Key Features of Budget 2017-2018
Inflation brought under control. CPI-based
inflation declined from 6% in July 2016 to 3.4% in December, 2016
Economy has moved on a high growth path. India’s
Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP
in the first half of 2016-17. FDI grew 36% in H1 2016-17 over H1 2015-16,
despite 5% reduction in global FDI inflows. Foreign exchange reserves have
reached 361 billion US Dollars as on 20th January, 2017
Government continued on path of fiscal
consolidation, without compromising on public investment.
The Indian economy has been robust to mild
shocks and IMF forecasts, India to be one of the fastest growing major
economies in 2017
Passage of the Constitution Amendment Bill for
GST and the progress for its introduction
Demonetisation of high denomination bank notes
Enactment of the Insolvency and Bankruptcy Code;
amendment to the RBI Act for inflation targeting; enactment of the Aadhar bill
for disbursement of financial subsidies and benefits
Budget 2017-18 contains 3 major reforms. First,
presentation of Budget advanced to 1st February to enable the Ministries to operationalise
all activities from the commencement of the financial year. Second, merger of
Railways Budget with General Budget to bring Railways to the centre stage of
Government’s Fiscal Policy and Third, removal of plan and nonplan
classification of expenditure to facilitate a holistic view of allocations for
sectors and ministries
CHALLENGES IN 2017-18
World economy faces considerable uncertainty, in
the aftermath of major economic and political developments during the last year
The US Federal Reserve's , intention to increase
policy rates in 2017, may lead to lower capital inflows and higher outflows
from the emerging economies
Uncertainty around commodity prices, especially
that of crude oil, has implications for the fiscal situation of emerging
economies
Signs of retreat from globalisation of goods,
services and people, as pressures for protectionism are building up
3 ROADMAP & PRIORITIES
Agenda for 2017-18 is : “Transform, Energise and
Clean India” – TEC India
TEC India
seeks to
Transform the quality of governance and quality
of life of our people; Energise various sections of society, especially the
youth and the vulnerable, and enable them to unleash their true potential; and
Clean the
country from the evils of corruption, black money and non-transparent political
funding
Ten distinct themes to foster this broad agenda:
Farmers : committed to double the income in 5
years;
Rural Population : providing employment &
basic infrastructure;
Youth : energising them through education,
skills and jobs;
The Poor and the Underprivileged : strengthening
the systems of social security, health care and affordable housing;
Infrastructure: for efficiency, productivity and
quality of life;
Financial Sector : growth & stability by
stronger institutions;
Digital Economy : for speed, accountability and
transparency;
Public Service : effective governance and
efficient service delivery through people’s participation;
Prudent Fiscal Management: to ensure optimal
deployment of resources and preserve fiscal stability;
Tax Administration: honouring the honest.
FARMERS
Target
for agricultural credit in 2017-18 has been fixed at a record level of ` 10
lakh crores
Farmers will also benefit from 60 days’ interest
waiver announced on 31 Dec 2016
To ensure flow of credit to small farmers,
Government to support NABARD for computerisation and integration of all 63,000
functional Primary Agriculture Credit Societies with the Core Banking System of
District Central Cooperative Banks. This will be done in 3 years at an estimated
cost of 1,900 crores
Coverage under Fasal Bima Yojana scheme will be
increased from 30% of cropped area in 2016-17 to 40% in 2017-18 and 50% in
2018-19 for which a budget provision of ` 9000 crore has been made
New mini labs in Krishi Vigyan Kendras (KVKs)
and ensure 100% coverage of all 648 KVKs in the country for soil sample testing
As announced by the Honourable Prime Minister,
the Long Term Irrigation Fund already set up in NABARD to be augmented by 100%
to take the total corpus of this Fund to ` 40,000 crores.
