On February 1, 2018, Union Minister for Finance and Corporate Affairs, Arun Jaitley presented Union Budget 2018-19 in Parliament.
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Quick Facts about Union Budget:
Union Budget of India is referred to as the Annual Financial Statement in the Article 112 of the Constitution of India.
- Till 2016, it was presented on the last working day of February. In 2017, it was presented on February 1, so that it could be materialized before the commencement of new financial year in April.
- Union Finance Minister presents the Budget by means of the Finance bill and the Appropriation bill which comes into effect from April 1 (the start of India’s financial year), after being passed by both the Houses of Parliament.
- From 2017, Railway Budget was merged with General Budget.
- First Union budget of independent India was presented by K. Shanmukham Chettyon November 26, 1947.
- Till Date, Morarji Desai has presented Union Budget for highest number of times (10 times).
Focus Areas of Union Budget 2018: To strengthen agriculture, rural development, health, education, employment, Micro Small and Medium Enterprises (MSME) and infrastructure sectors.
Highlights of Union Budget 2018
Minimum Support Price (MSP) for all unannounced kharif crops and majority of Rabi Crops will be at least 1.5 times of their production cost.
- Volume of institutional credit for agriculture sector will be raised to Rs. 11 lakh crore for the year 2018-19 (as compared to Rs. 10 lakh crore in 2017-18).
- Arun Jaitley announced setting up Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of animal husbandry sector and Fisheries and Aqua culture Infrastructure Development Fund (FAIDF) for fisheries sector. Total corpus for these two funds will be Rs.10000 crore.
- “Operation Greens” will be launched to address the challenge of price volatility of perishable commodities like tomato, onion and potato. Financial outlay for this initiative will be Rs 500 Crore.
- Existing 22000 rural haats will be developed and upgraded to Gramin Agricultural Markets (GrAMs) which will be electronically linked to ‘National Agriculture Market’ portal (e-NAM) and exempted from regulations of agricultural produce market committee (APMCs). GrAMs will benefit 86% of small and marginal farmers by providing them facility to make direct sale to consumers and bulk purchasers.
- Agri-Market Infrastructure Fund (with a corpus of Rs.2000 crore) will be setup for developing and upgrading agricultural marketing infrastructure in 22000 Grameen Agricultural Markets (GrAMs) and 585 APMCs.
- All APMCs will be connected to e-NAM network by March, 2018.
- Rs 200 crore has been allocated for organized cultivation of highly specialized medicinal and aromatic plants.
- Government will encourage organic farming by Farmer Producer Organizations (FPOs) and Village Producers’ Organizations (VPOs) in large clusters (preferably of 1000 hectares each).
- Allocation of Ministry of Food Processing has been doubled from Rs.715 crore in 2017-18 to Rs.1400 crore in 2018-19.
- A Re-structured National Bamboo Mission (with an outlay of Rs.1290 crore) to promote bamboo sector in a holistic manner has been announced. Jaitley referred to Bamboo as ”Green Gold”.
- Rs 2600 crore has been allocated for 96 deprived irrigation districts Under Prime Minister Krishi Sinchai Yojna-Har Khet ko Pani.
- Facility of Kisan Credit Cards will be extended to fisheries and animal husbandry farmers, which shall help them to meet their working capital needs.
- Export of agri-commodities will be liberalized.
- All the forty two Mega Food Parks will get state-of-the-art testing facilities.
- Jaitley announced a special Scheme to support the efforts of the governments of Punjab, Haryana, Uttar Pradesh and Delhi to address air pollution in the Delhi-NCR region by subsidizing machinery required for management of crop residue.
- Specialised agro-processing and financial institutions in Food Processing Sector to be promoted.
|Volume of institutional credit for agriculture sector will be raised to:||Rs. 11 lakh crore|
|Operation Greens||Rs. 500 crore|
|Organized cultivation of highly specialized medicinal and aromatic plants||Rs. 200 crore|
|Allocation of Ministry of Food Processing||Rs.1400 crore|
|Re-structured National Bamboo Mission||Rs. 1290 crore|
|96 deprived irrigation districts Under Prime Minister Krishi Sinchai Yojna-Har Khet ko Pani||Rs 2600 crore|
Rural Economy & Livelihood:
In 2018-19, all Union Ministries will spend Rs. 14.34 lakh crore for creation of livelihood and infrastructure in rural areas.
- This expenditure will create employment of 321 crore person days, 3.17 lakh km of rural roads, 51 lakh new rural houses, 1.88 crore toilets and will provide 1.75 crore new household electric connections
- Loans to Self Help Groups of women will increase to Rs.75000 crore by March, 2019.
