Union Budget 2017 Overview
Finance Minister, Arun Jaitley has now announced the Union Budget 2017. We are now providing the highlights of the Budget 2017.
Here are the highlights of Finance Minister’s speech during Budget presentation –
- IMF estimates that World GDP will grow by 3.4 per cent in 2017.
- CPI inflation declined from 6% in July 2016 to 3.4% in December, 2016 and is expected to remain within RBI’s mandated range of 2% to 6%.
- 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.
- Foreign Direct Investment (FDI) increased from 1,07,000 crores in the first half of last year to 1,45,000 crores in the first half of 2016-17.
- As on 20th January 2017, Foreign Exchange Reserves are at $361 billion.
- India has become the sixth largest manufacturing country in the world, up from ninth previously.
- Two major policy decisions taken by Government this year – Passage of the Constitution Amendment Bill for GST as well as the progress for its implementation and Demonetization of high denomination bank notes.
- He mentioned about three major reforms involved in the Budget 2017-18. These are –
(a) The presentation of the Budget has been advanced to 1st February to enable the Parliament to avoid a Vote on Account and pass a single Appropriation Bill for 2017-18, before the close of the current financial year, which would enable the Ministries and Departments to operationalise all schemes and projects, including the new schemes, right from the commencement of the next financial year.
(b) Discontinuing the colonial practice prevalent since 1924, Railways Budget has been merged with the Union Budget.
- (c) The plan and non-plan classification of expenditure.
- He also mentioned that Government’s agenda for the next year is – “Transform, Energize and Clean India”, that is, TEC India.
- He also mentioned that Budget will be focused on the following major themes –
Poor and underprivileged health care
Financial sector for stronger institutions
Prudent fiscal management
Tax administration for the honest
Highlights of Union Budget 2017
- Agriculture is expected to grow at 4.1% in the current year.
- For the financial year 2017-18, the target for agricultural credit to farmers has been fixed at a record level of Rs. 10 lakh crore with 60 days interest waiver.
- Government will support NABARD for computerization and integration of all 63,000 functional PACS (Primary Agriculture Credit Societies) with the Core Banking System of District Central Cooperative Banks which will be done in 3 years at an estimated cost of Rs. 1,900 crores, with financial participation from State Governments.
- The coverage of Fasal Bima Yojana will be increased from 30% of cropped area in 2016-17 to 40% in 2017-18 and 50% in 2018-19. The Budget provision for this scheme has been increased from Rs. 5,500 crores to Rs. 13,240 crores to settle the arrears claims.
- Government will set up new mini labs in Krishi Vigyan Kendras (KVKs) and ensure 100% coverage of all 648 KVKs in the country. 1000 mini labs will be set up by qualified local entrepreneurs. Government will also provide credit linked subsidy to these entrepreneurs.
- A Long Term Irrigation Fund has already been set up in NABARD. Addition of Rs. 20,000 crores to its corpus was also announced which will take the total corpus of this Fund to Rs. 40,000 crores.
- Micro Irrigation Fund will be set up in NABARD to achieve the goal, ‘per drop more crop’ which will have an initial corpus of Rs. 5,000 crores.
- The coverage of National Agricultural Market (e-NAM) will be expanded from the current 250 markets to 585 APMCs (Agriculture Produce Market Committee).
- A Dairy Processing and Infrastructure Development Fund would be set up in NABARD with a corpus of Rs. 8,000 crores over 3 years. Initially, the Fund will start with a corpus of Rs. 2,000 crores.
Rural Population –
- Government will undertake Mission Antyodaya to bring 1 crore households out of poverty and to make 50,000 Gram Panchayats poverty free by 2019.
- The target of 5 lakh farm ponds and 10 lakh compost pits announced in the last Budget from MGNREGA funds will be fully achieved.
- It is expected that about 10 lakh farm ponds would be completed by March 2017 against 5 lakh farm ponds earlier.
- Participation of women in MGNREGA has increased to 55% from less than 48% in the past.
- Budget provision under MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) has been increased to Rs. 48,000 crores in 2017-18 against Rs. 38,500 crores in 2016-17, i.e. the highest ever.
