Budget 2018-19 projects high growth with fiscal prudence

Finance minister Arun Jaitley today presented the National Democratic Alliance government's fifth and last budget that aims to address issues related to agriculture, job creation and financial sector reforms while maintaining fiscal discipline amidst financial and economic restructuring.

Presenting the General Budget 2018-19 in Parliament today minister of finance and corporate affairs Arun Jaitley said Indian society, polity and economy had shown remarkable resilience in adjusting with the structural reforms.

He said the Budget projections are largely in tandem with the International Monetary Fund's latest update of its forecast that India will grow at 7.4 per cent next year in the backdrop of services resuming high growth rates of over 8 per cent, exports expected to grow at 15 per cent in 2017-18 and manufacturing back on good growth path.

Jaitley reiterated the NDA government's pledge to give the nation an honest, clean and transparent administration and to build a strong, confident and a New India and said the Narendra Modi-led government has successfully implemented a series of fundamental structural reforms to propel India among the fastest growing economies of the world

Jaitley says the country is firmly on course to achieve over 8 per cent growth in the 2018-19 fiscal with manufacturing, services and exports back on the growth path and a series of structural reforms will propel India among the fastest growing economies of the world.

The Budget projects a 7.2 to 7.5 per cent growth in the country's gross domestic product (GDP) in the second half of the current fiscal and the finance minister says the economy is ''firmly on path to achieve 8 per cent plus growth soon''

The Budget estimates Rs1,38,000 crore expenditure on health, education and social security for the coming fiscal.

Jaitley has set aside Rs1,49,000 crore as capital expenditure for the Railways for the 2018-19 fiscal.

The finance minister also proposed the setting up of a Rs300,000 crore plan for lending to small enterprises and said he will soon announce measures to address bad loans problem of small and medium enterprises.

Besides, the finance minister proposed an increase in lending to agriculture sector to Rs10,00,000-11,00,000 crore as the government shifts focus to strengthening rural, agriculture economy.

With a view to make agricultural activities remunerative, Jaitley proposed an increase in minimum support price of all crops to at least 1.5 times of production cost. Besides, the government will liberalise export of agricultural commodities.

On the lines of the Dairy Infrastructure Fund, Jaitley also announced the setting up of a Fisheries and Aqua culture Infrastructure Development Fund (FAIDF) for fisheries sector and an Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of animal husbandry sector with a total corpus of Rs10,000 crore.

Anew scheme `Operation Green' on the lines of `Operation Flood' with an outlay of Rs500 crore has been proposed to address the challenge of price volatility of perishable commodities like tomato, onion and potato with the satisfaction of both the farmers and consumers. He also announced to develop and upgrade existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs) to take care of the interests of more than 86 per cent of small and marginal farmers. These GrAMs, electronically linked to e-NAM and exempted from regulations of APMCs, will provide farmers facility to make direct sale to consumers and bulk purchasers. Moreover, an Agri-Market Infrastructure Fund with a corpus of Rs2,000 crore will be set up for developing and upgrading agricultural marketing infrastructure in the 22,000 Grameen Agricultural Markets (GrAMs) and 585 APMCs.

The budget proposes increased focus on traditional sectors like textiles and leather, including quality upgradation and productivity improvement, in order to both increase employment and economic growth.

To ensure employability of the youth, the budget proposes to give emphasis to skill development through increased use of information and communication technology.

While the Union Budget for fiscal year April-March 2018-19 is a test for the Narendra Modi-led government to maintain fiscal discipline without stifling economic growth, finance minister Arun Jaitly also managed to withstand pressures arising from the upcoming assembly elections to eight state assemblies and the general elections due next year.

Jaitley said the emphasis will be on fiscal prudence and optimum utilisation of resources. Yet, he said, the Budget 2018-19 will provide for stepped-up funding for both existing programmes like MNREGA, rural housing, irrigation projects and crop insurance and new rural schemes.

With budget allocation of Rs48,000 crore for MNGRA, the government will ensure minimum 100 days wages to one member of all rural families, Jaitley said, adding that provision has also been increased for rural health and sanitation programmes as well as drinking water and irrigation programmes.

Finance minister Arun Jaitley's budget for the 2018-19 fiscal year pegs fiscal deficit target at 3.3 per cent of GDP for 2018-19 fiscal against the current year estimates of 3.5 per cent.

Union Budget 2018-19: Key points
Here are the key pointsof the Union Budget 2018-19 presented in Parliament by finance minister Arun Jaitley today.

