- Naba Raj Chetri and Bibhu Krishna Talukdar.
Finance Minister Arun Jaitley on (29th February) Monday presented his third Union Budget. With an eye on supporting the small tax-payer and the small investor, the Minister announced a slew of schemes, and income tax exemptions.
Jaitley announces the nine pillars of his Budget —
1) Agriculture and farmers' welfare:
The budget announced on Monday placed a renewed focus on the farm sector in a bid to revive agriculture growth and improve farm incomes at a time when rural India is going through a protracted period of distress.
The series of measure announced are:-
i) Under Pradhan Mantri krishi sinchai yogna (PMKSY), 28.5 lakh hectares will be brought under irrigation.
ii) 89 projects under the Accelerated Irrigation Benefits Programme (AIBP) covering 80.9 lakh hectares that are languishing will be fast-tracked. The centre is to spend 17000 crore in this project next year.
iii) Pradhan Mantri fasal bima yogna (PMFBY)s amount allocated has more than doubled from Rs. 2589 crore in 2015-16 to 5500 crores in 2016-17.
iv) Rs 15000 crore for interest subvention, to remove burden of loan on farmers.
v) Long term irrigation fund in NABARD with initial corpus of 20000crore.
vi) The overall budget for the agriculture sector was raised by over 44%, from Rs.24,909 crore in 2015-16 to Rs.35,984 crore in 2016-17.
The aim is basically double the income of the farming class by 2020.
2) Rural sector:
i) Total allocation: 87,765crore.
ii) 2.87 lakh crore to Gram panchayat and municipality as per the recommendation of 14th Finance Commission.
iii) New scheme Rashtriya Gram Swaraj Abhiyan proposed with allocation of Rs 655 crore.
iv) A new Digital Literacy Mission Scheme for rural India to cover around 6 crore additional household within the next 3 years.
v) 100% village electrification by 1st may2018
vi) Shyama Prasad Banerjee Rurban mission- 300 rurban centres.
vii) A sum of 38,500 crore for MNREGA
viii) Pradhan Mantri Gramin Sadhak Yogna (PMGSY)- allocated 27000 crore
ix) Digital literacy Scheme mission scheme launched to cover 6 crore additional household.
3) Social sector including healthcare
i) 3,000 Stores under Prime Minister’s Jan Aushadhi Yojana will be opened during 2016-17.
ii) National Dialysis Services Programme’ to be started under National Health Mission through Public Private Partnership (PPP) mode.
iii) New Health Protection scheme will provide health cover up to Rs.1 lakh per family and additional Rs. 30,000 for senior citizens
iv)National Scheduled Caste and Scheduled Tribe Hub to be set up in partnership with industry associations
v) Allocation of Rs 100 crore each for celebrating the Birth Centenary of Pandit Deen Dayal Upadhyay and the 350th Birth Anniversary of Guru Gobind Singh.
i) Increased allocation to Sarva Siksha Abhiyan.
ii) 62 new Navodayas to be set up.
iii) Regulatory architecture to 10 public and 10 private institutions to emerge them as world class teaching and research institute,
iv) Digital depository for school leaving certificate, college degrees, academic awards etc.
v) Creation of a Higher Education Funding Agency (HEFA) has been announced with a fund of Rs 1,000 crore, mostly to readdress the problem of student seeking educational loans.
5) Skills and job creation
i) Pradhanmantri kushal vikas yogna - 1700 crore sanctioned to set up 1500 multi skilled training institute.
ii) National Board for skill development certification to skill 1crore youth in next 3 years.
iii)100 model career centres.Model shops and establishment to be set up.
iv) Govt to pay 8.33% on behalf of all new employees for the first 3 years of enrolling to Employee providence fund ( EPF).
v) Entrepreneurship Educational and Training- 2200 colleges, 300schools, 500 ITIs and 50vocational training centre.
For placement, the government intends to link state employment exchange with the National Career Service.
vi) Small and medium shops will be allowed to remain open all seven days of the week to encourage employment of more personnel to man shops.
i) 70 languishing project, covering 8300 km covered.
ii) Record 10000 km of national highways to be approved in 2016-17
iii) Total investment in roads including PMGSY- 97000 crore
iv) Total outlay for infrastructure increased to 2,21,246 crore
v) Revive 160 unserved and underserved airport in partnership with state governments.
7) Financial sector reforms,
i) Amendments in Sarfaesi Act 2002, to allow sponsors of ARC to hold 100% stake in ARC.
ii) Comprehensive code on resolution of financial firms to be introduced.
iii) Deepening of corporate bond market.
iv) Financial data management centre to be setup for data aggregation and analysis.
v) Roadmap for consolidation of public sector bank.
vi) Allocation of Rs 25000 crore towards recapitalization of public sector banks.
