Modi govt maiden Budget unveils vision for growth revival, reforms
Armed with a massive mandate, the Modi Government today unveiled its maiden Budget,announcing its road map for major reforms to revive the ailing economy by boosting manufacturing and investment and revamping the tax regime.
It also gave minor sops to the common man by raising the personal income tax limits.
In his debut Budget, Finance Minister Arun Jaitely set a target of achieving 7-8 per cent economic growth in the next 3-4 years, bringing down fiscal deficit to 3.6 per cent of the GDP in 2015-16 and 3 per cent in 2016-17.
He also proposed to raise the caps on foreign investment in the defence and insurance sectors to 49 per cent from the present 26 per cent.
In his over two-hour-long speech, the Finance Minister said he had no option but to take bold steps, and underlined that these steps were only "directional," marking the beginning of the journey, of the effort to revive growth spirit of the Indian economy.
Referring to Prime Minister Narendra Modi's slogan of 'Sab ka saath, sab ka vikas'( development of all), Mr Jaitley said, "I shall leave no stone unturned in creating a strong and vibrant India."
The Finance Minister, who took a five-minute break in his long speech, also announced to have the GST in place by the end of the year, a much-needed reform that would bring uniformity in taxes of all the 29 states and boost both revenue and business.
Highlighting the difficult economic situation faced by the country, Mr Jaitley called for fiscal prudence and revival of growth by boosting manufacturing and investment in infrastructure.
The Finance Minister also announced that a high-level committee would be set up to review retrospective tax claims that had deterred foreign investors. This, he said, was being done to allay the fears of both home and foreign investors.
"We are committed to provide a stable and predictable tax regime that would be investor friendly and spur growth, " he said.
The FM also promised to retain the target of keeping fiscal deficit at 4.1 per cent of the GDP set by the previous government.
"Difficult as it may appear, I have decided to accept this target as a challenge," he said.
As far as tangibles for the common man were concerned , there was some relief for income tax payers. The Budget announced a Rs 50,000 increase in the personal Income Tax (IT) limit from Rs 2 lakh to Rs 2.5 lakh for individual tax payers below 60 years of age and from Rs 2.5 lakh to Rs 3 lakh for senior citizens.
Congratulating Mr Jaitley for his maiden budget, Prime Minister Narendra Modi expressed confidence that the Budget will take India to new heights of progress.
He stated,' This Budget is a new ray of hope for the poor and downtrodden sections of society.'
Mr Modi said that for the moribund economy, this budget has come as a 'sanjeevani' (new life) and an 'arunoday' (sunrise) for the last man in the line. The Prime Minister said development should be all-encompassing ('samaveshak, sarvadeshak, sarvasparshi') and should also reach those parts of the country which had remained underdeveloped.
ASSOCHAM described the Budget as realistic. It said though, there were no big bang announcements, it set achievable targets.
Industry body CII termed the proposals "pragmatic and extensive" that lay out a medium-term vision for the economy and meet industry expectations on growth and employment creation.
However, the Opposition was not enthused by the Budget, "There is no clear roadmap in the Budget. It is just a laundry list of Rs 100 crore proposals," Congress vice-president Rahul Gandhi said.
The Budget has an outlay of Rs 5,75,000 crore, which marks an increase of 26.9 per cent over the actuals for 2013-14. Mr Jaitley said the increased allocations were targeted towards agriculture, capacity building in health and
education, rural roads, national highways infrastructure, railways network expansion, clean energy initiatives, development of water resources conservation.
The Budget shows a revenue deficit of Rs 2,10,244 crore . The Finance Minister has projected total revenue receipts during the current fiscal at Rs 11,89,763 crore against total revenue expenditure of Rs 15,68,111 crore.
This leaves a revenue deficit of Rs 3,78,348 crore that after adjustment of grants for creation of capital assets comes down to effective revenue deficit of Rs 2,10,244 crore at the end of the year.
The fiscal deficit at the end of the year is estimated to be Rs 5,31,177 crore. This deficit after adjustment(subtracting) interest payments is expected to leave a primary budget deficit of Rs 1,04,166 crore.
The Budget has proposed several changes in indirect taxes to give some relief to the common man.
Cathode ray TV used by weaker sections would become cheaper as the colour picture tube had been exempted from basic custom duty.
In other sops for the common man, excise duty on footwear costing Rs 500 to Rs 1000 made in SME sector has been reduced from 12 to six per cent.
Personal computers would also become cheaper as the four per cent special additional duty on all the inputs and components used in their manufacture has been waived.
To boost domestic industry, basic customs duty on imported flat-rolled products of stainless steel has been raised from five to 7.5 per cent.
In another important measure, export duty on bauxite has been increased from 10 to 20 per cent. The move is aimed at conserving the precious natural resource.
The Finance Minister also announced a slew of measures regarding service tax, which he said, were aimed at preparing the indirect tax regime for smooth transition to GST.
To boost manufacturing, the Minister proposed to provide an investment allowance at the rate of 15 per cent to a company that invests more than Rs 25 cr in any year in new plant and machinery. This benefit will be available for three years up to March 2017.
BCD has been reduced on fatty acids, palm, steel grade limestone, coaltar and battery waste to promote domestic manufacturing sector, which have been under stress.
Investment limit under Section 80 C of the IT Act, which gets tax exemption, has also been raised from Rs 1 lakh to Rs 1.5 lakh.
There is no change in education cess which is at 3 per cent.
The Budget allocates substantial amounts for social sector and uplift of the disadvantaged classes, but has taken care to avoid mega populism.
It has earmarked Rs 50,548 crore for SC development and sanctioned minimum pension of Rs 1,000 crore to all public provident schemes.
To implement the promise of a clean India, the Finance Minister announced that a 'Swatchh Bharat Abhiyan' (Clean India Drive) would be launched and total sanitation goals would be achieved by 2019.
Moreover, Rs 3,600 crore have been allocated for drinking water programmes and Rs 500 crore earmarked for rural housing.
Rs 4,000 crore would be spent this year to provide affordable housing.
To boost rural infrastructure, an amount of Rs 14,389 crore has been earmarked for the 'Pradhan Mantri Gram Sarak Yojna'.
He said national skill programme called the 'Skill India' to provide training in traditional professions such as welding and carpentry would be launched and 24x7 power supply provided to all homes.
Moreover, Rs 500 crore would be infused into the 'Deen Dayal Upadhyaya Yojana.' Farmers would be provided social health card. To expand educational opportunities and health facilities, the government would set up four AIIMS and five IIMs.
Rs 7,000 crore has been allocated for development of smart cities.
A sum of Rs 1,000 crore will be provided to Pradhan Mantri Krishi Sinchayee Yojana to provide assured irrigation in rain fed areas.
(Posted on 10-07-2014)