The Budget for 2018 was presented on 1 February 2018 in the Parliament by the Finance Minister of India, Arun Jaitley. This was the fifth and the last budget of the current Government. Upcoming elections, impact of demonetization and economic growth has been the primary concern of the citizens. So, without any further delay let’s take a look at the key highlights of this year’s budget:
Table of contents
- #1 Fiscal Scenario
- #2 Taxation
- #3 Custom
- #4 Agriculture
- #5 Rural Development
- #6 Education sector
- #7 Health sector
- #8 Social Security
- #9 MSME Sector
- #10 Fuel
- #11 Employee Schemes
- #12 Infrastructure Development
- #13 Railway Sector
- #14 Aviation Sector
- #15 Stock Market and others
- #16 Technology
- #17 Company
- #18 Banking Sector
- #19 Industry
- #20 Others
#1 Fiscal Scenario
The current fiscal deficit is estimated at 3.5% of GDP. This comes to ₹5.95 lakh crore for the period 2017-18. By the next fiscal, the deficit is likely to come down to 3.3%. States have received ₹21.57 lakh crore against an estimated of ₹21.47 lakh crore.
It has been announced that during Financial Year, 85.51 lakh new tax payers have filed their returns to the IT Department. This has resulted into a growth of 18.7% in direct taxes till 15 January 2018. Apart from the above-mentioned figures, here are a few points to note:
- NO CHANGE in the current income tax slab (for Personal)
- Tax payers who income is greater than ₹50 lakh, but less than ₹1 crore would be required to pay a surcharge of 10% on income exceeding ₹50 lakh. Additionally, tax payers whose income is greater than ₹1 crore would be required to bear a surcharge of 15% on income exceeding ₹1 crore.
- Investment in co-operative societies will yield 100% deduction.
- Companies whose turnover in the FY 2016-17 was upto ₹250 crore would be required to bear a corporate tax @ 25%.
- Senior Citizens will get an exemption in income from Fixed Deposits in Banks and Post Offices upto ₹10,000.
- ₹50,000 has been allowed as an exemption on per annum basis for Senior Citizens, provided the sum has been used for Medical Insurance (Section 80D).
- Threshold for investment in LIC schemes (interest bearing) increased to ₹15 lakh. Earlier it was ₹7.5 lakh.
- Salaried tax payers can now claim a deduction of ₹40,000 in respect of medical reimbursement, transports, etc.
- Long-term Capital Gains (LTGC) will be taxed @ 10% (without indexing), provided the income is greater than ₹1 lakh.
- Short-term Capital gains would be taxed at 15% (NO CHANGE)
- 10% tax on distributed income.
- Education cess has been revised to 4%. Earlier it was 3%.
- PAN card becomes mandatory for any transaction where an amount of ₹2.5 lakh or greater is involved.
The introductions are bound to have an impact on the existing tax structure. Here are a few areas:
- Allowing standard deduction to salaried employees will incur a loss of revenue amounting to ₹8,000 crore to the Government.
- Reducing corporate tax for companies will result in a revenue deficit of ₹7,000 crore.
- Last fiscal has resulted in ₹19,000 revenue loss.
- Current year’s collection from GST (for nine months) is ₹4.44 lakh crore. ₹7.43 lakh crore is expected in 2018-19.
With a view to promote ‘Make in India’ campaign, the Government has made imported products costlier. Here are the key highlights:
- Custom Duty on electronics, such as, television and smartphones has been increased.
- 10% surcharge is applicable on imported goods on account of social welfare charge.
- Central Board of Excise and Customs (CBEC) has been renamed as Central Board of Indirect Taxes and Customs (CBITC).
- Solar tempered glass has exempted from custom duty, if the same is being used to manufacture solar cells.
- Importing crude vegetable oil will now attract a custom duty of 30% (earlier it was 12.5%). On the other hand, importing refined vegetable oil will attract a custom duty of 35% (earlier it was 20%).
- Products such as bus and truck tyres, sunglasses, furniture, etc., will attract a higher custom duty.
