Yojana-March 2018-Union Budget Highlights

 Union Budget 2018-19

(Articles Covered - Taking the Economy Forward, Rejuvenating the Economy & Highlights of Budget 2018-19)

The Union Budget 2018-19 is unique in many respects. It comes at a time when the economy is now witnessing the positive effects of two major structural reforms carried out by the Government in the last two years —demonetization and implementation of GST.
This budget is different from other budgets in several respects. The main focus of the budget is on spending more money on agriculture and rural economy so that apart from helping the farmers in increasing their income, it results into creation of demand for goods and services which will promote private investment. In the budget, maximum money is going to be spent on creation of rural infrastructure and rural employment. There is an increase in the budget allocation for rural livelihood programmes under which self-help groups, mainly of women, are being helped by corpus funds as well as bank credit. Also wherever required, new warehousing and processing capacities for these crops will be created with the help of a network of Farmers Producer Organizations (FPO). The second most important part of Union Budget 2018-19 is providing the education facilitates to make use of human resource for contributing to the wealth of the nation and to generate incomes for a good living, good health facilitates sustaining such human resource.

This year’s Budget will consolidate these gains.

Education, Health and Social Security

• The budget provision of setting up 1.5 lakh centres to provide health facilities closer to home with an allocation of Rs. 1200 crores under Aayushman Bharat programme is remarkable.
• Similarly, large amount of allocations made for TB nutritional support is also one of the welcome features in the budget.
• Finance Minister’s announcement for the world’s largest government funded health care programme titled National Health Protection Scheme to cover over 10 crore poor and vulnerable families covering approximately 50 crore beneficiaries from 10 crore families and providing coverage up to 5 lakh rupees per family per year for secondary and tertiary care hospitalization is a laudable step. This will also help promote business of insurance and generate employment in the country.
• Budget provision for one lakh crore for infrastructure system in education, setting up 2 new schools for planning and architecture, announcement of setting up one medical college for every three parliamentary constituencies with 24 new medical colleges, and upgrading hospitals to medical colleges will helping making the medical education and medical facilities available in the neighborhood of people around the country.

Infrastructure and Industry

• To further boost tourism, the Budget proposal to develop ten prominent tourist sites into Iconic Tourism destinations by following a holistic approach involving infrastructure and skill development, development of technology, attracting private investment, branding and marketing are welcome announcements which will generate employment and result into growth.
• Large amount of allocations have been made in Railways, Aviation, and digitalization of the economy. Railway capes has been pegged at Rs.1.48 crore to eliminate unmanned railway crossing, to build escalators, to provide WiFi and CCTV camera, to eliminate unmanned rail crossings.
• To further increase Broadband access in villages, the government proposal to set up five lakh Wi-Fi hotspots to provide net connectivity to five crore rural citizens and allocations of Rs. 10000 crore in 2018- 19 for creation and augmentation of Telecom infrastructure would help in Digital India programme of the government.
• The budget boosts the MSMEs which constitute 99 per cent of the companies, by providing them Rs.3794 crores for giving credit support, capital and interest subsidy and for innovations. MSME change in basis of classifying from investment in plant and machinery/equipments to annual from Rs 50 crore to turnover 250 crore and reducing the tax rate to 25 per cent will encourage ease of doing business, growth oriented and align them to new tax regime resolving around GST. Finance Minister has also offered Rs. 3 lakh crore more of MUDRA loans for MSMEs.

Tax Proposals
Long Term Capital Gains (LTCG) tax at a moderate rate of 10 percent based on equity, as there is no justification for incomes of Rs. 3.6 Iakh crores from this asset class to be exempted from tax. The tax on LTCG should have been 20 per cent as had existed earlier. The budget also proposed that all dividends distributed by equity mutual funds have to pay a 10 per cent. This would cut down on the net amount of money that mutual fund houses could distribute to their investors. He has proposed 1 per cent education cess ( tax on tax) for revenue considerations to run massive social security schemes.

Allocations for Socially Weaker Sections

• A New scheme Venture Capital Fund for OBCs on similar lines as Venture Capital Fund for SCs to be launched with an initial corpus of Rs. 200 crore. Rs. 140 crore has been provided for it in 20 18-19.
• The Skill Development Training has been given to 13,587 manual scavengers and their dependents. 809 manual scavengers and their dependents have been provided bank loans.
• For the Pre-Matric Scholarship for OBC, the income eligibility has been increased from Rs.44,500/- per annum to Rs. 2.5 lakh per annum. For Pre-Matric Scholarship for SC, the income eligibility has been raised from Rs.2.00 lakhs to Rs. 2.5 lakhs.
• Stipend for day scholars has been raised from Rs. 150 to Rs. 225 and for hostelers it has been raised from Rs. 350 to Rs. 525/-.
• For Free coaching for SC and OBC students, the income eligibility has been raised from Rs. 4.5 lakhs to Rs. 6 lakhs. Stipend has been raised from Rs. 1500/- Rs. 2500/- for local students and from Rs. 3000 to Rs. 5000 for outstation students. For Pre-matric Scholarship for OBC, the rates of scholarships has been increased substantially.

