Tuesday, 1 March 2016

UNION BUDGET 2016-17 HIGHLIGHTS

 Introduction :
  • Growth of Economy accelerated to 7.6% in 2015-16.
  •  India hailed as a ‘bright spot’ amidst a slowing global economy by IMF. Robust growth achieved despite very unfavourable global conditions and two consecutive years shortfall in monsoon by 13%.
  •  Foreign exchange reserves touched highest ever level of about 350 billion US dollars. Despite increased devolution to States by 55% as a result of the 14th Finance Commission award, plan expenditure increased at RE stage in 2015-16 – in contrast to earlier years.
Nine Pillars of the Budget :
1. Governance,
2. Ease of doing business,
3. Fiscal discipline,
4. Tax reforms,
5. Agriculture and farmers welfare ,
6. Rural sector with focus on employment ,
7. Social sector with healthcare ,
8. Educational skills and job creation ,
9. Infrastrucuture and investment and financial sector reforms are the nine pillars on which the budget has been prepared.

Challenges in 2016-17 :
1. Risks of further global slowdown and turbulence.
2. Additional fiscal burden due to 7th Central Pay Commission recommendations and OROP.

Roadmap & priorities :
1. 'Transform India' to have a significant impact on economy and lives of people.
2. Government to focus on –
   a. ensuring macro-economic stability and prudent fiscal management.
   b. boosting on domestic demand
   c. continuing with the pace of economic reforms and policy initiatives to change the lives of our people for the better.
3 Focus on enhancing expenditure in priority areas of ­ farm and rural sector, social sector, infrastructure sector employment generation and recapitalisation of the banks.
4 Focus on Vulnerable sections through:
   a. Pradhan Mantri Fasal Bima Yojana
   b. New health insurance scheme to protect against hospitalisation expenditure
   c. facility of cooking gas connection for BPL families
5. Continue with the ongoing reform programme and ensure passage of the Goods and Service Tax bill and Insolvency and Bankruptcy law
6. Undertake important reforms by:
   a. giving a statutory backing to AADHAR platform to ensure benefits reach the deserving.
   b. freeing the transport sector from constraints and restrictions
   c. incentivising gas discovery and exploration by providing calibrated  marketing freedom.
   d. enactment of a comprehensive law to deal with resolution of financial firms
   e. provide legal framework for dispute resolution and re-negotiations in PPP projects  and public utility contracts.
   f. undertake important banking sector reforms and public listing of general insurance companies undertake significant changes in FDI policy. 


Agriculture and farmers' welfare :
1. Allocation for Agriculture and Farmers' welfare is Rs 35,984 crore.
2. 'Pradhan Mantri Krishi Sinchai Yojana' to be implemented in mission mode. 28.5 lakh hectares will be brought under irrigation.
3. Implementation of 89 irrigation projects under AIBP, which are languishing for a long time, will be fast tracked.
4. A dedicated Long Term Irrigation Fund will be created in NABARD with an initial corpus of about Rs 20,000 crore.
5. Programme for sustainable management of ground water resources with an estimated cost of Rs 6,000 crore will be implemented through multilateral funding.
6. 5 lakh farm ponds and dug wells in rain fed areas and 10 lakh compost pits for production of organic manure will be taken up under MGNREGA.
7. Soil Health Card scheme will cover all 14 crore farm holdings by March 2017.
8. 2,000 model retail outlets of Fertilizer companies will be provided with soil and seed testing facilities during the next three years.
9. Promote organic farming through 'Parmparagat Krishi Vikas Yojana' and 'Organic Value Chain Development in North East Region'.
10. Allocation under Pradhan Mantri Gram Sadak Yojana increased to Rs 19,000 crore, Will connect remaining 65,000 eligible habitations by 2019.
11. To reduce the burden of loan repayment on farmers, a provision of Rs 15,000 crore has been made in the BE 2016­17 towards interest subvention
12. Allocation under Prime Minister Fasal Bima Yojana Rs 5,500 crore.
13. Rs 850 crore for four dairying projects ­ 'Pashudhan Sanjivani', 'Nakul Swasthya Patra', 'E­Pashudhan Haat' and National Genomic Centre for indigenous breeds.

Rural sector :
1. Allocation for rural sector ­ Rs 87,765 crore.
2. Rs 2.87 lakh crore will be given as Grant in Aid to Gram Panchayats and Municipalities as per the recommendations of the 14th Finance Commission.
3. Every block under drought and rural distress will be taken up as an intensive Block under the Deen Dayal Antyodaya Mission.
4. A sum of Rs 38,500 crore allocated for MGNREGA for 2016-17.
5. 300 Rurban Clusters will be developed under the Shyama Prasad Mukherjee Rurban Mission.
6. 100 % village electrification by 1st May, 2018.
7. District Level Committees under Chairmanship of senior most Lok Sabha MP from the district for monitoring and implementation of designated Central Sector and Centrally Sponsored Schemes.
8. Priority allocation from Centrally Sponsored Schemes to be made to reward villages that have become free from open defecation.
9. A new Digital Literacy Mission Scheme for rural India to cover around 6 crore additional household within the next 3 years.
10. National Land Record Modernisation Programme has been revamped. 

11. New scheme Rashtriya Gram Swaraj Abhiyan proposed with allocation of Rs 655 crore.

Education, skills and job creation :
1. 62 new Navodaya Vidyalayas will be opened
2. Sarva Shiksha Abhiyan to increasing focus on quality of education
3. Regulatory architecture to be provided to ten public and ten private institutions to emerge as world­class Teaching and Research Institutions
4. Higher Education Financing Agency to be set­up with initial capital base of Rs 1000 Crores.
5. Digital Depository for School Leaving Certificates, College Degrees, Academic Awards and Mark sheets to be set­up.