Dedicated Micro Irrigation Fund in NABARD to
achieve ‘per drop more crop’ with an initial corpus of 5,000 crores
Coverage of National Agricultural Market (e-NAM)
to be expanded from 250 markets to 585 APMCs. Assistance up to 75 lakhs will be
provided to every e-NAM
A model
law on contract farming to be prepared and circulated among the States for
adoption
Dairy Processing and Infrastructure Development
Fund to be set up in NABARD with a corpus of 2000 crores and will be increased
to 8000 crores over 3 years
RURAL POPULATION
Over 3 lakh crores spent in rural areas every
year, for rural poor from Central Budget, State Budgets, Bank linkage for
self-help groups, etc
Aim to bring one crore households out of poverty
and to make 50,000 Gram Panchayats poverty free by 2019, the 150th birth
anniversary of Gandhiji
Against
target of 5 lakh farm ponds under MGNREGA, 10 lakh farm ponds would be
completed by March 2017. During 2017-18, another 5 lakh farm ponds will be
taken up
Women participation in MGNREGA has increased to
55% from less than 48%
MGNREGA
allocation to be the highest ever at 48,000 crores in 2017-18. 5
Pace of construction of PMGSY roads accelerated
to 133 km roads per day in 2016-17, against an avg. of 73 km during 2011-2014
Government has taken up the task of connecting habitations
with more than 100 persons in left wing extremism affected Blocks under PMGSY.
All such habitations are expected to be covered by 2019 and the allocation for
PMGSY, including the State's Share is 27,000 crores in 2017-18
Allocation for Pradhan Mantri Awaas Yojana –
Gramin increased from 15,000 crores in
BE 2016-17 to 23,000 crores in 2017-18 with a target to complete 1 crore houses
by 2019 for the houseless and those living in kutcha houses.
Well on our way to achieving 100% village electrification
by 1st May 2018
Allocation for Prime Minister's Employment
Generation Program and Credit Support Schemes has been increased three fold
Sanitation coverage in rural India has gone up
from 42% in Oct 2014 to about 60%. Open Defecation Free(ODF) villages are now
being given priority for piped water supply.
As part of a sub mission of the National Rural
Drinking Water Programme (NRDWP), it is proposed to provide safe drinking water
to over 28,000 arsenic and fluoride affected habitations in the next four
years.
For imparting new skills to people in rural
areas, mason training will be provided to 5 lakh persons by 2022
A programme of “human resource reforms for
results” will be launched during 2017-18 for human resources development in Panchayati
Raj Institutions
Total
allocation for Rural, Agriculture and Allied sectors is 187223 crores YOUTH
To introduce a system of measuring annual
learning outcomes in our schools
Innovation Fund for Secondary Education proposed
to encourage local innovation for ensuring universal access, gender parity and
quality improvement to be introduced in 3479 educationally backward districts.
Good quality higher education institutions to
have greater administrative and academic autonomy
SWAYAM platform, leveraging IT, to be launched
with at least 350 online courses. This would enable students to virtually
attend courses taught by the best faculty
National
Testing Agency to be set-up as an autonomous and self-sustained premier testing
organisation to conduct all entrance examinations for higher education
institutions
Pradhan Mantri Kaushal Kendras to be extended to
more than 600 districts across the country. 100 India International Skills
Centres will be established across the country.
Skill Acquisition and Knowledge Awareness for
Livelihood Promotion programme (SANKALP) to be launched at a cost of 4000
crores. SANKALP will provide market relevant training to 3.5 crore youth
Next phase of Skill Strengthening for Industrial
Value Enhancement (STRIVE) will also be launched in 2017-18 at a cost of 2,200 crores
A scheme for creating employment in the leather
and footwear industries along the lines in Textiles Sector to be launched
Incredible India 2.0 Campaign will be launched
across the world to promote tourism and employment.
THE POOR AND THE UNDERPRIVILEGED
Mahila Shakti Kendra will be set up with an
allocation of 500 crores in 14 lakh ICDS Anganwadi Centres. This will provide
one stop convergent support services for empowering rural women with
opportunities for skill development, employment, digital literacy, health and
nutrition
Under Maternity Benefit Scheme 6,000 each will be transferred directly to the
bank accounts of pregnant women who undergo institutional delivery and
vaccinate their children
Affordable housing to be given infrastructure
status
National Housing Bank will refinance individual
housing loans of about 20,000 crore in
2017-18
Government has prepared an action plan to
eliminate Kala-Azar and Filariasis by 2017, Leprosy by 2018, Measles by 2020
and Tuberculosis by 2025 is also targeted
Action plan has been prepared to reduce IMR from
39 in 2014 to 28 by 2019 and MMR from 167 in 2011-13 to 100 by 2018-2020
To create additional 5,000 Post Graduate seats
per annum to ensure adequate availability of specialist doctors to strengthen
Secondary and Tertiary levels of health care
Two new All India Institutes of Medical Sciences
to be set up in Jharkhand and Gujarat
To foster a conducive labour environment,
legislative reforms will be undertaken to simplify, rationalise and amalgamate
the existing labour laws into 4 Codes on (i) wages; (ii) industrial relations;
(iii) social security and welfare; and (iv) safety and working conditions.