- Sum of Rs. 19,000 crores allocated for Pradhan Mantri Gram Sadak Yojana (PMGSY) in 2017-18. Together with the contribution of States, an amount of Rs. 27,000 crores will be spent on PMGSY in 2017-18.
- Proposal to complete 1 crore houses by 2019 for the houseless and those living in kutcha houses was also introduced. Amount allocated for Pradhan Mantri Awaas Yojana – Gramin will be stepped up from Rs. 15,000 crores in 2016-17 to Rs. 23,000 crores in 2017-18.
- Government also expects to achieve 100% village electrification by 1 st May 2018. An increased allocation of Rs. 4,814 crores has also been proposed under the Deendayal Upadhyaya Gram Jyoti Yojana in 2017-18.
- Proposal to increase the sum allocated for Deendayal Antyodaya Yojana- National Rural Livelihood Mission for promotion of Skill Development and livelihood opportunities for people in rural areas to Rs. 4,500 in 2017-18 has also been introduced.
- The allocation for Prime Minister’s Employment Generation Programme (PMEGP) and credit support schemes has been increased more than 3 times.
- Proposal to provide safe drinking water to over 28,000 arsenic and fluoride affected habitations in the next four years has been introduced which will be a sub mission of the National Rural Drinking Water Programme (NRDWP).
- Mason training will be provided to 5 lakh persons by 2022 for imparting new skills to the people in the rural areas.
- The total allocation for the rural, agriculture and allied sectors in 2017-18 is Rs. 1,87,223 crores, which is 24% higher than the previous year.
- An Innovation Fund for Secondary Education will be created to encourage local innovation for ensuring universal access, gender parity and quality improvement. This will include ICT enabled learning transformation. The focus will be on 3479 educationally backward blocks.
- In higher education, reforms will be undertaken in UGC. Good quality institutions would be enabled to have greater administrative and academic autonomy.
- Colleges will be identified based on accreditation and ranking, and given autonomous status. A revised framework will be put in place for outcome based accreditation and credit based programmes.
- SWAYAM platform will be launched with at least 350 online courses. Access to SWAYAM will also be widened by linkage with DTH channels, dedicated to education.
- Proposal to establish a National Testing Agency as an autonomous and self-sustained premier testing organisation to conduct all entrance examinations for higher education institutions has also been introduced which would free CBSE, AICTE and other premier institutions from these administrative responsibilities so that they can focus more on academics.
- Pradhan Mantri Kaushal Kendras (PMKK) will be extended to more than 600 districts across the country.
- 100 India International Skills Centres will be established across the country.
- Pradhan Mantri Kaushal Kendras (PMKK) have already been promoted in more than 60 districts. We now propose to extend these Kendras to more than 600 districts across the country.
- 100 India International Skills Centres will be established across the country.
- Proposal to launch the Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme (SANKALP) has also been introduced at a cost of Rs. 4,000 crores. SANKALP will provide market relevant training to 3.5 crore youth.
- The next phase of Skill Strengthening for Industrial Value Enhancement (STRIVE) will also be launched in 2017-18 at a cost of Rs. 2,200 crores.
- A special scheme for creating employment in the textile sector has already been launched. Similar schemes will be launched in the leather and footwear sectors.
- Incredible India 2.0 Campaign will be launched across the world.
Poor and underprivileged health care –
- Mahila Shakti Kendra will be set up at village level with an allocation of Rs. 500 crores in 14 lakh ICDS Anganwadi Centres.
- Fund allocated for the welfare of Women and Children under various schemes across all Ministries will be stepped up from Rs. 1,56,528 crores in 2016-17 to Rs. 1,84,632 crores in 2017-18.
- Affordable housing will now be given infrastructure status, which will enable these projects to avail the associated benefits.
- The 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 and Measles by 2020. Elimination of tuberculosis by 2025 is also targeted.
- 1.5 lakh Health Sub Centres will be transformed into Health and Wellness Centres.
- Two new All India Institutes of Medical Sciences (AIIMS) will be set up in the States of Jharkhand and Gujarat.
- Legislative reforms will be undertaken to simplify, rationalize and amalgamate the existing labor laws into 4 Codes on – wages, industrial relations, social security and welfare as well as safety and working conditions.
