Governance, Economy and Development
India achieved an average growth of 7.5 per cent in the first three years of Government. Indian economy is now 2.5 trillion dollar economy – seventh largest in the world. India is expected to become the fifth largest economy very soon. On Purchasing Power Parity (PPP) basis, we are already the third largest economy.
GDP growth at 6.3 per cent in the second quarter signaled turnaround of the economy. We are now firmly on course to achieve high growth of 8 per cent plus.
Government is providing free LPG connections to the poor of this country through Ujjwala Yojana. Under Saubhagya Yojna 4 crore household are being provided with electricity connections. More than 800 medicines are being sold at lower price through more than 3 thousand Jan Aushadhi Centres.
Investment,Expenditure and Policy Initiatives
Agriculture and Rural Economy
In our party’s manifesto it has been stated that the farmers should realise at least 50 per cent more than the cost of their produce, in other words, one and a half times of the cost of their production. Government have been very much sensitive to this resolutions and it has declared Minimum support price (MSP) for the majority of rabi crops at least at one-and-a-half times the cost involved. 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, 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.
Niti Ayog, in consultation with Central and State Governments, will put in place a fool-proof mechanism so that farmers will get adequate price for their produce.
Government will create an institutional mechanism, with participation of all concerned ministries, to develop appropriate policies and practices for price and demand forecast, use of futures and options market, expansion of warehouse depository system and to take decisions about specific exports and imports related measures.
470 APMCs have been connected to e-NAM network and rest will be connected by March 2018.
We will develop and upgrade existing 22,000 rural haats into Gramin Agricultural Markets(GrAMs). In these GrAMs, physical infrastructure will be strengthened using MGNREGA and other government schemes. These GrAMs, electronically linked to e-NAM and exempted from regulations of APMCs, will provide farmers facility to make direct sale to consumers and bulk purchasers.
Agri-Market Infrastructure Fund with corpus of Rs2,000 crore will be setup for developing and upgrading agricultural marketing infrastructure in the 22,000 Grameen Agricultural Markets (GrAMs)and 585 APMCs.
Cultivation of horticulture crops in clusters bring advantages of scales of operations and can spur establishment of entire chain from production to marketing, besides giving recognition to the districts for specific crops. The Ministry of Agriculture & Farmers’ Welfare will reorient its ongoing Schemes and promote cluster-based development of agri-commodities and regions in partnership with the Ministries of Food Processing, Commerce and other allied Ministries.
To promote organic farming in a big way, Farmer-Producer Organizations (FPOs) and Village Producers’ Organizations (VPOs) in large clusters, preferably of 1,000 hectares each, will be encouraged. Women Self-Help Groups (SHGs) will also be encouraged to take up organic agriculture in clusters under National Rural Livelihood Programme.
Government proposes to launch “Operation Greens” on the lines of “Operation Flood”. “Operation Greens” shall promote Farmer Producers Organisations (FPOs), agri-logistics, processing facilities and professional management. Rs500 crore proposed to be allocated for the purpose.
Export of agri-commodities will be liberalised. State-of-the-art testing facilities to be set up in all the forty-two Mega Food Parks.
Facility of Kisan Credit Cards to be extended to fisheries and animal husbandry to help them meet working capital needs. Small and marginal farmers to get more benefits.
Bamboo grown outside forest areas removed from the definition of trees. National Bamboo Mission with an outlay of Rs1,290 crore to promote bamboo sector in holistic manner.
Government will take necessary measures and encourage state governments to put in place a mechanism that their surplus solar power is purchased by the distribution companies or licencees at reasonably remunerative rates.
Scope of Long Term Irrigation Fund (LTIF)under Nabard to be expanded to cover specified command area development projects.
Fisheries and Aquaculture Infrastructure Development Fund (FAIDF) for fisheries sector and an Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of animal husbandry sector to be set up. Corpus of Rs10,000 crore to be set aside for purpose.
Volume of institutional credit for agriculture sector to be raised to Rs11 lakh crore for 2018-19.
