Interim Finance Minister Piyush Goyal has announced the much awaited Interim Budget with an eye on the upcoming general elections. On expected lines the budget set out to appease the lower and middle class, the salaried section of society and farmers. With tax breaks to the middle-class and cash handouts to farmers, this budget is indeed populist in nature and comes just months before the Lok Sabha elections.
Tax sops formed the backbone of the budget with Finance Minister Piyush Goyal announcing a major Income Tax benefit in the form of full tax rebate for income up to Rs 5,00,000 per annum, thereby doubling the limit from the previous Rs 2,50,000 per annum. This exercise is expected to benefit around 3 crore taxpayers and will entail a total of Rs 18,500 crore worth of benefit.
The standard deduction was raised from Rs 40,000 for salaried persons to Rs 50,000 per year.
Exemption limit for TDS for interest on savings bank account, post office savings account etc. was increased 4 fold from Rs 10,000 to Rs 40,000.
Further Income tax benefits focusing on self occupied properties and Capital gains u/s 54 were also announced.
An important macro-economic related announcement was the Fiscal Deficit target. The fiscal deficit target of 3.3% of GDP for the year was missed and a revised estimate of 3.4% of GDP has been provided.
Another important element of the budget this time around was centered around the agricultural sector and appeasement of farmers. Therefore, it came as no surprise when a massive income support scheme that entails an outlay of Rs 75,000 crore was announced. Under this scheme, a direct income support for small and marginal farmers that own less than 2 hectares of land was announced. Eligible farmers will receive Rs 6,000 each in 3 installments that will directly be transferred to their accounts. This scheme is set to benefit 12 crore farmers.
Further, farmers struck by natural calamities will now receive an interest subvention of 2% and for timely payment they will be entitled to a further 3%.
A budgeted amount of Rs 60,000 crore being the highest ever, was announced under the government’s flagship Mahatma Gandhi National Rural Employment Guarantee Scheme aimed at providing employment to rural sector.
The unorganised employment sector was given a big relief on announcement of a mega Pension Scheme. Under this scheme, workers in the unorganised sector earning salary up to Rs 15,000 per month and being above 60 years of age will receive a guaranteed pension of Rs 3,000 per month. 10 crore workers are expected to benefit from this scheme.
Completion of 8 crore free LPG connections under the Ujjwala Yojana scheme by next year was promised. An allocation of Rs 3,00,000 crore was set aside as the Defense budget. Playing to the middle class, no hike in passenger fare and freight charges were announced and this budget saw the Finance Minister announce the highest ever capital expenditure totaling Rs 1,58,658 crore for Indian Railways.
Further, an announcement of a 10 point vision plan for the next 10 years of growth was made including building physical and social infrastructure for a 10 trillion $ economy, promoting digital India initiative, making India pollution free, cleaning rivers, generating employment, developing space program, encouraging self sufficiency, production and export of food items etc.
The Finance Minister emphasised the Modi Government’s commitment towards fighting corruption and mentioned the enactment of 3 important acts during the incumbent NDA government’s regime which were the RERA Act, The Benami Properties Act and the Fugitive Economic Offenders Act. A special mention of 1,30,000 crore Rs of unaccounted money being brought to book was also announced.
Piyush Goyal also reiterated that India is the fastest growing major economy in the world and is on track to be a 5 trillion $ economy in the next 5 years and a 10 trillion $ economy in the next 8 years.
Also mentioned were the Infrastructural and Banking achievements of the NDA government during its 5 year reign including the fact that India is the fastest highway developer in the world with 27 kms per day of highways being built. The Insolvency & Bankruptcy Code has ushered in a new era of banking reforms and the Finance Minister made a claim that close to Rs 3,00,000 crore of bad loans have been recovered so far.