Union Budget 2017: Key highlights and themes

images.jpgSource: 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.
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: