Wednesday, March 21, 2018

Highlights of the Union Budget for 2018-19

Introductory Remarks
Budget 2018-19 reflects the Government’s firm commitment to substantially boost investment in Agriculture, Social Sector, Digital Payments, Infrastructure and Employment Generation on the one hand and simultaneously stick to the path of fiscal rectitude by aiming for a reduction of fiscal deficit by 0.2% of GDP over RE 2017-18.

Fiscal situation
  • Fiscal deficit target for 2018-19 at 3.3% of GDP to accommodate higher demand for expenditure against the earlier target of 3%. Revised deficit target for the year ending in March 2018 is 3.5% of GDP from the targeted 3.2%. Revenue deficit shot up to 2.6% of GDP in 2017-18 from the budget estimate of 1.9% of GDP (as receiving GST revenue for 11 months in 2017-18 led to a shortfall of Rs.50,000 crore).
  • Aims to reduce its debt-to-GDP ratio to 48.8% in 2018-19, 46.7% in 2019-20 and 44.6% in 2020-21. Nominal GDP for BE 2018-2019 has been projected at Rs. 18722302 crore assuming 11.5% growth over the estimated GDP of Rs. 16784679 crore for 2017-18 (RE).
  • Revenue receipts budgeted at Rs. 1725738 crores for 2018-19 against a BE of Rs. 1515771 and RE of Rs. 1505428 crore for 2017-18. Centre’s tax revenues at Rs. 1480649 crore in BE 2018-19 against a BE of Rs. 1227014 crore and RE of Rs.1269454 crore in 2017-18. Non- tax revenues at Rs. 245089 crore in BE 2018-19 against a BE of Rs. 288757 crore and RE of Rs. 235974 crore in 2017-18.
  • Total expenditure is budgeted at Rs. 2442213 crore for 2018-19 as against a BE of Rs. 2146735 crore and RE of Rs. 2217750 crore in 2017-18.
  • BE of Expenditure for 2018-19 show an increase of Rs. 2,24,463 crore over the RE 2017-18. Increases have occurred for higher —compensation to States and UTs for revenue loss on roll out of GST; payment of interest under Market loans; food subsidy under National Food Security Act; Defence, Civil and pensions payable to erstwhile employees of Department of Telecommunications, absorbed in Bharat Sanchar Nigam Limited; outlays provided for investment in Indian Railways, School Education and Literacy, Higher Education Financing Agency, Atomic Energy Industries and Construction of roads; capital expenditure of Defence Services; higher requirement by Central Armed Police Forces; provision made for Pradhan Mantri Swasthya Suraksha Yojana.
  • Borrowings and Other Liabilities estimated at Rs. 624276 crore in BE of 2018-19 as against a BE of Rs. 546531 crore and RE of Rs. 594849 crore in 2017-18.
  • Total resources going to States including the devolution of State’s share in taxes, Grants/Loans, and releases under Centrally Sponsored Schemes in BE (2018-19) is Rs.12,69,435 crore, with a jump of Rs. 1,53,558 crore over RE (2017-18) and Rs. 2,83,760 crore more than the Actuals (2016-17).
  • Disinvestment target for this year set at ₹80,000 crore.

Tax proposals

Personal income tax
  • No changes in personal income tax slabs.
  • Salaried tax-payers to get a standard deduction of Rs. 40,000 in lieu of transport allowance and "other medical expenses".
  • All senior citizens will now be able to claim benefit of a deduction of Rs. 50,000 for any medical insurance.
  • For critical illnesses, the deduction has been increased to Rs. 1,00,000.
  • Govt. will contribute 12% of the wages of new employees in EPF in all sectors for next 3 years. Women’s contribution to EPF reduced to 8% for first 3 years
  • 2,000-crore fund for development of agri markets.
  • Free power connections to 4 crore homes under Saubhagya Yojana. Rs. 16000 crore under this scheme
  • Eight crore free gas connections for poor women through Ujjwala Yojana.
  • Govt. to implement minimum support price for all crops; It is hiked to 1.5 times of production costs.
  • New flagship National Health Protection Scheme, providing a health insurance cover of ₹5 lakh per family per year announced.
  • Automatic revision of emoluments parliamentarians every five years, pegged to inflation.
  • develop and upgrade existing 22,000 rural haats into Gramin Agricultural Markets (GrAMs). In these GrAMs, physical infrastructure will be strengthened using MGNREGA and other Government Schemes. These GrAMs, electronically linked to e-NAM and exempted from regulations of APMCs, will provide farmers facility to make direct sale to consumers and bulk purchasers.
  • Organic farming in large clusters, preferably of 1000 hectares each, will be encouraged.
  • Allocation of Ministry of Food Processing is being doubled from `715 crore in RE 2017-18 to `1400 crore in BE 2018-19.
  • Rs. 500 crore ‘‘Operation Greens’’ to promote Farmer Producers Organizations (FPOs), agri-logistics, processing facilities and professional management.
  • Export of agricommodities to be liberalized. state-of-the-art testing facilities in 42 Mega Food Parks to be set up.
  • Volume of institutional credit for agriculture sector raised to Rs. 11 trillion for the year 2018-19 from Rs. 10 trllion in 2017-18.

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