Union Budget 2017: Key highlights

Union Budget 2017: Key highlights

Finance minister delivering the budget speech in the Parliament on Wednesday. Photo: PTI

Finance minister Arun Jaitley presented the Union Budget 2017 in Parliament on Wednesday. Here are the key highlights of his budget speech:

Union Budget 2017:

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

What has the budget done to revive investments?

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

Budget 2017: Jaitley reduces income tax rates for individuals, companies

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