UNION BUDGET FY19- IT’S ALL ABOUT BHARAT

By Ruma Dubey

In one word – good.

This is a good Budget. Maybe the first 20 minutes or so sounded more like an Election speech, getting ready for 2019 but from then on, it has been a well thought of, detailed Budget.

We talk about rising inequality and inclusive growth – well, this is Budget is all about the farmer and rural India; trying to raise people on the lowest rung of the economic ladder to a higher rung and bringing in more to the ladder at least.

The market can act like a rich spoilt brat, petulant and throwing a tantrum on account of the levy of long term capital gains tax but really, all these gains that we clock today could go away in a puff if the farmers and villages are not taken care of.  For India to prosper, we first need Bharat to grow.

There is worry on the upward revision of the fiscal deficit for FY18 at 3.5% of GDP as against widely expected target of around 3.2 to 3.3%. Then again, this was widely expected. Though the Govt has earned more revenue through taxes and more than met its divestment target of FY18, the real culprit has been the deferment of spectrum collection.  Thus this increase in fiscal deficit was bound to happen. The rating agencies can sit tight or downgrade but for now, this is a real truth.

The BJP has to do what it did in this Budget  - take care of the poor and especially the farmers; or else it would not be able to face their wrath in 2019. A long term capital gains tax does not affect the food on our table or livelihood but so many of the education, health and agri benefits, if not given would have made the condition worse for the farmers/rural Indian.

Yes, the salaried employees or largely the middle class has nothing really to cheer about as there has been no change in the personal Income Tax thresholds but some small token relief has come in the form of the standard deduction of Rs.40,000 in lieu of transportation and medical – this was already at Rs.30,000; so the benefit is of just Rs.10,000.

India Inc, the “listed world” where we live on Dalal Street wanted a cut in corporate tax too. That happened but not the way they wanted. The FM extended the turnover limit for 25% tax from Rs.50 crore to Rs.250 crore.  This will leave out most of the companies listed on the bourses but will go a long way in helping those in the SME sector to lift themselves up. Thus a good boost for startups and small/medium companies.

The Govt has been facing a lot of wrath from the senior citizens and the FM has tried to soothe these ruffled feathers,  giving them additional benefits like increase in pension schemes, medical insurance limits and increased deductions on interest earned.

Thus all in all, this is a good Budget for most of India but the elite market is sure to feel ignored. If the earlier years were about Ease of Doing Business, this one is about Ease of living for the majority of India.

The various sops announced for the agriculture sector and rural economy is expected to create employment of 321 crore person days, 3.17 lakh kilometers of rural roads, 51 lakh new rural houses, 1.88 crore toilets, and provide 1.75 crore new household electric connections besides boosting agricultural growth.

AGRICULTURE

• MSP for all unannounced kharif crops will be one and half times of their production cost like majority of rabi crops
• Institutional Farm Credit raised to Rs.11 lakh crore in 2018-19 from 8.5 lakh crore in 2014-15.
• 22,000 rural haats to be developed and upgraded into Gramin
• Agricultural Markets to protect the interests of 86% small and marginal farmers.
• “Operation Greens” launched to address price fluctuations in potato, tomato and onion for benefit of farmers and consumers
• An Agri-Market Infrastructure Fund with a corpus of Rs.2000 crore will be setup for developing and upgrading agricultural marketing infrastructure.
• So far 470 APMCs have been connected to e-NAM network and balance 115 to be connected by March, 2018.
• Rs 200 crore for organized cultivation of highly specialized medicinal and aromatic plants
• To set up a re-structured National Bamboo Mission with an outlay of Rs.1290 crore to promote bamboo sector.
• Under Prime Minister Krishi Sinchai Yojna-Har Khet ko Pani, 96 deprived irrigation districts will be taken up with an allocation of Rs 2600 crore.
• Govt to work with the state governments to facilitate farmers for installing solar water pumps to irrigate their fields.
• Extend facility of Kisan Credit Cards to fisheries and animal husbandry farmers to help them meet their working capital needs.
• To set up state-of-the-art testing facilities in all the forty two Mega Food Parks.
• Special Scheme to support the efforts of the governments of Haryana, Punjab, Uttar Pradesh and the NCT of Delhi to address air pollution in the Delhi-NCR region by subsidizing machinery required for in-situ management of crop residue.
• Two New Funds of Rs10,000 crore announced for Fisheries and Animal Husbandary sectors.
• Under Prime Minister Krishi Sinchai Yojna-Har Khet ko Pani, 96 deprived irrigation districts will be taken up with an allocation of Rs 2600 crore.
• Centre will work with the state governments to facilitate farmers for installing solar water pumps to irrigate their fields.

