The much awaited, and the first full-fledged, Union Budget by the Narendra Modi government for the financial year 2015-16 was tabled in the parliament today by the Finance Minister Mr. Arun Jaitley. Mid-way through his Budget speech, Mr. Jaitley sat down. Personal indisposition or the weight of expectations of over a billion Indians – one could not tell. There was more drama in store when Congress’ Lok Sabha leader Mr. Mallikarjun Kharge interjected forcefully at the mention of the MNREGA in the Finance Minister’s speech. The intent of the interjection was not as apparent as the impact it had on the proceedings – Mr. Jaitley was forced to take yet another ungainly pause. Yet, the Union Budget 2015-16 was anything but ungainly. In fact, the emerging buzz in expert circles and social media chatter both pointed towards a ‘bold’ and ‘forward-looking’ Budget that transcended party lines and drew parity lines on many fronts. Overall, the Budget aimed at achieving a higher growth rate that would eventually benefit the common man in the long term, while departing from the norm in quite a few spheres. Here are some of the highlights of the Union Budget as announced by the Finance Minister. Focus on Macroeconomic Stability: The Finance Minster commenced his Budget speech by noting that the world was looking upon India’s chance to fly. The emphasis on this year’s Budget has been more on long-term reformist measures rather than offering incremental sops for taxpayers. Mr. Jaitley emphasized that his government is focusing more on providing macroeconomic stability to the economy by keeping inflation under check and improving the current account deficit. With CAD improving CPI inflation currently at 5.1 %, the objective as per the Finance Minister was to keep inflation below 6% and work towards substantial reduction of poverty. Job Creation and Promotion of Entrepreneurship: The Finance Minister has made an announcement that the Government is working towards the dream of making sureat least one member of each family has a job by the year 2022. He also made a big-ticket announcement with the introduction of Mudra Bank, a refinance agency, which would offer lending priority for SC/ST entrepreneurs. Mudra Bank would have a corpus of Rs. 20,000 crore for microfinance. Underlining his credentials as an eloquent speaker, Mr. Jaitley noted that this initiative aimed at “banking the unbanked and funding the unfunded”. Promise of Early implementation of GST: The Finance Minister revealed that works are on track to make sure that the April 2016 deadline for GST was achieved. GST would put in place a state-of-art tax system and JAM system, which will help plug leakages. Banking Reforms: Apart from creation ofMudra Bank with corpus of Rs. 20,000 crore for microfinance, the Finance Ministry has also announced the initiation of a comprehensive bankruptcy code by 2015-16. Another significant announcement that augurs well for the banking sector was that all Non Banking Financial Companies (NBFCs), including post offices, registered with RBI for above Rs. 5,000 crore would be considered as financial institutions. Announcement of Various Social Security Schemes: The government has announced various social security schemes which can be termed as the hallmark of this budget. Some of the schemes announced include:
- Announcement of Atal Pension Yojana to provide a defined pension to all citizens above the age of 60 years, depending on their contribution. The Government on its part will contribute 50 per cent of the amount for five years.
- Pradhan Mantri Jeevan Jyoti Bima Yojana at Rs. 1 per month premium, offering insurance coverage of Rs. 2 Lakhs.
- Announcement of Nayi Manzil Scheme to enable minority youth to obtain school leaving certificate and gain better employment.
- Assisted-living devices for senior citizens living below the poverty line. The Finance Minister has announced the creation of a senior citizens’ welfare fund. All unclaimed deposits of Rs 3,000 crore in EPF will be used for the benefit of senior citizens
Announcement of New Educational Institutes: Injecting cheer into the education and academic community, the Finance Minster announced a number of new educational institutes across the country including AIIMS in Jammu and Kashmir, Punjab, Tamil Nadu, Assam and AIIMS-like institution in Bihar. An IIT in Karnataka, along with a centre for Film Production and Animation in Arunachal Pradesh, are the other prominent educational institutes that were announced in the Annual Budget speech. Infrastructure: In order to promote investment in infrastructure, the Finance Minster has announced an annual inflow of Rs. 20,000 crore by the way of a trust to use this extra equity to leverage the investment in infrastructure. The Government has stressed on its focus on affordable housing as it works towards developing 6 crore housing units by 2020. Financial Markets: For the financial markets, the Finance Minister announced setting up of public debt management agency and merging of Forward Markets Commission with SEBI. A Gold Monetization scheme would be introduced, which would develop sovereign gold bond with fixed rate of interest, allowing people, jewelers and traders to invest in gold and avail interest on gold investments. Taxation Announcements: While there were no big ticket announcements for personal income tax, this Budget stressed on flushing out black money from the economy. A new law to tackle black money has been planned which would have the provision of 300% penalty on concealing income and a 7-year imprisonment for non-filing of return on foreign assets. The highlights of taxation related announcements in the Annual Budget 2015-16 include:
- Corporate tax rate to be reduced to 25 % from the current level of 30% over the next four years.
- Wealth tax to be completely abolished and replaced by additional 2% cess to be levied on the super-rich with income of over Rs. 1 crore.
- Service Tax rate increased from 12.36 to 14%.
- Tax exemption for health insurance increased from Rs. 15,000/- to Rs. 25,000; Rs. 30,000/- for senior citizens.
- Additional deduction for investment of Rs. 50,000/- in National Pension Scheme under Section 80CCD, with an aim of moving from a pension-less to a pensioned society.
- Transport allowance increased from current levels of Rs. 800 to 1600 per month.
- Although the tax slabs have remain unchanged, individual taxpayer can get benefits up to Rs. 4,44,200/- under various Sections of the Income Tax.
Drama in the House notwithstanding, the Union Budget this time around seems to have delivered a dramatic boost to the hopes and inspirations of the average Indian, departing from the predictable and populist exercise it had become in the past. However, as with all else, the devil will be in the implementation.