With eye on 2019 polls, FM announces sops for farmers, but targets markets, salaried class
New Delhi: With an eye on the next Lok Sabha elections, Finance Minister Arun Jaitley in his 2018-19 budget Thursday proposed a major health insurance scheme for the poor, a higher minimum support price and a step up of `1 lakh crore as institutional credit for farmers along with a spend of nearly `6 lakh crore on infrastructure development.
To pay for this seeming bout of generosity, albeit with votebanks in mind, the finance minister has mopped up huge sums through three or four simple steps, mostly aimed at the middle class. While providing some sops to salaried individuals and pensioners, it has aimed to raise `11,000 crore by increasing cess on income of individuals, from three to four per cent. Additionally, it has aimed to raise money by imposing a 10 per cent social welfare surcharge on all imported goods.
At the same time, the finance minister has eyed the share-owning and investing class by removing an exemption on long term capital gains to possibly raise over `36,000 crore in a full year — by taxing at 10 per cent shares held for more than a year, exempting only profit of up to `1 lakh. The stock markets reacted sharply initially to the move, later recovering.
The four per cent health and education cess replaces the 2 per cent cess for primary education and 1 per cent cess for secondary and higher education on individuals and corporates to take care of the needs of education and health of BPL and rural families.
Similarly, the social welfare surcharge of 10 per cent on all customs duties replaces the education cess on imported goods. He also raised the customs duty on mobile phones by 5 per cent to 20 per cent. He also levied a 15 per cent duty on some of the parts and accessories of mobile phones and TV sets to promote creation of more jobs under the “Make in India” programme.
In line with the BJP’s poll promise before coming to power in 2014, the Finance Minister announced that the Minimum Support Price (MSP) for unannounced kharif crops will be 1.5 times the input cost and stepped up the institutional credit for the sector to `11 lakh crore — 1 lakh crore more than last year.
“Now, we have decided to implement this resolution as a principle for the rest of crops. I am pleased to announce that as per pre-determined principle, the government has decided to keep MSP for the all unannounced crops of kharif at least at one and half times of their production cost. I am confident that this historic decision will prove an important step towards doubling the income of our farmers,” Jaitley said.
The opposition reacted sharply to the government’s proposed budget with Congress leader P Chidambaram saying Jaitley had failed the fiscal consolidation test that will have “serious consequences” on the economic growth rate.
CPI-M leader Sitaram Yechury said the budget was “unconnected to ground realities” and “is a textbook exercise in post-truth”. However, the India Inc largely welcomed Jaitley’s budget.
Leaving the individual taxation slabs and rates untouched, Jaitley in his last full budget before the 2019 elections proposed to reintroduce a standard deduction of `40,000 for salaried tax payers in lieu of present exemption of transport allowance and reimbursement of miscellaneous medical expenses that will involve a revenue sacrifice of `8,000 crore to benefit 2.5 crore people.
In a bid to help senior citizens, the budget proposes to increase the exemption of interest income on deposits with banks and post offices from `10,000 to 50,000 and there will be no TDS deducted on them.
The limit for health insurance premium and medical expenditure will go up to `50,000 from `30,000.
For certain illnesses, in case of senior citizens and very senior citizens, the limit will go up to `60,000 and `80,000 respectively, The concessions will cost the government `4,000 crore.
In keeping with his earlier announcement of reducing corporate taxation rate, the Finance Minister reduced the rate for all companies with turnover of up to `250 crore, up from `50 crore. He said this would take care of almost 99 per cent of the companies and would have a negative impact of `7,000 crore on government finances. Only about 250 companies would have a turnover above the cut-off level and would continue to pay 30 per cent tax. 
An ID on lines of Aadhaar would also be set up for companies, Jaitley said.
For the railways, whose budget was merged with the general budget since last year, the capital expenditure has been fixed at `1,48,528 crore for 2018-19 with a large part devoted to capacity creation. Some 18,000 km of doubling, third and fourth line works and 5,000 km of guage conversion will be taken up to transform almost the entire network into broad guage.