RURAL ECONOMY BOOSTERS

• Loans to Women Self Help Groups will increase to Rs.75,000 crore in 2019 from 42,500 crore last year.
• Higher targets for Ujjwala, Saubhagya and Swachh Mission to cater to lower and middle class in providing free LPG connections, electricity and toilets.
• Outlay on health, education and social protection will be 1.38 lakh crore.
• Tribal students to get Ekalavya Residential School in each tribal block by 2022.
• Welfare fund for SCs gets a boost.
• World?s largest National Health Protection Scheme covering over 10 crore poor and vulnerable families launched with a family limit upto 5 lakh rupees for secondary and tertiary treatment. A
• Allocation of Ministry of Food Processing has been doubled from Rs.715 crore in 2017-18 to Rs.1400 crore in 2018-19.
• Increased allocation of National Rural Livelihood Mission to Rs 5750 crore in 2018-19.
• Under Ujjwala Scheme distribution of free LPG connections will be given to 8 crore poor women instead of the previous target of 5 crore women.
• Under Saubahagya Yojana, 4 crore poor households are being provided with electricity connection with an outlay of Rs.16,000 crore.
• To fulfil target of ‘Housing for All’ by 2022,more than one crore houses will be built by 2019 in rural areas, besides already constructed 6 crore toilets under Swachh Bharat Mission.
• For creation of livelihood and infrastructure in rural areas, total amount to be spent by the Ministries will be Rs.14.34 lakh crore.
• 100 percent deduction to companies registered as Farmer Producer Companies with an annual turnover upto Rs. 100 crore on profit derived from such activities, for a period of five years from FY19.

EDUCATION

• Estimated budgetary expenditure on health, education and social protection for 2018-19 is Rs.1.38 lakh crore V/S Rs.1.22 lakh crore in 2017-18.
• To step up investments in research and related infrastructure in premier educational institutions, including health institutions, a major initiative named, “Revitalising Infrastructure and Systems in Education (RISE) by 2022” with a total investment of Rs.1 lakh crore in next four years.
• To improve the quality of teachers an integrated B.Ed. programme for teachers will be initiated
• Centres of excellence to be set up on robotics, AI, Internet of things etc
• Under the Prime Minister?s Research Fellows (PMRF) Scheme, 1000 best B.Tech students per annum, from premier institutions to be provided facilities to do Ph.D in IITs and IISc, with a handsome fellowship.
• Allocation on National Social Assistance Programme this year has been kept at Rs. 9975 crore.
• To set up 24 new Government Medical Colleges and Hospitals by upgrading existing district hospitals in the country.

HEALTH

• World’s largest government funded health care programme titled National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage upto 5 lakh rupees per family per year for secondary and tertiary care hospitalization.
• Rs.1200 crore for the National Health Policy, which with 1.5 lakh Health and Wellness Centres will bring health care system closer to the homes of people.
• To allocate additional Rs.600 crore to provide nutritional support to all TB patients at the rate of Rs.500 per 10 month for the duration of their treatment.

INFRA

• Increase of budgetary allocation on infrastructure for 2018-19 to Rs.5.97 lakh crore against estimated expenditure of Rs.4.94 lakh crore in 2017-18.
• Projects worth 9.46 lakh crore have been facilitated and fast tracked.
• To develop ten prominent tourist sites into Iconic Tourism destinations
• Under the Bharatmala Pariyojana, about 35000 kms road construction in Phase-I at an estimated cost of Rs.5,35,000 crore has been approved.
• Over 9000 kms of highway to be completed before end of FY18.

RAILWAYS

• Railways Capital Expenditure for the year 2018-19 has been pegged at Rs.1,48,528 crore.
• 4000 kilometers of electrified railway network is slated for commissioning during 2017-18.
• Adequate number of rolling stock – 12000 wagons, 5160 coaches and approximately 700 locomotives are being procured during 2018-19.
• Over 3600 kms of track renewal is targeted during the current fiscal.
• Redevelopment of 600 major railway stations is being taken up.
• Mumbai?s local train network will have 90 kilometers of double line tracks at a cost of over Rs.11,000 crore.
• 150 kilometers of additional suburban network is being planned at a cost of over Rs.40,000 crore, including elevated corridors on some sections.
• A suburban network of approximately 160 kilometers at an estimated cost of Rs.17,000 crore is being planned to cater to the growth of the Bengaluru metropolis.