- Allocation of National Rural Livelihood Mission has been increased to Rs 5750 crore in 2018-19.
- Under Ujjwala Scheme, free LPG connections will be given to 8 crore poor women instead of the previous target of 5 crore women.
|Amount to be spent by all Union Ministries for creation of livelihood and infrastructure in rural areas||Rs. 14.34 lakh crore|
|Loans to Self Help Groups of women will be increased to:||Rs. 75000 crore|
|Allocation of National Rural Livelihood Mission||Rs. 5750 crore|
Education and Social Protection:
For 2018-19, estimated budgetary expenditure on health, education and social protection is Rs.1.38 lakh crore. For 2017-18, it was Rs.1.22 lakh crore.
- Ekalavya Model Residential School (on par with Navodaya Vidyalayas) will be set up by 2022 to provide the best quality education to the tribal children in their own environment.
- “Revitalising Infrastructure and Systems in Education (RISE) by 2022‟ with a total investment of Rs. 100000 crore (in next four years) has been announced. Objective of this initiative is to step up investments in research and related infrastructure in premier educational institutions, including health institutions. Higher Education financing Agency (HEFA) will be set up to look after the funding for this initiative.
- “Prime Minister’s Research Fellows (PMRF)” Scheme will be launched, under which, 1000 best B.Tech students will be identified each year and will be provided facilities to undertake Ph.D in IITs and IISc. These students will be given generous fellowship amount.
- Right to Education Act to be amended to enable training of more than 13 lakh untrained teachers; Integrated B. Ed programme to be initiated to improve quality of teachers.
- Aims to move from black board to digital board schools by 2022.
- Set up two new full-fledged Schools of Planning and Architecture (SPA) selected on challenge mode.
- 18 new SPAs would be established in the IITs and NITs as autonomous Schools on challenge mode.
Health & Social Protection:
Mr. Jaitley announced National Health Protection Scheme to provide health coverage upto 5 lakh rupees to 10 crore poor and vulnerable families. This is being termed as world’s largest government funded health care programme.
- Rs 1200 crore has been committed for the National Health Policy, 2017, for bringing 1.5 lakh Health and Wellness Centres closer to the homes of people.
- 600 crore has been allocated to provide nutritional support to all TB patients at the rate of Rs.500 per 10 month for the duration of their treatment.
- 24 new Government Medical Colleges and Hospitals will be set up by upgrading existing district hospitals in the country.
- Under Namami Gange Programme, 187 projects (entailing Rs. 16713 crore cost) have been sanctioned for infrastructure development, rural sanitation, river surface cleaning and other interventions.
- Allocation on National Social Assistance Programme this year has been kept at Rs. 9975 crore.
- Allocation for Scheduled Castes (SCs)- Rs 56,619 crore in BE 2018-19.
- Allocation for Scheduled Tribes (STs)- Rs 39,135 crore in BE 2018-19.
- Govt will expand PM Jan Dhan Yojana to bring all 16 crore accounts under micro insurance and pension schemes.
|Estimated budgetary expenditure on health, education and social protection||Rs. 1.38 lakh crore|
|Allocation for National Health Policy, 2017||Rs. 1200 crore|
|Allocation to provide nutritional support to all TB patients||Rs. 600 crore|
|Allocation on National Social Assistance Programme||Rs. 9975 crore|
Medium, Small and Micro Enterprises (MSMEs):
Rs. 3794 crore has been allocated for giving credit support, capital and interest subsidy and for innovations in MSMEs.
- For 2018-19, target of Rs. 3 lakh crore has been set for lending Micro Units Development and Refinance Agency (MUDRA) loans.
- Rs 7,148 crore outlay for textile sector in 2018-19.
- Government to contribute 12% of the wages of the new employees in the EPF for all the sectors for next 3 years.
- Amend Employees Provident Fund and Miscellaneous Provisions Act, 1952 to reduce women employees’ contribution to 8% for first 3 years of their employment against existing rate of 12% or 10% with no change in employers’ contribution.
Citing an independent study, Mr. Jaitley stated that 70 lakh formal jobs will be created in 2018-19.
- Government will contribute 12% of the wages of the new employees in Employees Provident Fund (EPF) for all the sectors for next three years.
- It has been proposed to make amendments in the EPF and Miscellaneous Provisions Act, 1952 to reduce women employees’ contribution to 8% for first three years of their employment against existing rate of 12% or 10% with no change in employers’ contribution.
