UNION BUDGET 2015-16
The first full year budget of Modi Government was presented by Union Finance Minister Mr. Arun Jaitley in Lok Sabha on February 28, 105. Union Budget 2015-16 marks the dawn of 'Cooperative federalism' and 'empowerment of the States'. The creation of National Institution of Transforming India (NITI) and acceptance of 14th Finance Commission's (FFC) recommendation of substantially higher devolution of Union taxes to States are landmarks in this direction. This Budget mark the beginning of the award period (2015-2020) of the FFC during which States will be devolved 42% of the divisible pool of Union taxes from existing 32%. This enhanced untied resource available to the States would enable them to address their specific needs through flexibility in design, implementation and financing of Programmes and schemes. This is expected to bring in high growth and faster development of different regions of the country contributing to overall National growth.
While presenting the Budget, Finance minister underlined that the credibility of Indian economy has been re-established in the last nine months and Indian economy is about to take-off on a fast downgrading global economic growth. Government has a vision to pursue accelerated growth, enhanced investment for the benefit of all Indians. India has become the fastest growing large economy in the World with a real GDP growth expected to be 7.4% (New Series). Macro-economic stability and conditions for sustainable poverty alleviation, job creation and durable double digit economic growth have been achieved in the economy.
- Total expenditure has accordingly been estimated at Rs.17, 77, 477 crore.
- Gross Tax receipts are estimated to be Rs.14, 49,490 crore.
- Devolution to the States is estimated to be Rs.5, 23,958.
- Share of Central Government will be Rs.9, 19,842.
- Non-Tax Revenues for the next fiscal are estimated to be Rs.2, 21,733 crore.
- Fiscal deficit will be 3.9% of GDP and Revenue Deficit will 2.8% of GDP.
- Fiscal deficit target at 3.9% of GDP for the year 2015-16.
- Revised fiscal deficit for 2014-15 at 4.1% of GDP.
- Revenue deficit target at 2.8% of GDP for the year 2015-16.
- Revised Revenue deficit for 2014-15 at 2.9% of GDP.
- Effective Revenue deficit target at 2.0% for the year 2015-16.
- Revised Effective revenue deficit target at 1.8% of GDP for 2014-15.
- Primary Deficit target at 0.7% for the year 2015-16.
- Revised Primary deficit at 0.8% for 2014-15.
Key Features of Budget 2015-16
State of Economy
- Inflation declined a structural shift
- CPI inflation projected at 5% by the end of the year, consequently, easing of monetary policy.
- Monetary Policy Framework Agreement with RBI, to keep inflation below 6%.
- GDP growth in 2015-16, projected to be between 8 to 8.5%.
Amrut Mahotsav Vision: The year 2022, 75th Year of Independence
- Housing for all 2 crore houses in Urban areas and 4 crore houses in Rural Areas.
- Basic facility of 24x7 power, clean drinking water, a toilet and road connectivity.
- At least one member has access to means for livelihood.
- Substantial reduction in poverty.
- Electrification of the remaining 20,000 villages including off-grid Solar Power by 2020.
- Connecting each of the 1,78,000 unconnected habitation.
- Providing medical services in each village and city.
- Ensure a Senior Secondary School within 5km reach of every child, while improving quality of education and learning outcomes.
- To strengthen rural economy increase irrigated area, improve the efficiency of existing irrigation systems, and ensure value addition and reasonable price for farm produce.
- Ensure communication connectivity to alL villages.
- To make India, the manufacturing hub f the World through Skill India and the Make in India Programmes.
- Encourage and grow the spirit of entrepreneurship to turn youth into job creators.
- Development of Eastern and North Eastern regions on par with the rest of the country.
- Government firm to achieve fiscal target of 3% GDP.
- Accordingly, journey for fiscal deficit target of 3% will be achieved in 3 years rather than 2 years. The fiscal deficit targets are 3.9%, 3.5% and 3.0% in FY 2015-16, 2016-17 & 2017-18 respectively.
- Additional fiscal space will go to funding infrastructure investment.
- Need to view public finances from a National perspective and not just the perspective of the Central Government. Aggregate public expenditure of the Governments, as a whole can be expected to rise substantially.
- Disinvestment to include both disinvestment in loss making units and some strategic disinvestment.
- Major steps take to address the two major factors critical to agricultural production, that of soil and water.
- 'Paramparagat Krishi Vikas Yojana' to be fully supported.
- 'Pradhanmantri Gram Sinchai Yojana' to provide 'Per Drop More Crop'.
- Rs.5,300 crore to support irrigation, watershed development and the 'Pradhan Mantri Krishi Sinchai Yojana'. States urged to chip in.
- Rs.25,000 crore in 2015-16 to the corpus of Rural Infrastructure Development Fund (RIDF) set up in NABARD; Rs.15,000 crore for Long Term Rural Credit Fund; Rs.45,000 crore for Short Term Co-operative Rural Credit Refinance Fund; and Rs.15,000 crore for Short Term RRB Refinance Fund.
- Target of Rs.8.5 lakh crore of agricultural credit during the year 2015-16.
- Focus on improving quality and effectiveness of activities of MGNREGA.
- Government to work with States, in NITI, for the creation of a Unified National Agricultural Market.
Funding Agency MUDRA
- Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs.20,000 crores, and credit guarantee to be created.
- MUDRA Bank will be responsible for refinancing all Micro-finance Institutions which are in the business of lending to such small entities of business through a Pradhan Mantri Mudra Yojana.
- A Trade Receivables Discounting System (TReDs) which will be an electronic platform for facilitating financing of trade receivables of MSMEs to be established.
- Government to work towards creating a functional social security system for all Indians, specially the poor and the under-privileged.
