Union Budget 2018

Highlights of Budget 2018-19
The much awaited Union Budget 2018-19 was tabled by the Finance Minister Shri Arun Jaitley on 1st Feb 2018. This is the first Budget after Goods and Services tax Act (GST) rollout which happened in June 2017
* Fiscal deficit is 3.5% of GDP at Rs 5.95 lakh crore in 2017-18. Projecting fiscal deficit to be 3.3% of GDP in the next fiscal 
* Rs 21.57 lakh crores transferred as net GST to states as against projection of Rs 21.47 lakh crores
Key Points from Budget 2018

  • Budget guided by mission to strengthen agriculture, rural development, health, education, employment, MSME and infrastructure sectors
  • Government says, a series of structural reforms will propel India among the fastest growing economies of the world. Country firmly on course to achieve over 8 % growth as manufacturing, services and exports back on good growth path.
  • MSP for all unannounced kharif crops will be one and half times of their production cost like majority of rabi crops: Institutional Farm Credit raised to 11 lakh crore in 2018-19 from 8.5 lakh crore in 2014-15.
  • 22,000 rural haats to be developed and upgraded into Gramin Agricultural Markets to protect the interests of 86% small and marginal farmers.
  • “Operation Greens” launched to address price fluctuations in potato, tomato and onion for benefit of farmers and consumers.
  • Two New Funds of Rs10,000 crore announced for Fisheries and Animal Husbandary sectors; Re-structured National Bamboo Mission gets Rs.1290 crore.
  • Loans to Women Self Help Groups will increase to Rs.75,000 crore in 2019 from 42,500 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 will be 1.38 lakh crore.  Welfare fund for SCs gets a boost.
  • World‟s largest Health Protection Scheme covering over 10 crore poor and vulnerable families launched with a family limit upto 5 lakh rupees for secondary and tertiary treatment.
  • Fiscal Deficit pegged at 3.5 %, projected at 3.3 % for 2018-19.
  • Rs. 5.97 lakh 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
  • Disinvestment crossed target of Rs 72,500 crore to reach Rs 1,00,000 crore
  • Comprehensive Gold Policy on the anvil to develop yellow metal as an asset class
  • 100 percent deduction proposed to companies registered as Farmer Producer Companies with an annual turnover upto Rs. 100 crore on profit derived from such activities, for five years from 2018-19.
  • Deduction of 30 percent 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 percent of consideration.
  • Proposal to extend reduced rate of 25 percent currently available for companies with turnover of less than 50 crore (in Financial Year 2015-16), to companies reporting turnover up to Rs. 250 crore in Financial Year 2016-17, to benefit micro, small and medium enterprises.
  • Standard Deduction of Rs. 40,000 in place of present exemption for transport allowance and reimbursement of miscellaneous medical expenses. 2.5 crore salaried employees and pensioners to benefit.
  • More concessions for International Financial Services Centre (IFSC), to promote trade in stock exchanges located in IFSC.
  • To control cash economy, payments exceeding Rs. 10,000 in cash made by trusts and institutions to be disallowed and would be subject to tax.
  • Tax on Long Term Capital Gains exceeding Rs. 1 lakh at the rate of 10 percent, without allowing any indexation benefit. However, all gains up to 31st January, 2018 will be grandfathered.
  • Proposal to introduce tax on distributed income by equity oriented mutual funds at the rate of 10 percent.
  • Proposal to increase cess on personal income tax and corporation tax to 4 percent from present 3 percent.
  • 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.
  • Proposed changes in customs duty to promote creation of more jobs in the country and also to incentivise domestic value addition and Make in India in sectors such as food processing, electronics, auto components, footwear and furniture.

