Finance minister Arun Jaitley Scripted His Last Full Budget Of The Current NDA Government To Woo The Aam Admi
The suspense is finally over. Finance minister Arun Jaitley scripted his last full budget of the current NDA government to woo the aam admi and those at the bottom of the pyramid. As expected with general elections just a year away and as many as eight state elections slated this year, the focus has been on agriculture, rural, micro small and medium enterprises, health, education and jobs with large allocation of funds. The salaried tax-payers received a token relief as the finance minister announced a standard deduction of Rs 40,000.
“This year’s budget will ….particularly focus on strengthening agriculture and rural economy, provision of good health care to economically less privileged, taking care of senior citizens, infrastructure creation and working with the states to provide more resources for improving the quality of education in the country,” Jaitley said.
Besides proposing to increase the minimum support price for Rabi crops to 1.5 times of production costs and providing MSP for all other crops, the finance minister announced the launch a flagship National Health Protection Scheme – the largest government funded programme. The proposed scheme will cover 10 crore poor and vulnerable families – about 50 crore beneficiaries--providing insurance coverage of upto Rs 5 lakh per family in a year for secondary and tertiary care hospitalization. “Adequate funds will be provided for smooth implementation of this programme,” he said.
Delivering the budget speech in English and Hindi, Jaitley underlined that India’s growth story was back on track. “GDP growth at 6.3% in the second quarter signalled turnaround of the economy. We hope to grow at 7.2% to 7.5% in the second half,” the minister said.
The fiscal deficit target for the current financial year has been revised to 3.5% of GDP instead of 3.2%. For 2018-19, too, the target has been reset to 3.3% against 3% set earlier.
Jaitley said that the government, in the current financial year, will be receive GST revenues only for 11 months, instead of 12 months which will have an impact on the fiscal situation. He also said that there has some shortfall in non-tax revenues on account of certain developments, including deferment of spectrum auction.
The total revised estimates for expenditure in the current financial year stood at Rs 21.57 lakh crore (net of GST compensation transfers to the states) against the budget estimates of Rs 21.47 lakh crore.
Jaitley re-iterated that his government would continue the fight against corruption and black money. Describing the demonetization drive announced on November 8, 2016, as “imandari ka utsav,” he said that the honest tax payers were rewarded and that the exercise helped in adding the number of new tax payers.
In 2016-17, 85.51 lakhs new taxpayers filed their returns of income as against 66.26 lakhs in the immediately preceding year.
Jaitley, who had promised to phase out tax incentives from April 1, 2017 while reducing the corporate tax rate from 30% to 25%, disappointed India Inc as he only extended the benefit of reduced income tax of 25% for companies with annual turnover up to Rs 250 crore. Last year, he had reduced the income tax rate to 25% only for small companies with annual turnover of Rs 50 crore.
This budget aroused extensive curiosity not only as it was the first after the implementation of the goods and services tax (GST) but it also came close on the heels of the Central Statistics Office’s growth projection of 6.5% for the current financial year.
“The Budget has taken in a wide-angle view, attending to the ‘aam admi’ of the country. The outreach it has managed to achieve cutting across the spectrum - rural and infra sectors, MSME, salaried, and retired classes - while staying on course with fiscal consolidation has struck a fine balance between the needs of growth, social development, and investor confidence,” Zarin Daruwala, CEO, Standard Chartered Bank, India said.
The finance minister increased the disinvestment target for 2018-19, to Rs 80,000 crore from Rs 72,500 crore in the current financial year.
The budget also proposed to merge three public sector insurance companies—Oriental Insurance Co. Ltd, National Insurance Co. Ltd, and United India Insurance Co. Ltd into one mega entity, which would be then be listed on the bourses.
“Budget 2018 ..is betting big on expenditure led recovery of the rural economy with huge and unprecedented outlays on rural livelihood and agriculture credit no doubt encouraged by the spike in personal direct tax revenues with the increase in the tax base brought about by demonetisation and GST. In the process, the FM has consciously chosen to stretch the fiscal deficit target beyond 3% for the right reasons,” Sudhir Kapadia, national tax leader, EY India, said.
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