- Pradhan Mantri Suraksha Bima Yojana to cover accidental death risk of Rs.2 lakh for a premium of just Rs.12 per year.
- Atal Pension Yojana to provide a defined pension, depending on the contribution and the period of contribution. Government to contribute 50% of the beneficiaries' premium limited to Rs.1,000 each year, for five years, in the new accounts opened before 31st December, 2015.
- Pradham Mantri Jeevan Bima Yojana to cover both natural and accidental death risk of Rs.2 lakh at premium of Rs.330 per year for the age group of 18-50.
- A new scheme for providing Physical Aids and Assisted Living Devices for senior citizens, living below the poverty line.
- Rs.1000 crore to the Nirbhaya Fund.
- Sharp increase in outlays of roads and railways. Capital expenditure of public sector units to also go up.
- National Investment and Infrastructure Fund (NIIF), to be established with an annual flow of Rs.20,000 crores to it.
- Tax free infrastructure bonds for the projects in the rail, road and irrigation sectors.
- PPP mode of infrastructure development to be revisited and revitalised.
- Atal Innovation Mission (AIM) to be established in NTTI to provide Innovation Promotion Platform involving academicians, and drawing upon national and international experiences to foster a culture of innovation, research and development. A sum of Rs.150 crore will be earmarked.
- (SETU) Self-Employment and Talent Utilization to be established as Techno-financial, incubation and facilitation programme to support all aspects of start-up business. Rs.1000 crore to be set aside as initial amount in NITI.
- Ports in public sector will be encouraged, to corporatize, and become companies under the Companies Act to attract investment and leverage the huge land resources.
- 5 new Ultra Mega Power Projects, each of 4000MW, in the Plug-and-Play mode.
- Gold monetisation scheme to allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans n their metal account to be introduced.
- Sovereign Gold Bond, as an alternative to purchasing metal gold scheme to be developed.
- Commence work on developing an Indian Gold coin, which will carry Ashok Chakra on its face.
- Foreign investments in Alternate Investment Funds to be allowed.
- Distinction between different types of foreign portfolio investments and foreign direct investments to be done away with Replacement with composite caps.
- A project development company to facilitate setting up manufacturing hubs in CMLV countries, namely, Cambodia, Myanmar, Laos and Vietnam.
- Resources to be provided to start work along landscape restoration, signage and interpretation centres, parking, access for the differently able, visitors' amenities, including securities and toilets, illumination and plans for benefitting communities around them at various heritage sites.
- Visas on arrival to be increased at 150 countries in stages.
- Target of renewable energy capacity revised to 1,75,000 MW till 2022, comprising 1,00,000 MW Solar, 60,000 MW Wind, 10,000 MW Biomass and 5000 MW Small Hydro.
- Less than 5% of our potential work force gets format skill training to be employable. A national skill mission to consolidate skill initiatives spread across several ministries to be launched.
- Deen Dayal Upadhyay Gramin Kashal Yojana to enhance the employability of rural youth.
- A student Financial Aid Authority to administer ad monitor the front-end all scholarship as well Educational Loan Schemes, through the Pradham Mantri Vidya Lakshmi Karyakram.
- An IIT to be set up in Karnataka and Indian School of Mines, Dhanbad to be upgraded in to a full-fledged IIT.
- New All India Institute of Medical Science (AIIMS) to be set up in J&K, Punjab, Tamil Nadu, Himachal Pradesh and Assam. Another AIIMS like institutions to be set up in Bihar.
- A post graduate institute of Horticulture Research & Education in to be set up in Amritsar.
- 3 new National Institute of Pharmaceuticals Education and Research in Maharashtra, Rajasthan & Chhattisgarh and one institute of Science and Education Research is to be set up in Nagaland & Odisha each.
Important Tax Proposal
- No change in rate of personal income tax.
- Proposal to reduce corporate income tax from 30% to 25% over the next four years, starting from the next financial year.
- Rationalisation and removal of various tax exemptions and incentives to reduce tax disputes and improve administration.
- Exemption to individual tax payers to continue to facilitate savings.
- Rate of Income-tax on royalty and fee for technical services reduced from 25% to 10% to facilitate technology inflow.
- Wealth tax replaced with additional surcharge of 2% on super rich with a taxable income of over Rs.1 crore annually.
- General Anti-Avoidance Rule (GAAR) to be deferred by two years.
- GAAR to apply to investments made on or after 10.04.2017, when implemented.
- Education cess and the Secondary and Higher education cess to be subsumed in Central.
- Specific rates of central excise duty in case of certain other commodities revised
- Excise levy on cigarettes and the compounded levy scheme applicable to pan masala, gutkha and other tobacco products also changed.
- Excise duty on footwear with leather uppers and having retail price of more than Rs.1000 per pair reduced to 6%.
- Online central excise and service tax registration to be done in two working days.
- Time limit for taking CENVAT credit on inputs and input services increased from 6 months to 1 year.
- Service-tax plus education cesses increased from 12.36% to 14% to facilitate transition to GST.
- Donation made to National Fund for Control of Drug Abuse (NFCDA) to be eligible for 100% deduction u/s 80G of Income-tax Act.
- Basic Custom Duty on certain inputs, raw materials, intermediates and components in 22 items, reduced to minimise the impact if duty inversion.
- 100% deduction for contributions, other than by way of CSR contribution, to Swachh Bharat Kosh and Clean Ganga Fund.
- Clean energy cess increased from Rs.100 to Rs.200 per metric tonne of coal, etc. To finance clean environment initiatives.
- Excise duty on sacks and bags of polymers of ethylene other than for industrial use increased from 12% to 15%.