Prime Minister’s Ujjwala Scheme initially targeted free LPG connections to about 5 crore poor women. In view of the pace of implementation of Ujjwala scheme and its popularity among women, it is proposed to be raised to to 8 crore poor women.
Government is planning to construct around 2 crore toilets. Under Prime Minister Awas Yojana 51 lakh houses are to be built in 2018-19. In urban areas, the assistance has been sanctioned to construct 37 lakh houses.
The government will also establish a dedicated Affordable Housing Fund (AHF) in National Housing Bank, funded from priority sector lending shortfall and fully serviced bonds authorized by the Government of India.
Government is confident that loans to SHGs will increase to Rs75,000 crore by March 2019. Propoal to substantially increase allocation of National Rural Livelihood Mission to Rs5,750 crore in 2018-19.
Health, Education and Social Protection
Allocation on National Social Assistance Programme this year has been kept at Rs9,975crore.
Government committed to provide the best quality education to the tribal children in their own environment. To realize this mission, it has been decided that by 2022, every block with more than 50 per cent ST population and at least 20,000 tribal persons, will have an Ekalavya Model Residential School. Ekalavya schools will be on par with Navodaya Vidyalayas and will have special facilities for preserving local art and culture, besides providing training in sports and skill development.
To step up investments in research and related infrastructure in premier educational institutions, including health institutions, the initiative named ‘Revitalising Infrastructure and Systems in Education (RISE) by 2022’ with a total investment of Rs1,00,000 crore in next four years. Higher Education Financing Agency (HEFA) would be suitably structured for funding this initiative.
Government proposes to set up two new full-fledged Schools of Planning and Architecture, to be selected on challenge mode. Additionally, 18 new SPAs would be established in the IITs and NITs as autonomous Schools, also on challenge mode.
The Government would launch the ‘Prime Minister’s Research Fellows’ (PMRF) Scheme this year. Under this, 1,000 best B.Tech students each year from premier institutions will be selected for Ph.D in IITs and IISc, with a handsome fellowship. It is expected that these bright young fellows would voluntarily commit few hours every week for teaching in higher educational institutions.
Health Sector
Two major initiatives proposed as part of ‘Ayushman Bharat’ programme aimed holistic health, in primary, secondary and tertiary care system covering both prevention and health promotion.
The National Health Policy, 2017, has envisioned Health and Wellness Centres as the foundation of India’s health system. These1.5 lakh centres will bring healthcare system closer to the homes of people. These centres will provide comprehensive healthcare, including for non-communicable diseases and maternal and child health services. These centres will also provide free essential drugs and diagnostic services.
Rs1,200 crore committed for the project in the budget.Private sector invited to participate through through CSR and philanthropic institutions in adopting these centres.
Current Rashtriya Swasthya Bima Yojana (RSBY) provides annual coverage of only Rs30,000 to poor families. Several state governments have also implemented or supplemented health protection schemes providing varying coverage. The government has decided to take health protection to more aspirational level.
National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage up to Rs5 lakh per family per year for secondary and tertiary care hospitalisation. This will be the world’s largest government funded healthcare programme. Adequate funds will be provided for smooth implementation of programme.
Government has decided to allocate additional Rs600 crore to provide nutritional support to all tuberculosis patients at the rate of Rs500 per month for the duration of their treatment.
24 new Government Medical Colleges and Hospitals to be set up by upgrading existing district hospitals in the country. This would ensure that there is at least1 Medical College for every 3 Parliamentary Constituencies and at least 1 Government Medical College in each State of the country.
Government to launch a scheme called Galvanizing Organic Bio-Agro Resources Dhan (GOBAR-DHAN) for management and conversion of cattle dung and solid waste in farms to compost, fertilizer, biogas and bio-CNG.
Government has identified 115 aspirational districts taking various indices of development in consideration. The government aims at improving the quality of life in these districts by investing in social services such as health, education, nutrition, skill upgradation, financial inclusion and infrastructure such as irrigation, rural electrification, potable drinking water and access to toilets at an accelerated pace and in a timebound manner. We expect these 115 districts to become models of development.