Propose to amend the Drugs and Cosmetics Rules
to ensure availability of drugs at reasonable prices and promote use of generic
medicines
The allocation for Scheduled Castes has been
increased by 35% compared to BE 2016-17. The allocation for Scheduled Tribes has
been increased to 31,920 crores and for Minority Affairs to 4,195 crores
For senior citizens, Aadhar based Smart Cards
containing their health details will be introduced
INFRASTRUCTURE
For transportation sector as a whole, including
rail, roads, shipping, provision of 2,41,387 crores has been made in 2017-18.
For 2017-18, the total capital and development
expenditure of Railways has been pegged at 1,31,000 crores. This includes 55,000 crores provided by the Government
For passenger safety, a Rashtriya Rail Sanraksha
Kosh will be created with a corpus of 1 lakh crores over a period of 5 years
Unmanned level crossings on Broad Gauge lines
will be eliminated by 2020
In the next 3 years, the throughput is proposed
to be enhanced by 10%. This will be done through modernisation and upgradation
of identified corridors.
Railway lines of 3,500 kms will be commissioned
in 2017-18. During 2017-18, at least 25 stations are expected to be awarded for
station redevelopment.
500 stations will be made differently abled
friendly by providing lifts and escalators.
It is proposed to feed about 7,000 stations with
solar power in the medium term
SMS based Clean My Coach Service has been
started
‘Coach Mitra’, a single window interface, to
register all coach related complaints and requirements to be launched
By 2019, all coaches of Indian Railways will be
fitted with bio toilets. Tariffs of Railways would be fixed, taking into
consideration costs, quality of service and competition from other forms of
transport
A new Metro Rail Policy will be announced with
focus on innovative models of implementation and financing, as well as
standardisation and indigenisation of hardware and software
A new Metro Rail Act will be enacted by
rationalising the existing laws. This will facilitate greater private
participation and investment in construction and operation.
In the
road sector, Budget allocation for highways increased from 57,976 crores in BE
2016-17 to 64,900 crores in 2017-18
2,000 kms
of coastal connectivity roads have been identified for construction and
development
Total length of roads, including those under
PMGSY, built from 2014-15 till the current year is about 1,40,000 kms which is
significantly higher than previous three years
Select airports in Tier 2 cities will be taken
up for operation and maintenance in the PPP mode 9
By the end of 2017-18, high speed broadband
connectivity on optical fibre will be available in more than 1,50,000 gram
panchayats, under BharatNet. A DigiGaon initiative will be launched to provide
tele-medicine, education and skills through digital technology
Proposed to set up strategic crude oil reserves
at 2 more locations, namely, Chandikhole in Odisha and Bikaner in Rajasthan.
This will take our strategic reserve capacity to 15.33 MMT
Second phase of Solar Park development to be
taken up for additional 20,000 MW capacity. For creating an eco-system to
make India a global hub for electronics manufacturing a provision of 745 crores in 2017-18 in incentive schemes
like M-SIPS and EDF.
A new and restructured Central scheme with a
focus on export infrastructure, namely, Trade Infrastructure for Export Scheme
(TIES) will be launched in 2017-18
FINANCIAL SECTOR
Foreign
Investment Promotion Board to be abolished in 2017-18 and further
liberalisation of FDI policy is under consideration
An expert committee will be constituted to study
and promote creation of an operational and legal framework to integrate spot
market and derivatives market in the agricultural sector, for commodities
trading. e- NAM to be an integral part of the framework.
Bill relating to curtail the menace of illicit
deposit schemes will be introduced. A bill relating to resolution of financial
firms will be introduced in the current Budget Session of Parliament. This will
contribute to stability and resilience of our financial system
A mechanism to streamline institutional
arrangements for resolution of disputes in infrastructure related construction
contracts, PPP and public utility contracts will be introduced as an amendment
to the Arbitration and Conciliation Act 1996.
A
Computer Emergency Response Team for our Financial Sector (CERT-Fin) will be
established
Government will put in place a revised mechanism
and procedure to ensure time bound listing of identified CPSEs on stock
exchanges. The shares of Railway PSEs like IRCTC, IRFC and IRCON will be listed
in stock exchanges.