AIR TRANSPORT

• To expand the airport capacity more than five times to handle a billion trips a year under a new initiative - NABH Nirman.
• Under the Regional connectivity scheme of UDAN (Ude Desh ka Aam Nagrik) initiated by the Government last year, 56 unserved airports and 31 unserved helipads would be connected.

DIGITAL INDIA

• NITI Aayog will initiate a national program to direct efforts in artificial intelligence.
• The Budget doubled the allocation on Digital India programme to Rs 3073 crore in 2018-19.
• To set up five lakh wifi hotspots to provide net connectivity to five crore rural citizens.
• Allocation of Rs.10,000 crore in 2018-19 for creation and augmentation of Telecom infrastructure.
• Scheme will be evolved to assign every individual enterprise in India a unique ID, on the lines of Aadhar.

FISCAL

• The Budget Revised Estimates for expenditure in 2017-18 are Rs.21.57 lakh crore (net of GST compensation transfers to the States) as against the Budget Estimates of Rs.21.47 lakh crore.
• Projected a Fiscal Deficit of 3.3% of GDP for FY19 and 3.5% for FY18.
• Acceptance of key recommendations of the Fiscal Reform and Budget Management Committee to bring down Central Government’s Debt to GDP ratio to 40%.
• FY18 disinvestment target of Rs.72,500 crore has been exceeded and expected receipts of Rs.1,00,000 crore.
• Disinvestment target of Rs.80,000 crore for FY19.
• Direct taxes showed a growth of 18.7% in current fiscal till 15^th Jan 2018.
• The number of Effective Tax Payers has increased from 6.47 crore at the beginning of FY15  to 8.27 crore at the end of FY17.

CORPORATE INDIA

• Reduced rate of 25% currently available for companies with turnover of less than Rs.50 crore extended up to Rs.250 crore.
• Payments exceeding Rs. 10,000 in cash made by trusts and institutions shall be disallowed and would be subject to tax.

DIRECT TAX

• Standard Deduction of Rs. 40,000 in place of the present exemption allowed for transport allowance and reimbursement of miscellaneous medical expenses.
• To continue with medical reimbursement benefits in case of hospitalization etc. for all employees.

SENIOR CITIZENS

• Exemption of interest income on deposits with banks and post offices are proposed to be increased from Rs. 10,000 to Rs. 50,000.
• TDS shall not be required to be deducted under section 194A.
• Benefit will also be available for interest from all fixed deposit schemes and recurring deposit schemes.
• Hike in deduction limit for health insurance premium and/ or medical expenditure from Rs. 30,000 to Rs. 50,000 under section 80D.
• Increase in deduction limit for medical expenditure for certain critical illness from Rs. 60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens) to Rs. 1 lakh for all senior citizens, under section 80DDB.
• To extend the Pradhan Mantri Vaya Vandana Yojana up to March, 2020.
• The current investment limit is also proposed to be increased to Rs. 15 lakh from the existing limit of Rs. 7.5 lakh.

EQUITY

• To bring in Long Term Capital Gains exceeding Rs. 1 lakh at the rate of 10 percent, without allowing any indexation benefit.
• All gains up to 31st January, 2018 will be grandfathered.

“Grandfathering’ is a provision in a law or contract that allows old rules to continue to apply in certain situations. So it is unfounded fears that people will rush to sell shares today to avoid paying the 10% Long term capital gains (LTCG) tax. All shares bought till today will have 0% LTCG tax but those purchased from tomorrow, will fall under the 10% bracket. Here, based on this, it is assumed that long term means one year.

• To introduce a tax on distributed income by equity oriented mutual funds at the rate of 10%.
• Cess on personal income tax and corporation tax increased to 4% from current 3% - to be called ‘Health and Education Cess’.

CUSTOMS DUTY

• Increased on mobile phones from 15 percent to 20 percent,
• Some mobile parts and accessories at 15%
• Certain parts of televisions at 15%.
• Reduced on raw cashew from 5% to 2.5%.
• Abolish the Education Cess and Secondary and Higher Education Cess on imported goods – replaced by 10% Social Welfare Surcharge.
• Name of the Central Board of Excise and Customs (CBEC) changed to the Central Board of Indirect Taxes and Customs (CBIC).