The 2017-18 budget saw the highest ever allocation to Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) — the world’s largest make-work programme — at Rs 48,000 crore, but 56 percent wages were delayed and 15 percent wage seekers did not find work in 2016-17, an IndiaSpend analysis of government data shows.
The allocation to be announced by Finance Minister Arun Jaitley on 1 February, 2018, when he presents his government’s last full-year budget ahead of the general elections in 2019 will be closely watched, even as his government has decided to “pump an additional Rs 7,000 crore into the rural job scheme” for the current financial year, as The Telegraph reported on 5 January, 2018.
According to the chamber, simplification of Goods and Services Tax (GST) compliances would result in higher number of returns filed, increased collection of revenues, and easier working capital management by trade and industry. The GST Network (GSTN) functioning and return filing formats could be tweaked to ensure acceptance of invoices, it added.
CII also stressed upon the need for designing a fool-proof and effective return filing system where seamless and speedier input tax credit (ITC) can be availed by the recipient, as against the current requirement of filing three GST returns.
Speaking at a press conference, former finance minister P Chidambaram said, "I did not hear any measure to boost exports, as the government has run out of ideas. Jaitley has imposed additional custom duties to restrict imports. Prime Minister Narendra Modi's speech at and the spirit of Davos has been forgotten within a few days."
2 Rs excise on petrol and diesel is being reduced & this is being converted into cess, that is the only change we have made, practically there is no impact on the final price of petrol & diesel. To the consumers, there is no change: Hasmukh Adhia, Finance Secretary pic.twitter.com/U2HiUsd9pJ
A finance ministry official says, "Rashtra Swasth Bima Yojana cover has been increased to Rs 5 Lakh. It was limited to specific people but now 10 crore family groups will be considered. We are working on it and soon it will be implement."
Jaitley says Budget proposes 'institutional mechanism' to fix emoluments of elected members
The budget proposes an institutional mechanism to fix the emoluments of the elected members, thereby addressing the criticism that they fix their own salaries: FM Jaitley
I have been putting surplus money in the hands of the middle-class taxpayers in every Budget, says Jaitley
Speaking at a press conference, Finance Minister Arun Jaitley said: "I think there are some factors which benefit all. But there are three specific. This is the first time that the salaried class is a whole. This totals 2.5 crore people, which is almost 35 percent of taxpayers base. We have given them a standard deduction. Second, I think our senior citizens. I have given them additional avenue of investment. Limit for investment in LIC schemes doubled to Rs 15 Lakh. And I have not forgotten the business class either. So all businesses and companies, uniformly they pay 5 percent tax."
Budget 2018 brings overdue salary hike for President, Vice-President and Governors
The salaries of the President and the Vice-President have been increased to Rs 5 lakh and Rs 4 lakh per month respectively, in a rectification of an anomaly.
Announcing the hike in their salaries in his Budget speech, Finance Minister Arun Jaitley said the emoluments of the President, the Vice President and the Governors were last revised with effect from 1 January, 2006.
"These emoluments are proposed to be revised to Rs 5 lakh for the President, Rs 4 lakh for the Vice President and to Rs 3.5 lakh per month for the Governors," he said, amidst thumping of desk by the members in the Lok Sabha.
As of now, the President gets Rs 1.50 lakh per month, the Vice President Rs 1.25 lakh and a Governor of a state Rs 1.10 lakh. Till now, the President, the Vice President and the Governors continued to get less salaries as compared to the top bureaucrats and service chiefs since the laws were not amended to rectify an anomaly with the implementation of the 7th Pay Commission's recommendations two years ago.
After the implementation of the 7th Pay Commission's awards on January 1, 2016, the Cabinet Secretary, who is the top-most bureaucrat in the country, gets Rs 2.5 lakh per month and a Secretary in the Union government draws Rs 2.25 lakh per month.
The President is also the supreme commander of all the three armed forces — the Army, Air Force, and Navy. However, the President's current salary was less than the chiefs of the three armed forces, who draw a salary equivalent to the cabinet secretary.
Budget gives wings to aspirations of poor, says Amit Shah
BJP chief Amit Shah said that the budget will empower all sections of society. In a series of subsequent tweets, he also lauded the government for raising MSPs and reducing corporate tax to 25 percent.