- Jewellery will attract a custom duty of 20% (earlier it was 15%) and watches will attract a custom duty of 20% (earlier it was 10%).
- Imported TV parts (LCD, LED, etc.) will now be taxed at 15%. Footwear, wearable electronics gadgets will be taxed at 20%.
This year’s budget has been focused upon providing higher income opportunities for the farmers. For achieving this objective, Government plans to help farmers producing more at a lesser price. Currently, the agricultural output for India is at a record high with 275 million tonnes of foodgrains. Fruits and vegetables have been produced at a scale of 300 million tonnes. Government plans to keep a profit of 1.5 times for the farmers. Here are the key highlights:
- Setting up of ₹2000 crore fund to improve the connection between market and agricultural fields.
- Operation Green, an initiative to promote agricultural products, to be launched at a cost of ₹500 crore.
- Kisan credit now available to animal husbandry and fishery sector.
- ₹10,000 crore allocated to Fisheries and Aquaculture Development.
- ₹10,000 crore allocated to animal husbandry infrastructure development fund.
- ₹1,200 crore allocated towards restricting of bamboo forests.
- Target for Agricultural Credit extended to ₹11 lakh crore (earlier it as ₹8.5 crore)
- Special scheme introduced to manage crop reduce in high pollution areas like Delhi, Haryana and Punjab.
#5 Rural Development
With a view to develop the rural economy, this year’s budget covered the following:
- New LPG connection to 8 crore women who are below the poverty line.
- New power connection to 4 crore people under PM Saubhagya Yojana.
- The allocated budget for PM Saubhagya Yojana is ₹16,000 crore.
- Construction of 2 crore toilets across India by 2019 under Swach Bharat Abhiyan
- By 2022, everyone in India will have a home. Currently 51 lakh affordable home in rural areas have been constructed along with 50 lakh homes in urban areas.
- Rural areas to get 1 crore homes under Pradhan Mantri Awas Yojana.
- ₹5,750 crore to be allocated to National livelihood scheme.
- ₹9,975 crore allocated to Social Security Scheme for next year.
#6 Education sector
This year’s budget has laid special importance to the education sector. With emphasis being on digital technology, Finance Minister, Arun Jaitley, said that technology is the biggest driver in improving quality of education that children get these days. Here are the key highlights:
- ₹1 lakh crore allocated towards upgrading education sector.
- Eklavya Schools to be setup in every block where more than 50% of the population belongs to ST by 2022.
- Black board to be replaced by digital boards in all schools by 2022.
- PM Research fellows introduced. 1000 Btech candidates to be identified each year by the Government. The selected candidates will get a chance to pursue PHD from IIT and IISc. The candidates would also teach undergraduates once a week.
#7 Health sector
Covering the health sector, here are the key highlights:
- Around 1200 crore homes would be offered healthcare facility through Aayushman Bharat programme. With 1.5 lakh centres spread across India, this facility would reach to a wide section of people.
- World’s largest Government funded healthcare programme has been launched. Flagship National Healthcare Protection Scheme aims at offering ₹5 lakh per family in respect of secondary and tertiary care in hospitals. There are around 50 crore beneficiaries in this program.
- ₹600 crore has been allocated to patients suffering from tuberculosis. They are subject to receive ₹500 per month during the treatment period.
- One medical college to be set up for every three parliamentary constituencies. In total there will be 24 new Government Medical Colleges along with improving the existing ones.
Social Security has always been a key aspect of the Budget. The existing PM Jivan Bima Yojana has been benefiting more than 5.22 crore families in India. Additionally, there are few more hey highlights that were mentioned in the budget.
- Sukanya Samriddhi Yojana now has 1.26 crore accounts.
- ₹52,719 has been offered under Social Inclusion Scheme for Schedule Castes
- ₹39,139 has been offered under Social Inclusion Scheme for Schedule Tribes
#9 MSME Sector
- ₹4.6 lakh crore allotted to MUDRA scheme
- ₹3 lakh crore is the target for Mudra Yojana
- Unbranded diesel gets cheaper by ₹2 as excise has been reduced. The effective rate now stands at ₹6.33/ltr.