Agriculture

  • The government’s emphasis will be on generating higher incomes for farmers, by helping them produce more with lesser cost, and in turn, earn higher income for their produce.
  • Jaitley stressed on the fact that India’s agricultural production is at a record high level today. 275 million tonne foodgrains and 300 million tonne fruits and vegetable have been produced in the country.
  • The FM said the government wants farmers to earn 1.5 times the production cost, and the Minimum Selling Price (MSP) for the Kharif Crops has been set at 1.5 times the produce price. Jaitley said the Centre will work with states to ensure that all farmer get a fair price.
  • Agricultural market and infra fund of Rs 2000 crore fund will be set up to strengthen the market connectivity.
  • A sum of Rs 500 cr will be allocated for Operation Green to be launched to address price voltility of perishable commodities like potato, tomato, and onion. It will promote agricultural products, Farmers Producers Organizations (FPOs), agri-logistics, processing facilities and professional management.
  • Extend the facility of Kisan credit card to fisheries and for animal husbandry
  • Rs 10,000 crore set aside for Fisheries and Aquaculture Development Fund
  • Rs 10,000 crore set aside for animal husbandry infra fund
  • Propose to launch a restructured bamboo mission with a fund of Rs 1200 crore . “Bamboo is green gold,” Jaitley said.
  • Agricultural credit target increased from Rs 8.5 lakh crore to Rs 11 lakh core
  • Special scheme to manage crop reduce in Haryana, Punjab and Delhi to reduce pollution
  • 22,000 RURAL HAATS TO BE DEVELOPED AND UPGRADED INTO GRAMIN AGRICULTURAL MARKETS (GRAMS) FOR FARMERS TO DIRECTLY SELL TO CONSUMERS AND BULK PURCHASERS

 

Rural Economy

  • 8 crore poor women will get new LPG connections.
  • PM Saubhagya Yojana: 4 crore poor people will get power connection. The government will spend Rs 16,000 crore on this scheme.
  • Govt plans to construct 2 crore toilets in next fiscal year under Swach Bharat Mission
  • Government target house for all by 2022. 51 lakh houses have been constructed affordable houses in rural and further 50 lakh houses in urban areas.
  • 1 cr houses to be built under Pradhan Mantri Awas Yojana in rural areas
  • National livelihood scheme gets Rs 5,750 crore .
  • In 2018-19, ministries will be able to spend Rs 14.34 lakh crores for creation of livelihood in rural areas.
  • Govt gives Rs 9,975 crore for social security schemes for the next fiscal year.
  • Aannounced the launch of Galvanizing Organic Bio-Agro Resources Dhan (GOBAR-DHAN)

Education

“EDUCATION WILL BE TREATED HOLISTICALLY FROM PRE-NURSERY TO
CLASS XII”, SAYS FINANCE MINISTER

Education now has become a necessity.  Government also plans to launch two new schools of Planning and Architecture. The government will build Eklavya schools to ensure that Scheduled Tribe populations get access to education.

  • Govt to increase digital intensity in education. Technology to be the biggest driver in improving quality of education: FM Jaitley
  • Rs. 1 lakh crore allocated to revitalisation and upgradation of education sector named as “Revitalising Infrastructure and Systems in Education (RISE)“. Promoting learning based outcomes and research.
  • By 2022, every block with more than 50 per cent ST population will have Ekalvya schools at par with Navodaya Vidyalayas
  • Aims to move from black board to digital board schools by 2022.
  • PM Research fellows: Govt will identify 1000 B.tech students each years and provide them to do PHDs in IIT and IISc, while also teaching undergraduate students once a week at that time.
  • 18 new Schools of Planning & Architecture (SPAs) will also be established
  • Rs.9, 975 crore has been allocated for the National Social Assistance Programme

Health

  • Aayushman Bharat programme: 1.5 lakh centres will be set up to provide health facilities closer to home. Rs 1,200 crore to be allocated for this programme
  • Flagship National Healthcare protection scheme, with approximately 50 crore beneficiaries. Up to Rs 5 lakh per family per year for secondary and tertiary care hospitalisation. World’s largest government-funded healthcare programme.
  • Universal health coverage will be expanded after seeing the performance of the scheme
  • Rs 600 crore allocated for tuberculosis patients, at the rate Rs 500 per month during the course of their treatment.
  • Jaitley announces setting up of one medical college for every three parliamentary constituencies, with 24 New government medical colleges also being envisioned. Government also will work on upgrading hospitals to medical colleges

Railways

  • 4000 kilometers of electrified railway network is slated for commissioning during 2017-18.
  • Mumbai‟s local train network will have 90 kilometers of double line tracks at a cost of over Rs.11,000 crore.
  • 150 kilometers of additional suburban network is being planned at a cost of over Rs.40,000 crore, including elevated corridors on some sections.
  • A suburban network of approximately 160 kilometers at an estimated cost of Rs.17,000 crore is being planned to cater to the growth of the Bengaluru metropolis.

