Highlights of Union Budget 2016-17; Focus on Poor and Farmers

In a major paradigm shift in its policy, the Modi Government’s 3rd Budget focused more on agriculture, social sector and rural development to counter a hostile opposition, which dubbed it as ‘pro-poor’. MGNREGA sector got a big boost with Rs 38,500 crores, highest allocated till date in a single year. Rs. 35,984 crores have been allocated for farmers’ welfare.

There is no big relief for industry and corporate barring a few exceptions. But, the government has ensured that development work will continue unabated. For salaried class, there is no big relief barring some relief in HRA deductions. The I-T slabs remain unchanged. The rich would be taxed more. Luxury cars, branded garments and jewellery items to become costlier. In a bid to check black money, the government has come up with a slew of measures. It seems PM Narendra Modi and Union Finance Minister Arun Jaitley have just played a master stroke.

Highlights of Union Budget 2016-17:

* Indian Economy holds its ground firmly despite the global economic slowdown.
* Bold measures have India to stay ahead.
* India hailed as a bright spot amidst global slowdown.
* GDP has witnessed growth from 6.3% to 7.6%; Inflation goes down below 5.4%.
* Forex reserves go up to $350 billion.
* Center’s share of taxes reduced from 68% to 58%.
* Govt. has to prioritize expenditure. Focus on the rural and social sectors, infrastructure and recapitalization of banks.
* Nominal premium and highest ever compensation in case of crop loss under the PM Fasal Bima Yojana.

The #Budget2016 proposal is a transformative agenda based on 9 pillars:

Agriculture:

* Grateful to our farmers for being the backbone of food security in our country.
* Aim is to double the income of farmers by 2022.
* Pradhanmantri Krishi Sinchaai Yojna strengthened and implemented in Mission Mode.
* A dedicated irrigation fund worth Rs 20,000 crore to be initiated under NABARD.
* Agenda for next year is to undertake transformative measures based on 9 pillars for

India.
* Aim to double the income of farmers in five years. Rs. 35,984 crores total allocation for farmers’welfare.
* The soil health card scheme to be implemented with greater vigour, all 14,000 crore Farms to be included under it by 2017.
* A dedicated irrigation fund worth Rs 20,000 crore to be set up under NABARD.
* 89 irrigation projects to be fast-tracked.
* A unified e-Platform on agriculture to be dedicated to the nation on the birthday of Dr. B.R.Ambedkar.
* Allocation of Pradhanmatri Gram Sadak Yojna to be increased to 19,000 Crore.
* Special focus has been given on timely credit to farmers.
* Allocation of 5,500 crores for PM Fasal Bima Yojna.
* There has been a visible rise in yield of honey. 90% of domestic honey is now exported.

Rural Development:

* Rs 2.87 Lakh Crores to be given as aid to Gram Panchayats as recommended by Finance Commission, a jump of 128%.
* A sum of Rs 38,500 crores, highest allocated till date in a single year, will be allocated to MGNREGA.
*5 lakh acres to be brought under organic farming over three years.
* 5 eligible habitats to be connected via 2.23 lakh kms of road.Current construction pace is 100 kms per day.
* Quantum jump of 228% in grants to gram panchayats and urban local bodies in accordance with FFC recommendations.
* 5542 villages have been electrified till Feb 23rd, 2016, to achieve 100% village electrification till May 1st, 2018.
* Rs 9,000 crores allocated to Swaccha Bharat Abhiyaan.
* Digital Literacy Mission Scheme to be implemented in Rural areas.

Social Sector:

* 300 rurban clusters to be set up under Shyama Prasad Mukherji Rurban Mission.
* LPG Connection in the name of women members to be introduced, a sum of Rs 2,000 crores to be allocated for BPL families.
* New 3,000 stores to be opened under the Jan Aushadhi Scheme in 2016-17.
* A National Dialysis Services Program to be introduced under National Health Mission.
* Union cabinet has approved StandUp India Scheme to encourage SC & ST entrepreneurs.
* SC/ST Hub to be constituted under MSME Ministry to encourage SC/ST entrepreneurship.

Education Skills & Job Creation:

* 62 new Navodya Vidyalayas to be opened in uncovered districts under Sarva Siksha Abhiyaan.
* A Higher Education Finance Company to be set up, an amount of Rs 1000 Crores to be initial allocation.
* Proposes National Dialysis Service Programme to provide dialysis service in all district hospital.
* A Digital Depository to be established which will be a One-stop place for all education related e-certificates.
* National Skill Development Mission has imparted training to 76 lakh youth. 1500 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.

Infrastructure & Investment:

* India achieved highest Motor Vehicles Manufacturing and highest number of kms of Road Construction awarded in 2015.
* 85% of stalled road projects back on track.
* We expect to award 10,000 km of National highway construction projects in 2016.
* Target of 10,000 kms of national highway and upgradation of 50,000 kms of state highways in 2016-17.
* Total outlay for infrastructure Rs. 2,21,246 crores in 2016-17.
* Total allocation to road sector including PMGSY: Rs. 97,000 crores.
* Government is drawing a comprehensive plan to be implemented in the next 15-20 years for exploiting Nuclear energy.
* Government to incentivise Gas production from deep sea and other deep sources which are yet unutilised.
* We have started a series of measures for modernising ports.
* Initiatives being introduced to reinvigorate infrastructure sector through PPP.
* Massive Mission @ Rs 2,000 crore to provide LPG connections to poor households. It would be in the name of women members of the households.

