The Union Budget of India for the financial year 2018-19 was presented to the Parliament on 1 February 2018 by Finance Minister Arun Jaitley.
The 2018 budget is considered to be a crucial one as it the first since the rollout of Goods and Service Tax (GST) regime in India.
This year’s Budget will particularly focus on strengthening agriculture, rural development, health, senior citizens, education, employment, MSME and infrastructure sectors.
Following are the Highlights of the Union Budget 2018-19
Economic and Fiscal Situation
- Indian economy is now 2.5 trillion dollar economy making it the seventh largest in the world. India is expected to become the fifth largest economy with growth rate of 8 percent very soon.
- India’s GDP is expected to grow at 7.2% to 7.5% in the second half of 2017-18.
- International Monetary Fund (IMF), in its latest update, has forecasted that India will grow at 7.4% next year.
- Total expenditure during 2018-19 is estimated to be over Rs. 24.42 lakh crore.
- Fiscal Deficit pegged at 3.5 % of GDP at Rs 5.95 lakh crore for 2017-18, projected at 3.3 % for 2018-19.
- Rs 21.57 lakh crores transferred as net GST compensation to states against a projection of Rs 21.47 lakh crores.
- Government has declared Minimum support price (MSP) for the majority of rabi crops at least at 1.5 times the cost involved and MSP for the all unannounced crops of kharif at least at 1.5 times of their production cost.
- 470 Agricultural Produce Market Committees (APMC) out of 585 APMCs have been connected to e-NAM network and rest will be connected by March 2018.
- Existing 22,000 rural Haats to be transformed into Gramin Agricultural Markets (GrAMs) to protect the interests of 86% small and marginal farmers.
- Specialised agro-processing and financial institutions in Food Processing Sector to be promoted.
- Special scheme for free dialysis of poor have been initiated.
- Facility of Kisan Credit Cards to be extended to fisheries and animal husbandry farmers.
- Around 2 crore more toilets to be constructed under Swachh Bharat Mission.
- Special scheme will be implemented to support Haryana, Punjab, Uttar Pradesh and Delhi NCT to address air pollution and subsidise machinery for management of crop residue.
- 24 new Government Medical Colleges and Hospitals to be set up to ensure at least 1 Medical College for every 3 Parliamentary Constituencies and at least 1 Government Medical College in each State of the country.
- World’s largest Health Protection Scheme covering over 10 crore poor and vulnerable families launched with coverage upto Rs 5 lakh per family for secondary and tertiary treatment.
- Scheme called Galvanizing Organic Bio-Agro Resources Dhan (GOBAR-DHAN) to be launched for conversion of cattle dung and solid waste in farms to compost, fertilizer, bio-gas and bio-CNG.
- Proposed to take up construction of tunnel under Sela Pass.
- Develop 10 prominent tourist sites into Iconic Tourism destinations.
- Dedicated Affordable Housing Fund (AHF) to be established in National Housing Bank (NHB).
- Develop two Defence Industrial Production Corridors in the country.
- Defence Production Policy 2018 to be rolled out to promote domestic production.
- Launch Scheme to assign a unique ID to every individual enterprise in India.
- Department of Commerce to develop National Logistics Portal as a single online window to link all stakeholders.
- Government will formulate a comprehensive Gold Policy to develop gold as an asset class. Gold Monetization Scheme to be revamped to enable people to open a hassle-free Gold Deposit Account.
- Central Board of Excise and Customs [CBEC] to be renamed as Central Board of Indirect Taxes and Customs (CBIC).
- Agri-Market Infrastructure Fund to be set up with a corpus of Rs 2000 crore for developing and upgrading rural agriculture market infrastucture.
- Allocation for Ministry of Food Processing doubled from Rs 715 crore in RE 2017-18 to Rs 1400 crore in BE 2018-19.
- Rs 500 crore allocated to “Operation Greens” to address price fluctuations in potato, tomato and onion.
- Restructured National Bamboo Mission to be launched at a cost of Rs 1,290 crore to promote bamboo sector.
- Fishery and Aquaculture Infrastructure Development Fund (FAIDF) and Animal Husbandry Infrastructure Development Fund (AHIDF) to be set up with total corpus of Rs 10,000 crore.
- Institutional Credit for agriculture sector increased from Rs 8.5 lakh crore in 2014-15 to Rs 10 lakh crore in 2017-18 and further to Rs 11 lakh crore for 2018-19.
- Rs 14.34 lakh crore to be spent by the Ministries in 2018-19 for creation of livelihood and infrastructure in rural areas.
- Proposed 8 crore free LPG gas connections to women under UJJWALA Scheme and 4 crore free electricity connections to the poor under Saubhagya Yojana. Rs 16000 crore allocated for the scheme.
