Union Budget 2016-17 – Highlights

By BankBazaar | February 29, 2016

Transforming rural India, empowering urban India

Union Budget 2016-17 - Highlights

The Finance Minister Arun Jaitley presented the Union Budget 2016-17 on Monday. The budget for the next fiscal year is aimed at vastly improving the rural sector with emphasis on agriculture, education, job and skills training and various reforms supporting the Stand up India campaign, among others.

The FM claimed that Indian growth is at an extraordinary high, even with a slowdown in exports. India continues to shine despite the worldwide economic gloom with growth expanding by 7.5 percent and robust foreign exchange. Inflation has also come down in spite of two poor monsoons.

Highlights of the Budget:

The 20160-17 Budget identifies 9 pillars that the government plans to focus on to bring about the winds of change throughout India, with a focus on the rural sector. Here are the highlights:

Agriculture and farmer welfare with an aim to double farmers’ income in the next five years

(Total allocation – 35,984 crores)

  • A dedicated, long-term irrigation fund to be set up under NABARD with an initial corpus of about Rs 20,000 crore
  • Organic farming to get a big push with the government aiming to double the income of farmers by 2022. 5 lakh acres to be brought under organic farming over a three-year period
  • ‘Pradhan Mantri Krishi Sinchai Yojana’ to be implemented in mission mode. 28.5 lakh hectares will be brought under irrigation.
  • Implementation of 89 irrigation projects under AIBP, which have been in the pipeline for a long time, will be fast tracked.
  • Programme for the sustainable management of ground water resources with an estimated cost of Rs 6,000 crore will be implemented through multilateral funding.
  • 5 lakh farm ponds and wells in rain fed areas and 10 lakh compost pits for production of organic manure will be taken up under MGNREGA.
  • Soil Health Card scheme will cover all 14 crore farm holdings by March 2017.
  • 2,000 model retail outlets of Fertilizer companies will be provided with soil and seed testing facilities during the next three years.
  • Organic farming through ‘Parmparagat Krishi Vikas Yojana’ and ‘Organic Value Chain Development in North East Region’ to be promoted.
  • Unified Agricultural Marketing ePlatform to provide a common e- market platform for wholesale markets.
  • Allocation under Pradhan Mantri Gram Sadak Yojana increased to Rs 19,000 crore. Will connect remaining 65,000 eligible habitations by 2019.
  • To reduce the burden of loan repayment on farmers, a provision of Rs 15,000 crore has been made in the BE 2016-17 towards interest subvention.
  • Allocation under Prime Minister Fasal Bima Yojana Rs 5,500 crore to provide insurance coverage and financial support to farmers.
  • Rs 850 crore for four dairying projects – ‘Pashudhan Sanjivani’, ‘Nakul Swasthya Patra’, ‘E-Pashudhan Haat’ and National Genomic Centre for indigenous breeds.

Rural sector

(Allocation for rural sector – Rs 87,765 crore.)

  • Rs 2.87 lakh crore will be given as Grant in Aid to Gram Panchayats and Municipalities as per the recommendations of the 14th Finance Commission.
  • Every block under drought and rural distress will be taken up as an intensive Block under the Deen Dayal Antyodaya Mission.
  • A sum of Rs 38,500 crore allocated for MGNREGS.
  • 300 Rurban Clusters will be developed under the Shyama Prasad Mukherjee Rurban Mission.
  • 100 per cent village electrification by 1st May, 2018.
  • District Level Committees under Chairmanship of senior most Lok Sabha MP from the district for monitoring and implementation of designated Central Sector and Centrally Sponsored Schemes.
  • Priority allocation from Centrally Sponsored Schemes to be made to reward villages that have become free from open defecation.
  • A new Digital Literacy Mission Scheme for rural India to cover around 6 crore additional household within the next 3 years.
  • National Land Record Modernisation Programme has been revamped.
  • New scheme Rashtriya Gram Swaraj Abhiyan proposed with allocation of Rs 655 crore.

Social sector including healthcare

(Allocation for social sector including education and health care – Rs 1,51,581 crore)

  • Rs 2,000 crore allocated for initial cost of providing LPG connections to BPL families.
  • New health protection scheme will provide health cover up to Rs. 1,00,000 per family. For senior citizens, an additional top-up package up to Rs 30,000 will be provided.
  • 3,000 generic drug stores under Prime Minister’s Jan Aushadhi Yojana will be opened during 2016-17.
  • ‘National Dialysis Services Programme’ to be started under National Health Mission through PPP mode.
  • “Stand Up India Scheme” to facilitate at least two projects per bank branch. This will benefit at least 2.5 lakh entrepreneurs.
  • National Scheduled Caste and Scheduled Tribe Hub to be set up in partnership with industry associations.

Educational skills and job creation to make India a knowledge based and productive economy

  • 62 new Navodaya Vidyalayas will be opened in the next 2 years.
  • 6 crore additional households to be covered under digital literacy scheme in next 3 years.
  • 1,500 multi skill training institutes to be set up.
  • Objective to skill 1 crore youth in the next 3 years under the PM Kaushal Vikas Yojana.
  • Sarva Shiksha Abhiyan to increasing focus on quality of education.
  • Regulatory architecture to be provided to ten public and ten private institutions to emerge as world-class Teaching and Research Institutions.
  • Higher Education Financing Agency to be set-up with initial capital base of Rs 1000 Crores.
  • Digital Depository for School Leaving Certificates, College Degrees, Academic Awards and Mark sheets to be set-up.

