phones hiked to 2 per cent. Such electronic items were tax free previously.
Excise duty on non-filter cigarettes of length not exceeding 65 mm raised to Rs 311 per thousand from Rs 215 per thousand.
Duty on aluminium ores and concentrates raised to 30 per cent from nil presently.
Cigarettes, pan masala, cigar, cheroots, bidis, chewing tobacco
Cashew nuts (roasted and salted)
Polymer coated MS tapes used in manufacturing of optical fibres
Silver coins and medallions
Printed circuit board used in making mobile phones
WHAT COMES DOWN
Solar tempered glass used for manufacturing of solar cells/panels exempted from Customs Duty.
Customs duty on Liquefied Natural Gas (LNG) to be reduced from 5 per cent to 2.5 per cent.
Duty exempted on various Point-of-sale (POS) machines and iris readers to encourage digital payments.
Booking railway tickets online
RO membrane elements for household usage
Solar tempered glass used in solar panels
Fuel cell-based power generating systems
Wind operated energy generator
Vegetable tanning extracts used in making leather products
Group insurance for Defence services
RAILWAYS HIGHLIGHTS BUDGET-2017
The Rail Budget was merged with it after 92 years. The Budget proposed to withdraw service tax on the purchase of e-tickets booked through IRCTC making railway travel cheaper.
It is announced that by 2019, all coaches of Indian Railways would be fitted with bio-toilets taking a step further towards making the railways clean and more environment-friendly.
A new metro rail policy will be announced, this will open up new jobs for our youth.
Rail Safety Fund with a corpus of Rs 1,00,000 crore to be created over a period of 5 years.
Steps will be taken to launch dedicated trains for pilgrimage and tourism.
At least 25 stations expected to be awarded during 2017-18.
500 stations to be made differently-abled-friendly by providing lifts and escalators, Bio-toilets in all coaches by 2019.
Railways will integrate end-to-end transport solutions for selected commodities through partnership.
Railway related state-run companies like IRCON and IRCTC will be listed on stock exchanges.
Unmanned-crossing will be eliminated by 2020.
Railways gets an allocation of Rs 1.31 lakh crore including Rs 55,000 crore provided from the government fund.
3,500-km-long railway lines will be commissioned in 2017-18.
No more service charge for IRCTC bookings; new metro rail policy on the cards; Railways to implement end-to-end connectivity for some commodities with the help of logistics firms.
BUDGET HIGHLIGHTS IN VARIOUS SECTORS
What is special about Budget 2017?
Every year as Budget nears, speculation surrounding the budget also abound. Will the taxes be raised or lowered? Will any new government saving scheme be announced? Lets See what is in the bucket.
Budget 2017-18 contains 3 major reforms:
Advancement of date of presentation.
Merger of railway budget with general budget
Abolition of Plan and Non- Plan expenditure.
FARMERS
Farmer credit fixed at record level of Rs. 10 trillion (10 lakh crore) will ensure adequate flow to underserved areas.
Soil Health Cards: Gov to set up mini-labs in Krishi vigyan Kendra.
Long term Irrigation fund in Nabard – corpus at Rs. 40,000 crore.
Model law on contract farming to be circulated
Dairy processing infra fund with corpus of Rs. 8,000 crore.
Dedicated micro-irrigation fund with Rs. 5,000 crore corpus.
Insurance of soil cards has gained momentum.
A model law on contract farming will be prepared and shared with the States.
RURAL POPULATION
Mission Antyodaya to bring 1 crore households of poverty by 2019.
MGNREGA : 48,000 crore has been allocated, participation of women now at 55%, using space technology.
Pradhan Mantri Gram Sadak Yojana: Rs. 19,000 crore allocated, along with states, Rs. 27,000 crore will be spent in FY 18.
100% village electrification by May 2018.
Rural livelihood mission: Rs. 4,500 crore allocated.
Mason training to be provided for 5 lakh people.
Panchayat Raj: Human resource reform programme to be launched.
1,87,223 crore allocated for rural programmes.
Swachh Bharat mission had made tremendous progress, sanitation coverage has gone up from 42% in Oct 13 to 60% now.
FOR YOUTH
Education: System of measuring annual learning outcomes, emphasis on science.
Innovation fund for secondary education.
Reforms in UGC: colleges to be identified based on ranking and given more autonomy.
Propose to leverage Information technology with launch of SWAYAM platform for virtual learning.
National testing agency to be established for all entrance exams, freeing up CBSE, AICTE and other bodies.
100 Indian International skill centres to be established with courses in foreign languages.
4,000 crore allocated to launch skill acquisition and knowledge awareness.
Special scheme for creating employment in leather/footwear sector.
Tourism: Five Special zones to be set up.
Focus will be on 3,479 educationally-backward blocks.
Colleges will be identified based on accreditation.
POOR AND UNPRIVILEGED HEALTH CARE
Women : Mahila Shakti Kendras with Rs. 500 crore corpus.