• Focus on agriculture, rural development, health, education, employment, MSME and infrastructure sectors;
• Structural reforms to propel economy as the one of the fastest growing economies with over 8 per cent growth;
• Manufacturing, services and exports back on good growth path;
• MSP for all outstanding kharif crops to be one and half times of their production cost;
• Institutional farm credit raised to Rs11,00,000 crore in 2018-19 from Rs8,500,000  crore in 2014-15;
• 22,000 rural haats to be developed and upgraded into Gramin Agricultural Markets to protect the interests of 86 per cent small and marginal farmers;
• ''Operation Greens'' launched to address price fluctuations in potato, tomato and onion;
• Two new funds of Rs10,000 crore announced for fisheries and animal husbandry sectors; Re-structured National Bamboo Mission gets Rs1,290 crore;
• Loans to Women Self Help Groups to increase to Rs75,000 crore in 2019 from Rs42,500 crore last year;
• Higher targets for Ujjwala, Saubhagya and Swachh Mission to cater to lower and middle class in providing free LPG connections, electricity and toilets;
• Outlay on health, education and social protection raised to Rs1,38,000 crore. Tribal students to get Ekalavya Residential School in each tribal block by 2022. Welfare fund for SCs gets a boost;
• World's largest Health Protection Scheme covering over 100 million poor and vulnerable families launched with a family limit up to Rs5 lakh for secondary and tertiary treatment'
• Fiscal deficit for 2017-18 pegged at 3.5 per cent, projected at 3.3 per cent for 2018-19;
• Rs5,97,000 crore allocation for infrastructure;
• Ten prominent sites to be developed as Iconic tourist destinations;
• NITI Aayog to initiate a national programme on Artificial Intelligence(AI);
• Centres of excellence to be set up on robotics, AI, Internet of things etc;
• Divestment crossed target of Rs72,500 crore to reach Rs1,00,000 crore;
• Comprehensive Gold Policy on the anvil to develop yellow metal as an asset class;
• Farmer Producer Companies with annual turnover up to Rs100 crore to get 100 per cent deduction on profit derived from such activities for five years from 2018-19;
• Deduction of 30 per cent on emoluments paid to new employees Under Section 80-JJAA to be relaxed to 150 days for footwear and leather industry, to create more employment;
• No adjustment in respect of transactions in immovable property where Circle Rate value does not exceed 5 per cent of consideration;
• Concessional rate of 25 per cent for micro, small and medium enterprises with turnover of less than Rs50 crore (in financial year 2015-16), to be extended to companies with turnover up to Rs250 crore in financial year 2016-17;
• Standard deduction of Rs40,000 in place of present exemption for transport allowance and reimbursement of miscellaneous medical expenses. To benefit about 25 million salaried employees and pensioners'\;
• Relief to Senior Citizens:
• Exemption of interest income on deposits with banks and post offices to be increased from Rs10,000 to Rs50,000;
• TDS not required to be deducted under section 194A. Benefit also available for interest from all fixed deposit schemes and recurring deposit schemes;
• Hike in deduction limit for health insurance premium and/ or medical expenditure from Rs30,000 to Rs50,000 under section 80D;
• Deduction limit for medical expenditure for certain critical illness raised from Rs60,000 (in case of senior citizens) and from Rs80,000 (in case of very senior citizens) to Rs1 lakh for all senior citizens, under section 80DDB;
• Proposed to extend Pradhan Mantri Vaya Vandana Yojana up to March 2020;
• Current investment limit proposed to be increased to Rs15 lakh from the existing limit of Rs7.5 lakh per senior citizen;
• More concessions for International Financial Services Centre (IFSC), to promote trade in stock exchanges located in IFSC;
• To control cash economy, payments exceeding Rs10,000 in cash made by trusts and institutions to be disallowed and be subject to tax;
• Tax on long term capital gains exceeding Rs1 lakh at the rate of 10 per cent, without allowing any indexation benefit. However, all gains up to 31 January, 2018 will be grandfathered;
• Proposal to introduce tax on distributed income by equity oriented mutual funds at the rate of 10 per cent;
• Cess on personal income tax and corporation tax proposed to be increased to 4 per cent from present 3 per cent;
• Proposal to roll out e-assessment across the country to almost eliminate person to person contact leading to greater efficiency and transparency in direct tax collection; and
• Changes in customs duty proposed to to incentivise domestic value addition and Make in India in sectors such as food processing, electronics, auto components, footwear and furniture.