Propose to create an integrated public sector
‘oil major’ which will be able to match the performance of international and
domestic private sector oil and gas companies
A new ETF with diversified CPSE stocks and other
Government holdings will be launched in 2017-18
In line with the ‘Indradhanush’ roadmap, 10,000
crores for recapitalization of Banks provided in 2017-18
Lending target under Pradhan Mantri Mudra Yojana
to be set at 2.44 lakh crores. Priority
will be given to Dalits, Tribals, Backward Classes and Women.
DIGITAL ECONOMY
125 lakh people have adopted the BHIM app so
far. The Government will launch two new schemes to promote the usage of BHIM;
these are, Referral Bonus Scheme for individuals and a Cashback Scheme for
merchants
Aadhar Pay, a merchant version of Aadhar Enabled
Payment System, will be launched shortly
A Mission will be set up with a target of 2,500
crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and
debit cards
A proposal to mandate all Government receipts
through digital means, beyond a prescribed limit, is under consideration
Banks have targeted to introduce additional 10
lakh new POS terminals by March 2017. They will be encouraged to introduce 20
lakh Aadhar based POS by September 2017
Proposed to create a Payments Regulatory Board
in the Reserve Bank of India by replacing the existing Board for Regulation and
Supervision of Payment and Settlement Systems
PUBLIC SERVICE
The
Government e-market place which is now functional for procurement of goods and
services
To utilise the Head Post Offices as front
offices for rendering passport services
A Centralised Defence Travel System has been
developed through which travel tickets can be booked online by our soldiers and
officers
Web based interactive Pension Disbursement
System for Defence Pensioners will be established
To rationalise the number of tribunals and merge
tribunals wherever appropriate
Commemorate both Champaran and Khordha revolts appropriately
PRUDENT FISCAL MANAGEMENT
Stepped up allocation for Capital expenditure by
25.4% over the previous year
Total resources being transferred to the States
and the Union Territories with Legislatures is 4.11 lakh crores, against 3.60 lakh crores in BE 2016-17
For the first time, a consolidated Outcome
Budget, covering all Ministries and Departments, is being laid along with the
other Budget documents
FRBM Committee has recommended 3% fiscal deficit
for the next three years, keeping in mind the sustainable debt target and need
for public investment, fiscal deficit for 2017-18 is targeted at 3.2% of GDP
and Government remains committed to achieve 3% in the following year
Net market borrowing of Government restricted to
3.48 lakh crores after buyback in 2017-18, much lower than 4.25 lakh crores of
the previous year
Revenue Deficit of 2.3% in BE 2016-17 stands
reduced to 2.1% in the Revised Estimates. The Revenue Deficit for next year is
pegged at 1.9% , against 2% mandated by the FRBM Act
PROMOTING
AFFORDABLE HOUSING AND REAL ESTATE SECTOR
Between 8th November and 30th December 2016,
deposits between 2 lakh Rupees and 80 lakh Rupees were made in about 1.09 crore
accounts with an average deposit size of 5.03 lakh. Deposits of more than 80 lakh were
made in 1.48 lakh accounts with average deposit size of 3.31 crores.
Under the scheme for profit-linked income tax
deduction for promotion of affordable housing, carpet area instead of built up
area of 30 and 60 Sq.mtr. will be counted.
