Bangalore: Budget is the most important word that determines the expense and savings in any middle class family. In the same way, the Union Budget of India otherwise called as the general Indian budget outlines all the economic planning of the Indian government in the upcoming financial year. This budget is presented by the Finance minister of India on the last working day of February till last year. The budget is presented on the first day of February, unlike past years, by the Finance Minister of India in the Parliament. The Indian budget is the most economic event that affects almost every section of the society.
The budget for 2018-2019 was presented by the current Finance Minister, Arun Jaitley. This budget has it’s main focus on the agriculture and health sectors. Let’s look at some of the important changes made in the budget comparing to last year’s.
1. Agriculture Sector
Jaitley said, “My government is committed to the welfare of farmers… My prime minister gave the clarion call to double the farmers’ income by 2022. We consider agriculture to be an enterprise and want farmers to produce more on the same land and also get better returns from their produce,”.
Jaitley said that Modi’s government will launch ‘Operation Green’, which will help in promoting farmer producer organisations and agri-logistics associations. “I propose to allocate Rs. 500 crore for this purpose,” Jaitley said.
Fiscal deficit is 3.5% of GDP at Rs 5.95 lakh crore in 2017-18. Projecting fiscal deficit to be 3.3% of GDP in the next fiscal, 1.5% times MSP for kharif crops, new policies that will address procurement, demand and forecast. The target for agricultural credit was set at Rs. 11 lakh crore – up from Rs 10 lakh crore last year.
On education, Jaitley gave hints on how to improve the quality of education, stating, “Technology will be a biggest driver in improving quality,”
Rs. 1 lakh crore were announced for revitalization and upgradation of education. But he did not mention what this would entail or the details of the scheme. For increasing digital intensity in the education, he announced target of moving from black boards to digital boards in schools by 2022. The government will identify around 1000 Btech students every year to provide them to do PHDs in IIT and IISc, while also teaching undergraduate students once a week at that time.
In the health sector, Jaitley announced the ‘Ayushman Bharat’ scheme, saying, “India cannot realise demographic dividend without its citizens being healthy” calling it as the “largest government-funded health programme”.
He announced two initiatives under the Ayushman Bharat programme aimed at taking care of health in the primary and tertiary systems. Rs. 1,200 crore was allocated for setting up centres across the country to deliver health services while providing essential medicines and equipments. Rs 600 crore to provide nutritional support for all tuberculosis patients.
4. Railway Budget
Jaitley did not focus on railway safety even though it was one of the main concerns of 2017. He said, ”Enhancing Railways’ carrying capacity has been major focus of government,”. The railway capex for 2018-2019 is Rs. 1,48,500 crore which is an increase of Rs. 10,000 crore from last year.
5. Fiscal Situations and Taxes
Jaitley announced, “In 2018-2019, the central government will receive GST (Goods and Services Tax) revenue only for 11 months. This will have a fiscal effect,”. This shortfall will be made up through higher direct tax.
Jaitley also presented an extension of corporate income tax reduction to companies who have a reported turnover of Rs. 250 crore. The target earlier was for companies with Rs. 50 Crore turnover. Because of this, the revenue of about Rs. 7,000 crore will be lost.
The Interest income exemption is increased to Rs.50,000 from Rs.10,000 for all fixed and RD schemes, including small savings.
The customs duty on a range of sectors and items were increased. “There is a substantial potential for domestic value-add in food processing, electronics components and footwear…I propose to increase custom duty in certain items: mobile phones (15% to 20%) and on some other parts and accessories (to 15%). These measures will promote more jobs in the country.”, Jaitley announced.
6. Long Term Capital Gains (LTCG)
“Currently, LTCG arising from transfer of limited equity shares…are exempted from tax. With reforms introduced by government, the equity market has become buoyant,” Jaitley affirmed. The total amount that is exempted is Rs. 3,67,000 crore. “I propose to tax such long-term capital gains exceeding Rs. 1 lakh at the rate of 10% without allowing the benefit of indexation. However all gains up to January 31, 2018 will be grandfathered.”
Any gain in excess of Rs. 20 earned after January 31, 2018 will be taxed at 10% if this share is sold after January 31, 2018.
“Revenue off LTCG tax will net government Rs. 20,000 crore in first year,” said Jaitley.
Overall, the main beneficiaries of this year budget are the farmers, education sectors, Heath care providers and transport companies. Similarly, the losers are financial sectors, salaried people and mobile sectors.