Government increased total earmarked allocation for SCs in 279 programmes from Rs34,334 crore in 2016-17 to Rs52,719 crore in Revised Estimate 2017-18. Likewise, for STs, earmarked allocation was increased from Rs21,811 crore in 2016-17 to Rs32,508 crore in Revised Estimate 2017-18 in 305 programmes. Government proposes to earmark allocation of Rs56,619 crore for SCs and Rs39,135 crore for STs in Budget Estimate 2018-19.
Government’s estimated schematic budgetary expenditure on health, education and social protection for 2018-19 is Rs1.38 lakh crorea gainst estimated expenditure of Rs1.22 lakh crore in Budget Estimate 2017-18. This expenditure is likely to go up by at least Rs15,000 crore in 2018-19 on account of additional allocation during the year and extra budgetary expenditure, including through Higher Education Financing Agency.
Medium, Small and Micro Enterprises(MSMEs)and Employment
Government will contribute 12% of the wages of the new employees in the EPF for all the sectors for next three years. Also, the facility of fixed term employment will be extended to all sectors.
To incentivize employment of more women in the formal sector and to enable higher take-home wages, it was proposed to make amendments in the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, to reduce women employees’ contribution to 8% for first three years of their employment against existing rate of 12 per cent or 10 per cent with no change in employers’contribution.
Government had approved a comprehensive textile sector package of Rs6,000 crore in 2016 to boost the apparel and made-up segments. It is proposed to provide an outlay of Rs7,148 crore for the textile sector in 2018-19.
Infrastructure and Financial Sector Development
All-time high allocation made to rail and road sectors. Proposal moved to take up construction of tunnel under Sela Pass. India Infrastructure Finance Corporation Limited (IIFCL) to help finance major infrastructure projects, including investments in educational and health infrastructure, on strategic and larger societal benefit considerations.
Railways’ Capex for 2018-19 has been pegged at Rs1,48,528 crore. A large part of the Capex is devoted to capacity creation. 18,000 kilometers of doubling, third and fourth line works and 5,000 kilometers of gauge conversion would eliminate capacity constraints and transform almost entire network into Broad Gauge.
Decision taken to eliminate 4,267 unmanned level crossings in the broad gauge network in the next two years. Redevelopment of 600 major railway stations is being taken up by Indian Railway Station Development Co.Ltd. All stations with more than 25,000 footfall will have escalators. All railway stations and trains will be progressively provided with Wi-Fi. CCTVs will be provided at all stations and on trains to enhance security of passengers. Modern train-sets with state-of-the-art amenities and features are being designed at Integrated Coach Factory, Perambur. First such train-set will be commissioned during 2018-19.
UDAN (Ude Desh ka Aam Nagrik) to connect 56 unserved airports and 31 unserved helipads across the country. 16 such airports operational. Effort to set up a Coalition on Disaster Resilient Infrastructure for developing international good practices, appropriate standards and regulatory mechanism for resilient infrastructure development to receive Rs60 crore to be kick-started in 2018-19.
Reform measures with respect to stamp duty regime on financial securities transactions in consultation with the states and make necessary amendments to the Indian Stamp Act.
Government will establish a unified authority for regulating all financial services in IFSCs in India.
NITI Aayog to initiate a national programme to direct our efforts in the area of artificial intelligence, including research and development of its applications.
Department of Science & Technology will launch a Mission on Cyber Physical Systems to support establishment of centres of excellence. Allocation on Digital India programme doubled to Rs3,073 crore in 2018-19.
Government proposes to set up five lakh Wi-Fi hotspots which will provide broadband access to five crore rural citizens. Rs10,000 crore provided in 2018-19 for creation and augmentation of Telecom infrastructure.
Government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system. The government will explore use of block chain technology proactively for ushering in digital economy.
Government has approved listing of 14 CPSEs, including two insurance companies, on the stock exchanges.The government has also initiated the process of strategic disinvestment in 24 CPSEs. This includes strategic privatization of Air India.