- Unbranded petrol gets cheaper by ₹2 as excise has been reduced. The effective rate now stands at ₹4.48/ltr.
#11 Employee Schemes
- Government to sponsor 12% of the wages towards EPF for all sector. The scheme is available for new employees and the funding will take place only for the first three years.
- EPF contribution for women has been reduced to 8%; valid only for the first 3 years.
#12 Infrastructure Development
- New tunnel to be constructed in Sera Pass for boosting the tourism industry.
- 99 cities have already been selected out of 100 smart cities. The cities will avail facilities worth ₹2.04 lakh crore.
- Private funding along with branding and marketing will help the Government to promote 10 prominent tourist destinations in the country.
- Pay-as-you-use system introduced by the Government for dealing with toll payments.
- Bharatmala project is introduced. The project includes developing 35,000 kms with a budget of ₹5.35 lakh crore. This section is only Phase 1 of the total project.
#13 Railway Sector
- ₹1.48 lakh crore for Railways sector. Previously, it was ₹1.31 lakh crore.
- Escalators to be mandatory in stations where footfall is greater than 25,000 per day.
- Number of station with Wifi and CCTVs to increase.
- Elimination of 4267 unmanned rail crossing by 2020.
- ₹11000 crore allocated to Mumbai rail network and ₹17,000 crore allocated for Bengaluru metro network.
- ₹17,000 crore allocated towards development of railway network in suburban regions of Bengaluru.
#14 Aviation Sector
- Number of airports under AAI to increase by 5 times with 1 billion trips every year. Currently, there are 124 airports under AAI. The allocated budget is ₹60 crore.
- Unconnected airports to be linked with all other airports through UDAN Scheme.
#15 Stock Market and others
- Government seeks to safeguard the interest of angel investors and venture capitalists.
- SEBI to implement a new rule that requires corporations to reserve 1/4th of their debt needs.
- SEBI to instruct companies to meet 25% of their debt from bond market.
- ₹3073 crore allotted to Digital India campaign. The amount has doubled from last year.
- ₹10000 crore has been allocated towards offering 5 lakh WiFi hotspots. This will serve 5 crore people in the rural India.
- Cryptocurrency such as Bitcoin is illegal. The Government will take measure to curb its trading in India.
- Blockchain Technology to be one of the areas of focus for technology development in India.
- Companies, too, require Aadhar card. Government of India will soon formulate a policy to offer Unique ID for companies across the nation.
- The target for disinvestment for FY 2019 is ₹80,000
- United Assurance, National Insurance and Oriental Insurance will now be merged into a single entity and would also be listed.
- The target for disinvestment for FY 18 has been revised to ₹1 lakh crore.
#18 Banking Sector
- Public banks, with the aid of recapitalization, will now be able to lend an additional amount of ₹5 lakh crore.
- The textile industry has been allocated ₹7148 crore for its development.
- Defence has been allocated with ₹2.82 lakh crore. In the previous year, this segment was allotted ₹2.67 lakh crore.
- Food subsidy increases to ₹1.69 lakh crore for the year 2018-19. Earlier, food subsidy was ₹1.4 lakh crore
- Increase in Emoluments: Governors – ₹3.5 lakh, Vice President – ₹4 lakh, President – ₹5 lakh.
- Emoluments for Parliamentarians has also increased based on index to inflation.
- ₹150 crore for honouring 150th birth anniversary of the Father of the Nation, Mahatma Gandhi.
Thus, we find that the Budget 2018 has been a mixed bag for the people of India. On one hand, people belonging to sectors like Agriculture, Healthcare, Transport and Aviation have been benefited from this budget. On the other hand, people belonging to sectors like Finance, Electronics and Service have almost nothing to celebrate. Given the overall objective of Budget 2018, it has mostly focused towards development of agriculture, improving infrastructure and focusing on quality education. This makes it obvious that the Government is planning to prepare an educated India that has the potential to become a super power in near future.