In a calculated move by Finance Minister, Arun Jaitley, the 2017-18 budget announcements had been preponed to February 1, 2017, allowing for sufficient time allotted to various departments, in order to implement the proposed government schemes. If we are to believe the numerous rumors doing the rounds of the internet, this year’s budget was primed to be an explosive announcement, with income tax cuts, transaction taxes at banks, capital gains taxes, etc., being proposed, speculated, and discussed. All of those were apparently scrapped as the budget that was announced was a rather conservative and slightly defensive budget. Here are the highlights of the Union Budget 2017:
Standing out as a bright spot amongst the economic gloom prevalent in the world, India is being seen as an engine of global growth, showing huge reforms over the last one year. The focus of this year’s budget is set to be on energizing the youth, pointing them towards growth and employment. The main agenda is to Transform, Energize, and Clean India (TEC India); and the basic approach is to spend more on rural areas, poverty alleviation, and infrastructure. Volatile commodity prices, oil prices, and the rising dollar, were labeled as the biggest risks to the Indian economy.
The Demonetization move was labeled as a bold and decisive mood to fight against those who had made tax evasion a way of life. The effect of this note ban on the economy is considered as only transient, and with an increase in the pace of remonetization, the effects are not expected to spill in to the next year.
The total budget announced was of ₹ 21.47 lakh crore.
The IMF (International Monetary Fund) has estimated that the world GDP will grow by 3.4% in the year 2017. There is a lot of growth that has been announced, and a lot of growth that is expected this year:
Allocation for agricultural, rural, and allied sectors has been increased by 24% as compared to last year; making it an amount of ₹ 1,87,223 crore.
There has been a 36% increase in the FDI flow.
Forex reserves set at $361 billion in January (enough to cover 12 months’ needs)
Allocation under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) has been increased from ₹ 38,500 crore to ₹ 48,000 crore, the highest allocation till date.
The agriculture expenditure has been targeted at Rs 10 lakh crore, with an expected growth of 4.6% for the sector.
The budget has also paid due attention to the living conditions in the country. Numerous steps have been announced:
The budget allocation for health has been increased from Rs 399 billion to Rs 489 billion.
One crore houses are expected to be ready for the poor by 2019.
Over 28,000 fluoride and arsenic affected habitations are to receive safe drinking water in the coming four years.
Against the 73 km road per day being constructed in 2011 – 14, the quota has been increased to the construction of 133 km road per day, under the Pradhan Mantri Gram Sadak Yojna.
Aadhaar based health cards will be issued for senior citizens.
Two new AIIMS (All India Institute of Medical Sciences) will be set up in Gujarat and Jharkhand.
With a view for digital India, it was announced that 1.25 crore citizens have already begun digital payments with the Bhim app. The government also plans to launch an app for merchants, called ‘Aadhaar Pay’, along with about 20 lakh Aadhaar-based POS, by September of this year.
About the Railways
The Railways are still one of the most major forms of transport in our country. Transport was mainly treated as one big subject, with ₹ 2.4 lakh crore being allocated to Railways, Inland Waterways, Civil Aviation, and Roads. Here’s what it means for our Railways:
The capital and the development expenditures for the Railways have been pegged at ₹ 1.31 lakh crore within the Union Budget 2017.
3500 km of railway lines are to be installed.
Any tickets that are booked through the IRCTC will not have any service charge.
A rail safety fund will be created over a 5-year period, with an expected corpus of ₹ 100,000 crore.
More lifts and elevators to be installed across 500 railway stations, to make them, easily accessible for the differently abled.
A new metro rail policy is to be announced to help create more jobs for the youth.
Infrastructure and Employment
The major infrastructure and employment related announcements in the 2017 budget are:
The abolishment of the Foreign Investment Promotion Board (FIBP).
Plans to set up crude oil reserves in Rajasthan and Odisha.
The total allocation for infrastructure stands at ₹ 396,135 crore.
The jobs boosts were mostly limited to announcements about packages available in the leather and footwear and textiles industries.
The Pradhan Mantri Kaushal Kendras are to be extended to 600 districts to help skill our youth.
Other announcements included those on new medical seats, investments in digital learning, and a National Testing Agency.
There was also a focus on BharatNet which is being aimed to connect 150,000 Gram Panchayats on the broadband network.
Holding period for LTCG for lands and buildings has been reduced to 2 years.
MAT Credit can be carried forward for 15 years now instead of 10.
Taxes and Expenses and Funding
Now, the one we’ve all been waiting for. How does the new budget affect the various taxpayers? Here’s how: –
The income tax for the tax slab of ₹ 250,000 to ₹ 500,000 has been reduced from 10% to 5% and no tax will be applicable below the lower limit.
People with an annual income of ₹ 50 Lakh to 1 crore, are liable to pay a surcharge of 10%
On incomes above ₹ 1 crore, the surcharge of 15% will continue.
Small firms, with a turnover of up to ₹ 50 crore, are to pay 25% tax, instead of the earlier 30%
A 6% presumptive tax is applicable on a turnover up to ₹ 2 crore.
Proposal to simplify the income tax forms, making it a 1 page form.
No major changes in indirect taxes owing to the GST implementation.
India is largely a tax non-compliance society, where a number of people evade taxes, making the tax to GDP ratio very low. However, after demonetization, a 34% increase in direct tax collection has been noted.
Out of the 3.7 crore people who filed for taxes in 2015-16, only 24 lakh showed an income above 10 lakh.
Out of the 76 lakh who reported having an income over ₹ 5 lakh, 56 lakh were salaried individuals.
The government announced that a new law is being considered which authorizes the confiscation of the assets of any offender that escapes the country.
The defense expenditure, excluding the pensions, has been announced at ₹ 2.74 lakh crore
About the Funding
The Black money SIT has suggested making any cash transactions that are above ₹ 3 lakh illegal. This suggestion has been accepted.
For donations, no party (charity or political), can receive more than ₹ 2000 from a single source.
Political parties will be required to receive any donations by either cheque or by other digital modes.
An amendment is also being proposed to the RBI, which will allow for the issuance of electoral bonds for funding for political parties.
Food subsidy has been estimated at ₹ 1.45 trillion, compared to the ₹ 1.35 trillion that was the revised estimate for last year.
Fuel subsidy is estimated at ₹ 250 billion, while the revised estimate of last year was ₹ 275 billion
The fertilizer subsidy has seen no change and is set at ₹ 700 billion.
The fiscal deficit has been pegged at 3.2% of the GDP, for the year 2017-18, while a pegged 3% fiscal deficit has been targeted for the next three years.
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