Financial Sector Reforms:

* Financial Data Management Center to be established.
* Comprehensive Code to be introduced to provide a specialised resolution mechanism for bankruptcy of banks/insurance companies.
* Department of Disinvestment to be renamed as Department of Investment and Public Asset Management.
* 100% FDI to be allowed through FIPB route in Food Products Produced and Marketed in India.
* RBI Act to be amended to give statutory backing for monetary policy.
* Govt. stands firmly behind public sector banks.
* More number of benches of Security Appellate Tribunal to be introduced by amending SEBI Act.
* FDI Policy; Changes proposed in areas – Insurance & Pension, Asset Reconstruction Companies, Stock Exch. etc.
* Rs 25,000 Crores to be allocated for re-capitalisation of Public Sector Banks.

Government & Ease of Doing Business:

* Amount sanctioned under PM MudraYojana has reached Rs.1 lakh crore to cover 2.5 crore borrowers by Feb, 2016.
* Task Force formulated to rationalise Human Resources in Ministries.
* ovt to increase ATMs, micro-ATMs in post offices in next three years.
* Public Money should reach the poor and deserving without any leakage.
* DBT on pilot basis in fertilisers to be introduced in some districts.
* A Bill to amend the Companies Act to be introduced in the coming session for the Ease of doing business.
* Govt has option of reducing stake in IDBI Bank below 50%. Its share price seeing sudden rise.
* Registration of new companies to be completed in one day.
* 900 crore rupees for Market Stabilization Fund for Pulses.
* Ek Bharat, Shresth Bharat programme launched to connect states and districts better.
* 160 airports and airstrips can be revived at a cost of Rs 50-100 Cr each.
* Rs 8000 crore provided for Sagarmala project.

Fiscal Discipline:

* Fiscal deficit for FY 2016-’17 targeted at 3.5%.
* Resources transferred to states Rs 2.46 lakh cr more than FY15 actual, Rs 99,000 cr more than FY16.
* Govt to set up committee to review constitution of FRBM.
* Plan Non-plan distinction to be removed from 2017-18.
* Initial sum of rs 100 cr each for birth anniversaries of Deen Dayal Upadhyay, Guru Gobind Singh.
* Necessary provisions for implementation of 7th Pay Commission recommendations made.

Tax Reforms:

* Government acknowledges the role of tax payers in Nation building.
* HRA deduction increased to Rs 60,000 per annum  from Rs 24,000 per annum under Section 88G.
* To lessen burden on individuals with income less than Rs 5 lakh, sealing of tax rebate under sec 87A from Rs 2000 to Rs 5000.
* Presumptive I-T scheme extended to all professions.
* Businesses with Rs 2 crore turnover, will pay 8% presumptive tax.
* 100% deduction on profits for start-ups for 3 out of first 5 years; MAT to apply.
* Capital gains not to be taxed on investments in regulated Fund of Funds for start-ups.
* Long-term capital gains for unlisted firms lowered to two years from three years.
* Committed to implement GAAR from April 1, 2017.
*  Incentives for new manufacturing companies and relatively small enterprise companies.
* New manufacturing companies to be taxed at 25%.
* Corporate tax for small companies at 29% plus cess.
* Companies incorporated after March 1st 2016 to be taxed at 25%+ Surcharge.
* Service tax exempted for General Insurance Schemes under Niramaya Swasthaya Bima Yojana.
* Customs and excise duties incentivise domestic manufacturing capabilities under #MakeInIndia, flagship scheme of our Govt.
* Service Tax Exemption for services under the Deen Dayal Gram Jyoti Yojana.
* Houses of less than 60 sq m to get benefit of Service tax waiver.
* 100% deduction on profits to undertakings for construction of affordable housing.
* Additional deduction of Rs 50,000 proposed on interest for loan upto Rs 35 lakh for 1st home buyers
* No change in Income Tax slabs.
* Earlier: 12%, Now onward: 15% – surcharge on income tax for those with incomes exceeding 1 crore per annum
* 0.5% Krishi Kalyan Cess on all taxable services.
* 1% levy on petrol cars, 2.5% on diesel cars, 4% on luxury cars. Cars to become costlier.
* Clean Energy Cess (renamed as Clean Environment Cess) increased from Rs 200/ton to 400/ton on coal, lignite and peat.
* Branded ready-made garments, jewellery to get more expensive.
* Excise duty on tobacco increased by 10-15%, except for beedi.
* To reduce multiplicity of taxes and cascading – 13 taxes with collection less than Rs. 50 Crores a year abolished.
* 11 new benches of Customs Excise Services Appellate Tribunal to be introduced.
* Accept various recommendations of Justice Eshwar Committee examining simplification of Income tax laws.
* Net revenue gain of RS. 19,610 crores due to surplus from indirect taxes.

Black Money Special:

* Limited tax compliance window from June 1st to September 30th for declaring undisclosed income – 45% incl. surcharge and penalties and immunity from prosecution.
* 3 lakh cases pending, disputed amount of Rs 5 lakh crores. New dispute resolution scheme.
* Penalty to be 50% of tax in income under-reporting cases, 200% in misreporting of facts.
* TDS provisions to be rationalised. NRI without Pan card can now provide alternate proof.