- The fund allocation for the welfare of Scheduled Castes has been stepped up from Rs. 38,833 crores in 2016-17 to Rs. 52,393 crores in 2017-18
- The allocation for Scheduled Tribes has been increased to Rs. 31,920 crores and for Minority Affairs to Rs. 4,195 crores.
- For senior citizens, Aadhar based Smart Cards containing their health details will be introduced.
- LIC will implement a scheme for senior citizens to provide assured pension, with a guaranteed return of 8% per annum for 10 years.
Railways Budget –
- Rs. 1,31,000 crore allocated for Railways for total capital and development expenditure in 2017-18, which also includes Rs. 51,000 crore from 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.
- Railway lines of 3,500 kms will be commissioned in 2017-18, as against 2,800 kms in 2016-17.
- Steps will be taken to launch dedicated trains for tourism and pilgrimage.
- 500 stations will be made differently abled friendly by providing lifts and escalators.
- Proposal to feed about 7,000 stations with solar power in the medium term has been introduced.
- Proposal for ‘Coach Mitra’ facility, a single window interface, to register all coach related complaints and requirements has been introduced. Bio-toilets for all coaches of the Indian Railways will be provided by 2019.
- Railways will also implement end to end integrated transport solutions for select commodities through partnership with 18 logistics players.
- Railways will offer competitive ticket booking facility to the public at large. Service charge on e-tickets booked through IRCTC has been withdrawn.
- A new Metro Rail Policy will be announced with focus on innovative models of implementation and financing.
Aviation and Road Transport –
- Budget allocation for Highways will be stepped up from Rs. 57,976 crores in 2016-17 to Rs. 64,900 crores in 2017-18.
- Select airports in Tier 2 cities will be taken up for operation and maintenance in the PPP mode.
- Total fund of Rs. 2,41,387 crores will be allocated for transportation sector as a whole, including rail, roads, shipping in 2017-18.
- Allocation for BharatNet Project will be increased to Rs. 10,000 crores in 2017-18.
- High speed broadband connectivity on optical fibre will be available in more than 1,50,000 gram panchayats by the end of 2017-18.
- A DigiGaon initiative will be launched to provide tele-medicine, education and skills through digital technology.
- Government has decided to set up Strategic Crude Oil Reserves for strengthening our Energy sector, . 2 more reserves will be set up at Chandikhole in Odisha and Bikaner in Rajasthan for this.
- Fund allocation for incentive schemes like M-SIPS and EDF has been increased to Rs. 745 crores in 2017-18.
- Trade Infrastructure for Export Scheme (TIES), a new and restructured Central scheme will be launched in 2017-18.
- The total allocation for infrastructure development in 2017-18 stands at Rs. 3,96,135 crores.
Financial sector –
- Foreign Investment Promotion Board (FIPB) will be phased out in 2017-18 and a roadmap for the same will be announced in the next few months.
- Multi State Cooperative Societies Act, 2002 will be amended in consultation with various stakeholders, as part of the Clean India agenda.
- A Computer Emergency Response Team for Financial Sector (CERT-Fin) will be established.
- The 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
- In lines with the ‘Indradhanush’ roadmap, Rs. 10,000 crores for recapitalisation of Banks will be provided in 2017-18. Additional allocation will be provided if required.
- Lending target of Pradhan Mantri Mudra Yojana will be set at Rs. 2.44 lakh crores for 2017-18.
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 – 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.
- Government will undertake a comprehensive review of Payment and Settlement Systems Act and bring about appropriate amendments.
- Proposal 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 has been introduced.
Public Service –
- Head Post Offices will be utilised 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.
- A comprehensive web based interactive Pension Disbursement System for Defence Pensioners will be established.
- A system will be introduced for single registration and two tier system of examination for our citizens to avoid the cumbersome procedures of Government recruitment.
Prudent fiscal management –
- The total expenditure in Budget for 2017-18 has been placed at Rs. 21.47 lakh crores.
- Allocation for Capital expenditure has been stepped up by 25.4% over the previous year.
