Agencies, New Delhi
With an eye on the next Lok Sabha elections, Finance Minister Arun Jaitley in his 2018-19 budget on Thursday proposed a major health insurance scheme for the poor, a higher minimum support price and a step up of Rs 1 lakh crore as institutional credit for farmers along with a spend of nearly Rs 6 lakh crore on infrastructure development.
To pay for this seeming bout of generosity, albeit with votebanks in mind, the finance minister has mopped up huge sums through three or four simple steps, mostly aimed at the middle class. While providing some sops to salaried individuals and pensioners, it has aimed to raise Rs 11,000 crore by increasing cess on income of individuals, from three to four per cent. Additionally, it has aimed to raise money by imposing a 10 per cent Social Welfare Surcharge on all imported goods.
At the same time, the finance minister has eyed the share-owning and investing class by removing an exemption on long term capital gains to possibly raise over Rs 36,000 crore in a full year — by taxing at 10 per cent shares held for more than a year, exempting only profit of up to Rs 1 lakh. The stock markets reacted sharply initially to the move, later recovering.
The four per cent health and eduction cess replaces the 2 per cent cess for primary education and 1 per cent cess for secondary and higher education on individuals and corporates to take care of the needs of education and health of BPL and rural families.
Similarly, the Social Welfare Surcharge of 10 per cent on all customs duties replaces the education cess on imported goods. He also raised the customs duty on mobile phones by 5 per cent to 20 per cent. He also levied a 15 per cent duty on some of the parts and accessories of mobile phones and TV sets to promote creation of more jobs under the “Make in India” programme.
In line with the BJP’s poll promise before coming to power in 2014, the Finance Minister announced that the Minimum Support Price (MSP) for unannounced kharif crops will be 1.5 times the input cost and stepped up the institutional credit for the sector to Rs 11 lakh crore — 1 lakh crore more than last year.
“Now, we have decided to implement this resolution as a principle for the rest of crops. I am pleased to announce that as per pre-determined principle, the government has decided to keep MSP for the all unannounced crops of kharif at least at one and half times of their production cost. I am confident that this historic decision will prove an important step towards doubling the income of our farmers,” Jaitley said.
The opposition reacted sharply to the government’s proposed budget with Congress leader P. Chidambaram saying Jaitley had failed the fiscal consolidation test that will have “serious consequences” on the economic growth rate.
CPI-M leader Sitaram Yechury said the budget was “unconnected to ground realities” and “is a textbook exercise in post-truth”.
However, the India Inc largely welcomed Jaitley’s budget.
Leaving the individual taxation slabs and rates untouched, Jaitley in his last full budget before the 2019 elections proposed to reintroduce a standard deduction of Rs 40,000 for salaried tax payers in lieu of present exemption of transport allowance and reimbursement of miscellaneous medical expenses that will involve a revenue sacrifice of Rs 8,000 crore to benefit 2.5 crore people.
In a bid to help senior citizens, the budget proposes to increase the exemption of interest income on deposits with banks and post offices from Rs 10,000 to 50,000 and there will be no TDS deducted on them. The limit for health insurance premium and medical expenditure will go up to Rs 50,000 from Rs 30,000.
For certain illnesses, in case of senior citizens and very senior citizens, the limit will go up to Rs 60,000 and Rs 80,000 respectively, The concessions will cost the government Rs 4,000 crore.
In keeping with his earlier announcement of reducing corporate taxation rate, the Finance Minister reduced the rate for all companies with turnover of up to Rs 250 crore, up from Rs 50 crore.
He said this would take care of almost 99 per cent of the companies and would have a negative impact of Rs 7,000 crore on government finances. Only about 250 companies would have a turnover above the cut-off level and would continue to pay 30 per cent tax. An ID on lines of Aadhaar would also be set up for companies, Jaitley said.
For the Railways, whose budget was merged with the general budget since last year, the capital expenditure has been fixed at Rs 1,48,528 crore for 2018-19 with a large part devoted to capacity creation.
Some 18,000 km of doubling, third and fourth line works and 5,000 km of guage conversion will be taken up to transform almost the entire network into broad guage.
Prime Minister Narendra Modi hailed the Finance Minister for presenting an all-friendly budget 2018-19 with the focus on agriculture, health and small businesses.
“This budget is farmer-friendly, common citizen-friendly, business environment-friendly and development-friendly.”
Announcing the flagship National Health Protection Scheme, which he billed as the world’s largest government funded healthcare programme, Jaitley said the government proposed to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage up to Rs 5 lakh per family per year for secondary and tertiary care hospitalisation.
In another populist measure, the Finance Minister announced that as part of Prime Minister’s Ujjwala Scheme the government proposed to increase the target of providing free LPG connections to eight crore poor women, three crore up from the original target.
He said the focus of the government in the next fiscal will be on providing maximum livelihood opportunities in the rural areas by spending more on livelihood, agriculture and allied activities and construction of rural infrastructure.
“In the year 2018-19, for creation of livelihood and infrastructure in rural areas, total amount to be spent by the ministries will be Rs 14.34 lakh crore, including extra-budgetary and non-budgetary resources of Rs 11.98 lakh crore.
