Amid lots of hits and misses and rising speculations Finance Minister Arun Jaitley released the union budget for 2018, the last full budget from the Modi led NDA government before the 2019 general elections. The union budget for this fiscal year was marked with a clear political overtone, one that propagates the Modi government as pro-poor, to negate the mounting pressure from the opposition over the fall in farmer income and incurred production losses.
While it gave little hope for the middle class, investors and corporates, it gave the rural sector, health, MSME, education, employment sector a major boost with the fiscal deficit of 3.3 % within the market tolerance and a projected GDP growth of 7.2 to 7.5 % looking healthy.
Maintaining the status quo of the personal income tax slabs, the salaried class gets a breather with a tax reduction of Rs 40,000 for travel and health related expenditure.
However the introduction of the Long Term Capital Gains Tax (LTCG) of 10% on stock and equity mutual funds investments of over 1 lakh was a big turndown for the stock markets and big investors. While the short term capital gains tax remains fixed at 15 %.
However, all investment gains till 31st January will be grandfathered.
A survey conducted by the Bombay Stock Exchange (BSE) claimed that the LTCG taxes can generate a revenue of Rs. 49000 crore per annum.
The budget also mentioned a slash in corporate tax rate from 30 % to 25 % for companies clocking a turnover of 50 crores, in a move to promote the MSMEs (Micro, Small And Medium Enterprises).
Rural Sector Under Focus–
The union budget reinforces the government’s resolve to boost the rural economy by encouraging credit and investments in the farming sector which automatically will have a domino effect on the manufacturing sector and boost production.
A major relief comes to farmers as the minimum support price (MSP) for all Kharif crops has been raised to 1.5 times the cost of production. Also a Rs 2000 crore infra fund has been created for 22,000 agricultural markets and APMCs.
A new cluster based model for horticulture will be introduced with greater emphasis on organic farming.
A restructured national bamboo mission will be set up with an allocation of Rs 1,290 crore with Kisan credit cards being extended to animal husbandry and fisheries sector with a corpus of Rs. 10,000 crores.
As part of social protection and security benefits gas connections will be provided to 8 crore poor women under Ujjwala Yojana.
Under the Pradhan Mantri Saubhagya Yojana a corpus of Rs. 16000 crore has been announced to light up 4 crore homes with electricity.
The government has pledged a contribution of 12 % in wages of new employees under the EPF scheme, with women employees contribution reduced to 8 % for initial three years, with a hike in take home salary.
The union budget has the right package when it comes to health care and social welfare with its primary emphasis on the lower income groups. With the launch of National Health Protection Scheme the government aims to provide free health care of up to 5 lakhs for 50 crore people.
This effective scheme comes as a blessing for all those rural people who cannot afford higher health care costs.
It acts as a bonus for the already existing healthcare schemes under Pradhan Mantri Jeevan Bima Yojana and Suraksha Yojana. To improve education and healthcare services the government has plans to establish 1.5 lakh health care centres and 24 lakh government colleges.
The government has provided additional safety nets for senior citizens by extending the exemption of tax limit from Rs. 30,000 to Rs.50,000 under section 80 D. For critical illnesses the tax deduction has been stretched up to Rs. 1,00,000.
Education policy to be implemented without segmentation from KG to class 12, a comprehensive National Social Assistance Program has been announced in this regard with a push towards digital technology and e-education.
The government plans to ramp a special Eklavya school By 2022, in every block with over 20,000 tribals and over 50 percent STs.
An allocation of 1 lakh has been proposed to upgrade the existing education sector and an integrated B.Ed programme has been proposed to improve the quality of faculty and education.
The disinvestment target for the current fiscal year has been pegged at Rs. 80,000.Also, emoluments of parliamentarians are slated to increase every five years with index to inflation.
Also an allocation of Rs. 3073 crore was provided under Digital India Scheme, unravelling plans to install as many as 5 lakh wifi hotspots to give broadband services to 5 crore rural citizens. Railway capex for 2018-19 set at ₹1.48 lakh crore.
Customs duty on TVs and mobiles phones is hiked and a 10% social welfare charge has been levied on imported goods.
The current union budget has laid out a vision for sustainable growth chart with main focus on the rural sector, education, health, research and infrastructure development maintaining a holistic approach. It presents an upbeat financial plan addressing various sections of the economy with fiscal prudence.