Government will formulate a comprehensive Gold Policy to develop gold as an assetclass. The Government will also establish a system of consumer-friendly and trade-efficient system of regulated gold exchanges in the country. Gold Monetization scheme will be revamped to enable people to open a hassle-free Gold Deposit Account.
Emoluments of the President, the Vice President and the Governors were last revised with effect from January 1, 2006.These emoluments are proposed to be revised to Rs5 lakh for the President, Rs4lakh for the Vice President and to Rs3.5 lakh per month for governors.
Proposal to fix their own emoluments which invites criticism. Necessary changes to refix the salary, constituency allowance, office expenses and meeting allowance payable to Members of Parliament with effect from April 1, 2018. The law will also provide for automatic revision of emoluments every five years indexed to inflation.
Section III – Fiscal Management
Fiscal Deficit was brought down to 4.1 per cent in 2014-15 to 3.9 per cent in 2015-16, and to 3.5 per cent in 2016-17. Revised Fiscal Deficit estimates for 2017-18 are Rs5.95 lakh crore at 3.5 per cent of GDP. Fiscal Deficit for 2018-19 projected at 3.3 per cent of GDP.
PART B
Tax proposals.
Tax incentive for promoting post-harvest activities of agriculture
To encourage professionalism in post-harvest value addition in agriculture, the government proposes to allow 100 per cent deduction in respect of profit to companies registered as Farmer Producer Companies and having annual turnover up to Rs100 crore in respect of profit derived from such activities for five years from financial year 2018-19. This measure will encourage “Operation Greens” and give a boost to Sampada Yojana.
Employment generation
Currently, a deduction of 30 per cent is allowed in addition to normal deduction of 100 per cent in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year under section 80-JJAA of the Income Tax Act. However, the minimum period of employment is relaxed to 150 days in the case of apparel industry. To encourage creation of new employment, the benefit is proposed to be extended to footwear and leather industry. It is also proposed to rationalise this deduction of 30 per cent by allowing the benefit for a new employee who is employed for less than the minimum period during the first year but continues to remain employed for the minimum period in subsequent year.
Incentive for real estate
Currently, while taxing income from capital gains, business profits and other sources in respect of transactions in immovable property, the consideration or circle rate value, whichever is higher, is adopted and the difference is counted as income both in the hands of the purchaser and seller. Sometimes, this variation can occur in respect of different properties in the same area because of a variety of factors including shape of the plot and location. To minimise hardship in real estate transaction, it has been proposed that no adjustment shall be made in a case where the circle rate value does not exceed 5 per cent of the consideration.
Incentivising MSMEs
Towards reduction of corporate tax rate in a phased manner, it has been proposed to extend the benefit of reduced rate of 25 per cent also to companies that have reported turnover up to Rs250 crore in the financial year 2016-17. This will benefit the MSMEs that account for almost 99 per cent of companies filing their tax returns. The estimate of revenue forgone due to this measure is Rs7,000 crore during FY 2018-19.
After this, out of about 7 lakh companies filing returns, about 7,000 companies which file returns of income and whose turnover is above Rs250 crore will remain in 30 per cent slab. The lower corporate income tax rate for 99 per cent of the companies will leave them with higher investible surplus which in turn will create more jobs.
Relief to salaried taxpayers
No further change in the structure of the income tax rates for individuals as changes have been brought about over the past three years; standard deduction of Rs40,000 in lieu of the present exemption with respect to transport allowance and reimbursement of miscellaneous medical expenses. However, the transport allowance at enhanced rate shall continue to be available to differently-abled persons. Also other medical reimbursement benefits in case of hospitalization etc, for all employees shall continue. Apart from reducing paper work and compliance, this will help middle class employees even more in terms of reduction in their tax liability. This decision will benefit pensioners, too. The revenue cost of this decision is approximately Rs8,000 crore. 2.5 crore salaried employees and pensioners will benefit from this decision.
Relief to senior citizens
Exemption of interest income on deposits with banks and post offices to be increased from Rs10,000 to Rs50,000 and TDS shall not be required to be deducted on such income, under section 194A. This benefit shall be available also for interest from all fixed deposits schemes and recurring deposit schemes.
