Union Budget 2016-17 Full coverage

Basics:

• GDP growth has accelerated to 7.6%. CPI inflation has come down to 5.4%
•  Forex reserves are at the highest ever levels — $350 billion. 
• FY 16-17 will have the additional burden of implementing the VII pay commission and the defence OROP. 
• AD is 1.4% of GDP.

Jaitley announces the nine pillars of his Budget —

1.      Agriculture and farmers' welfare,

2.      Rural sector,

3.      Social sector including healthcare,

4.      Education, skills and job creation,

5.      Infrastructure,

6.      Financial sector reforms,

7.      Ease of doing business,

8.      Fiscal discipline,

9.      Tax reforms to reduce compliance burden.  

1.Agriculture and Farmer’s welfare:

• Govt will reorganise agricultural policy to double farmer income in five years.
• New scheme for BPL families for gas connections. Statutory backing for Aadhaar platform to ensure delivery of benefits.
• 28.5 lakh hectares to be brought under irrigation.
• Paramparagat Krishi Vikas Yojana to bring 5 lakh acres under organic farming.
• Unified e-platform for farmers to be inaugurated on Ambedkar's birthday.
• Agricultural credit target of Rs. 9 lakh crore. Govt to allocate Rs 5,500 crore for crop insurance scheme.
• Four schemes for animal welfare.

2.Rural India:

• Rs. 2.87 lakh crore for gram panchayats as per recommendation of 14th finance commission.
• Rs. 38,500 crore for MNREGA. Highest ever for the rural employment scheme.
• 5,542 villages have been electrified, more than the last three years combined.
• Rs. 9,000 crore for Swachch Bharat Abhiyan.
• Two schemes for digital literacy for rural India to cover 6 crore households in the next three years.
• Total rural sector allocation Rs. 87,769 crore.

3. Social Sector including  Health care:

• Government to provide health insurance of upto Rs. 1 lakh per family; top up of Rs. 35,000 for people above 60 years. 3,000 stores to be opened for generic drugs.
• National dialysis service programme under PPP model. LPG connection for women members of rural homes.

4. Education, Skills and job creation:

• Hub to support SC/ST entrpreneurs.
• 10 public and 10 private educational institutions to be made world-class. Digital repository for all school leaving certificates and diplomas. Rs. 1,000 crore for higher education financing.
• Rs. 1,700 crore for 1500 multi-skill development centres.
• Small shops should be given the choice to remain open on all 7 days a week.

5. Infrastructure:

• More than 70,000 road projects were languishing at the beginning of the year. Nearly 85% of these projects have been put back on track.
• Rs. 97,000 crore for all roads. Total outlay on roads and rails will be Rs. 2.80 lakh crore. 
• 10,000 km of national highways in 2016-17 and 50,000 km state highways to be converted to NH roads.
• Total outlay for infrastructure is at Rs. 2.31 lakh crore.
• Motor Vehicles Act to be amended to enable entrepreneurship in the road transport sector.
• There are 160 airports and airstrips which can be revived.
• In the power sector, the govt is drawing up a plan for 15-20 years to augment investment in nuclear power. Rs. 3,000 crore per annum for this.
• 100% FDI through FAPB route in marketing of food products produced and manufactured in India.

6. Financial sector reforms:

• RBI Act to be amended to set up monetary policy committee.
• (A significant reform as wished by RBI governor Raghuram Rajan. This means monetary policy will be decided by a committee and will be accountable for not achieving the inflation target. It is to be seen if RBI continues to have majority members in the committee, as was proposed by Urjit Patel committee that was set up to review the framework).
• Amendmends to boost Asset Reconstruction Companies to manage NPAs of public sector banks.
• Rs. 25,000 crore for recapitalisation of public sector banks. 
• General insurance companies owned by the govt to be listed in stock exchanges. (The 25,000 Cr may be woefully inadequate for public sector banks' recapitalisation. 
• The changes in SARAFESI act proposed to help Asset Reconstruction
• EPF at 8.33 per cent for new employees joining the scheme
• Direct Benefit Transfer for fertiliser subsidy.
• Dept of Disinvestment renamed as Dept of Investment and Public Asset Management.
• Rs. 900 crore for buffer stock of pulses.
• Amendment to the Companies Act to ensure speedy registration and boost start-ups.
• A bill on targeted delivery of financial services using Aadhar to be introduced.

7. Fiscal discipline:

• FIscal deficit at 3.5% of GDP in 2016-17.( This will give comfort to the central bank for further reducing interest rate. All eyes on RBI now.)
• Classification of expenditure as plan and non-plan to be done away with.
• Rs. 100 crore for Deendayal Upadhyay's birthday celebrations and Guru Gobind Singh 300th birth anniversary.
• Ceiling under 87A to be increased by Rs. 3,000. HRA deduction up from Rs. 24,000 to Rs. 60,000 p.a.

8. Ease of doing business:

• Lowering of Corporate IT rate for companies not exceeding Rs. 5 crore turnover to 25% plus surcharge.
• Tax holiday for startups for three of five years of setting up the company
• 40% of withdrawal at the time of retirement under National Pension Scheme to be tax exempt.
• Additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50 lakh.

(Exemptions provided on housing loan interest for first time home buyers and affordable housing would provide a boost the stressed residential sectors. Scrapping of dividend distribution tax on Real Estate Investment Trusts (REITs) would help developers to raise funds, as this makes investments attractive for investors. REITs works similar to mutual funds where individuals and institutions pool in money to invest in leased office or retail assets.)

9. Tax reforms:

• 1 per cent service charge on purchase of luxury cars over Rs. 10 lakh and in-cash purchase of goods and services over Rs. 2 lakh.
• Infrastructure and agriculture cess to be levied.
• No changes have been made to existing income tax slabs.
• Limited period compliance window for domestic taxpayers to declare undisclosed income. 
• Declarations to have immunity from prosecutions.
• 4% high capacity tax for SUVs
• Committed to stable taxation regime. No more retrospective amendments.
• Excise duty on tobacco increased by 10-15 per cent. 
• No Service Tax for houses built under 60 square metres. 
• 13 different cesses levied by various ministries with collections less than Rs.50 crore a year to be done away with.
• Rs. 1,060 crore revenue loss through direct tax proposals.