- Outlay for the textiles sector in 2018-19 will be Rs.7148 crore.
For 2018-19, budgetary allocation on infrastructure has been increased to Rs.5.97 lakh crore against estimated expenditure of Rs.4.94 lakh crore in 2017-18.
- In a bid to boost tourism, ten prominent tourist sites will be developed into Iconic Tourism destinations.
- Approval for 35000 kms road construction under Phase-I Bharatmala Programme has been granted. Estimated cost will be Rs.535000 crore.
- India needs investment in excess of Rs 50 lakh crore in the infrastructure sector.
- Under Prime Minister Awas Scheme (Rural), 51 lakhs houses in year 2017-18 and 51 lakh houses during 2018-19 will be constructed exclusively in rural areas.
- Construction of 37 lakh houses sanctioned under Prime Minister Awas Scheme (Urban).
For the year 2018-19, Railways Capital Expenditure has been pegged at Rs.148528 crore.
- 4000 kilometers of electrified railway network will be commissioned in near future.
- During 2018-19, 12000 wagons, 5160 coaches and approximately 700 locomotives will be procured.
- Government to eliminate 4267 unmanned level crossings in the broad gauge network in the next 2 years.
- All stations with more than 25000 footfalls will have escalators.
- All trains to be progressively provided with Wi-Fi, CCTV and other state-of-the-art amenities.
- Specialized Railways University to be set up at Vadodara to train manpower required for high speed rail projects.
|Total allocation on infrastructure||Rs.5.97 lakh|
|Railways Capital Expenditure||Rs.148528 crore|
Under a new initiative ‘NABH Nirman’, current airport capacity will be expanded by more than five times to handle a billion trips a year.
- 56 unserved airports and 31 unserved helipads would be connected under the Regional connectivity scheme of UDAN (Ude Desh ka Aam Nagrik).
- NABH Nirman initiative announced with allocation of Rs 60 crores to expand airport capacity.
- Rs 51,000 crore allocated to add 90 kilometers of double line tracks and 150 km additional suburban network in Mumbai.
- Rs 17,000 crore allocated to add 160 km of suburban network in Bengaluru.
- Airport Authority of India (AAI) has 124 airports; Under NABH Nirman propose to expand airport capacity by more than 5 times to handle 1 billion trips a year.
- UDAN (Ude Desh ka Aam Naagrik) scheme will connect 56 unserved airports and 31 unserved helipads.
NITI Aayog will initiate a national program to direct efforts in artificial intelligence.
- A Mission on Cyber Physical Systems to support establishment of centres of excellence for research, training and skilling in robotics, artificial intelligence, digital manufacturing, big data analysis, quantum communication and internet of things will be launched by Department of Science & Technology.
- For 2018-19, allocation on Digital India programme has been doubled to Rs 3073 crore.
- Five lakh wifi hotspots will be set up to provide net connectivity to five crore rural citizens.
- For 2018-19, Rs. 10000 Crore has been allocated for creation and augmentation of Telecom infrastructure.
- Rs 10,000 crore allocated to set up 5 lakh wi-fi hotspots to provide broadband access to five crore rural citizens.
- Department of Telecom will establish indigenous 5G Test Bed at IIT, Chennai.
- Government does not consider crypto-currencies as legal tender/coin and will take measures to eliminate use of these crypto assets in financing illegitimate activities.
- Propose policy to introduce toll system on ‘‘pay as you use’’ basis.
India’s defence budget has been hiked by 7.81% to Rs 295511 crore from Rs 274114 crore last year
Development of two defence industrial production corridors has been proposed.
- Industry friendly Defence Production Policy 2018 will be brought out to promote domestic production by public sector, private sector and MSMEs.
- Disinvestment target for 2018-19 is Rs.80000 crore.
- Approved listing of 14 Central Public Sector Enterprises (CPSEs), including two insurance companies, on the stock exchanges.
- A National Committee, chaired by the Prime Minister, which includes Chief Ministers of all the States, representatives from across the political spectrum, Gandhians, thinkers and eminent persons from all walks of life, has been constituted to formulate a Commemoration Programme.
Revised Estimates for expenditure in 2017-18 are Rs.21.57 lakh crore (net of GST compensation transfers to the States).
- For 2018-19, Total Expenditure will be Rs. 24.42 lakh crore
- Jaitley has projected a Fiscal Deficit of 3.3% of Gross Domestic Product (GDP) for the year 2018-19.