Limit of deduction for health insurance premium and/ or medical expenditure raised from R30,000 to Rs50,000, under section 80D. All senior citizens will now be able to claim benefit of deduction up to Rs50,000 per annum in respect of any health insurance premium and/or any general medical expenditure incurred.
Limit of deduction for medical expenditure with respect to certain critical illness raised from, Rs60,000 in case of senior citizens and from Rs80,000 in case of very senior citizens, to Rs1 lakh in respect of all senior citizens, under section 80DDB. These concessions will give extra tax benefit of Rs4,000 crore to senior citizens.
In addition to tax concessions, I propose to extend the Pradhan Mantri Vaya Vandana Yojana up to March, 2020 under which an assured return of 8% is given by Life Insurance Corporation of India. The existing limit on investment of Rs7.5 lakh per senior citizen under this scheme is also being enhanced to Rs15 lakh.
Further Measures to control cash economy
To have audit trail of expenses incurred by trusts and institutions, it is proposed that payments exceeding Rs10,000 in cash made by such entities shall be disallowed and the same shall be subject to tax. Further, to improve TDS compliance by these entities, it is proposed to provide that in case of non-deduction of tax, 30 per cent of the amount shall be disallowed and the same shall be taxed.
Rationalisation of Long Term Capital Gains (LTCG)
The return on investment in equity is already quite attractive even without tax exemption. There is therefore a strong case for bringing long term capital gains from listed equities in the tax net. However, recognising the fact that vibrant equity market is essential for economic growth, a modest change in the present regime is proposed. The proposed tax on long term capital gains exceeding Rs1 lakh is 10 per cent without allowing the benefit of any indexation. All gains up to January 31, 2018, will be grandfathered. If equity share is purchased six months before January 31, at Rs100 and the highest price quoted January 31 in respect of this share is Rs120, there will be no tax on the gain of Rs20 if this share is sold after one year from the date of purchase. However, any gain in excess of Rs20 earned after January 31, 2018, will be taxed at 10 per cent if this share is sold after July 31, 2018. The gains from equity share held up to one year will remain short-term capital gain and will continue to be taxed at the rate of 15 per cent. It is also proposed to introduce a tax on distributed income by equity oriented mutual fund at the rate of 10 per cent.
Health and Education Cess
At present there is a 3 per cent cess on personal income tax and corporation tax consisting of two per cent cess for primary education and one per cent cess for secondary and higher education. To take care of the needs of education and health of BPL and rural families under newly announced health schemes, the cess is increased by 1 per cent. The existing three per cent education cess will be replaced by a four per cent “Health and Education Cess” to be levied on the tax payable. It is expected to help collect an estimated Rs11,000 crore.
E-assessment
E-assessment to be rolled out across the country, which will transform the age-old assessment procedure of the income tax department and the manner in which they interact with taxpayers and other stakeholders. Income Tax Act to be amended to notify a new scheme for assessment where the assessment will be done in electronic mode which will almost eliminate person to person contact leading to greater efficiency and transparency.
Indirect Tax
Budget proposals are mainly on the customs side. To further incentivise domestic value addition and Make in India in some such sectors, customs duty has been increased on mobile phones from 15 per cent to 20 per cent, on some of their parts and accessories to 15 per cent and on certain parts of TVs to 15 per cent. Customs duty on raw cashew is proposed to be reduced from 5 per cent to 2.5 per cent. Education Cess and Secondary and Higher Education Cess on imported goods to be abolished and replaced with Social Welfare Surcharge, at the rate of 10 per cent of the aggregate duties of customs on imported goods, to provide for social welfare schemes of the Government. Goods which were hitherto exempt from Education Cesses on imported goods will, however, be exempt from this Surcharge. In addition, certain specified goods will attract the proposed surcharge at the rate of 3 per cent of the aggregate duties of customs only.
Name of Central Board of Excise and Customs (CBEC) to be changed to Central Board of Indirect Taxes and Customs (CBIC).
