Budget 2018 Highlights – A Roti, Kapda & Kisaan Proposition

Pramit Pratim Ghosh |Updated on: August 24, 2021

1^st of February indeed turned out to be a landmark day in Indian Economy. Not only did this day witness the rollout of the e-way bill (and unfortunately the deferment of the same as well), but also the first ever budget to be announced in the GST era – Budget 2018.

Finance Minister Mr. Arun Jaitley started off Budget 2018 on a positive note, as he started off with the promise that India will become the 5^th largest economy very soon. Not only does the government estimate a 7.2-7.5% GDP growth in the second half of the current fiscal year, but also a steady growth rate of 7.5% over the next 3 years. With the fiscal deficit estimated to drop to 3.3% in FY 2018-19 from the current 3.5% in FY 2017-18, exports to grow by 15% and the manufacturing sector on track, the economy surely is on the right track, and that was what was highlighted in the Budget 2018 updates.

Major Budget 2018 highlights:

Agriculture

• Farmers’ income to be doubled by 2020
• Farmers’ Minimum Support Price (MSP) to be increased to 1.5 times
• Centres for Direct Sales to be opened for farmers
• Farm Credit to be increased by 10% to INR 11 Lakh Crore
• INR 2,000 Crore to be allocated to the Agricultural Development Corpus
• INR 500 Crore to be allocated to Operation Green – a new mission to take the agricultural sector forward
• Agricultural Exports to be liberalised
• Allocations in Krishi Yojana and Food Processing to be doubled
• INR 10,000 Crore to be allocated to fisheries

Rural Economy

• 8 Crore women to get free gas connection
• 2 Crore toilets to be built as part of Swachch Bharat campaign
• 51 Lakh new houses to be constructed
• 75 Crore houses to get power
• INR 12.34 Lakh Crore to be allocated for rural infrastructure and housing
• Loans to rural self-help groups to be increased

Education

• INR 1 Lakh Crore to be allocated to RISE – an education initiative to be started and to be completed by 2022
• Eklavya Schools to be set up in each block with substantial population of Scheduled Tribes
• PM Research Fellowship Programme to identify 1000 B. Tech. students each year, who will be provided grants and opportunities to pursue in IITs and IISc, while also teaching undergraduate students once a week at that time
• New Rail University to be set up in Vadodara
• 13 Lakh untrained teachers to get trained
• Initiatives will be explored to move towards digital education

Healthcare

• INR 1,200 Crore to be allocated for the Aayushman Bharat Programme, under which 1.5 Lakh health centres are to be set-up
• INR 5 Lakh cover per family per year to be provided under the Rashtirya Bima Yojana, the flagship National Health Protection Scheme. This will benefit over 10 Crore families – roughly 500 million people – as far as secondary and tertiary medical care and hospitalisation is concerned
• 1 medical college to be set up in every 3 constituencies
• 1 government medical college to be present in every state. Under this, 24 new government medical colleges to be set up
• INR 600 Crore to be allocated for TB nutritional support

Infrastructure

• INR 2.04 Lakh Crore to be allocated for Smart City Mission – 99 cities identified under the same
• 9,000 Km of national highways to be completed
• 36,000 Km of railway tracks to be renewed
• 4,267 unmanned railway crossings to be eliminated
• Escalators to be installed in all railway stations
• INR 1,48,528 Crore to be allocated for the digitization of 600 railway stations
• INR 17,000 Crore investment boost to be given to Bengaluru Metro Rail and INR 11,000 Crore investment boost to be given to Mumbai Rail
• Airport capacities to be raised to accommodate 5 billion trips in a year
• 5 lakh Wi-fi hotspots to be set up

Pollution Control

It was heartening to find a few pollution control initiatives as part of the Budget 2018 highlights:

• Special schemes to be rolled out for Haryana and NCR to control air pollution
• 187 projects approved for River Ganga clean-up project

MSME & Welfare Financing

Some of the major Budget 2018 highlights with respect to MSME and welfare financing were as follows:

• 372 basic business reforms to be introduced across all states
• INR 56,919 Crore allocated for welfare of SCs
• INR 48,081 Crore allocated for welfare of STs
• Online loan sanctioning to be introduced for quicker set-up of small businesses, including automatic linkage to GSTN on formation
• INR 3,794 Crore to be allocated to the MSME sector in the form of capital support and interest subsidy as part of Mudra Yojana
• Jan Dhan Yojana to cover all 600 million bank A/C s
• INR 7,148 Crore to be allocated for textiles
• Kaushal Kendras to be set up for skill development of youth

Direct Taxes

The Budget 2018 updates with regards to direct taxation, had a plethora of initiatives:

• INR 6.4 Lakh Crore total tax collection in FY 2014-15 has increased to INR 8.47 Lakh Crore total tax collection in FY 2016-17
• Tax payer base has increased - 85.51 Lakh new tax payers who filed income tax returns in FY 16-17
• INR 80,000 Crore disinvestment target to be set
• 100% Tax Deduction to be provided to farmer producer companies with turnover of up to INR 100 Crore, for 5 years
• Reduced Corporate Tax of 25% to be extended to companies with turnover of up to 250 Crore
• Government to contribute 12% of new employee wages as part of EPF for next 3 years
• New women employees’ contribution to EPF to be reduced from 12% to 8%
• Personal income tax slabs to remain unchanged
• Standard deduction of INR 40,000 to be re-introduced in lieu of the medical reimbursement worth INR 15,000 and transport allowance worth INR 19,200 which are currently available. Thus the net benefit will only be INR 5,800, which will reach over 2.5 Crore tax payers
• Health And Education Cess to be increased from 3% to 4%
• Host of tax benefits to be provided for senior citizens
• Capital gains tax at 10% to be re-introduced on gains of over INR 1 lakh on long-term investments
• E-assessment platforms to be rolled out across all touch-points to reduce human intervention

Indirect Taxes

This was the first budget to be presented in the GST era, and also probably the first budget with no substantial indirect tax component, as most of the initiatives were already being notified by the GST Council from time to time. Nevertheless, a few Budget 2018 highlights pertaining to indirect taxes, are as follows:

• As per the budget news, the GST revenue shortfall is to be balanced by higher direct tax and disinvestment collections. Overall INR 21.57 Lakh Crore transferred as net GST to states as against projection of INR 21.47 Lakh Crore
• GST compensation cess has been budgeted at INR 90,000 Crore for FY 18-19, while revised estimates for FY18 are at INR 61,000 Crore. The GST compensation cess funds are to be kept under public accounts
• GST collections projection are pegged at INR 7.43 Lakh Crore in FY 18-19 as against INR 4.44 lakh Crore in nine months of the current fiscal
• Central Board of Excise and Customs to be renamed as Central Board of Indirect Taxes and Customs
• Excise Duty – As per the Budget 2018 highlights, the price of petrol and diesel has effectively come down by INR 2 per litre due to the cut in excise duty
• Imports & Customs Duty – A social welfare surcharge of 10% has now been introduced on imported goods. In addition, the following rate changes were declared:

In conclusion, Budget 2018 India Inc. was largely a pro-agriculture, pro-healthcare and pro-rural budget, which aims to improve the quality of life of the financially backward sections of the society. At the same time, as per the Budget 2018 highlights, the government will also be looking forward in terms of investment in modern fields – robotics, AI, block chain and cyber security, which will surely bolster the Indian economy in times to come.