In a move to fulfil Prime Minister Narendra Modi’s long-cherished dream of ‘Ek Bharat, Shreshtha Bharat’, Finance Minister Arun Jaitley’s Union Budget on Monday offered a fine blueprint with a slew of measures to revitalise the rural economy, build up infrastructure, give relief to banks and simplify taxes. Without giving a ‘jolt’ or ‘excitement’ to either any individual or corporate, the Budget sprang no short-term surprises but a clean roadmap for the year 2016-17, which will certainly help provide jobs to millions in delivering an expected growth for the country.
“The Union Budget is aimed at taking forward economic reforms, increasing spending on infrastructure and taking the country’s economy towards further development. The country’s development is on services, manufacturing and agriculture sector, that was the aim,” Jaitley said while presenting his third Union Budget in Parliament.
Promising a better and greater India, the Finance Minister classified his growth vision in nine different pillars — fiscal discipline, rural economy, social sector, tax reforms, agriculture and farmers’ welfare, healthcare, education, infrastructure and investment, ease of doing business etc.
Terming the Budget as one close to the ‘dreams’ of the people, Prime Minister Modi said its biggest focus was on villages, poor people, farmers, women and youth to ensure a qualitative change in their lives and alleviate poverty through a slew of time-bound
programmes.
“Special attention has been paid to agriculture, village infrastructure, healthcare and employment-generation besides the entrepreneurship aspirations of Dalits and tribals. I want to assure the countrymen that this Budget is close to your dreams. To fulfil your dreams, this Government has presented its commitment along with programmes,” he said.
Jaitley also proposed to significantly relax the Foreign Direct Investment (FDI) policy in several sectors, including insurance, pension and asset reconstruction companies, to attract more overseas investments. “I would like to announce further reforms in our FDI policy. The changes proposed are in the area of insurance, pension, asset reconstruction companies and stock exchanges etc,” he said.
Besides, the FDI policy has to address the requirements of farmers and the food processing industry as a lot of fruits and vegetables grown by farmers either do not fetch the right price or fail to reach the market. “The food processing industry and trade should be more efficient. Hundred per cent FDI will be allowed through the Foreign Investment Promotion Board route in the marketing of food products that are produced and manufactured in India. I hope this will come as an impetus to the Ministry of Food Processing Industries to boost the sector,” he added.
Committing to the fiscal consolidation path for the year 2016-2017, Jaitley announced a deficit target of 3.5 per cent, down from 3.9 per cent in 2015-16. Jaitley also promised that there won’t be compromise on the spending side, announcing an 11 per cent increase to Rs 19.78 lakh crore in 2016-17 from Rs 17.77 lakh crore. Of this, Plan expenditure is up by 15 per cent to Rs 5.5 lakh crore and non-Plan expenditure increased by 9 per cent to Rs 14.28 lakh crore. He also announced a subsidy
scheme for BPl families for cooking gas.
The Budget however, kept the tax slab for individuals unchanged though there was a slight tinkering in Corporate Tax and excise duty of some sectors to help the industry remain competitive and insulated from global headwinds, i.e; steel, aluminum, textiles etc. As a result of tinkering, some luxury items such as laptops, tablets, cars (small, SUV), jewellery (excluding silver), air travel, watching movies, cigarettes and tobacco products (excluding bidi) etc will be costlier, while set-top box, broadband, single premium insurance, DVR, CCTV camera etc will be cheaper.
Jai Kisan BUDGET
As the Indian economy is facing agrarian distress, for Jaitley, the Budget was a tough balancing act between fiscal consolidation and much-needed spending to revive economic growth. To bridge the gap, the Government is revisiting the roadmap, especially in the rural areas, which was documented in the first Budget in 2014 when Modi took charge. Now, the Government is trying to identify areas to improve health of rural income and employment as well.
The roadmap includes rural electrification of all villages by March 2018, road network connecting each village by 2019 and doubling of farmers’ income by 2020, besides maximum irrigation facilities to farmers and digital literacy as well. For digital literacy, the Government has a big plan to launch a scheme as part of the ‘Digital India’ initiative to help learn the rural masses for betterment of their daily lives. “We now plan to launch the digital literacy mission scheme for rural India to cover around 6 crore additional households in the next three years, details of the scheme will be spelt out separately,” he said, adding that the Government has already approved two schemes to promote digital literacy - national digital literacy mission and digital Saksharta Abhiyan.
As far as financial sector reforms are concerned, the Budget has focused reforms on banks, black money and taxation. For bank reforms and bad loan woes, the Government will unveil a roadmap for consolidation of public sector banks (PSBs) which are expected to get an infusion of Rs 25,000 crore. Besides, the Government may consider bringing down its stake in State-owned IDBI Bank to below 50 per cent.
Also, as part of curbing black money in the ponzi schemes, the Government proposed to come out with a comprehensive central legislation to safeguard the public from getting defrauded by illicit deposit taking schemes.
“The Government lowered the Corporate Tax for new manufacturing units to 25 per cent with a view to promote industrial activity and generate jobs. With regard to small units having a turnover of Rs 5 crore, the Corporate Tax rate has been reduced from 30 per cent to 29 per cent, Jaitley said.
On roads and Railways, the total expenditure of 2.21 lakh crore has been put aside. Also, 85 per cent of the 70 stuck road projects have been put back on track. “These projects entailed an investment to the tune of Rs 1 lakh crore involving 8,300 km. For highways sector, an allocation of Rs 55,000 crore has been made while National Highways Authority of India (NHAI) can raise tax free bonds of Rs 15,000 crore,” he said.
As far as the Government’s targets on infrastructure and road sector are concerned, be it rural or urban, they will be well connected by roads. “The total allocation for the road sector has been Rs 97,000 crore including rural roads,” he added.
QUOTES
The biggest focus of this Budget is on villages, poor people, farmers, women and youth to ensure a qualitative change in their lives and alleviate poverty through a slew of time-bound programmes. Special attention has been paid to agriculture, village infrastructure, healthcare and employment generation besides entrepreneurship aspirations of Dalits and tribals. I want to assure the countrymen that this Budget is close to your dreams.
-- Prime Minister Narendra Modi
The budget is aimed at taking forward economic reforms, increasing spending on infrastructure and taking the country’s economy forward towards further development. The country’s development is on services, manufacturing and agriculture sector, that was the aim
--- Finance Minister Arun Jaitley