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Union Budget 2017-18: Key Highlights

Here are the key highlights of finance minister Arun Jaitley’s Union budget speech

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India will ramp up spending on rural areas, infrastructure and fighting poverty, Finance Minister Arun Jaitley said as he unveiled his annual budget on Wednesday (February 01), adding the impact on growth from the government's cash crackdown would wear off soon.

Addressing Parliament, Jaitley called his fourth budget one for the poor. Yet, while vowing prudent fiscal management, he also raised his 2017-18 federal deficit target to 3.2 per cent of gross domestic product to cover his spending promises.

Here are the highlights of Jaitley's budget for the 2017/18 fiscal year that begins on April 1.

FISCAL DEFICIT

* Projects 2017/18 fiscal deficit at 3.2 per cent of GDP

* Government remains committed to 2018-19 fiscal deficit at 3 per cent of GDP

* The 2017-18 budget seeks to pursue prudent fiscal management to preserve financial stability

GROWTH

* Jaitley says India seen as an engine of global growth

EXPENDITURE

* Estimates 2017-18 total expenditure at Rs 21.47 trillion

* Capital spending raised by 25.4 per cent on year in 2017-18

BORROWING

* 2017-18 net market borrowing estimated at Rs 3.48 trillion 

* 2017-18 gross market borrowing seen at Rs 6.05 trillion

* Government to switch Rs 25,000 crore of bonds in 2017-18

INFLATION

* Consumer price index inflation is expected to remain within the central bank's mandated range of 2 to 6 per cent

DEMONETISATION

* Demonetisation "a bold and decisive measure", will make GDP bigger and lead to higher tax revenues - finance minister

* Hit to economy from government decision to outlaw high-denomination notes will be "transient", effects of demonetisation not expected to spill over to next year

* Pace of remonetisation has picked up and will soon reach comfortable levels

* No transaction above Rs 300,000 to be permitted in cash

* Surplus money in the banking system will lower borrowing costs, increase credit flow

TAXATION

* 2017-18 total tax revenue seen at Rs 12.27 trillion

* 2017-18 total revenue receipts seen at Rs 15.16 trillion

* Proposes cuts in personal income tax for those at bottom end of income scale

* Proposes to reduce income tax rate for medium and small enterprises with annual turnover up to Rs 500 million to 25 per cent

* Extends relaxation on withholding tax on foreign investor's interest income from debt until June 30, 2020

* Proposes change in capital gains tax in real estate, land

AGRICULTURE


* With a better monsoon agriculture is expected to grow at 4.1 per cent in 2016-17

* Agricultural credit target fixed at Rs 10 trillion ($147.88 billion) for 2017/18

* Long-term irrigation fund allocated Rs 40,000 crore

* Allocates Rs 8,000 crore for milk processing over 3 years

* Farm insurance to cover 40 per cent of net sown area, up from 30 per cent last year

* Modern law on contract farming will be drafted and circulated to states

INFRASTRUCTURE

* Allocates Rs 3.96 trillion for infrastructure in 2017-18

* Allocates Rs 2.41 trillion for transport sector in 2017-18

* Proposes Rs 64,000 crore investments in national and state highways in 2017-18

FOREIGN INVESTMENT


* Decides to abolish foreign investment promotion board

* To exempt some foreign investors from indirect transfer provisions

BANKING

* The government to provide already planned Rs 10,000 crore capital infusion to state-run banks in 2017-18

* Proposes to raise allowable provision for bad loans in banks to 8.5 per cent from 7.5 per cent

* To introduce legislation changes for confiscating assets of economic offenders

DEFENCE

* 2017-18 defence expenditure excluding pensions estimated at Rs 2.74 trillion

* Defence capital outlay at Rs 86,488 crore

DIVESTMENT

* Total disinvestment target Rs 72,500 crore in 2017-18

* Proposes revised mechanism for time bound listing of public sector companies

RURAL SPENDING

* Allocation for rural, agriculture and allied areas to increase by 24 per cent to Rs 1.87 trillion

* Allocates Rs 48,000 crore to rural jobs scheme in 2017-18, versus a revised estimate of Rs 47,000 crore in the current fiscal year

* Allocates Rs 19,000 crore for rural road scheme in 2017-18

* On course to complete 100 per cent electrification by May 1, 2018, allocating Rs 4,800 crore for rural electrification scheme

RAILWAYS

* Proposes to invest Rs 1.31 trillion in railways in 2017-18; budget 2017-18 allocates Rs 55,000 crore for railways

* Dedicated railway safety fund of Rs 1 trillion over next five years

* 3,500 kms of railway lines to be commissioned in 2017-18 as against 2,800 km in 2016-17

* Transformative measures have to be taken to make Indian railways competitive

* Railways to withdraw service charges on online booking of tickets

LABOUR

* Legislative reforms to be undertaken to simplify, rationalise existing labour laws

MANUFACTURING AND TRADE

* Taking steps to make India a global hub for electronics manufacturing; received over 250,000 proposals last year with an investment value of Rs 1.26 trillion

* Announces new trade infrastructure export scheme

WELFARE SPENDING

* India to spend more in rural areas, infrastructure and poverty alleviation

* The government will continue process of economic reforms for the benefit of the poor

* To allocate Rs 4,000 crore for market-relevant training for youth

* Total allocation for women and children welfare set at Rs 1.84 trillion

* To double lending target under Mudra Yojana (Micro Units Development and Refinance Agency) to Rs 2.44 trillion

* Airports Authority of India to monetize land around certain Tier 2 airports, use funds to upgrade airports

COMMODITIES

* To set up two more strategic oil storage in 2 states; proposes to create integrated oil company

* Halves import tax on LNG to 2.5 per cent

* To integrate stock and derivative markets for commodities trading

POLITICAL PARTY FUNDING

* Political transparency in political party funding; parties will need to file income tax returns

* Proposes to amend central bank act for issue of electoral bonds for political funding

* Proposes to limit maximum individual donation at Rs 2000 in cash for political funding

HOUSING


* National housing bank to provide Rs 20,000 crore for housing loans

* Affordable housing to be given infrastructure status

* Long-term capital gains tax on immovable property to be levied after 2 years instead of 3 years

FINANCE MINISTER'S COMMENTS

* "India stands out as a bright spot in the world economic landscape."

* "My approach in preparing the budget is to spend more on rural areas, infrastructure and poverty alleviation with fiscal prudence."

* "Signs of retreat from globalization have potential to affect exports from many emerging economies, including India."

* "One of the thrust areas of my tax proposals is to stimulate growth, give relief to the middle class, (promote) affordable housing, curb black money, bring transparency in political funding and simplify tax administration."

(Reuters)