Finance Minister (FM) Arun Jaitley presented the 2018 Budget earlier today morning. The FM assured that the economy will grow at 7.2%-7.5% in the second half of 2017-18, and is on track to achieve 8% growth in the near future. Prime Minister Modi appreciated the Budget and praised Jaitley for a fine balancing act which caters to all sections of the society.
1. Income and Taxation: The Income Tax slabs (which were amended last year) have been left unchanged, although a standard deduction of Rs. 40,000 for transport and medical expenses for salaried employees has been introduced. The government will also contribute 12% of EPF contribution for new employees in all sectors for three years. The EPF contribution for women employees has been proposed to be brought down from 12% to 8%.
2. Stock Market: The stock markets witnessed an immediate red, owing to the revision of the fiscal deficit for 2017-18 to 3.5% and for 2018-19 at 3.3%. Furthermore, the proposal of Long-Term Capital Gains exceeding 1 lakh to be taxed at 10% without indexing was also not initially received well. At the time of publication, however, the knee-jerk reaction had given way to recovery, and the markets were in green again.
3. Healthcare: An ambitious National Health Protection Scheme has been proposed to cover ten crore poor and vulnerable families. In effect, 50 crore beneficiaries will be covered under the scheme. The government will provide up to Rs. 5 lakh per family per year for secondary and tertiary care hospital.
4. Education: The FM proposed refocusing on infrastructure, opening more schools for the ST population and also promoting programs for teachers to improve quality training and teaching.
5. Senior Citizens: Senior Citizens get Rs. 50,000 exemption for medical insurance, and also Rs. 10,000 exemption in income from Fixed Deposits.
6. Agriculture: There was a reiteration to the commitment to double farmers’ income by 2022, and the FM increased the Minimum Support Price (MSP) of all crops to at least 1.5 times to that of the production cost. Furthermore, Rs. 2,000 was allocated to developing agricultural markets, Rs. 500 crore for ‘Operation Green’ to promote processing facilities, professional management, etc.
7. India Inc.: a Corporate Tax rate of 25% has been extended to companies with a turnover of up to Rs. 250 crore for FY 2016-17. The FM also proposed a unique ID for individual enterprises, which has been understood as quasi-Aadhaar identification for organizations.
8. Government Disinvestment: The FM proposed to merge government insurance companies into a single entity, as part of the Rs. 80,000 crore disinvestment target for 2018-19. As for the current financial year, the FM reported that the target has been exceeded and will touch Rs. 1 lakh crore.
9. Digitisation: The government proposed to set up 5 lakh Wi-Fi hotspots, and allocated Rs. 10,000 crore under the telecom infrastructure. Additionally, the FM said that crypto-currencies are not legal tender and are used to fund illegitimate transactions.
10. Railways: Like last year, the Railway budget was included in the General budget and an allocation of Rs. 1, 48, 528 crores for the Railways for 2018-19 has been announced. Furthermore, installation of Wi-fi and CCTVs across all trains has also been proposed.
Other important highlights of the budget:
- The Custom duty on mobile phones has been increased from 15% to 20%.
- The salaries of the President, Vice-President have been proposed to be increased to Rs. 5 lakh per month and Rs. 4 lakh per month respectively. For Members of Parliament, there is a proposal to provide an automatic revision of emoluments every 5 years, indexed to inflation.
- As per Budget 2018, Bengaluru Metro will get Rs 17,000 crore and Rs 11,000 crore will be allocated to Mumbai rail network.
- The FM proposed help to the states of Delhi, Haryana, and Punjab to curb the challenge of excessive air pollution.
- For the Armed Forces, the FM said the government will bring out a new industry-friendly policy to boost domestic defense production.
- Capital gains made on shares until Jan 31 will be grandfathered; short-term capital gains remain unchanged at 15%.
Watch this space for more coverage of the Budget 2018!
(This is the sixth of an eight-part series of the People Matters: Budget 2018 Series)