Budget 2017 – What’s in store?

Budget 2017 – What’s in store?

In a first-of-its-kind move, Finance Minister Arun Jaitley created history by merging the Union and Rail Budgets for 2017-18 and presenting them to the Parliament. In this Budget, FM emphasised mainly on agriculture, rural development, housing, small tax payers, and infrastructure growth among other key areas.

Maintained FRBM roadmap for Fiscal Deficit target of 3.2% for FY18. Planned to bring it down to 3% in FY19 The total expenditure for FY18 projected at Rs. 21.47 lakh crore Revenue was projected at Rs. 18.4 lakh crore Net market borrowing peggedatRs. 3.48 lakh crores after buyback in FY18 This was lower than Rs. 4.25 lakh crores of net market borrowing in the previous year Decrease in net borrowing is a big positive for India along with the reduction in target for Fiscal Deficit. Following are the 10 different themes. Finance Minister has set his agenda on ten distinct themes:

Agriculture     

Government remains committedtowards doublingfarmers’ income in 5 years It has fixed the target for agricultural credit in 2017-18 at a record high of Rs. 10 lakh crores Government announced a benefit of 60 days’ interest waiver on Dec 31, 2016 Dedicated Micro Irrigation Fund in NABARD is all set to achieve ‘per drop more crop’ with an initial investment of Rs. 5,000 crores Government would set up a Dairy Processing and Infrastructure Development Fund in NABARD with aninitialinvestment of Rs. 2000 crores.This would be increased to Rs. 8000 crores in the coming 3 years

Rural India   

MGNREGA allocation is atits highest ever at levels of Rs. 48,000 crores in 2017-18 The construction pace of PMGSY roads has been hastened to 133 km roads per day in 2016-17 compared with an average of 73 km during 2011-2014 Pradhan Mantri Awaas Yojana – Gramin’s allocation was increased from Rs. 15,000 crores in 2016-17 to Rs. 23,000 crores in 2017-18.The target is to complete 1 crore houses by 2019 for the homeless and people living in kutcha houses

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Achieving100% rural electrification by May 01, 2018 has been set as a mandate The government has allocated Rs. 187,223 crores for rural, agriculture, and allied sectors

Young Indian population   

The government has set a mandate to empoweryoungIndia through education, skills, and jobs.

The government will launch the Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme (SANKALP) at a cost of Rs. 4000 crores. SANKALP will provide market-specific training to around 3.5 crore Indian youth The government will launch the next phase of Skill Strengthening for Industrial Value Enhancement (STRIVE) in 2017-18 at a cost of Rs. 2,200 crores

The underprivileged and poor      

The government is committed towards strengthening systems of social security, healthcare, and affordable housing for the poor and underprivileged Indians In a key move, the government has given infrastructure status to affordable housing Individual housing loans of around Rs. 20,000 crore will be refinanced by National Housing Bank in 2017-18 Scheduled Castes allocation has been increased by 35% YoY Scheduled Tribes allocation has been increased to Rs. 31,920 crores Minority Affairs allocation has been increased to Rs. 4,195 crores

Infrastructure     

Provision of Rs. 241,387 crores has been made in 2017-18 for transportation sector including rail, roads, and shipping The government haspegged the total capital and development expenditure of Railways at Rs. 131,000 crores for 2017-18. This includes Rs. 55,000 crores provided by the government Rashtriya Rail Sanraksha Kosh will be created for passenger safety with aninitial corpus of Rs. 1 lakh crores over the next 5 years Budget allocation for highways has been increased from Rs. 57,976 crores in 2016-17 to Rs. 64,900 crores in 2017-18 PPP mode will be used to take up operation and maintenance of select airports in Tier 2 cities

Financial sector  

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The government has planned to abolish the Foreign Investment Promotion Board (FIPB) in 2017-18 whileworking on liberalisingthe FDI policy further A revised mechanism will be put in place along with proper proceduralguidelines for time-bound listing of select CPSEs on the stock exchanges. Railway PSEs such as IRCTC, IRFC, and IRCON will list their shares in stock exchange The government has proposed creation of an integrated public sector ‘oil major’, which will be able to compete strongly with international and localoil and gas players in the private sector The government plans to launch a new ETF with diversified CPSE stocks and other government holdings in 2017-18 The government has provisionedRs. 10,000 crores for recapitalisation of banks in 2017-18 in line with the ‘Indradhanush’ roadmap The government is planning to set the lending target under Pradhan Mantri Mudra Yojana at Rs. 2.44 lakh crores, withpriority provided to Dalits, Tribals, Backward Classes, and Women.

Digital India   

The government has proposed to set a mission with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS, and debit cards The government has proposed to mandate all government receipts through digital means beyond a prescribed limit The government has proposed to create a Payments Regulatory Board in the RBI by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems

Public service   

The government is working towards effective governance and efficient service delivery through people’s participation The government has planned to use the Head Post Offices as front offices for providing the publicwith passport services The government has made its e-market place functional for procurement of goods and services

Fiscal prudence       

The government strives to ensure that it strikes a balance between optimal deployment of resources and preservingthe country’s fiscal stability Capital expenditure allocation has been increased by 25.4% compared with the previous year Total resources being transferred to states and Union Territories with Legislatures is Rs. 4.11 lakh crores compared withRs. 3.60 lakh crores in 2016-17 FRBM Committee has recommended 3% fiscal deficit for the next three years with an eye on sustainable debt target and need for public investment.

Fiscal deficit for 2017-18 has been pegged at 3.2% of GDP. The government stays committed to bring it down to 3% in 2018-19 Net market borrowing of the government was restricted to Rs. 3.48 lakh crores after buyback in 2017-18.This was much lower than Rs. 4.25 lakh crores in 2016-17 Revenue Deficit reduced to 2.1% compared with 2.3% in 2016-17. For the next year, it is pegged at 1.9% against 2% mandated by the FRBM Act

Tax management         

The main mandate behind tax administration is to ‘honour the honest’ The government has allowed MAT credit to be carried forward for up to 15 years instead of the current 10 years The government has reduced income tax to 25% for companies with annual turnover of up to Rs. 50 crore.The objective behind this move was to make MSMEs more viable The government has reduced basic customs duty on LNG from 5% to 2.5% The government has reduced presumptive income for SMEs whose turnover is upto Rs. 2 crores from the current 8% of turnover to 6% of turnover, which is by non-cash means Transaction above Rs. 3 lakh would not be permitted in cash.However, this rule is subject to certain exceptions The government set the maximum amount of cash donation that a political party can receive from one personatRs. 2000 Existing rate of taxation for individualsfalling in the income slab of Rs. 2.5 – 5 lakhs has been reduced to 5% from the current rate of 10% There will be a 10% surcharge payable on tax for individuals with annual taxable income between Rs. 50 lakhs and Rs. 1 crore