So, were our expectations met ? (Click here to read the expectations we set from this budget http://edtimes.in/2015/02/inside-the-fms-briefcase-budget-2015.html)
Taking the India story forward, Finance Bill 2015-16 presented in the Parliament this morning was more than just satisfying. Mr. Arun Jaitley, presenting the first full budget of the BJP led Central Government, made sure that the future projections of country’s financials touched and heeled as many nerves of the economy as possible.
Even the PM welcomed the budget as one with a clear vision which is progressive, positive, practical, pragmatic and prudent.
Firing all the cylinders of the economy is the need of the hour, and due impetus has been given to the same. Before moving on to the formal nitty gritties, it’s important to appreciate that the budget is a medium not only to showcase the direction and might of the country but it also serves as an opportunity to lay out a red carpet for foreign investors to come in and participate in the India story.
Budget estimates FY 15-16
Non-Plan expenditure is estimated at Rs. 13,12,220 crore and Plan expenditure is estimated to be Rs. 4,65,277 crore. Total Expenditure has accordingly been estimated at Rs. 17,77,477 crore. Gross Tax receipts are estimated to be Rs. 14,49,490 crore. Devolution to the States is estimated to be Rs. 5,23,958 crore. Share of Central Government will be Rs. 9,19,842 crore. Non Tax Revenues for the next fiscal are estimated to be Rs. 2,21,733 crore.
So what’s in it for the industry, the global investments seekers, for you and me ? Let’s take it up one by one –
1) Macro-economic indicators-
With estimations for GDP growth coming in pre-2008 levels at 8% and Fiscal deficit expected to come down to 3.6% this FY, the picture presented comes across to be too rosy to be believed. With m-o-m WPI reaching next to 0 last November, and CPI expected to fall down to 5%, the targets set are ambitious. However, if stock markets are anything to go by, India has full support of the investor community.
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Budget at a glance: Fiscal trends
2) Boost to the Manufacturing and Capital Investment-
An array of measures have been introduces to cheer up India Inc. From the promise to cut down on the corporation tax from 30% to 25% over next 4 years to bringing in a complete overhaul in both direct tax (through Direct Tax Code) and indirect tax (through GST- with it’s possible introduction by April 1, 2016), from steep increase in outlays towards roads and railways to revamping of the PPP mode of infrastructure, from setting up 5 Ultra Mega Power Projects, each of 4000 MW, and deferring GAAR by 2 years to eliminating MAT for FII’s. The Govt. has done much to show its support to the industry.
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Making Make in India a reality
Aimed at harnessing the manufacturing prowess of India, a number of schemes have been proposed. National Investment and Infrastructure Fund (NIIF), is planned to be established with an annual flow of 20,000 crores to it. Tax free infrastructure bonds for the projects in the rail, road and irrigation sectors and monetising physical gold through gold bonds are a few measures for turning latent assets into productive ones.
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Infrastructure is the key to growth
3) Sops for the Aam Aadmi
The budget has brought with it a number of tax exemptions and deductions. Although, the basic slabs remain unchanged, the wealth tax has been abolished (albeit with a 2% surcharge on individuals with income of over 1 crores). Limit of deduction of health insurance premium increased from Rs. 15,000 to Rs. 25,000. An additional deduction of Rs. 50,000 has been implemented for contribution to the new pension scheme u/s 80CCD. Transport allowance exemption has been increased from Rs.800 to Rs.1,600 per month. The hole in the pocket will be caused due to the increase in Service Tax rate from 12.36% to 14%. Strict measures now stand enforced on those concealing their income, from a penalty of 300% of the tax amount to a maximum of 10 years of rigorous imprisonment, the state is in full mood to tame the monster of black money
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Tax breaks for everyone: Upholding “Sabka Saath Sabka Vikas”
4) Clean India Initiative –
Swachh Bharat Campaign is not only a programme to improve hygiene and cleanliness but has become a revolution and provides India with a second go at becoming a healthy nation. The Budget provides for a 100% deduction for contributions, other than by way of CSR contribution, to Swachh Bharat Kosh and Clean Ganga Fund. Excise duty on sacks and bags of polymers of ethylene other than for industrial use increased from 12% to 15%. Concessions on custom and excise duty available to electrically operated vehicles and hybrid vehicles stand applicable upto March 31, 2016.
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Swachh Bharat Shreshtha Bharat
Conclusion –
The budget while bring progressive towards the industry and its citizens, has still left us wanting for more. A greater thrust and clear roadmap towards digitalisation, renewable energy and start-ups could have made it a game-changer. But, still the budget has lived up to the expectations.
Taking handover of a dysfunctional state bugged with hurdles, and finances of the country in doldrums, the last nine months were spent on building a foundation for accelerating on the future growth trajectory. With a leader bent on taking this nation forward, India finds itself in a sweet spot. As an emerging country, there are umpteenth opportunities in sight, all we need to do is put our heads together and move forward. Time starts now…
