st February 2018, Finance Minister Arun Jaitley presented the last “full budget” of the current government before the Lok Sabha elections in 2019. This budget is being termed as a fusion of populism and fiscal prudence. The budget aims to address rural distress that had got many farmers to streets in 2017. Also going by a ‘Welfares intent’ that the last budget of governments usually does, it has an ambitious package for rural economy and social sector. The Budget 2018 has disappointed middle classes and the corporate sector. There was a big expectation in changing of tax slab to save their earnings. But people disappointed in the finance minister. ‘Budget’ is the popular name for ‘Annual Financial Statement’ found in Article 112 of the Constitution.

Important/Key Facts of the Budget 2018:

The Budget 2018 was last full budget of the Modi Government. So, election impact is also reflecting in the budget announcement. Like Obama Health Care, finance minister Arun Jaitley also announced Free Mediclaim up to 5 lacs. It’s termed as Modi Health Care in Indian Media. A big expectation of corporate industry fulfilled by reducing the Corporate tax rate to 25%. But only the turnover of 250 Crores of Companies can get the benefit of this reduction. The key points of the budget 2018 are as below:

1. Key Facts in Fiscal Management:

   

 

Total budget receipt estimate for 2018-19 – Rs.2442213 crore (including borrowing)

• The growth of direct taxes has been 18.7% in 2017-18 (up till 15 Jan 2018).
• The top five which form the bulk of budget expenditure are- Interest Payments, Defense, Food subsidy, Pensions, State allocation (in the same order).
• The reduced Corporate Tax of 25% would be extended to include companies with a turnover of up to Rs. 250 crores in 2016-17. This move is expected to boost the micro, small and medium enterprises (MSMEs) Companies.
• Deduction of Rs. 40,000 purposed for salaried taxpayers in place of their medical and transport allowance. Transport allowance would continue for differently abled persons while other medical reimbursements for employees will continue.

• ⇒Click here to know about Economic Survey for Financial Year 2017-18

The two education cess of 3% in total would be replaced by a ‘Health and Education’ cess of 4%.

• Senior citizens- Interest income on bank and post-office deposits is exempted from tax up to Rs. 50,000 up from Rs. 10,000. Increased deduction for health insurance premium and medical treatment expenditure from Rs. 30,000 to Rs. 50,000. Increased deduction for medical treatment for the critical illness of all senior citizens to Rs 1 lakh.
• Excise duty amounting to total Rs. 8 on petrol and diesel has been replaced by Rs. 8 per liter road and infrastructure cess.
• Long-Term Capital Gains above Rs. 1 lakh would be taxed at 10% without indexation benefit (Inflation adjustment).
• The dividends derived from equity-oriented mutual funds would be taxed at 10%.
• Farmer Producer Companies with turnover of Rs.100 crore established under Operation Green would get 100% tax deduction for five
• Custom Duties have been increased on imported goods to incentivize domestic manufacturing. Customs duties on mobile phones are proposed to increase from 15% to 20% and on imported TV panels from 7.5% to 15%.
• Central Board of Excise and Customs to be rechristened Central Board of Indirect Taxes and Customs.

 

2. Key Facts in Agriculture / Rural Economy:

The Budget allocation for Agriculture Ministry is increased to Rs. 58,080 crores in 2018-19 from Rs. 51,576 crores in 2017-18.

• MSP’s of all crops would be ensured at least 1.5 times the cost of their production.
• Operation Green is proposed with an outlay of Rs.500 crore to address price volatility of perishable food.
• Institutional credit in agriculture to get an increase of Rs. 1 lakh crore from last year, totaling it to Rs. 11 lakh crores in 2018-19.
• 22,000 rural haats (Small Markets) to upgrade to Gramin Agricultural Market (GRAM), for producers to sell directly to buyers.
• Agri-Market Development Fund with a Rs. 2000 crore corpus to develop marketing infrastructure.
• Allocation for Food Processing Ministry doubled to 14,00 crores in 2018-19 up from Rs. 715 crores in 2017-18.
• The e-trading platform of National Agricultural Market, e-NAM cover to be widened to 585 APMC’s.
• The National Bamboo Mission has been restructured and allocated Rs. 1290 crore. Northeast would benefit which grows 67% of India’s bamboo.
• Fisheries & Aquaculture and Animal Husbandry Funds get Rs. 10,000 crores.
• PM Krishi Sinchai Yojana would take up 96 irrigation deprived districts and is allocated 2600 crore.
• Free gas connections to 8 crore poor women under Ujjwala Yojana and free electricity connection to 4 crore households under Saubhagya Yojana. 2 crore new toilets to be built under Swacha Bharat Mission.

 

3. Key Facts in Social Sector:

[caption id="attachment_12515" align="aligncenter" width="640"] Aam Budget 2017-18[/caption]

• National Health Protection Scheme (NHPS) was announced which would provide health insurance of up to 5 lakhs per family per year. The scheme would cover ten crore homes or 50 crore people in secondary and tertiary care hospitalization. Rs. 1200 crore for National Health Policy, 2017 is allocated which focuses on health and wellness centers. Both would comprise the “Ayushman Bharat Programme” for holistic healthcare.
• Revitalizing Infrastructure and Systems in Education (RISE) purposed with an investment of Rs.1 lakh crore over in four years. It is mandated to step up higher education institutional infrastructure including health. Higher Education Financing Agency (HEFA) would be restructured to fund RISE.
• By 2022, Eklavya Model Residential Schools to be developed in every block with more than 50 % tribal population and at least 20,000 tribal persons.

 

4. Key Facts in Micro, Small and Medium Enterprises (MSME):

• The extension of 25% Corporate Tax to include companies with turnover up to Rs 250 crore would primarily benefit MSME sector.
• 3794 crores is the outlay for the sector towards credit support, capital, interest subsidy, and innovation.
• The lending target under MUDRA has been set at Rs. 3 lakh crore in 2018-19.

5. Key Facts in Infrastructure Sector:

The total infrastructure outlay in the budget 2018-19 is set at Rs. 5.97 lakh crore.

• Road– 35,000 km of roads would be built under the Bharatmala Pariyojana at an estimated cost of Rs. 5.35 lakh crore, in Phase 1.
• Railway– Highest ever allocation of railways at Rs. 1,48,58 crore in 2018-19.
• Aviation– The allocation to the ministry has almost tripled. A new initiative called the NABH Nirman I proposed to expand airport capacity. The allocation under UDAN to augment regional connectivity is increased five times at Rs. 1,014 crores.
• Digital Infrastructure– Rs.10000 crore allocated for telecom infrastructure mainly Bharat Net. Rs. 4500 crores has been allocated for an optic-fiber based communication network for defense

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