Under the UPA regime, we had seen discretionary spending, favouritism, crony capitalism based system that nearly ruined our economy. It was a challenge to pull the economy back after Modi government took charge in 2014, with the government requiring to keep the long term as well as short term needs in mind while budgeting.
This year’s Budget was in itself very unique. Firstly, it was preponed by a month so as to better plan the expenditure in line with monsoon cycle. Secondly, it removed the Plan and Non-Plan expenditure bifurcation. Thirdly, it was a merged budget encompassing the railways as well.
This year the Current Account deficit declined to 0.3% of the GDP from about 1%, the monsoons were good, crop sowing data showed excellent numbers, Foreign Direct Investment grew by about 36% in First half of 2016.
After the “war on black money” aka demonetisation, public was expecting a lot from this budget. So here is how the Finance Minister addressed each sector:
The budget was focused on 10 key aspects which are:
- Farmers: Government committed to double the income in 5 years;
- Rural Population: providing employment & basic infrastructure;
- Youth: energising them through education, skills and jobs;
- The Poor and the Underprivileged; strengthening the systems of social security, health care and affordable housing;
- Infrastructure: for efficiency, productivity and quality of life;
- Financial Sector: growth & stability by stronger institutions;
- Digital Economy: for speed, accountability and transparency;
- Public Service: effective governance and efficient service delivery through people’s participation;
- Prudent Fiscal Management: to ensure optimal deployment of resources and preserve fiscal stability;
- Tax Administration: honouring the honest.
In this article, we shall cover Farmers, Rural populace, youth and personal Income tax under the budget.
Finance Minister Arun Jaitley has targeted agricultural credit in 2017-18 at 10 lakh crores. The Budget also provides for increased coverage under Fasal Bima Yojana scheme from 30% of cropped area in 2016-17 to 40% in 2017-18 and 50% in 2018-19; budgeted 9000 crore for the same.
The FM proposed setting up of new mini labs in Krishi Vigyan Kendras (KVKs) and ensured 100% coverage of all 648 KVKs in the country for soil sample testing. The long term irrigation fund already set up by NABARD is proposed to be augmented by 100% to take the total corpus of this Fund to 40,000 crores.
The biggest move was setting up of Dedicated Micro Irrigation Fund in NABARD to achieve ‘per drop more crop’ with an initial corpus of 5,000 crores. Coverage of National Agricultural Market (e-NAM) to be expanded from 250 markets to 585 APMCs. This will ensure the farmers have an option to decide when and at what price they can sell their produce.
With a move to formalize agriculture sector and address the problem of “small farms”, the FM proposed a model law on contract farming to be prepared by the Centre and circulated among the States for adoption.
For Rural Folks
The FM set the agenda that the aim of the Government was to bring 1 crore people out of poverty. Probably taking cue from the success of Jal Yukt Shivar scheme in Maharashtra, the budget proposed building 5 lakh farm ponds by March 2018.
The FM allocated 48000 Crores to MNREGA, which is the highest ever till date, and together with the states contribution allocated 27000 crores to rural roads in this budget.
Allocation for Pradhan Mantri Awaas Yojana–Gramin was increased from 15,000 crores in to 23,000 crores in 2017-18 with a target and set a target to complete 1 crore houses by 2019 for the houseless and those living in kutcha houses. Allocation for Prime Minister’s Employment Generation Program and Credit Support Schemes was increased three-fold and Narendra Modi’s pet scheme the “Swachchha Bharat Abhiyan” too received considerable attention in this Budget.
This took the total allocation for Rural, Agriculture and Allied sectors is to 187223 crores.
Proposal was moved for introducing a system of measuring annual learning outcomes in our schools, however the fine print on this is important. To spur innovation and grass root technology, an Innovation Fund for Secondary Education is proposed to encourage local innovation for ensuring universal access, gender parity and quality improvement in 3479 educationally backward districts of our country.
In a radical move, the FM suggested setting up of National Testing Agency as an autonomous and self-sustained premier testing organisation to conduct all entrance examinations for higher education institutions.
Building on the Skill India scheme, the FM proposed setting up of Pradhan Mantri Kaushal Kendras in more than 600 districts across the country and establishment of 100 India International Skills Centres across the country.
To bridge the Demand for skills and supply a Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme (SANKALP) is be launched at a cost of 4000 crores. It is estimated that SANKALP will provide market relevant training to 3.5 crore youth and the next phase of Skill Strengthening for Industrial Value Enhancement (STRIVE) will also be launched at a cost of 2,200 crores.
Other sectors for jobs were leather, footwear, textiles and tourism.
For the Poor and the underprivileged
FM proposed setting up of Mahila Shakti Kendra with an allocation of 500 crores in 14 lakh Anganwadi Centres. Government has taken up fighting diseases like Measles, TB, Leprosy etc.
Affordable housing has been given infrastructure status which should technically enable them to tax breaks etc.
With the bulk of our labour in rural areas the government has taken up the task of legislative reforms to simplify, rationalise and amalgamate the existing labour laws into 4 Codes on (i) wages, (ii) industrial relations, (iii) social security and welfare, and (iv) safety and working conditions. This will surely benefit the Employers and employees.
For Personal Income Tax
The existing rate of taxation for individual assesses between income of 2.5 lakhs to 5 lakhs was reduced to 5% from the present rate of 10%.
To compensate the loss of revenue to the state the FM proposed a Surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between 50 lakhs and 1 crore.
This effectively means that INR 12,500 relief was provided to those earning more than INR 5 lacs. Post demonetization the honest tax payers were expecting much more than this from the Government.
To rationalize the tax filing procedure the FM introduced Simple one-page form to be filed as Income Tax Return for the category of individuals having taxable income up to 5 lakhs other than business income.