Finance Minister Arun Jaitley on Monday gave relief to small tax payers, nudged the affluent to shell out more while focusing on the rural economy with much higher fiscal outlays, as he presented India’s national budget for 2016-17 in the Lok Sabha.
He also said that people living in rented houses will be eligible for deductions of up to Rs.60,000 now — up from Rs.24,000. He also said the ceiling of tax rebate for people with income up to Rs.500,000 per annum was being raised to Rs.5,000 from the present Rs.2,000.
But for larger tax payers, he said, the income tax surcharge of 12 percent at present was being hiked to 15 percent for incomes exceeding Rs.1 crore per annum. Suitable changes, Jaitley said, will also be made in customs and excise duty rates to push the “Make in India” programme.
“Tax evasion will be countered strongly,” he warned.
Jaitley also said that the fiscal deficit target of 3.9 perecent of GDP for the current fiscal will be met, even as the target for next year has been fixed at 3.5. “Prudence lies in adhering to fiscal targets,” he said.
But in a major departure from the past, where government expenditure could be demarcated between productive and administrative expenses, the finance minister said the classigication of plan and non-plan will be done away with from 2017-18.
The minister began his speech saying that India was a bright spot in the global economy in these difficult times. He later outlined his nine focus areas for this annual budget exercise in which rural development took the top slot.
“I am presenting the budget when the global economy is in crisis,” Jaitley said in his first set of remarks, adding that India, despite the gloom in the world economy, was turning difficulties into opportunities.
He said India’s growth has expanded 7.5 percent, despite slowdown in exports, even as inflation had eased, bringing big relief to the general public. He also said foreign exchange reserves were robust. “Indian growth is at an extraordinary high.”
Jaitley said his budget will look at three pillars in right earnest: A prudent fiscal policy, raising domestic demand and carrying out reforms. He also said that farm, rural sector, infrastructure and social sector will be allotted more money.
“Recapitalization of banks also to be done during next fiscal year,” he said, as much concern have emerged over the quantum of exposure of Indian scheduled banks in terms of gross non-productive assets, re-cast loans and write-offs, which amounts to Rs.9.5 lakh crore.
He said the nine pillars of this year’s budget will be: agriculture, social programmes, rural development, education with skill development, infrastructure, financial reforms, policy reforms in terms of ease of doing business, fiscal discipline and tax reforms.
“A unified agriculture platform to be dedicated to the nation on the birth anniversary of Dr. B.R. Amebdkar,” the finance minister said, amid applause from the benches.
He said the government had targeted agriculture credit of Rs.8.5 lakh crore in 2015-16, which was being enhanced to Rs.9 lakh crore in the next fiscal. He also said that Rs.19,000 crore will be allocated for rural roads development programme.
Overall, Rs.87,765 crore was being allocated for rural development as a whole.
At the same time, Rs.35,984 crore was being allocated for agriculture in the next fiscal. This apart, the outlay under the job guarantee programme was being enhanced to Rs.38,500 crore. These enhanced allocations are capable of transforming villages and towns, Jaitley said.
He said there was also the need to spread digital literacy in rural areas. In addition, Rs.8,500 crore was being allotted towards rural electrification, targeting 100 percent rural electrification by May 1, 2018.
Jaitley also assured that the government intended to double the income of farmers in five years, besides allotting Rs.35,984 crore towards welfare of farmers. The proposals also included universal coverage of cooking gas in the country, with a massive mission towards this aimed at the poor people.
In this regard, he said, the government appreciated the 75 lakh middle class and lower middle class families for willingly giving up cooking gas subsidy.
On health, he said, a new scheme will provide medical cover up to Rs.1 lakh per family.