India’s Finance Minister Arun Jaitley is no new hand. A veteran in politics with nearly 30 years of expertise, Jaitley has been known as one of the most trusted politicians in Prime Minister Narendra Modi’s cabinet.
Presenting the Budget a month in advance from the usual, the Finance Minister outlined three broad agendas - transform, energise and clean India – for the coming year. The FM said government’s focus will be on ten themes including jobs, infrastructure, digitization and fiscal management.
15 key announcements made in the India’s Budget 2017.
Jaitley said the government has set agriculture credit target at INR 10 lakh crore this year. The corpus for long-term irrigation fund under NABARD to be enhanced to INR 40,000 cr Vs INR 20,000 cr. The government will also dedicate a micro-irrigation fund to be set up by NABARD to achieve goal of Per Drop More Crop, with an initial corpus of INR 5000 cr.
Jaitley said the government aims to complete 1,00,00,000 houses by 2019 for houseless and those living in kaccha houses. In line with PM’s vision of Affordable Housing for All by 2022, affordable housing will be given infrastructure status.
Jaitley said allocation for schemes for rural India is pegged 24 percent higher at over INR 1,87,000 cr mission to make 50,000 gram panchayats poverty free by 2019. INR 48,000 cr has been allocated for Mahatma Gandhi National Rural Employment Gurantee Act (NREGA).
The government envisions 100 percent village electrification to be achieved by May 1, 2018.
Jaitley said total allocation for infrastructure sector in over INR 3,96,000 cr. For the road sector, finance minister has allocated INR 67,000 crore for the national highways in 2017-18 compared to INR 57,676 crore in 2016-17.
The government said it is allocating INR 19,000 crore towards Pradhan Mantri Gram Sadak Yojana (PMGSY) that may result in a total capital expenditure of INR 27,000 crore.
Jaitley said railways will integrate end to end transport solutions for selected commodities through partnership. Railway safety fund to be launched, corpus of 1 lakh cr over 5 years. New policy on Metro Rail to be introduced, will facilitate greater private investment. 3,500 km railway lines to be commissioned in 2017-18 as against 2,800 km in 2016-17.
The government has withdrawn service charge on e-tickets booked through IRCTC.
The government plans to abolish foreign investment promotion bureau. Reform to streamline foreign direct investments in India will be undertaken. The government has proposed to create an integrated public sector oil behemoth; could look at M&A of other PSUs also.
Jaitley pegged divestment target at INR 72,500 crore in FY18 by divesting stakes in public sector firms, compared to a target of INR 56,500 crore for this fiscal. The FM said the government will continue the use of ETFs for divestment.
Jaitley said Digi Gaon initiative will be launched to provide tele-medicine, education & skills through digital technology. 2,500 cr digital transactions are targeted in FY18. Aadhaar-enabled payment system to be launched shortly for those without debit cards, mobile phones.
The government also removed all taxes on PoS machines to push digital payments.
Arun Jaitley said the pace of remonitisation has picked up and the impact of demonetisation will not spill over to next year. He said demonetisation’s impact will only be short-term. The move was to create a new normal for a bigger, cleaner GDP and slowdown if any will be only transient.
The government said professionals earning up to INR 3 lakh will enjoy zero tax liability and slashed taxes to 5 per cent instead of 10 per cent for individuals earning INR 2.5 – INR 5 lakh a year. A single-page income tax return filing form for taxable income under INR 5 lakh to ease tax filing is introduced. Those with income between INR 50 lakh and INR 1 crore, 10 per cent surcharge will be imposed, Jaitley said.
The government outlined the maximum amount of cash donation by an individual to a political party at INR 2,000 in cash, a sharp drop from the INR 20,000 earlier.
Presenting the Union Budget for 2017-18, Jaitley said political parties can take donations from donors through cheque and digital payments. The move is expected to stimulate greater transparency in political funding.
Jaitley said 100 India International Skill Centers will be developed across the country. The government plans to train 3.5 crore youth under the Sankalp program.
The government will set up national testing agency to conduct all exams for higher education so that CBSE and AICTE can focus on academics. Colleges will be given autonomous status.
The government intends to launch Swayam, a platform with over 300 online courses to push virtual education.
Jaitley said the government plans to infuse already planned 100 billion rupees of capital into PSU banks in 2017-18. The government proposes to raise allowable provision for bad loans in banks to 8.5 percent from current 7.5 percent.
An important step towards curbing economic offenders will be to introduce new law to confiscate assets of accused who flee the country.
The government did not do much on subsidies with marginal increase in a few. Budget allocation to health is seen at 489 billion rupees in 2017-18 compared with 399 billion rupees. Food subsidy is estimated at 1.45 trillion rupees in 2017-18 compared with 1.35 trillion rupees earlier. Fuel subsidy is seen at 250 billion rupees versus 275 billion rupees.
There is no change in fertilizer subsidy, which is seen at 700 billion rupees for 2017-18.