8) Fiscal discipline:
i) Fiscal deficit capped at 3.5% for 2016-17.
ii) Planned/ Non planned classification to be done away from 2017-18
iii) Every new sanctioned scheme to have sunset day and outcome review.
iv) Planned expenditure Rs. 5.5 lakh crore; increase of 15.3%
9) Tax reforms to reduce compliance burden.
i) Tax rebate upto 5lakh income rose from 2000 to 5000, which will seemingly relief 2 crore taxpayers.
ii) 13 cesses by various ministries with turnover less than 50crores levied
iii) Roadmap to reduce corporate tax while phasing out tax exemption.
iv) Rent reduction limit increased from 24000 to 60000.
v) Sur-charge to be raised from 12% to 15% on persons, other than companies, firms and cooperative societies having income above Rs. 1 crore.
vi) Krishi Kalyan Cess, @ 0.5% on all taxable services, w.e.f. 1 June 2016.
vii) Infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles and SUVs.
viii) Clean Energy Cess’ levied on coal, lignite and peat renamed to ‘Clean Environment Cess’ and rate increased from `200 per tonne to `400 per tonne.
ix) Excise duties on various tobacco products other than beedi raised by about 10 to 15%.
Things that gets costlier
4.All services like bill payments, eating out, air travel
5.Gold and diamond
6.Water including mineral water, aerated water containing added sugar or sweetening matter
7.Goods and services above Rs 2 lakh in cash
9.Industrial solar water heater
12.Imported Golf Cars
Items that will turn cheaper
3.Router, broadband modems and set top boxes, Digital video recorder and CCTV cameras
4.Hybrid electric vehicles
6.Low cost houses with less than 60 sq mt carpet area
7.Hiring of folk artists for performance
Hits and misses of this budget
1) The Finance Minister announced cuts of tax rates on start-ups to 25 per cent and reduces taxes on companies with turnover less than Rs 5 crore by 1 per cent.
2) Relief to those in rented houses; deduction raised from 24,000 to 60,000.
3) An allocation of Rs.55,000 crore in the Budget for Roads and Highways has been proposed which will be further topped up by additional Rs. 15,000 crore to be raised by NHAI through bonds. The total investment in the road sector including PMGSY allocation would be 97,000 crore during 2016-17.
4) Ease of doing business has been one of the most vociferous pitches from Modi government. To that effect, FM today announced that it will introduce a bill to amend the Companies Act, 2013 in the current Budget Session of the Parliament. The Bill would also improve the enabling environment for start ups as it will allow registration of companies be done in one day.
5) Setting up a health cover of Rs 1lakh per family besides additional Rs 30000 for senior citizens. Opening of 30000 generic medicine stores and "National Dialysis Service Programme" is also an added advantage.
1) Income slab remained unchanged.
2) Car & SUV prices to increase substantially which can cause major drop in demand. And additional 1% infrastructure cess to be levied on Petrol, CNG, LPG cars while 2.5% infrastructure cess to be levied on diesel cars below certain engine capacity and 4% on bigger diesel cars and SUV. While an additional 1% extra luxury cess to be put on cars priced above Rs 10 lakh.
3) The government decided to impose tax at the time of withdrawal on 60 per cent of the contributions made after 1 April, 2016, to EPF( Employee Providence Fund) and other schemes. The proposal has come as an unexpected shocker for the salaried class. The govt has meanwhile clarified that there would be no taxation on PPF
(PPF, a statutory scheme by the central government, started with the objective of providing old age income security to self-employed individuals and workers from unorganised sectors.
EPF, on the other hand, is a retirement benefit applicable only for salaried employees. It is a fund to which both the employee and employer contribute 12 per cent of the former's basic salary amount each month. This percentage is pre-set by the government.)
The Union Budget brings with it great expectations for the upcoming financial year, let's have a look at some interesting facts about it –
1) The first union budget of independent India was presented by R.K. Shanmukhan Chetty on 26 November, 1947.
2) The budget is usually presented on the last working day of February. The finance ministry officials involved in printing and proof-reading of the union budget are locked up in a basement of the north bloc 10 days prior to budget day. They are released only after presentation of the budget.
3) The printing of the budget of India starts with ' Halwa Ceremony '.
4) The budget comes into effect from the first of April. So, the Lok Sabha gets 1 month to discuss and vote on the budget.
5) Moraji Desai hold the distinction of presenting the union budget the maximum no. of times that is 10.
6) Indira Gandhi remains the only women to present the union budget ( 1969-70). Jawaharlal Nehru (1958-59), Indira Gandhi (1969-70) and Rajiv Gandhi (1987-89) are the only Prime Ministers to present the union budget.
7) The word budget is derived from the French word- 'Bougette', meaning a leather bag used for carrying coins. Hence, the budget is usually presented in a leather brief case.
8) Service Tax was first introduced by Manmohan Singh in the union budget of 1994-95 .
9) In 2001, the then finance minister Yashwant Sinha, changed the time of presentation of budget to 11am from 5pm.