The Union Finance Minister Arun Jaitley on Thursday presented his maiden budget with the intent to boost growth and create employment opportunities. Stressing on the need to reduce the fiscal deficit, the finance minister announced several measures for the same.
Blaming the previous UPA government for slow decision making, the finance minister said that the new government has inherited a challenging situation of low growth and inflation.
The finance minister refrained from announcing grand schemes and chose financial prudence to put the economy back on track. In his two hour speech, the finance minister said, “The prevailing economic situation presents a great challenge. It calls for a conscious choice to be made by all of us. Should we allow this drift to carry on and watch helplessly? Should we allow our future to suffer because of our indecisiveness? Should we be victims of mere populism or wasteful expenditure?”
Shri Jaitley identified inflation, unemployment, infrastructure, agriculture, rural renewal and manufacturing as some of the key areas of concern that need immediate attention. And his budget speech centred around these constraints and how to bring about reforms that could put the economy back on track.
The Budget left income tax rates unchanged but provided sops to small and marginal assessees by raising the threshold exemption limit from Rs 2 lakh to Rs 2.5 lakh and investments under 80C by Rs 50,000 to Rs 1.5 lakh while promising not to bring tax changes with retrospective effect.
In encouraging signals to domestic and foreign investors, Jaitley announced that all fresh cases arising out of retrospective amendments of 2012 in respect of indirect transfers will be scrutinised by a high level committee to be constituted by the CBDT before any action is initiated.
“I hope the investor community both within India and abroad will repose confidence on our stated position and participate in the Indian growth story with renewed vigour,” he said, offering a stable and predictable tax regime. He also said the government will revive the revised Direct Taxes Code (DTC) taking into account the comments of stakeholders.
The Finance Minister said government will promote FDI by raising the cap to 49 per cent in Defence and Insurance with full Indian management and control.
The direct tax proposals involve a sacrifice of Rs 22,200 crore while indirect tax proposal will yield revenue of Rs 7,725 crore.
The Budget raises defence spending by 12.5 per cent to Rs 2.29 lakh crore. Non-plan expenditure for the current year has been estimated at Rs 12,19,892 crore with additional amount for fertiliser subsidy and capital expenditure for armed forces.
The total expenditure estimates stand at Rs 17,94,892 crore. Gross tax receipts will be Rs 13,64,524 crore, of which Centre’s share will Rs 9,77,258 crore. Non-tax revenues for current financial year will be Rs 2,12,505 crore and capital receipts other than borrowings will be Rs 73,952 crore.
The Budget pegs the fiscal deficit for the current fiscal at 4.1 per cent of the GDP and 3.6 and 3 per cent in 2015-16 and 2016-17 respectively.
He said government intends to usher in a policy regime that would bring the desired growth, lower inflation, sustained level of external sector balance and prudent policy stance.
The government will constitute an Expenditure Management Commission to look into every aspect of expenditure reform. It will overhaul the subsidy regime while providing full protection to the marginalised.
Jaitely said the government would like to introduce the Goods and Services Tax (GST) to streamline tax administration, avoid harassment of business and ensure higher revenue collection. The Budget proposes to infuse Rs 2.40 lakh crore in PSU banks in which citizens will be allowed direct shareholding.
The Budget sets a target of Rs 8 lakh crore for agriculture credit during the current year and will continue the interest subvention scheme and raise the corpus of rural infrastructure development fund (RIDF) to Rs 25,000 crore.
As a measure of encouraging infrastructure and construction sectors to revive growth and provide jobs, the Budget provides tax incentives for real estate investment trust and infrastructure investment trust.
Here are some of the key announcements made by the Union Finance Minister:
- Horticulture university in Haryana and Telangana
- Agricultural Research Institute of excellence in Assam and Jharkhand
- Provision of Rs 100 crore under “Beti Bachao, Beti Padhao” scheme.
- 12 new medical colleges with Dental facility across the country.
- 5 new IIMs in Bihar, Odisha, Maharashtra, Himachal Pradesh and Punjab
- 5 new IITs in Chhattisgarh, Goa, Andhra Pradesh, Jammu & Kashmir and Kerala.
- Provision of Rs 100 crore for Sports University in Manipur.
- Provision of Rs 28.635 billion for national education campaign.
- Rs 4966 crore for Rashtriya madhyamic Shiksha Abhiyan
- 500 crore for “Pandit Madan Mohan Malviya New Teachers Training Programme”
- Allocation of Rs 22,635 crore for Sarva Shiksha Abhiyaan.
- 15 model Rural Health Research Centre.
- 12 new medical colleges and 4 new AIIMS, Rs 500 crore for each AIIMS
- “Swachh Bharat Abhiyan” to cover every house hold with sanitation facility by 2019.
- Free Drug Service and Free Diagnosis Service to achieve “Health For All”
- Price stabilisation fund to tackle inflation.
- Government’s emphasis on strict action against hoarders.
- The problem of black money must be fully addressed.
- Inflation has remain at elevated level with gradual moderation in WPI recently.
- Personal Income tax exemption limit has been increased from Rs 2 lakh to Rs 2.5 lakh.
- For senior citizens, the limit has been increased from Rs 2.5 lakh to Rs 3 lakh
- One KYC for all kind of investors
- Maximum annual deposit limit of PPF increased to Rs 1.5 lakh from Rs. 1 lakh
- For EPF deduction the minimum wage should be Rs 15,000 as compared to Rs.6,500
- Under Section 24 B of the Income Tax Act, the Income Tax exemption on Home loan increased to Rs 2 lakh from 1.5 lakh.
- Goal of opening two bank accounts for every family.
- Need to review the pension scheme for senior citizens
- An amount of 100 crores set aside for “Agri-tech Infrastructure Fund”.
- A sustainable growth of 4% in Agriculture will be achieved.
- A target of 8 lakh crore has been set for agriculture credit during 2014-15.
- Allocation of 5,000 crore provided for the Warehouse Infrastructure Fund
- Amount of 50,000 crore allocated for Short Term Cooperative Rural Credit
- Fund of 10,000 cr for new companies.
- 6 new textile clusters in different cities.
- Rural Entrepreneurship Scheme for the employment of youth living in rural areas.
- MNREGA scheme continues, guarantee of work for 100 days
- Capex plan of Rs 2.47 trillion for public companies
- Emphasis on investment to create job opportunities.
- Rs 2,037 crore ‘Namami Ganga’ project to revive Ganga.
- Rs 4,200 crore for the Jal Marg Vikas project for Ganga in Uttar Pradesh. This project connects Allahabad to Haldia through 1,620 km long inland waterway.
- Rs 100 crore has also been set aside for Ghat development and beautification of the river Ganga.
Apart from these, a slew of other announcements were made by the Finance Minister and it remains to be seen whether these interventions would bring in the kind of change that the newly elected government promised to the nation during its election campaign.
Meanwhile, the opposition parties were overtly critical and called it a budget that benefits only the corporate and creamy layer of the society. Some of them even went on to the extent of calling it an “anti-people” budget.