The Hon. Finance Minister of India, Shri Arun Jaitley, just announced the Union budget for FY 2018-19. With the Central Government elections slated to happen next year, it was largely expected to be a populist budget. However, the key was to maintain a balance between fiscal prudence (ensuring the fiscal deficit does not go out of hand) and that the voting community gets something more than usual.
The budget focused on key elements of agriculture and rural economy – with focus on the doubling of farmers income and providing clean healthy living conditions for the rural populace. There was also focus on health and education, infrastructure, and financial services. Within infrastructure, the FM spoke about increased investments in the road sector, modernisation of rail stations, and modernisation of tolling systems. As always, considerable allocations have been made to the defence sector.
The government has shown continued commitment to ease-of-doing business in India and creates a list of aspects that each state government needs to work on to improve this working environment. There were announcements concerning the review of overseas investments’ regulations and the treatment of hybrid instruments for foreign direct investment (FDI); this should specifically help companies in the start-up ecosystem.
For tax proposals, keys takeaways are the reduced corporate tax rate to 25% for companies with a turnover less than Rs 250 crores (USD 40mn), standard deduction of Rs.40,000 for salaried professionals, incentives for senior citizens, introduction of tax on long term capital gains, and the increase in the cess rate from 3% to 4%. One key announcement was the complete movement to electronic assessments thus resulting in a reduction in the interface between taxpayer and tax officers.
From ease of doing business of India, the budget of 2018 moved to ease of living. Budget 2018 concentrated largely on agriculture sector, rural sector, women and senior citizens, infrastructure creation and education sector.
- Hon’ble FM considered Agriculture as an enterprise promised to double to income of the farmers, simultaneously concentrating on agriculture infrastructure, and operation green.
- Under healthcare sector, Hon’ble FM introduced flagship project of national health protection scheme wherein Rs. 5 Lac per family shall be allocated for hospitalization which will benefit 50 crore people. Further, promising 24 now medical colleges to hospitals, social security and protection.
- Emphasizing on importance of education, FM promised new schools of planning and architecture, digitalization and allotment of Rs. 1 lac crores to infrastructure for education.
- Budget included commitment for urbanisation and smart city mission, concentrating on 100 new smart cities and national heritage cities.
- MSME sector was also not left far behind from online loan sanctioning, measures for NPAs, to reduction in corporate tax.