Finance Minister, Arun Jaitley presented Modi Government’s maiden budget in the Parliament on Saturday. The entire country eagerly awaited the shape and content of this Government’s budget as it affects each and every family in the country. The budget of PM’s treasurer focuses on improving infrastructure, cutting the fiscal deficit and boosting investment so that growth would accelerate to 8-8.5% in India’s next financial year starting in April. “While global growth forecasts are coming down, India’s forecasts are either maintaining or scaling up,” said the Finance Minister in his budget speech in Parliament. He promised to overhaul Government finances, reduce corporate tax in phases and remove business bottlenecks. Tweeting after the presentation of his Government’s first full-year budget the Prime Minister said it was pro-poor, pro-growth, pro-middle class, pro-youth and paradigm shifting budget.
The emphasis of the budget is on “quantum leap” since the Finance Minister believes that incremental change would not take the country far. The budget announcements, however, did not reveal any sweeping economic overhaul measures, or unveil any ‘big bang reforms’ as some have termed it. Expectations were sky-high as a reworking of calculations this year has catapulted India to forefront among the world’s fastest-growing economies, even overtaking China. A pace of 7.4 percent growth is expected in the current year ending in March, claims the Government. The fiscal deficit target for the 2014-2015 year would be on target of 4.1% of its gross domestic product. Jaitley set the country’s fiscal deficit target for the 2015/16 fiscal year at 3.9 percent of gross domestic product and said it would reduce the target gradually to 3 percent by 2017/18, one year later than previously expected. Falling global oil prices have given the Government the room to spend on creating infrastructure without increasing inflation or messing with fiscal deficit targets.
The Government would invest a further 700 billion rupees (over $11 billion) this year, and announced a national investment infrastructure fund. Five ultra-mega power projects of 4,000 MW capacity each are planned. The Government will introduce tax-free infrastructure bonds for road, rail and irrigation projects. The focus will be on additional road and ports projects. The Government would look to improve the effectiveness of its rural job creation scheme, its costliest welfare measure, by increasing digital welfare payments that go directly into the bank accounts of the poor.
Coming to benefits to ordinary people and households, the budget promises no change in the income tax rates or increasing the exemption limits for individuals. FM has proposed increasing the range of tax deductible investments/spend. Asking rich and wealthy to pay higher tax, he abolished the wealth tax but increased the surcharge to 12 per cent on individuals earning Rs 1 crore and above annually and on firms with an annual income of Rs 10 crore or more. Finance Minister announced a slew of low-cost pension and insurance schemes, including Atal Pension Yojana and Universal Social Security scheme. The social sector spending for poor and disadvantaged have been kept at allocation of Rs 68,968 crore to education sector, Rs 33,152 crore for health, Rs 77,526 crore for rural development including MGNREGA, and Rs 22,407 crore for Housing and Urban Development
India will introduce gold deposit accounts to utilize the 20,000 tonnes available within the country and launch a sovereign bond as an alternative to buying the metal, moves that are likely to cut imports into the biggest gold consumer. About the sensitive and contentious issue of black money, the FM proposed to enact a comprehensive law to bring back black money stashed abroad. Jaitley announced that a new comprehensive law will be brought to provide for a jail term up to 10 years for hiding foreign assets and a 300 per cent penalty on undisclosed income and asset abroad.
The budget allocates 11 per cent more to Defence production in comparison to last budget. This year’s allocations would be Rs 2, 46, 727 crore in the defence sector. Speaking about social security schemes, the budget proposes to set up an educational loan scheme for higher education.
There are some cheering announcements for our State in the budget. We will get an All India Institute of Medical Sciences and an Indian Institute of Management. Leh Palace in Ladakh will get upgrading facilities of world class heritage site. FM appears to have taken a holistic view of the question of relief, return, employment and rehabilitation of Kashmiri migrants. Without spelling out the details of their return and rehabilitation, the FM announced reserving funds for the purpose adding that the State Government had sent some suggestions in this behalf and the matter was in the pipeline. The migrants would get enhanced relief of rupees 2500 per person per month.
Though an announcement of relief enhancement has been made earlier also, it now formed the budget proposals of the Finance Minister, which means that the proposal will be implemented by the MHA shortly as mandatory funds would be released by the Union Finance Ministry for the MHA, which bears entire cost of the relief given to the Kashmiri migrants.
Rs 90 crores are allocated for construction of godowns by Food Corporation of India and State Governments in Jammu and Kashmir, North East and newly emerging major procurement States. One lakh youth from rural and urban areas of Jammu and Kashmir will be covered in next five years for implementation of new scheme titled Skill Empowerment and Employment in Jammu and Kashmir. National Centre for Design and Product Development as nodal agent is to be appointed for undertaking baseline survey/diagnostic study for Jammu and Kashmir craft project and support the formation of SPV and preparation of DPR. An amount of Rs 25.50 lakh has been released for the purpose. This should go a long way in boosting handicrafts production centres in Srinagar. Other areas to be developed with central financing in J&K are Solar Parks and Ultra Mega Solar Power Projects, upgrading of indoor and outdoor sports stadia to international standards. The initiative has already been taken. It is for the first time that J&K’s interests are significantly portrayed in the national budget.
Responding to the presentation of Union Budget for 2015-6, the PM congratulated him for doing an excellent job in respecting aspirations of States and at the same time, delivering on national priorities. He said that the Budget has a distinct focus on farmers, youth, poor, neo-middle class and the Aam Nagrik and delivers on growth, equity and job creation. At the same time, the Budget is investment friendly, removes all doubts on tax issues and assures investors that the country has a stable, predictable and fair tax system.
The nation approves the intention of the Modi Government to make the budget people oriented and a harbinger of investment and progress. We ardently hope that positive aspects of the budget will be implemented with regularity and that Make in India slogan and desire of the PM is vindicated.
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