This budget gives new wings to the aspirations of the poor, farmers and the middle class. The #NewIndiaBudget will truly empower all sections of the society to attain prosperity.
Congress leader Shashi Tharoor slammed the budget presented by Arun Jaitley with this GIF:
On the whole disappointing #Budget2018. Nothing for the aam aadmi, no tax for the middle class, no incentives to create jobs, no investment stimulus. Silence on disaster relief for #CycloneOckhi & on the defence budget. No MSP for rabi farmers. No additional funds for MNREGA. pic.twitter.com/2qROUfXPiv
The Government has focused on inclusive measures in the budget , targeting critical areas of agriculture , education , health , power among others. On health insurance, the introduction of Rs. 5 lakh cover for families and increase in medical insurance tax exemption for senior citizens indicate the focus of policy makers to ensure adequate protection against health hazards for India’s populace, said Bhargav Dasgupta's ,MD & CEO, ICICI Lombard.
Finance Minister remarkably restrained
On the infrastructure front, the Finance Minister has shown remarkable restraint, and therein lies the brilliance of his announcements. India is at the cusp of an infrastructure revolution, and the budgetary support of Rs. 5.97 lakh crore for FY19 will be a big positive for the sector and supplementary industries such as cement. The focus of the government will likely remain on effective and timely execution of existing projects,with the FM promising construction of 9,000 km highways by the end of FY19.
Also, it was encouraging to see the reinforcement of the government’s commitment to the Bharatmala Project, which will be a major boost to demand in the next financial year. Besides this, the announcement of the Affordable Housing Fund was also a positive announcement,especially since it will create an impetus for the housing sector, which contributes around 65% to India’s cement demand.
"The Budget is a populist one with lot of focus on agriculture sector. Refund in case of exempted supplies needs to be implemented. The credit support to MSMEs by linking data to GSTN for approving loan is innovative and encouraging. While tourism is encouraged, the tax benefits including refunds to foreigners still remains to be seen. Further improvement in ease of doing business ranking can happen through simplified GST compliances and this needs to implemented. Average tax buoyancy has improved and the tax base has improved. This is encouraging unlike presumptive tax collection. The pre notice consultation for Customs and time based litigation is welcome," Abhishek A Rastogi, Partner, Khaitan & Co said.
Prudent and well-packaged Budget
A job well-done of managing expectations from most quarters. Populist measures in line with the government’s policy direction with continued focus on agriculture, poor, women, digital, infrastructure, social security, governance. No change in maximum amount of income exempt from tax instead increase in the Education cess from existing 3 percent to Health and Education cess of 4%. Reintroduction of standard deduction in lieu of medical expense reimbursement & transport allowance, for salary income earners. Bringing in cheer for the senior citizens through tax deduction on deposits, enhanced medical insurance premium deduction, increase in expense deduction for critical care illness. Reinforcement of commitment to planned reduction in corporate tax rates. Enhancement of benefits for employment creation and incentives for MSME enterprises. All in all a mature approach to the Budget befitting the circumstances of the country and the ruling party, said Sonu Iyer, Tax Partner & National Leader, People Advisory Services, EY India.
Budget has strong focus on agriculture
The 2018 budget has a strong focus on agriculture, healthcare, and rural development. I believe this will contribute to the holistic growth of India. The reduced corporate tax rates to the MSME sector is welcome, but I hope it is in the books to extend this benefit to all companies soon. The continued focus on digital growth by the government including a special focus on cyber security with the launch of Centers of Excellence is a huge necessity for India and I am happy to see it in this Budget, said Man Mohan Malik, Founder & CMD, Himalaya Foods International
Good for tech sector
Overall the budget has been encouraging for the technology sector, with a specific inclination towards greater localization and domestic consumption, and consequent indigenization. National Health Protection Scheme will entail significant technology investments, which could be catered to, very efficaciously, by the Indian technology sector already proficient in addressing this segment globally. The rich data base and scope for analytics emanating from a successful project of this nature can provide valuable insights for public policy. Focus on improvements in efficiencies and productivity across varied sectors like agriculture, health, education, infrastructure, etc. are likely to spur development of indigenous and localized technology solutions, said Man Mohan Malik, Founder & CMD, Himalaya Foods International.