- Provision of Rs. 3,000 crores under the Department of Economic Affairs will be made to implement various Budget announcements and other 26 new schemes in 2017-18. For Defence expenditure excluding pensions, sum of Rs. 2,74,114 crores including Rs. 86,488 crores for Defence capital will be allocated. Allocation for Scientific Ministries will be increased to Rs. 37,435 crore in 2017-18.
- Fiscal deficit for 2017-18 pegged at 3.2 percent of GDP and its target for next three years pegged at 3 percent.
- Revenue Deficit of 2.3% in 2016-17 stands reduced to 2.1% in the Revised Estimates. The Revenue Deficit for next year is pegged at 1.9%.
Tax Proposals –
- Against the estimated 4.2 crore persons engaged in organised sector employment, the number of individuals filing return for salary income are only 1.74 crore.
- Against 5.6 crore informal sector individual enterprises and firms doing small business in India, the number of returns filed by this category are only 1.81 crore.
- Of the 76 lakh individual assesses who declare income above ` 5 lakh, 56 lakh are in the salaried class.
- The number of people showing income more than ` 50 lakh in the entire country is only 1.72 lakh.
- During the period 8th November to 30th December 2016, deposits between ` 2 lakh and ` 80 lakh were made in about 1.09 crore accounts with an average deposit size of ` 5.03 lakh.
- Tax to be levied for unoccupied houses a year after getting completion certificate on notional rental income.
- Capital Gains Tax holding period will be reduced from 3 years to 2 years for real estate. 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.
- Concessional with-holding rate of 5% is charged on interest earned by foreign entities in external commercial borrowings or in bonds and Government securities. This concession period will be extended to 30.06.2020 from 30.6.2017.
- MAT (Minimum Alternate Tax) will carry forward upto a period of 15 years instead of 10 years at present.
- Income tax for smaller companies with annual turnover upto Rs. 50 crore will be reduced to 25%.
- Proposal to increase allowable provision for Non-Performing Asset from 7.5% to 8.5% has also been introduced.
- Basic customs duty on LNG will be reduced from 5% to 2.5%.
- Proposal to limit the cash expenditure allowable as deduction, both for revenue as well as capital expenditure to Rs. 10,000 has been introduced.
- Limit of cash donation which can be received by a charitable trust will be reduced from Rs. 10,000/- to Rs. 2000/-.
- Special Investigation Team (SIT) has suggested that no transaction above Rs. 3 lakh should be permitted in cash.
- List of donors who contributed more than Rs. 20,000/- to any party in cash or cheque is required to be maintained.
- The maximum amount of cash donation that a political party can receive will be `2000/- from one person and they will be entitled to receive donations by cheque or digital mode from their donors.
- Proposal to increase the threshold limit for audit of business entities who opt for presumptive income scheme from Rs. 1 crore to Rs. 2 crores has been introduced.
- The threshold for maintenance of books for individuals and HUF will be increased from turnover of Rs. 10 lakhs to Rs. 25 lakhs or income from Rs. 1.2 lakhs to Rs. 2.5 lakhs.
- TDS of 5% will be deducted from commission payable to individual insurance agents even if the income of some of them may be below taxable limit.
- The time period for revising a tax return will be reduced to 12 months from completion of financial year.
Personal Income Tax –
- Proposal to reduce the existing rate of taxation for individual assesses between income of Rs. 2.5 lakhs to Rs. 5 lakhs to 5% from the present rate of 10% has been introduced.
- To avoid duplication of benefit, the existing benefit of rebate available to the same group of beneficiaries is being reduced to Rs. 2500 available only to assessees upto income of Rs. 3.5 lakhs.
- The combined effect of both these measures will mean that there would be zero tax liability for people getting income upto Rs. 3 lakhs p.a. and the tax liability will only be Rs. 2,500 for people with income between Rs. 3 and Rs. 3.5 lakhs.
- While the taxation liability of people with income upto `5 lakhs is being reduced to half, all the other categories of tax payers in the subsequent slabs will also get a uniform benefit of `12,500/- per person.
- Proposal to levy a surcharge of 10% of tax payable on categories of individuals whose annual taxable income is between Rs. 50 lakhs and Rs. 1 crore has been introduced.
- 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 will be introduced.