Highlights of Union Budget 2015-16

By | March 1, 2015
Highlights of Budget 2015-16

FISCAL DEFICIT:
* Fiscal deficit seen at 3.9 per cent of GDP in 2015/16
* Will meet the challenging fiscal target of 4.1 per cent of GDP
* Remain committed to meeting medium term fiscal deficit target of 3 per cent of GDP
* Current account deficit below 1.3 per cent of GDP
* Jaitley says have to keep fiscal discipline in mind despite need for higher investment

GROWTH:
* GDP growth seen at between 8 per cent and 8.5 per cent year on year
* Aiming double digit growth rate, achievable soon

INFLATION:
* Expects consumer inflation to remain close to 5 per cent by March, opening room for more monetary policy easing
* Monetary policy framework agreement with the RBI clearly states objective of keeping inflation below 6 per cent
* “One of the achievements of my government has been to conquer inflation. This decline in my view represents a structural shift.”

REVENUES:
* Revenue deficit seen at 2.8 percent of GDP
* Non tax revenue seen at Rs. 2.21 lakh crore
* Agricultural incomes are under stress

MARKET REFORMS:
* Propose to merge commodities regulator with SEBI
* To bring a new bankruptcy code
* Jaitley says will move to amend the RBI act this year, and provide for a monetary policy committee
* To set up public debt management agency
* Proposes to introduce a public contract resolution of disputes bill
* To establish an autonomous bank board bureau to improve management of public sector banks

POLICY REFORMS:
* To enact a comprehensive new law on black money
* Propose to create a universal social security system for all Indians
* To launch a national skills mission soon to enhance employability of rural youth
* To raise visa-on-arrival facility to 150 countries from 43
* Allocates Rs. 34,699 crore for rural employment guarantee scheme

TAXATION:
* To abolish wealth tax
* Replaces wealth tax with additional 2 pct sur charge on super rich
* Proposes to cut to 25 per cent corporate tax over next 4 years
* Corporate tax of 30 per cent is uncompetitive
* Government defers rollout of anti-tax avoidance rules GAAR by two years
* GAAR to apply prospectively from April 1, 2017
* Retrospective tax provisions will be avoided
* Jaitley proposes modification of permanent establishment norms so that the mere presence of a fund manager in India would not constitute a permanent establishment of the offshore fund, resulting in adverse tax consequences.
* Proposes to rationalise capital gains tax regime for real estate investment trusts
* Expects to implement goods and services tax by April 2016
* To reduce custom duty on 22 items
* Proposes to increase service tax rate and education cess to 14 percent from 12.36 percent
* Plans to introduce direct tax regime that is internationally competitive on rates without exemptions
* Exemptions for individual tax payers to continue
* To enact tough penalties for tax evasion in new bill
* Tax dept to clarify indirect transfer of assets and dividend paid by foreign firms

INFRASTRUCTURE:
* Investment in infrastructure will go up by Rs. 70,000 crore in 2015-16 over last year
* Plans to set up national investment infrastructure fund
* Proposes tax-free infrastructure bonds for projects in roads, rail and irrigation projects
* Proposes 5 “ultra mega” power projects for 4,000 MW each
* Second unit of Kudankulam nuclear power station to be commissioned
* Will need to build additional 100,000 km of road
* Ports in public sector will be encouraged to corporatise under Companies Act

EXPENDITURE:
* Plan expenditure estimated at about Rs. 4.65 lakh crore
* Non-plan expenditure seen at about Rs. 13.12 lakh crore
* Allocates Rs. 2.46 lakh crore for defence spending
* Allocates Rs. 33,150 crore for health sector
* If revenue improves, hope to raise budgeted allocations for rural job scheme by Rs. 5,000 crore

INVESTMENT:
* Propose to do away with different types of foreign investment caps and replace them with composite caps
* To allow foreign investment in alternative investment funds
* Public investment needed to catalyse investment

GOLD:
* To develop a sovereign gold bond
* To introduce gold monetisation scheme to allow depositors to earn interest
* To introduce Indian-made gold coin to reduce demand for foreign gold coins


SUBSIDIES:
* We are committed to subsidy rationalisation based on cutting leakages

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