Infrastructure investment to enhance quality of life

(Total outlay for infrastructure – Rs. 2,21,246 crore.)

  • Approve nearly 10,000 kms of National Highways in 2016-17.
  • Allocation of Rs 55,000 crore in the Budget for Roads. Additional Rs. 15,000 crore to be raised by NHAI through bonds.
  • Amendments to be made in Motor Vehicles Act to open up the road transport sector in the private segment.
  • Action plan to revive airports to be drawn up in partnership with State Governments.
  • To provide calibrated marketing freedom in order to incentivise gas production from deep-water, ultra deep-water and high pressure-high temperature areas.
  • Comprehensive plan, spanning next 15 to 20 years, to augment the investment in nuclear power generation to be drawn up.
  • Steps to be taken to re-vitalise PPPs.
  • Public Utility (Resolution of Disputes) Bill will be introduced during 2016-17.
  • Guidelines for renegotiation of PPP Concession Agreements will be issued.
  • New credit rating system for infrastructure projects to be introduced.
  • Reforms in FDI policy in the areas of Insurance and Pension, Asset Reconstruction Companies, Stock Exchanges.
  • 100 per cent FDI to be allowed through FIPB route in marketing of food products produced and manufactured in India.
  • A new policy for management of Government investment in Public Sector Enterprises, including disinvestment and strategic sale, approved.

Financial sector reforms

  • A bill on targeted delivery of financial services using Aadhar to be introduced.
  • FDI Policy: Changes proposed in areas – Insurance & Pension, Asset Reconstruction Companies, Stock Exchange.
  • A comprehensive Code on Resolution of Financial Firms to be introduced.
  • Statutory basis for a Monetary Policy framework and a Monetary Policy Committee through the Finance Bill 2016.
  • New Financial Data Management Centre to facilitate integrated data analysis.
  • RBI to facilitate retail participation in Government securities.
  • New derivative products will be developed by SEBI in the Commodity Derivatives market.
  • Amendments in the SARFAESI Act 2002 to enable the sponsor of an ARC to hold up to 100 per cent stake in the ARC and permit non institutional investors to invest in Securitization Receipts.
  • Comprehensive Central Legislation to be bought to deal with the menace of illicit deposit taking schemes.
  • Increasing members and benches of the Securities Appellate Tribunal.
  • Allocation of Rs. 25,000 crore towards recapitalisation of Public Sector Banks.
  • Target of amount sanctioned under Pradhan Mantri Mudra Yojana increased to Rs. 1,80,000 crore.
  • General insurance companies owned by the government to be listed in the stock exchanges.

Governance reforms and ease of doing business

  • A task force has been created for rationalisation of human resources in various ministries.
  • Comprehensive review and rationalisation of autonomous bodies.
  • Bill for targeted delivery of financial and other subsidies, benefits and services by using the Aadhar framework, to be introduced.
  • Introduce DBT on pilot basis for fertilizer.
  • Automation facilities will be provided in 3 lakh fair price shops by March 2017.
  • Amendments in Companies Act to improve enabling environment for start-ups.
  • Price Stabilisation Fund with a corpus of Rs. 900 crore to help maintain stable prices of pulses.

Fiscal discipline

  • Fiscal deficit in RE 2015-16 and BE 2016-17 retained at 3.9 per cent and 3.5 per cent.
  • Revenue Deficit target from 2.8 per cent to 2.5 per cent in RE 2015-16.
  • Total expenditure projected at Rs 19.78 lakh crore.
  • Plan expenditure pegged at Rs 5.50 lakh crore, an increase of 15.3 per cent.
  • Non-Plan expenditure to be kept at Rs. 14.28 lakh crore.
  • Special emphasis to sectors such as agriculture, irrigation, social sector including health, women and child development, welfare of scheduled castes and scheduled tribes, minorities, infrastructure.
  • Mobilisation of additional finances to the extent of Rs. 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority by raising Bonds.
  • Plan/Non-Plan classification to be done away with from 2017-18.
  • Every new scheme sanctioned will have a sunset date and outcome review.
  • Rationalised and restructured more than 1500 Central Plan Schemes into about 300 Central Sector and 30 Centrally Sponsored Schemes.
  • Committee to review the implementation of the FRBM Act

Tax reforms to reduce compliance burden

  • Tax proposals to provide relief to small taxpayers through rebates.
  • 13 cesses, levied by various ministries in which revenue collection is less than Rs. 50 crore in a year to be abolished.
  • For non-residents providing alternative documents to PAN card, higher TDS will not apply.
  • Revision of return extended to Central Excise assesses.
  • Additional options to banking companies and financial institutions, including NBFCs, for reversal of input tax credits with respect to non- taxable services.
  • Customs Act to provide for deferred payment of customs duties for importers and exporters with proven track record.
  • Customs Single Window Project to be implemented at major ports and airports starting from beginning of next financial year.
  • Increase in free baggage allowance for international passengers. Filing of baggage only for those carrying dutiable goods.

Three cheers for the common man:

  • HRA tax relief raised from Rs 24,000 to Rs 60,000, under Section 88G.
  • 1st home buyers to get additional deduction of Rs 50,000 on interest for loans up to Rs 35 lakh, where the cost of the house is not more than Rs 50 lakh.
  • Ensure universal coverage of LPG connections.
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