Prime Minister Narendra Modi hailed the Finance Minister for presenting an all-friendly budget 2018-19 with the focus on agriculture, health and small businesses.
“This budget is farmer-friendly, common citizen-friendly, business environment-friendly and development-friendly.”
Announcing the flagship National Health Protection Scheme, which he billed as the world’s largest government funded healthcare programme, Jaitley said the government proposed to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage up to `5 lakh per family per year for secondary and tertiary care hospitalisation.
In another populist measure, the Finance Minister announced that as part of Prime Minister’s Ujjwala Scheme the government proposed to increase the target of providing free LPG connections to eight crore poor women, three crore up from the original target.
He said the focus of the government in the next fiscal will be on providing maximum livelihood opportunities in the rural areas by spending more on livelihood, agriculture and allied activities and construction of rural infrastructure.
“In the year 2018-19, for creation of livelihood and infrastructure in rural areas, total amount to be spent by the ministries will be `14.34 lakh crore, including extra-budgetary and non-budgetary resources of `11.98 lakh crore. Apart from employment due to farming activities and self employment, this expenditure will create employment of 321 crore person days, 3.17 lakh km of rural roads, 51 lakh new rural houses, 1.88 crore toilets, and provide 1.75 crore new household electric connections besides boosting agricultural growth.”
In a labour welfare measure, the minister announced extension of contribution of 8.33 per cent of employee provident fund for new employees by the government for three years to all the sectors and raised it to 12 per cent.
In order to create employment and aid growth, the Finance Minister said, the government’s estimated budgetary and extra budgetary expenditure on infrastructure for 2018-19 was being increased to `5.97 lakh crore against estimated expenditure of `4.94 lakh crore last year.
The Finance Minister indicated a slippage in fiscal deficit for the current year revising it from 3.2 per cent to 3.5 per cent and from 3 per cent to 3.3 per cent (Rs 5.95 lakh crore) of the GDP next year, implying that the government will be borrowing more to balance its books.
The government has set a target of `80,000 crore divestment target for 2018-19, the finance minister said adding that target for 2018-19 had exceed the target of `72,500 crore and would touch `1 lakh crore. Despite that, he did keep his aim low for the next year. He announced that the three public sector insurance companies would be merged.
The merged entity is expected to be listed at some stage. The minister started his speech by reading out the achievements made by the government, saying: “We”are now a $2.5 trillion economy, and we are firmly on path to achieve 8 per cent plus growth soon. We hope to grow at 7.2 per cent to 7.5 per cent in the second half of 2017-18. Our exports are expected to grow at about 15 per cent in 2017-18.”
Keen to see MSP workings: CM
Bhubaneswar: Chief Minister Naveen Patnaik Thursday termed Union Budget 2018-19 as a mixed bag. While welcoming the rise in Minimum Support Price (MSP), the CM felt let down by lack of focus in the budget on the state’s KBK region and tribal areas. 
“It has been our constant demand to increase the minimum support price to 1.5 times of the cost of production of crops. It looks like our demand has been accepted,” Patnaik said, adding, the cost of production, however, must take into account the actual cost incurred by farmers on a realistic basis. “I welcome the intent of the Centre. At the same time, I am keenly waiting to see the modalities of calculation,” he said.
Patnaik also expressed happiness over announcement of the national health protection scheme for 10 crore poor families. He, however, said, “It would have been better if all eligible poor families would have been incorporated.”
Patnaik said he is disappointed as the Centre has missed out focus for KBK and other tribal areas again. In fact the allocation for SCs, STs and other vulnerable sections and social sector is grossly inadequate, the CM said.
The list of complaints was, however, long. There is inadequate emphasis on drinking water while there is a marginal increase in allocation for irrigation, he said.
The CM said he is surprised by the reduction in allocation for Pradhan Mantri Awas Yojana at a time when the government is committed to ‘housing for all’. He further said he is concerned about the low level of allocations for MGNREGA, MDM, NHM and PMGSY.
On railway sector, Naveen said, the outlay for Orissa against its demand of `6,500 crore is yet to be known, however, we hope this year the allotment is as per our demand.
Agencies