- Loans to Women Self Help Groups to increase to Rs.75,000 crore by March 2019 from 42,500 crore last year.
- Allocation under National Rural Livelihood Mission increased to Rs 5750 crore in 2018-19.
- Ground water irrigation scheme under Prime Minister Krishi Sinchai Yojna-Har Khet ko Pani allocated Rs 2600 crore.
Health, Education and Social Protection
- Government’s estimated schematic budgetary expenditure on health, education and social protection for 2018-19 is Rs 1.38 lakh crore.
- Ayushman Bharat programme allocated Rs 1,200 crore under which 1.5 lakh centres will be set up to provide health facilities closer to home.
- Additional Rs 600 crore allocated to provide nutritional support to all TB patients at the rate of Rs 500 per month for the duration of their treatment.
- Right to Education Act to be amended to enable training of more than 13 lakh untrained teachers; Integrated B. Ed programme to be initiated to improve quality of teachers.
- Aims to move from black board to digital board schools by 2022.
- Eklavya schools to be started for Scheduled Tribe population. Every block with more than 50 percent ST population and at least 20,000 tribal people will have Ekalvya schools at par with Navodaya Vidyalayas by 2022.
- Initiative named ‘‘Revitalising Infrastructure and Systems in Education (RISE) by 2022’’ to be launched with a total investment of Rs 1,00,000 crore in next 4 years.
- Set up two new full-fledged Schools of Planning and Architecture (SPA) selected on challenge mode.
- 18 new SPAs would be established in the IITs and NITs as autonomous Schools on challenge mode.
- Prime Minister’s Research Fellows (PMRF) Scheme to be launched which would identify 1,000 best B.Tech students each year from premier institutions and provide them facilities to do Ph.D in IITs and IISc.
- Rs 9975 crore allocated to National Social Assistance Programme.
- Allocation for Scheduled Castes (SCs)- Rs 56,619 crore in BE 2018-19.
- Allocation for Scheduled Tribes (STs)- Rs 39,135 crore in BE 2018-19.
- Govt will expand PM Jan Dhan Yojana to bring all 16 crore accounts under micro insurance and pension schemes.
- Rs 3794 crore allocated to MSME Sector.
- Rs 7,148 crore outlay for textile sector in 2018-19.
- Set target of Rs 3 lakh crore for lending under MUDRA for 2018-19.
- Government to contribute 12% of the wages of the new employees in the EPF for all the sectors for next 3 years
- Amend Employees Provident Fund and Miscellaneous Provisions Act, 1952 to reduce women employees’ contribution to 8% for first 3 years of their employment against existing rate of 12% or 10% with no change in employers’ contribution.
- India needs investment in excess of Rs 50 lakh crore in the infrastructure sector.
- Estimated budgetary and extra budgetary expenditure on infrastructure for 2018-19 increased to Rs 5.97 lakh crore against estimated expenditure of Rs 4.94 lakh crore in 2017-18.
- Ambitious Bharatmala Pariyojana to be launched at an estimated cost of Rs 5,35,000 crore; develop about 35000 kms in Phase-I to provide seamless connectivity of interior and backward areas and borders of the country.
- Under Prime Minister Awas Scheme (Rural), 51 lakhs houses in year 2017-18 and 51 lakh houses during 2018-19 will be constructed exclusively in rural areas.
- Construction of 37 lakh houses sanctioned under Prime Minister Awas Scheme (Urban).
Railways & Aviation Sector
- Capital Expenditure in Railway Sector for the year 2018-19 has been pegged at Rs 1,48,528 crore.
- Government to eliminate 4267 unmanned level crossings in the broad gauge network in the next 2 years.
- All stations with more than 25000 footfalls will have escalators.
- All trains to be progressively provided with Wi-Fi, CCTV and other state-of-the-art amenities.
- Specialized Railways University to be set up at Vadodara to train manpower required for high speed rail projects.
- NABH Nirman initiative announced with allocation of Rs 60 crores to expand airport capacity.
- Provision for acquisition of 12,000 wagons, 5,160 coaches and approximately 700 locomotives during 2018-19.
- Rs 51,000 crore allocated to add 90 kilometers of double line tracks and 150 km additional suburban network in Mumbai .
- Rs 17,000 crore allocated to add 160 km of suburban network in Bengaluru.
- Airport Authority of India (AAI) has 124 airports; Under NABH Nirman propose to expand airport capacity by more than 5 times to handle 1 billion trips a year.
- UDAN (Ude Desh ka Aam Naagrik) scheme will connect 56 unserved airports and 31 unserved helipads.
