This election year’s budget is much focused on rural India, with the uplifting of agriculture and other rural sectors. Healthcare too is brought into focus with the Government announcing the ‘world’s largest’ health protection scheme. However, the middle class seems lost in this budget, which also has been termed a ‘disappointment’ for investors.
An ambitious national flagship program was launched by Finance Minister, Arun Jaitley, the National Health Protection Scheme, which is to cover ten crore poor families with an allocation of Rs 5 lakh per family. This is somewhat like an insurance scheme, where the government covers the payments for poor families to access secondary and tertiary care. In the last budget too, the Govt had announced a similar budget, offering RS 1 lakh per family. However, that scheme never took off.
This year, RS 52,000 crore is allocated to health-care. And Jaitley also announced that the Govt will set up 24 more medical colleges by upgrading current district hospitals.
Farmers and Agriculture
The Finance Ministry has proposed the launch of Operation Greens (similar to an earlier project Operation Food) by creating a 500 Crore fund for agricultural infrastructure. The aim, Jaitley said, is to double the farmers’ income. The MSP (minimum support price) for upcoming kharif crops will be fixed at least 1.5 times higher than the cost of production. However, no step has been taken to increase private investment in greenfield projects, which could not only create more jobs but also increase exports.
Budget allocation for defence stands around 10% of the Union Budget, that is, Rs 2,95,511 crore (marking a 6% increase).
Announcing state-of-art facilities like wifi, CCTVs in all trains, the Ministry has allocated capital expenditure of Rs 1,48,528 crore for 2018-19 in railways.
The Ministry has allocated Rs 2,675.42 crore to the Environment Ministry for the year 2018-19. Keeping in mind the recent air pollution scares of Delhi, FM Jaitley has announced a scheme to manage crop residue, a major contributor to the deadly smog of Delhi-NCR.
National Mission For Green India, the Govt’s tree plantation drive, too recorded a major increase Rs 159 Crore being allocated for afforestation, marking an increase of Rs 52 Crore over the last fiscal.
The announcements for education, with primary emphasis on SC/ST education through the Eklavya residential schools, were mainly focused at the rural population. Rs 85,010 Crore has been allocated for this sector in the Union Budget.
Jaitley announced a new scheme called Revitalising Infrastructure and Systems in Education or RISE, which will be financed via a restructured higher education financing agency (HEFA) (that is functioning for the last two months as a non-banking financial company). Its aim is to lend low-cost funds to government higher educational institutions. HEFA is looking to raise Rs 20,000 crore and Jaitley’s announcement hikes this number to Rs 1 lakh crore.
No changes were made in income tax slabs for individuals. The cess on personal income tax and corporation tax has been increased to 4 per cent from the earlier 3 per cent. But, Jaitley also announced that all salaried people will get a standard deduction of Rs. 40,000 on their income in lieu of medical and transport reimbursements.
The Ministry, in an attempt to create more opportunities for MSMEs ( Micro, Small and Medium Enterprises) lowered the corporate tax rate to 25 per cent for businesses with a turnover of up to Rs 250 crore and set a target of Rs 3 lakh crore for lending under the MUDRA scheme for the year 2018-19. The introduction of 12% (8% for women) EPF in wages towards new employees in all sectors for three years is seen as a way of creating more formal jobs.
The Budget provides many tax benefits for Senior citizens, like an increase in exemption of interest income on deposits with banks and post offices from Rs 10,000 to Rs 50,000. The limit of deduction for health insurance premium and medical expenditure has been raised from Rs 30,000 to Rs 50,000, for senior citizen. Furthermore, pensioners will also be eligible for standard dedcution of Rs 40,000.
Customs duty, however, has been hiked on many imported goods like mobile phones, cars, motorcycles, fruit juices, perfumes and footwear. Basic excise duty on petrol and diesel has been lowered to Rs 2 per litre, and an additional duty of Rs 6 per litre of excise on both transport fuels too was abolished. However, a new Rs 8 per litre ‘Levy of Road and Infrastructure Cess’ will be applied on both petrol and diesel, hence keeping the total price of both the fuels unchanged.
A 10% tax has been levied on long term capital gains, exceeding 1 lakh, made in the share market and on distributed income by equity oriented mutual funds. This move is seen as a way to curb tax evasion.