Stepped up allocation to Rs. 1.84 trillion for various schemes for women and children.
Affordable housing to be given infrastructure status.
Action Plan to eliminate leprosy by 2018, TB by 2025, reduce IMR to 29 in 2019.
To create additional PG medical seats per annum.
Two new AIIMS in Jharkhand and Gujarat.
New rules to be introduced for medical devices.
Labour rights: Legislative reforms to simplify and amalgamate existing labour laws.
Allocation to SCs increased to Rs. 52, 393 crore, STs given Rs. 31,920 crore, minority affairs allocated 4, 195 crore.
Senior Citizens: Aadhaar-based smart cards with health details to be provided.
Health sub centres, numbering 1.5 lakh, will be transformed into health wellness centres.
Under a nationwide scheme for pregnant women, Rs.6000 will be transferred to each person.
Will undertake structural transformation of the regulator framework for medical education.
INFRASTRUCTURE
Total Allocation for Infrastructure: 3.96 crore.
Road Sector: Allocation for national highways at Rs. 64,000 crore.
Airport Authority of India Act to be amended to enable monetization of land resources.
Transport Sector: Total allocation is Rs. 2 trillion.
Telecom Sector: Allocation to Bharat Net Programme is Rs. 10,000 crore.
Digi –gau initiative: To make India Global Hub for electronics manufacture.
Export Infra: New restructured central scheme to be launched.
ENERGY SECTOR
A strategic policy for crude reserves will be set up.
1,26,000 crore received as energy production based investments.
Trade infra export scheme will be launched 2017-18.
FINANCIAL SECTOR
Foreign Investment Promotion Board (FIPB) to be abolished.
Commodities Market: Panel to study legal framework for spot and derivatives market.
Resolution mechanism for financial firms.
Cyber- security: Computer emergency response team to be set up.
Listing of PSEs will foster public accountability, revised mechanism for time- bound listing.
To create integrated public sector for Oil Industries.
New ETF to be launched.
Pradhan Mantri Mudra Yojana: Lending target is Rs.2.44 lakh crore for 2017-18.
Stand up India Scheme: Over 16,000 new enterprises have been set up.
Shares of Railway PSE like IRCTC will be listed on stock exchanges,
FDI policy reforms – more than 90% of FDI inflows are now automated.
Digital India- BHIM App will unleash mobile phone revolution. The government will introduce two schemes to promote BHIM App- referral bonus for the users and cash back for the traders.
DBT to LPG consumers, Chanfigarh is kerosene-free, 84 government schemes are on the DBT platform.
Head post office as the central office for rendering passport service.
Easy Online booking system for Army and other Defence Personnel.
For big time offences- including economic offenders fleeing India, the government will introduce legislative change or introduce law to confiscate the assets of these people within country.
DIGITAL ECONOMY
India at cusp of massive digital revolution.
Govt to launch two new schemes to promote BHIM app, including cashback scheme for merchants
Aadhaar Pay to be launched for people who don’t have mobile phones
Focus on rural and semi-urban areas
To strengthen financial inclusion fund
Panel on digital payments has recommended structural reforms
To create payment regulatory board at RBI
PUBLIC SERVICES
To use head post-office for passport services.
Defence: centralized defence travel system developed
Defence: Centralized pension distribution system to be established
Govt recruitment: To introduce two-tier exam system
Govt looks to introduce laws to confiscate assets of economic defaulters
High-level panel chaired by PM to commemorate Mahatma Gandhi’s 150th birth anniversary
FISCAL MANAGEMENT
Total budget expenditure: Rs21 trillion
Rs3,000 crore to implement various budget announcements
Defence expenditure excluding pensions: Rs2.74 trillion
Consolidated outcome budget for all ministries being created
Fiscal deficit for FY18 pegged at 3.2% of GDP
Revenue deficit for FY18 at 1.9%
TAX ADMINISTRATION
Direct tax collection not commensurate with income/expenditure pattern of India.
We are largely a tax non-compliant society; predominance of cash in society enables tax evasion
After demonetization, data received will increase tax net
Black money: No cash transactions above Rs3 lakh
Transparency in political funding: Parties continue to receive anonymous donations; propose system of cleaning up
Political funding: Maximum amount of cash donation that can be received is Rs2,000; political parties can receive donations by cheques or digitally; amendment proposed to RBI Act to issue electoral bonds; every party has to file returns within specified time
Personal income tax: Rate reduced to 5% for income bracket of Rs2.5-5 lakh; All other categories to get uniform benefit of Rs12,500 per person; to levy surcharge on income bracket Rs50 lakh-Rs1 crore
Personal income tax: To have simple one-page form for taxable income up to Rs5 lakh
GST: preparedness of IT system on schedule
Not many changes to excise duties since GST will be implemented soon
FPI category 1 and 2 investors exempted from indirect transfer provisions
Time period of revising tax returns reduced to 12 months
Real estate: to make changes in capital gains tax
Concessional withholding rate will be extended to 30 June 2020, rupee-denominated masala bonds to be included
MAT not to be abolished at present; to allow carry-forward for 15 years
Corporate tax rate: MSMEs’ rate (annual turnover less than Rs50crore) reduced to 25%
LNG: Reduce customs duty to 2.5%
Limit of cash donation for charitable trusts cut to Rs2,000.