Aviation

  • Proposal to increase airport capacity by 5 times to handle more than one billion trips every year named as NABH Nirman
  • The Regional connectivity scheme of UDAN (Ude Desh ka Aam Nagrik) was initiated by the Government last year. Now 56 unserved airports and 31 unserved helipads would be connected to it.

For senior citizens

  • Exemption of interest income on deposits with banks and post offices to be increased from Rs. 10,000 to Rs. 50,000.
  • 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 Rs. 30,000 to Rs. 50,000 under section 80D.
  • Increase in deduction limit for medical expenditure for certain critical illness from Rs. 60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens) to Rs. 1 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 Rs. 15 lakh from the existing limit of Rs. 7.5 lakh per senior citizen.

Markets

  • Govt to take additional measures to strengthen environment for venture capitalists and angel investors.
  • SEBI to consider mandating large corporations to meet 1/4th of their debt needs
  • SEBI to mull asking large cos to meet 25% debt from bond market
  • RBI norms to nudge companies to access bond market for funds

Technology

  • Allocation to Digital India scheme doubled to Rs 3073 cr
  • 5 lakh WiFi HotSpots to provide Broadband access to 5 crore rural citizens, at the cost of Rs 10,000 cr.
  • Government will take measures to stop cryptocurrency circulation, as it is not considered legal tender
  • Government will explore the usage of Blockchain technology.

Banking

  • Recapitalization will pave the way for public banks to lend an additional Rs 5 lakh crore.
  •  Three public sector general insurance companies — National Insurance Co Ltd, United India Assurance Co Ltd and Oriental India Insurance Company — will be merged into a single insurance company and be subsequently listed
  • Government does not consider cryptocurrency as legal tender and will work towards eliminating illicit transactions going on through crypto assets.
  • Disinvestment target of Rs. 80,000 crore for 2018-19.
  • Bank recap to help banks lend additional Rs. 5 lakh crores.
  • 24 Public Sector Units to be divested.

Other key points of Union Budget 2018

  • 5 lakh WiFi hotspots to be established in rural areas to ensure easy internet access
  • Elimination of the use of cryptocurrencies via government policies
  • Amrut program for water supply: Supply of water to all households in 500 cities.
  • World’s largest Government-funded health protection scheme: Cover 10 crore poor families
  • Proposal of a long term capital gain exceeding Rs 1 lakh at 10 per cent without indexation
  • Redevelopment activity of 600 major railway stations across the country. Capital expenditure of Rs 1,48,528 crore for Indian Railways in 2018-19
  • Escalate bank account numbers to 60 crore accounts under the Jan Dhan Yojana
  • The government also reiterated their mission to provide homes to all Indians by 2022
  • Income tax will be assessed electronically
  • No changes in Income tax slabs. Also, the FM proposed a fiscal deficit of 3.3% of GDP for 2018-19

 

Miscellaneous

  • Defence outlay raised to Rs 2.82 lakh crore in 2018-19 from Rs 2.67 lakh crore in current year
  • Food subsidy to rise to Rs 1.69 lakh crore in 2018-19 from Rs 1.4 lakh crore in current year.
  • Emoluments for President set at Rs 5 lakh, Rs 4 lakh for Vice President, Rs 3.5 lakh for governors
  • Emoluments for Parliamentrians: Law for increase in pay based on index to inflation
  • Govt earmarks Rs 150 cr to commemorate 150 years of birth of Mahatma Gandhi.

Further Reading:

With many points from Economic Times

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