Source: LiveMint.com, Feb 02, 2017
Finance minister Arun Jaitley presented the Union Budget 2017 in Parliament on Wednesday. Here are the key highlights of his budget speech:
Jaitley divided his budget proposal into 10 distinct themes: Farmers; rural population; energizing youth; poor and underprivileged; infrastructure; financial sector; digital economy; public service; prudent fiscal management; and tax administration.
OPENING REMARKS:
Our government was elected amidst huge expectations; the underlying theme was good governance: Arun Jaitley
Massive war against black money has been launched
Government now seen as a trusted custodian of public money: FM
We will focus on energizing youth to reap benefits of growth
World economy faces considerable uncertainty: FM
Three major challenges for emerging economies: US Federal Reserve’s stance, uncertainty over commodity prices, especially crude prices and signs of increasing retreat from globalization as protectionist fears build up
India stands out as a bright spot
Govt has continued with steady path of fiscal consolidation: FM
We are seen as an engine of global growth: FM
There are two tectonic policy initiatives: GST implementation and demonetization
Demonetization was the continuation of series of measures taken in last two years and was a bold and decisive measure
Demonetization seeks to create a new normal where GDP would be cleaner and bigger
Drop in economic activity due to remonetization is expected to have only a transient effect
Demonetization has strong potential to generate long-term benefits
Demonetization helps to transfer resources from tax evaders to govt
Firmly believe demonetization and GST will have epoch-making impact
Pace of remonetization will soon reach comfortable levels; effect of demonetization not expected to spill over into next year
Surplus liquidity in banking system will raise access to credit, leading to multiplier effect on economic activity: FM
Overall approach in budget to spend more in rural areas
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 Rs10 trillion; will ensure adequate flow to underserved areas
Soil health cards: Govt to set up mini-labs in Krishi Vigyan Kendras
Long-term irrigation fund in Nabard—corpus at Rs40,000 crore
Model law on contract farming to be circulated
Dairy processing infra fund with corpus of Rs8,000 crore
Dedicated micro-irrigation fund with Rs5,000 crore corpus
RURAL POPULATION:
Mission Antyodaya to bring 1 crore households of poverty
MGNREGA: Rs48,000 crore has been allocated; participation of women now at 55%; using space technology in a big way
Prime Minister Gram Sadak Yojana: Rs19,000 crore allocated; along with states, Rs27,000 crore will be spent in FY18
Pradhan Mantri Awas Yojana: Rs23,000 crore allocated
100% village electrification by May 2018
Rural livelihood mission: Rs4,500 crore allocated
Mason training to be provided for 5 lakh people
Panchayat Raj: Human resource reform programme to be launched
Rs1,87,223 crore allocated for rural programmes
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
Rs4,000 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
POOR AND UNPRIVILEGED:
Women: Mahila Shakti Kendras with Rs500 crore corpus
Stepped up allocation to Rs1.84 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 Rs52,393 crore; STs given Rs31,920 crore, minority affairs allocated Rs4,195 crore
Senior citizens: Aadhaar-based smart cards with health details to be provided
INFRASTRUCTURE:
Total capex and development expenditure of railways pegged at Rs1.31 trillion
Railways: Passenger safety—Safety fund corpus set up; unmanned level crossings to be eliminated by 2020
Railway lines of 3,500km to be commissioned
To launch dedicated tourism/pilgrimage trains
500 stations to be made differently-abled friendly
Cleanliness in railways: To introduce Coach Mitra facility; By 2019, biotoilets for all coaches
Railways to offer competitive ticket-booking facility; service charge withdrawn for tickets booked on IRCTC
New metro rail policy to be announced
Roads sector: Allocation for national highways at Rs64,000 crore
Airports Authority of India Act to be amended to enable monetization of land resources
Total allocation to transport sector at Rs2 trillion
Telecom sector: Allocation to Bharat Net programme at Rs10,000 crore
Digi-gau initiative to be launched
To make India global hub for electronics manufacture
Export infra: New restructured central scheme to be launched
Total allocation for infrastructure: Rs3.96 trillion
FINANCIAL SECTOR:
Foreign Investment Promotion Board (FIPB) to be abolished
Commodities market: panel to study legal framework for spot and derivative markets
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 oil major
New ETF to be launched
Pradhan Mantri Mudra Yojana: Lending target at Rs2.44 trillion
Stand-up India scheme: over 16,000 new enterprises have been set up
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.
CLOSING REMARKS:
It is said when my goal is in sight, the winds favour me and I fly. There is no other day more appropriate than this: FM Jaitley.