Budget was silent on angel tax
Yes, we were expecting a lot on angel tax. A lot of startups are facing a lot of issues with angle taxes. I felt that a clarification should have been issued.
Moody's says 3.3% fiscal deficit in line with forecast, target achievable
Mumbai: Global rating agency Moody's said the fiscal deficit projection of 3.3 percent for FY19 is in line with its forecast and the target will be achieved.
In the Budget, Finance Minister Arun Jaitley revised fiscal deficit estimates for the current financial year upwards at Rs 5.95 trillion or 3.5 percent of GDP against the estimate of 3.3 percent and also projected 3.3 percent for FY19, up from the road-map of 3 percent of GDP.
GST is still not streamlined. so its impact will be seen in 2018, says Sumeet Mehta
Budget good for farmers' income
The Budget has recognized food processing as the major tool for rural upliftment and to enhance farmers income. Besides double allocation, huge increase in rural Infra and overall support to the farm sector through new initiatives will further add to the growth of food processing industry. Thrust on agro and processed food exports will be further icing on the cake. Easier availability of Mudra loans to young and new entrepreneurs will help to build food service chain linking farms to process industry to the consumer directly.
Good that govt did not apply tax retrospectively
It is good that they have not applied taxes retrospectively. But at one point of time, I feel a flat 10 percent tax will be applied. But the government must factor in inflation to help the common man with the tax problem.
Reduction in corporate tax welcome
The reduction of corporate tax by 25 percent for companies with a turnover of 250 crore is a positive step. Moreover, the interest shown by the government to promote online lending is also encouraging for Fintech. Although the Finance Minister touched upon the Angel Tax but it is yet to be seen that what is there to boost the business eco-system. The move to assign uniques IDs for Companies is also a welcome step. Personally, I am very happy to witness the measures taken in education and health sectors, said Dinesh Agarwal, Founder and CEO, IndiaMART.com
Budget not exciting as expected
The Budget does not generate excitement to the extent that was anticipated. Though the extension of rural WiFi hotspots along with investments in telecom can enable rural economy and drive much better financial inclusion and drive technology enabled growth for the subset of our rural population, we need a better connect between strategy and execution especially in terms of digital India so that we are able to fully leverage the enhanced allocation.
Looking at the overall picture, I feel that the approach is more fragmented at the moment and outcome and objectives of digital India needs to be better connected with the investments which are being made.Rather than restricting crypto-currencies, they can be regulated to prevent any adverse impact and risks while exploring blockchain side by side and leverage opportunities which are available with new concepts and technologies that they bring to the table, said DD Mishra, Research Director at Gartner .
Fintech sector gets lot of promises
By forming a group in the ministry of finance to examine the policy and development measures needed for creating right environment for fintech companies, the finance minister has recognised the role played by us in assisting MSMEs and economic development. Fintech companies especially the ones in online lending space are not only easing the credit delivery to salaried class and MSMEs, but are also improving the entire delivery chain through innovative use of technology as well as lowering cost. In fact a flourishing fintech sector has the capability to improve various segments of banking and bring efficiency in the credit lending process. The second major promise was to take additional innovative measures to strengthen venture capital and angel investor ecosystem. The government has been quite supportive earlier by launching Startup India program and taking steps to build a robust alternative investment regime. Additional measures will further energise our already booming sector and lead the economic development in the country. With good support, online lending companies will be able to expand the business, reach out to larger sections of the country and aid in job creation, said Tushar Aggarwal, Founder, StashFin, online lending platform.
Interest rates may rise
By the way, things are going on, I feel liquidity is tightnening and this would lead to a increase in interest rates.
Disinvestment targets exceeded, says Ranen Banerjee, Partner and Leader, PwC India
"This is possibly the first time when the disinvestment targets have been exceeded and is pegged at 1 lakh crore. A higher target has been taken for the next year too at 80k crore. With Air India divestment on the anvil and further tranches of the exchange traded funds, the target looks achievable."
Modi government's health card
The finance bill is very clear that the LTCG tax will start from the next year. There is an unnecessary panic being created.