- NITI Aayog to initiate a national program in the area of Artificial Intelligence(AI); Centres of excellence to be set up on robotics, AI, Internet of things etc.
- Allocation on Digital India programme doubled to Rs 3073 crore in 2018-19.
- Rs 10,000 crore allocated to set up 5 lakh wi-fi hotspots to provide broadband access to five crore rural citizens.
- Department of Telecom will establish indigenous 5G Test Bed at IIT, Chennai.
- Government does not consider crypto-currencies as legal tender/coin and will take measures to eliminate use of these crypto assets in financing illegitimate activities.
- Propose policy to introduce toll system on ‘‘pay as you use’’ basis.
- Disinvestment crossed target of Rs 72,500 crore and likely to reach Rs 1,00,000 crore in 2017-18. Disinvestment target of Rs 80,000 crore set for 2018-19.
- Approved listing of 14 Central Public Sector Enterprises (CPSEs), including two insurance companies, on the stock exchanges.
- Three Public Sector Insurance companies- National Insurance Co. Ltd., United India Assurance Co. Ltd., and Oriental India insurance Co. Ltd. to be merged into a single entity, and subsequently listed in the stock exchange, as part of the disinvestment programme.
- Emoluments of the President revised to Rs 5 lakh; Vice President to Rs 4 lakh; and Governors to Rs 3.5 lakh per month.
- Proposed necessary changes to refix emoluments of Member of Parliaments (MPs) with effect from April 1, 2018; automatic revision of emoluments every 5 years, indexed to inflation.
- A National Committee, chaired by the Prime Minister, which includes Chief Ministers of all the States, representatives from across the political spectrum, Gandhians, thinkers and eminent persons from all walks of life, has been constituted to formulate a Commemoration Programme.
- Commemorate 150th birth anniversary of Mahatma Gandhi, Father of the Nation, from 2nd October, 2019 to 2nd October 2020.
- Rs 150 crore earmarked for the year 2018-19 for the activities leading to the Commemoration.
- No changes in the structure of income tax slabs proposed.
- 85.51 lakhs new taxpayers filed their returns of income in financial year 2016-17, as against 66.26 lakhs in the immediately preceding year.
- Growth in direct taxes up to 15th January, 2018 is 18.7%.
- 100 percent tax deduction for the first 5 years to companies registered as Farmer Producer Companies (FPC) with a turnover of Rs 100 crore and above.
- Extend the benefit of reduced corporate tax rate of 25 percent currently available for companies with turnover of less than 50 crore (in Financial Year 2015-16), to companies reporting turnover up to Rs. 250 crore in Financial Year 2016-17, to benefit MSMEs.
- Deduction of 30 percent on emoluments paid to new employees Under Section 80-JJAA of the Income-tax Act to be relaxed to 150 days for footwear and leather industry, to create more employment.
- Standard Deduction of Rs. 40,000 in place of present exemption for transport allowance and reimbursement of miscellaneous medical expenses to benefit salaried employees and pensioners.
- Payments exceeding Rs. 10,000 in cash made by trusts and institutions to be disallowed and would be subject to tax.
- Tax on Long Term Capital Gains exceeding Rs 1 lakh proposed at the rate of 10%. However, all gains up to 31st January, 2018 will be exempted from tax.
- Propose to introduce a tax on distributed income by equity oriented mutual fund at the rate of 10%.
- Existing 3 percent education cess to be replaced by a 4 percent “Health and Education Cess” to collect an estimated additional amount of Rs 11,000 crores.
- GST collections projection pegged at Rs 7.43 lakh crore in full year 2018-19 as against Rs 4.44 lakh crore in 9 months of current fiscal.
- Govt makes PAN mandatory for any entity entering into a financial transaction of Rs 2.5 lakh or more.
- E-Assessment of Income Tax to be rolled out across the country to transform age old assessment procedure.
- Changes proposed to the Custom Act to improve Ease of Doing Business.
- To incentivise ‘Make in India’, custom duty increased on mobile phones and TV parts.
Incentives for Senior Citizens
- Raised the deduction of interest income on senior citizen’s bank and post office deposits from Rs. 10,000 to Rs. 50,000.
- Deduction limit for health insurance premium/medical expenditure raised from Rs. 30,000 to Rs. 50,000 under section 80D..
- Increased deduction limit for medical expenditure for certain critical illness from Rs. 60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens) to Rs. 1 lakh for all senior citizens, under section 80DDB.
- Propose to extend the Pradhan Mantri Vaya Vandana Yojana up to March, 2020.
- Existing limit on investment of Rs 7.5 lakh per senior citizen under Pradhan Mantri Vaya Vandana Yojana increased to Rs 15 lakh.