TRANSPARENCY IN ELECTORAL FUNDING
Need to cleanse the system of political funding in India
Maximum amount of cash donation, a political party can receive, will be ` 2000/- from one person.
Political parties will be entitled to receive donations by cheque or digital mode from their donors.
Amendment to the Reserve Bank of India Act to enable the issuance of electoral bonds in accordance with a scheme that the Government of India would frame in this regard.
Every political party would have to file its return within the time prescribed in accordance with the provision of the Income-tax Act
Existing exemption to the political parties from payment of income-tax would be available only subject to the fulfilment of these conditions
DEFENCE SECTOR
Defence sector gets an allocation of Rs. 2,74,114 crore excluding pensions
The launch of a central defence travel system for soldiers and an online pension distribution system for defence pensioners.
The defence budget for last year was ₹2,49,000 crore, an 11% increase compared to 2015-2016 budget.
PERSONAL INCOME TAX
Existing rate of tax for individuals between Rs. 2.5- Rs. 5 lakh is reduced to 5% from 10%.
All other categories of tax payers in subsequent brackets will get a benefir of Rs. 12,500.
Simple one page return for people with an annual income of Rs. 5 lakh other than business income.
People filing I-T returns for the first time will not come under any government scrutiny.
10% surcharge on individual income above Rs. 50 lakh and up to Rs 1 crore tomake up for Rs. 15,000 crore loss due to cut in personal I –T rate.
15 surcharge on individual income above Rs. 1 crore to remain.
PRUDENT FISCAL MANAGEMENT
Stepped up allocation for Capital expenditure by 25.4% over the previous year
Total resources being transferred to the States and the Union Territories with Legislatures is Rs. 4.11 lakh crores, against Rs. 3.60 lakh crores in BE 2016-17
For the first time, a consolidated Outcome Budget, covering all Ministries and Departments, is being laid along with the other Budget documents
FRBM Committee has recommended 3% fiscal deficit for the next three years, keeping in mind the sustainable debt target and need for public investment, fiscal deficit for 2017-18 is targeted at 3.2% of GDP and Government remains committed to achieve 3% in the following year
Net market borrowing of Government restricted to Rs. 3.48 lakh crores after buyback in 2017-18, much lower than Rs. 4.25 lakh crores of the previous year Revenue Deficit of 2.3% in BE 2016-17 stands reduced to 2.1% in the Revised Estimates. The Revenue Deficit for next year is pegged at 1.9% , against 2% mandated by the FRBM Act
PROMOTING AFFORDABLE HOUSING AND REAL ESTATE SECTOR
Deposits of more than 80 lakh were made in 1.48 lakh accounts with average deposit size of Rs. 3.31 crores.
Under the scheme for profit-linked income tax deduction for promotion of affordable housing, carpet area instead of built up area of 30 and 60 Sq.mtr. will be counted.
The 30 Sq.mtr. limit will apply only in case of municipal limits of 4 metropolitan cities while for the rest of the country including in the peripheral areas of metros, limit of 60 Sq.mtr. will apply.
For builders for whom constructed buildings are stock-in-trade, tax on notional rental income will only apply after one year of the end of the year in which completion certificate is received
Reduction in the holding period for computing long term capital gains from transfer of immovable property from 3 years to 2 years. Also, the base year for indexation is proposed to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property
For Joint Development Agreement signed for development of property, the liability to pay capital gain tax will arise in the year the project is completed
Exemption from capital gain tax for persons holding land on 2.6.2014, the date on which the State of Andhra Pradesh was reorganised, and whose land is being pooled for creation of capital city of Andhra Pradesh under the Government scheme
STARTUPS
The policy on tax concessions for start-ups and the firms incorporated after 31 March 2016 could now avail of a three-year tax holiday in the first seven years of their existence.
The rebate could earlier be availed in the first five years.
The profit-linked deduction available to start-ups for three years out of five years is now being changed to three years out of seven years.
Further, for medium and small enterprises with an annual turnover of up to Rs50 crore, the budget announced a five percentage point rebate on corporate tax to 25% from the earlier 30%.
Stakeholders had requested either removal of the incorporation date criterion or increase in the concession period. Most start-ups are not able to achieve profitability in the first few years of existence.
To avail the concession, start-ups (that meet the government’s definition of a start-up) have to present their application to the DIPP, which will then be reviewed by a three-member inter-ministerial panel comprising a joint secretary from DIPP and representatives from the Department of Biotechnology and Department of Science and Technology.
The panel meets once a month to decide on applications based on how innovative a start-up is.
Only eight start-ups were allowed to avail the tax rebate in 2016 out of 111 applications received, according to data on the Startup India website.
~Article by Ruchi
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