Budget and elections cannot be linked
"There is talk that securities transaction tax and LTCG can overlap. This is on our mind. In the long run, the strength of the market will depend on the Indian economy. Let me clarify that the Budget cannot be linked to elections, we needed to strengthen the rural sector," said Finance Minister Arun Jaitley.
WATCH: Jaitley talking on roadmap to bring down corporate taxes
"In a country where tax evasion is high, it is a big task to bring people into the tax system. But we have tried to do so by various means," says Jaitley.
Highlights from Jaitley's pro-farmer budget
The Minimum Support Price of all crops shall be increased to at least 1.5 times that of the production cost
470 APMCs have been connected to eNAM network, the rest to be connected by March 2018
Agri-Market Development Fund with a corpus of Rs 2,000 crore to be set up for developing agricultural markets
Proposed to raise institutional credit for agriculture to Rs 11 Lakh crore for 2018-19 from Rs 10 lakh for 2017-18
100 percent tax deduction for the first five years to companies registered as farmer producer companies with a turnover of Rs. 100 crore and above
Rs 500 crore for Operation Green
Free medical care, rural sops; Jaitley gives a Modi package for 2019 sans a reformist touch
In an election-heavy year, Union Finance Minister Arun Jaitley presented a Budget that had Prime Minister Narendra Modi’s signature all over, focusing primarily on rural India but failed to offer a blueprint that one could use to describe this government’s last full Budget as reformist one. There are ample evidence to say that this Budget is designed to specially target Bharat more than India.
As expected, the government couldn’t keep the fiscal deficit target of 3.2 percent this fiscal year, saying it might slip to 3.5 percent on account on delayed spectrum auction and lower tax collections. For next year, the fiscal deficit target has been set at 3.3 percent. Markets didn’t take this well as investors turned jittery on government finances.
MSP won't solve every problem of India's farmers. You need to also give our farmers more opportunities to earn income," said Arun Jaitley.
Arun Jaitley on fiscal deficit and reduction of corporate taxes
"I see the deficit come down in the next fiscal. I am of the view that corporate tax needs to be brought down, so we brought it down to 25%. 5.3 Lakh companies have been covered by corporate tax relief. 3,67,000 crore profit has been earned by large companies and not a single rupee of tax has been paid. Long Term Capital Gains (LTCG) has been introduced because someone needed to bite the bullet," Finance Minister Arun Jaitley said.
Budget was populist
The long term capital tax will matter to a few people in Bombay and Ahmedabad. The finance minister in his excitement to explain the calculation of long term capital tax confused many people. From what I understand the tax will apply to people who buy it today. I will the budget a "Nar Indira Modi budget". It was very populist like Indira Gandhi's. On the question of fiscal prudence, I dont agree with that.
Fundamental problems cannot be solved through budget
The fundamental problems of the education sector will not be addressed by throwing money into it. The problem in the sector also relates to the primary education, not just higher education.
The railway math
Budget overpromises a lot
There is a lot of overpromising and messaging. I feel the politics of the budget got addressed but not the economics of it.
It is 'bottom of pyramid' budget
It is "bottom of the pyramid" economics and "bottom of the pyramid" politics. I have no doubt it is a ballot budget. it gives the sense that it will uplift this section of the society while giving a lollipop to the middle-class too.
Firstpost Editor BV Rao said, "Forty minutes into the speech the Finance Minister was still on benefits for the poor. A pro-poor Budget was expected. But this is pro-poor like how!"
Universal healthcare, rural jobs, significant SC/ST welfare funds, an agriculture market fund, free LPG connections for underprivileged women: the message is amply clear. This is intended to be a 'grassroots' budget, says Jaideep V Giridhar, Firstpost's Executive Editor.
Shares of agri-related companies surge after pro-farmer budget
Shares of agriculture-related stocks surged up to 10 percent on Thursday after finance minister Arun Jaitley said that Budget 2018-19 will focus on strengthening agricultural and rural economy.
NACL Industries stock zoomed 9.64%, PI Industries 6.49%, Shakti Pumps India 5.89%, Action Construction Equipment 5.66% and Monsanto India 4.84% on BSE.
Latest update, 2.50 pm: After the conclusion of his Union Budget address to the Parliament, Finance Minister Arun Jaitley said that he does not link Budget to elections.