- It has been proposed to accept key recommendations of the Fiscal Reform and Budget Management Committee to bring down Central Government’s Debt to GDP ratio to 40%.
- Number of Effective Tax Payers has increased from 6.47 crore at the beginning of Financial year 2014-15 to 8.27 crore at the end of 2016-17.
- Companies registered as Farmer Producer Companies, with an annual turnover upto Rs. 100 crore will be eligible for 100 per cent deduction on profit for a period of five years from financial year 2018-19.
- For Corporate Tax, it has been proposed to extend the reduced rate of 25 percent currently available for companies with turnover of less than 50 crore (in Financial Year 2015-16), also to companies reporting turnover up to Rs. 250 crore in Financial Year 2016-17.
- Salaried tax payers have been allowed a Standard Deduction of Rs. 40,000 in place of the present exemption allowed for transport allowance and reimbursement of miscellaneous medical expenses.
- This year, there are no changes in the structure of income tax of individuals.
- For 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.
- Long Term Capital Gains exceeding Rs. 1 lakh will be taxed at the rate of 10 percent.
- It has been proposed to increase the cess on personal income tax and corporation tax to 4 per cent from the present 3 percent. The new cess will be called the “Health and Education Cess” and is aimed to take care of the education and health care needs of Below Poverty Line (BPL) and rural families.
- Customs duty on mobile phones has been increased from 15 percent to 20 percent. This is an attempt to incentivise ‘Make in India’.
- Education Cess and Secondary and Higher Education Cess on imported goods will be abolished and will be replaced by Social Welfare Surcharge at the rate of 10 percent of the aggregate duties of Customs, on imported goods.
- It has been proposed to change the name of the Central Board of Excise and Customs (CBEC) to the Central Board of Indirect Taxes and Customs (CBIC).
- Indian economy is now 2.5 trillion dollar economy making it the seventh largest in the world. India is expected to become the fifth largest economy with growth rate of 8 percent very soon.
- International Monetary Fund (IMF), in its latest update, has forecasted that India will grow at 7.4% next year.
- Payments exceeding Rs. 10,000 in cash made by trusts and institutions to be disallowed and would be subject to tax.
- Propose to introduce a tax on distributed income by equity oriented mutual fund at the rate of 10%.
- GST collections projection pegged at Rs 7.43 lakh crore in full year 2018-19 as against Rs 4.44 lakh crore in 9 months of current fiscal.
- Govt makes PAN mandatory for any entity entering into a financial transaction of Rs 2.5 lakh or more.
- E-Assessment of Income Tax to be rolled out across the country to transform age old assessment procedure.
- Changes proposed to the Custom Act to improve Ease of Doing Business.
A unified authority for regulating all financial services will be established in International Finance Service Centre (IFSCs) in India.
- Gold Trading: Policy will be formed to promote Gold as an asset class. Regulated Gold exchanges will be established. Gold Monetisation scheme will be revamped.
- Three Public Sector Insurance companies – National Insurance Co. Ltd., United India Assurance Co. Ltd., and Oriental India insurance Co. Ltd., will be merged into a single insurance entity.
- Monthly emoluments of President, Vice President and Governor have been revised to Rs. 5 lakh, Rs. 4 lakh and Rs. 3.5 lakh.
- For emoluments paid to the Members of Parliament, it has been proposed to make necessary changes to refix the salary and allowances with effect from April 1, 2018. Besides, the law will also provide for automatic revision of emoluments every five years.
- 150 crore has been set aside for the activities leading to the commemoration programme to celebrate the 150 Birth Anniversary of Mahatma Gandhi on October 2, 2019.
- Pradhan Mantri Vaya Vandana Yojana (under which an assured return of 8 per cent is given by Life Insurance Corporation of India) will be extended up to March, 2020.
- Special scheme for free dialysis of poor have been initiated.
- scheme called Galvanizing Organic Bio-Agro Resources Dhan (GOBAR-DHAN) to be launched for conversion of cattle dung and solid waste in farms to compost, fertilizer, bio-gas and bio-CNG.
- Proposed to take up construction of tunnel under Sela Pass
- Dedicated Affordable Housing Fund (AHF) to be established in National Housing Bank (NHB).
- Launch Scheme to assign a unique ID to every individual enterprise in India.
- Department of Commerce to develop National Logistics Portal as a single online window to link all stakeholders.
Relief To Senior Citizens proposals:
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.
- Increease 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. Concessions will give extra tax benefit of Rs. 4,000 crore to senior citizen.
- It is also proposed 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 per senior citizen.