Apart from employment due to farming activities and self employment, this expenditure will create employment of 321 crore person days, 3.17 lakh km of rural roads, 51 lakh new rural houses, 1.88 crore toilets, and provide 1.75 crore new household electric connections besides boosting agricultural growth.”
In a labour welfare measure, the minister announced extension of contribution of 8.33 per cent of employee provident fund for new employees by the government for three years to all the sectors and raised it to 12 per cent.
In order to create employment and aid growth, the Finance Minister said, the government’s estimated budgetary and extra budgetary expenditure on infrastructure for 2018-19 was being increased to Rs 5.97 lakh crore against estimated expenditure of Rs 4.94 lakh crore last year.
The Finance Minister indicated a slippage in fiscal deficit for the current year revising it from 3.2 per cent to 3.5 per cent and from 3 per cent to 3.3 per cent (Rs 5.95 lakh crore) of the GDP next year, implying that the government will be borrowing more to balance its books.
The government has set a target of Rs 80,000 crore divestment target for 2018-19, the finance minister said adding that target for 2018-19 had exceed the target of Rs 72,500 crore and would touch Rs 1 lakh crore. Despite that, he did keep his aim low for the next year. He announced that the three public sector insurance companies would be merged. The merged entity is expected to be listed at some stage.
The minister started his speech by reading out the achievements made by the government, saying: “We”are now a USD2.5 trillion economy, and we are firmly on path to achieve 8 per cent plus growth soon. We hope to grow at 7.2 per cent to 7.5 per cent in the second half of 2017-18. Our exports are expected to grow at about 15 per cent in 2017-18.”
Big hike proposed in Prez, VP, Governors’ salaries
While presenting Union Budget for 2018, Union Finance Minister Arun Jaitley on Thursday proposed a big hike in the salaries of the President, Vice-President and Governors.
Mr Jaitley proposed the monthly emoluments of the President at Rs 5 lakh, Vice-President at Rs 4 lakh and Rs 3.5 lakh for Governors.
Besides, the Finance Minister also proposed an inflation-linked revision of salary and allowances for the Members of Parliament in an automatic mechanism every five years. He said lawmakers often faced criticism as they decided their own salaries and allowances.
After the Seventh Pay Commission’s recommendations, the country’s top-most bureaucrat Cabinet Secretary gets Rs 2.5 lakh per month and a Secretary to the Union government gets Rs 2.25 lakh per month.
At present, the President gets Rs 1.5 lakh a month while the Vice-President draws Rs 1.10 lakh per month. The scale of raise, proposed in the Budget, is to the tune of nearly 200 per cent.
Jaitley’s wife gives 9 points, sister 10
Sangeeta Jaitley, wife of Finance Minister Arun Jaitley on Thursday praised the Union Budget 2018-19 and rated the Budget at nine out of 10 points. She said she is not giving him full marks due to “human error”. Ms Jaitley said, ‘’I give Mr Jaitley nine out of 10. Not giving him the top spot due to human error.’’
Along with Ms Jaitley, her son, Rohan Jaitley and Arun Jaitley’s sister Madhu Bhargava also sat in the visitors gallery of the Lok Sabha to listen to the FM’s budget speech. Ms Bhargava gave 10 on 10 points to her brother.
She said her brother has done a good job and the Budget is in line with the expectations. ‘’This is good for everyone,’’ she said adding that every section has been taken care of in the Budget.
On being asked that Congress has criticised the Budget, Ms Jaitley said,’’Their job is to criticise.’’Praising his father, Rohan said,’’There is a vision in the Budget.’’
No change in petrol, diesel prices despite excise duty cut
Though the government cut additional excise duty on the fuels by Rs 6 per litre in the Union Budget for 2018=19, Finance Minister Arun Jaitley on Thirsday slapped a new Rs 8 per litre ‘Levy of Road and Infrastructure Cess’ on both petrol and diesel, thereby keeping the total incidence at the same level.
The Budget reduced basic excise duty on branded and unbranded petrol as well as diesel.Unbranded Petrol which attracted excise of Rs 6.48 per litre has been reduced to Rs 4.48 per litre.
Branded petrol has basic excise duty of Rs 7.66 per litre which has been slashed to Rs 5.66 per litre. Unbranded diesel having basic excise duty of Rs 8.33 per litre was reduced to Rs 6.33 per litre. Basic excise duty on branded diesel was also reduced from Rs 10.69 per litre to Rs 8.69 per litre.
In January, fuel prices touched a 40-month high in Mumbai. Petrol price in Mumbai was Rs 80.10 per litre, while diesel was priced at Rs 67.10.
Prices in international markets have been fluctuating since the last few weeks and are being reflected in domestic rates. In wake of the rallying crude oil price, the Oil Ministry had demanded excise duty cut from the Finance Ministry.
Indian Oil Corp (IOC) Chairman Sanjiv Singh on Monday responding to the charges of government meddling in fixing of fuel prices said that Petrol and diesel prices in India are to a “large extent” aligned to international rates.