Prime Minister Narendra Modi has praised his government's Union Budget, calling it a "common man friendly budget", and saying it will help farmers and increase their income.
The Lok Sabha has been adjourned till 5 February, 2018. However, the Sensex and Nifty have been left disappointed by the Budget.
While presenting the Budget, Jaitley had said there were over 85 lakh new taxpayers in the country in 2016-17, up from 66.26 lakh in the preceding years. Jaitley had also announced that the government is launching a flagship National Health Protection Scheme to cover 10 crore poor and vulnerable families (with a total beneficiary net of over Rs 50 crore).
He had earlier said his government will focus on agriculture, education and improved quality healthcare. He said they will focus on training the teachers in schools and colleges, and will make use of technology, calling it the "biggest driver" in improving quality of education. He also said they will focus on training the teachers in order to improve the standards of students.
This was after he said the focus of his government's Budget will be on agriculture and rural economy in the coming year.
This came after the Cabinet approved the Union Budget for 2017-18. Jaitley had earlier called on President Ram Nath Kovind at the Rashtrapati Bhavan.
The budget, in view of upcoming assembly polls in eight states — including three major states ruled by the BJP — and general elections next year, may see new rural schemes and stepping up of funding towards existing programs like MNREGA, rural housing, irrigation projects and crop insurance.
File image of Arun Jaitley. PTI
With the recent elections in Gujarat indicating erosion of BJP's rural vote base, Jaitley may also unveil incentives for the farm sector.
Small businesses, which have traditionally formed the core support base of the BJP, too may get some sops to ease pain caused to them due to a chaotic rollout of the Goods and Services Tax (GST) and demonetisation.
There is also an expectation that common man may get some relief in income tax by way of a raise in the exemption limit.
Also on Jaitley's menu may be upping spending on infrastructure projects like highways and modernisation of railways to boost economic growth that is at a four-year low.
But he has to do all this while sticking to the roadmap of narrowing one of Asia's largest budget deficits, as failing which, India may fall on the wrong side of global investors and credit rating agencies which had late last year handed out a rare sovereign upgrade.
The target Jaitley had previously set out was to lower the fiscal deficit to 3.2 percent of the GDP in the current fiscal and to 3 percent in 2018-19, the budget for which he would present in the Lok Sabha on Wednesday.
Prime Minister Narendra Modi seemed to have already lowered expectations of mass voter swaying announcements when he indicated that the budget may not be resort to populism and that it was a myth that common man wants sop.
This will be India's first post-GST and is being keenly watched to see what Jaitley does to boost growth in Asia's third-largest economy.
There are talks that tax break on capital gains from stock investments may go and it remains to be seen if Jaitley will finally show some movement on his 2015 promise to lower corporate tax rate to 25 percent from 30 percent over four years.
Some kind of incentives to boost exports of certain sectors may be announced while there may be announcements for start-ups as well as for promoting entrepreneurship.
In the first eight months of 2017-18, fiscal deficit reached 112 percent of the target, stoking fears of a fiscal slippage. The shortfall was largely due to reduced dividends from government companies, which the government looks to bridge through stake sale in state-owned firms like HPCL.
Scrapping the colonial-era tradition of presenting the budget at the end of February, Jaitley had for the first time presented the annual accounts on 1 February last year.
The budget presentation was advanced by a month to ensure that proposals take effect from 1 April, the beginning of the new financial year.
Also, the nearly century-old tradition of having a separate budget for the railways was scrapped and merged with the general budget.
The Union Budget 2018-19 would be the last full budget of the BJP-led NDA government before the 2019 general elections. As per the practice, a vote-on-account or approval for essential government spending for a limited period is taken in the election year and a full-fledged budget presented by the new government.
Even though independent India's biggest tax reform of GST was implemented from 1 July, the Budget for 2017-18 (April- March), had followed the practice of tax revenue projections under the heads of customs duty, central excise and service tax alongside direct tax numbers.
With excise duty and service tax being subsumed in the GST, the classifications in the forthcoming budget may undergo change.
While a new classification for revenues to be accrued from GST will be included in the budget for the next fiscal, for the current year two sets of accounting may be presented — one for actual accruals during April-June for excise, customs and service tax, and the other for July-March period for GST and customs duty.
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