The 30 Sq.mtr. limit will apply only in case of
municipal limits of 4 metropolitan cities while for the rest of the country
including in the peripheral areas of metros, limit of 60 Sq.mtr. will apply
For builders for whom constructed buildings are
stock-in-trade, tax on notional rental income will only apply after one year of
the end of the year in which completion certificate is received
Reduction in the holding period for computing
long term capital gains from transfer of immovable property from 3 years to 2
years. Also, the base year for indexation is proposed to be shifted from
1.4.1981 to 1.4.2001 for all classes of assets including immovable property
For Joint Development Agreement signed for
development of property, the liability to pay capital gain tax will arise in
the year the project is completed
Exemption from capital gain tax for persons
holding land on 2.6.2014, the date on which the State of Andhra Pradesh was
reorganised, and whose land is being pooled for creation of capital city of
Andhra Pradesh under the Government scheme
MEASURES FOR STIMULATING GROWTH
Concessional withholding rate of 5% charged on
interest earned by foreign entities in external commercial borrowings or in
bonds and Government securities is extended to 30.6.2020. This benefit is also
extended to Rupee Denominated (Masala) Bonds
For the purpose of carry forward of losses in
respect of start-ups, the condition of continuous holding of 51% of voting
rights has been relaxed subject to the condition that the holding of the
original promoter/promoters continues. Also the profit (linked deduction)
exemption available to the start-ups for 3 years out of 5 years is changed to 3
years out of 7 years 13
MAT credit is allowed to be carried forward up
to a period of 15 years instead of 10 years at present In order to make MSME
companies more viable, income tax for companies with annual turnover upto 50
crore is reduced to 25%
Allowable provision for Non-Performing Asset of
Banks increased from 7.5% to 8.5%. Interest taxable on actual receipt instead
of accrual basis in respect of NPA accounts of all non-scheduled cooperative
banks also to be treated at par with scheduled banks
Basic
customs duty on LNG reduced from 5% to 2.5%
PROMOTING DIGITAL ECONOMY
Under scheme of presumptive income for small and
medium tax payers whose turnover is upto 2 crores, the present, 8% of their
turnover which is counted as presumptive income is reduced to 6% in respect of
turnover which is by non-cash means
No transaction above 3 lakh would be permitted
in cash subject to certain exceptions
Miniaturised POS card reader for m-POS (other than mobile phones or tablet
computers), micro ATM standards version 1.5.1, Finger Print Readers / Scanners
and Iris Scanners and on their parts and components for manufacture of such
devices to be exempt from BCD, Excise/CV duty and SAD
TRANSPARENCY IN ELECTORAL FUNDING
Need to cleanse the system of political funding
in India
Maximum amount of cash donation, a political
party can receive, will be 2000/- from one person.
Political parties will be entitled to receive
donations by cheque or digital mode from their donors.
Amendment to the Reserve Bank of India Act to
enable the issuance of electoral bonds in accordance with a scheme that the
Government of India would frame in this regard.
Every political party would have to file its
return within the time prescribed in accordance with the provision of the
Income-tax Act
Existing
exemption to the political parties from payment of income-tax would be
available only subject to the fulfillment of these conditions
EASE OF DOING BUSINESS
Scope of domestic transfer pricing restricted to
only if one of the entities involved in related party transaction enjoys
specified profit-linked deduction
Threshold limit for audit of business entities
who opt for presumptive income scheme increased from 1 crore to 2 crores. Similarly, the threshold for
maintenance of books for individuals and HUF increased from turnover of 10
lakhs to 25 lakhs or income from 1.2 lakhs to 2.5 lakhs
Foreign Portfolio Investor (FPI) Category I
& II exempted from indirect transfer provision. Indirect transfer provision
shall not apply in case of redemption of shares or interests outside India as a
result of or arising out of redemption or sale of investment in India which is
chargeable to tax in India
Commission payable to individual insurance
agents exempt from the requirement of TDS subject to their filing a
self-declaration that their income is below taxable limit
Under scheme for presumptive taxation for professionals
with receipt upto 50 lakhs p.a. advance
tax can be paid in one installment instead of four
Time period for revising a tax return is being
reduced to 12 months from completion of financial year, at par with the time
period for filing of return. Also the time for completion of scrutiny
assessments is being compressed further from 21 months to 18 months for
Assessment Year 2018-19 and further to 12 months for Assessment Year 2019-20
and thereafter
PERSONAL INCOME-TAX
Existing rate of taxation for individual
assesses between income of 2.5 lakhs to 5 lakhs reduced to 5% from the present
rate of 10%
Surcharge of 10% of tax payable on categories of
individuals whose annual taxable income is between 50 lakhs and 1 crore
Simple one-page form to be filed as Income Tax
Return for the category of individuals having taxable income upto 5 lakhs other
than business income
Appeal to all citizens of India to contribute to
Nation Building by making a small payment of 5% tax if their income is falling
in the lowest slab of 2.5 lakhs to 5 lakhs. GOODS AND
SERVICES TAX
The GST Council has finalised its
recommendations on almost all the issues based on consensus on the basis of 9
meetings held
Preparation of IT system for GST is also on
schedule.
The extensive reach-out efforts to trade and
industry for GST will start from 1st April, 2017 to make them aware of the new
taxation system. RAPID (Revenue, Accountability, Probity, Information and
Digitisation)
Maximise efforts for e-assessment in the coming
year
Enforcing greater accountability of officers of
Tax Department for specific act of commission and omission