Skill development : 

1. Allocation for skill development ­ Rs 1804 crore.
2. 1500 Multi Skill Training Institutes to be set­up.
3. National Board for Skill Development Certification to be setup in partnership with the industry and academia.
4. Entrepreneurship Education and Training through Massive Open Online Courses.

Job creation :
1. GoI will pay contribution of 8.33 per cent for of all new employees enrolling in EPFO for the first three years of their employment. Budget provision of Rs 1000 crore for this scheme.
2. Deduction under Section 80JJAA of the Income Tax Act will be available to all assesses
who are subject to statutory audit under the Act.
3. 100 Model Career Centres to operational by the end of 2016­17 under National Career
Service.
4. Model Shops and Establishments Bill to be circulated to States.

Infrastructure and investment :
1. Rs. 27,000 crore to be spent on roadways.
2. 65 eligible habitats to be connected via 2.23 lakh kms of road. Current construction pace is 100 kms/day
3. Shops to be given option to remain open all seven days in a week across markets.
4.  Rs. 55,000 crore for roads and highways. Total allocation for road construction, including PMGSY, - Rs 97,000 crore
5. India's highest-ever production of motor vehicles was recorded in 2015
6. Total outlay for infrastructure in Budget 2016 now stands at Rs. 2,21,246 crore
7. New greenfield ports to be developed on east and west coasts
8. Revival of underserved airports. Centre to Partner with States to revive small airports for regional connectivity.
9. 100 per cent FDI in marketing of food products produced and marketed in India
10. Dept. of Disinvestment to be renamed as Dept. of Investment and Public Asset Management
11. Govt will amend Motor Vehicle Act in passenger vehicle segment to allow innovation.
12. MAT will be applicable for startups that qualify for 100 per cent tax exemption
13. Direct tax proposals result in revenue loss of Rs.1060 crore, indirect tax proposals result in gain of Rs.20,670 crore

Tax :
1. Infrastructure and agriculture cess to be levied.
2. Excise duty raised from 10 to 15 per cent on tobacco products other than beedis.
3. 1 % service charge on purchase of luxury cars over Rs. 10 lakh and in-cash purchase of goods and services over Rs. 2 lakh.
4. SUVs, Luxury cars to be more expensive. 4% high capacity tax for SUVs.
5. Companies with revenue less than Rs 5 crore to be taxed at 29% plus surcharge
6. Limited tax compliance window from Jun 1 - Sep 30 for declaring undisclosed income at 45% incl. surcharge and penalties.
7. Excise 1 % imposed on articles of jewellery, excluding silver.
8. 0.5 per cent Krishi Kalyan Cess to be levied on all services.
9. Pollution cess of 1 % on small petrol, LPG and CNG cars; 2.5 per cent on diesel cars of certain specifications; 4 % on higher-end models.
10. Dividend in excess of Rs. 10 lakh per annum to be taxed at additional 10 per cent.

Personal Finance :
1. No changes have been made to existing income tax slabs.
2. Rs 1,000 crore allocated for new EPF (Employees' Provident Fund) scheme.
3. Govt. will pay EPF contribution of 8.33% for all new employees for first three years
4. Deduction for rent paid will be raised from Rs 20,000 to Rs 60,000 to benefit those living in rented houses.

5.Additional exemption of Rs. 50,000 for housing loans up to Rs. 35 lakh, provided cost of house is not above Rs. 50 lakh.
6. Service tax exempted for housing construction of houses less than 60 sq. m
7. 15 per cent surcharge on income above Rs. 1 crore 


Social :
1. Rs. 38,500 crore for Mahtma Gandhi MGNREGA for 2016-17.
2. Swacch Bharat Abhiyan allocated Rs.9,500 crores.
3. Hub to support SC/ST entrpreneurs.
4. Government is launching a new initiative to provide cooking gas to BPL families with state support.
5. LPG connections to be provided under the name of women members of family: Rs 2000 crore allocated for 5 years for BPL families.
6. 2.87 lakh crore grants to gram panchayats and municipalities - a quantum jump of 228%.
7. 300 urban clusters to be set up under Shyama Prasad Mukherji Rurban Mission.
8.  Four schemes for animal welfare.

Health :

1. 2.2 lakh renal patients added every year in India. Basic dialysis equipment gets some relief.
2. A new health protection scheme for health cover upto 1 lakh per family.
3. National Dialysis Service Prog with funds thru PPP mode to provide dialysis at all district hospitals.
4. Senior citizens will get additional healthcare cover of Rs 30,000 under the new scheme
5. PM Jan Aushadhi Yojana to be strengthened, 300 generic drug store to be opened

Energy :

1. Rs. 3000 crore earmarked for nuclear power generation
2. Govt drawing comprehensive plan to be implemented in next 15-20 years for exploiting nuclear energy.
3. Govt to provide incentive for deepwater gas exploration.
4. Deepwater gas new disc to get calibrated market freedom, pre-determined ceiling price based on landed price of alternate fuels.



Banking :
1. Banks get a big boost: Rs 25,000 crore towards recapitalisation of public sector banks. Jaitley says:
 Banking Board Bureau will be operationalised, we stand solidly behind public sector banks.
2. Target of disbursement under MUDRA increased to 1,80,000 crore.
3. Process of transfer of government stake in IDBI Bank below 50% started.
4. General Insurance companies will be listed in the stock exchange.
5. Govt to increase ATMs, micro-ATMs in post offices in next three years.
 

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