Defence Sector

• Private sector and MSMEs to be promoted in defence by formulation of and industry friendly defence production policy 2018.
• Two defence-manufacturing corridors to be established to boost defence manufacturing in the country.
• Foreign Direct investment to be liberalized in the defence sector.

Enterprise/Industry reforms

• A unique Adhaar like ID to be given to each and every enterprise big or small to help in easy roll out of schemes and benefit and easy and effective collection of taxes and duties etc.
• The government's plan to develop a National Logistics Portal as a single online window to link all stakeholders will significantly help the logistics industry by dealing with a single ministry than with seven different ministries.

Tax related reforms

• With the roll out of GST, the union government has acquired the concurrent powers of taxation when it comes to indirect taxes. Hence, the Central Board of Excise and Customs (CBEC) is being renamed as Central Board of Indirect Taxes & Customs.
• 100 percent deduction proposed to companies registered as Farmer Producer Companies with an Annual turnover upto Rs. 100 crore on profit derived from such activities, for five years from 2018-19.
• Deduction of 30 percent on emoluments paid to new employees Under Section 80-JJM to be relaxed to 150 days for footwear and leather industry, to create more employment
• Proposal to extend reduced rate of 25 Percent currently available for companies with turnover of less than 50 crore (in Financial Year 201 5-16), to companies reporting turnover up to Rs. 250 crore in Financial Year 2016-17, to benefit micro, small and medium enterprises
• Standard Deduction of Rs. 40,000 in place of present exemption for transport allowance and reimbursement of miscellaneous medical expenses. 2.5 crore salaried employees and pensioners to benefit. .
• Relief to Senior Citizens proposed Exemption of interest income on deposits with banks and post offices to be increased from Rs. 10,000 to Rs. 50000; TDS not required to be deducted under section 194A. Benefit also available for interest from all fixed deposit schemes and recurring deposit scheme; Hike in deduction limit for health insurance
• Increase 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 Rs. 1 lakh for all senior citizens undersection 8ODD); Proposed to extend Pradhan Mantri Vaya Vandana Yojana up to March, 2020. Current investment limit proposed to be increased to Rs. l5lakh from the existing limit of 7.5 lakh per senior citizen.
• Proposal to introduce tax on distributed income by equity oriented mutual funds at the rate of 10 percent.
• Proposal to increase cess on personal income tax and corporation tax to 4 percent from present 3 percent.
• Proposal to roll out E-assessment across the country to almost eliminate person to person contact leading to greater efficiency and transparency in direct tax collection.
• Customs act to be changed to improve ease of doing business.

Other Highlights of Budget 2018-19

• MSP for all unannounced kharif crops will be one and half times of their production cost like majority of rabi crops
• Institutional Farm Credit raised toll lakh crore in 2018-19 from 8.5 lakh crore in 2014-15.
• 22,000 rural haats to be developed and upgraded into Gramin Agricultural Markets
• “Operation Greens” launched to address price fluctuations in tomato, Onion and potato for benefit of farmers and consumers
• Two new funds of Rsl0,000 crore announced for Fisheries and Animal Husbandry sectors;
• Re-structured National Bamboo Mission gets R5.l290crore
• Loans to Women Self Help Groups will increase to Rs. 75,000 crore in 2019 from 42,500 crore last year.
• Higher targets for Ujjwala, Saubhagya and Swachh Bharat Mission to cater to lower and middle class in
• Providing free LPG connections, electricity and toilets.
• Outlay on health, education and social protection will be 1.38 lakh crore. Tribal students to get Ekalavya Residential School in each tribal bloEk by 2022. Welfare fund for SCs gets a boost.
• World’s largest Health Protection Scheme covering over 10 crore poor and Vulnerable families launched with a family limit upto 5 lakh rupees for secondary and tertiary treatment.
• Fiscal Deficit pegged at 3.5 per cent, projected at 3.3 per cent for 2018-19.
• Rs. 5.97 lakh crore allocation for infrastructure; Ten prominent sites to be developed as Iconic tourist destinations
• NITI Aayog to initiate a national programme on Artificial Intelligence; Centres of excellence to be set up on robotics, Al, Internet of things etc
• Disinvestment crossed target of Rs 72,500 crore to reach Rs 1,00,000 crore.
• Comprehensive Gold Policy on the anvil to develop yellow metal as an asset class.

By: Deepak Hooda