Budget 2016: FM Jaitley outlines nine pillars to transform India, puts focus on social sector

Sticking to the script, Union Finance Minister Arun Jaitley presented the NDA government’s third union budget, which focused largely on bolstering the rural economy and bringing tax relief for the salaried class. With an aim to transform the country Arun Jaitley today identified “nine pillars” for India, which will be focus areas for the government. The pillars listed by the Finance Minister are – agriculture, rural sector, social sector, education and job creation, infrastructure investment, financial sector reforms, governance and ease of doing business, fiscal discipline and tax reforms. While the government covered infrastructure spending, providing incentives to start ups and touching on initiatives such as ‘Make in India’, the target segment was clearly the rural household and the salaried middle class, after an increase in criticism against the government for not focusing enough on these major segments.

Emphasising that the Indian economy has held its ground firmly in a tough global economic environment, Mr Jaitley said: “Global economy is in serious crisis; financial markets have been battered and trade contracted.” The government announced a total rural sector allocation Rs. 87,769 crore( around $13 billion). Giving further impetus to welfare schemes and in an attempt to bolster rural wages, Mr Jaitley announced that the government will invest Rs. 38,500 crore for MNREGA to generate rural employment.

Power sector

Seeking to bolster power generation in rural areas, the government has set a target of 100 percent rural electrification by May 1, 2018.

Infrastructure projects

Announcing the progress made in infrastructure development, the government said that 85 percent of the projects have been put back on track.

Tax incentives

Bringing some cheer to the salaried class Mr Jaitley announced no hike in tax slabs, while bringing cheer to the salaried class by increasing their House Rent Allowance (HRA tax relief) raised from Rs 24,000 to Rs 60,000 under Section 88G. There would also be no Service Tax for houses built under 60 square meters. The budget also proposed relief for people with income less than Rs 5 lakh to get a deduction of Rs 5,000, up from Rs 2,000 last year.

The budget announced creating a hub to support SC/ST entrepreneurs that would help in the generation of employment.

Health insurance, social security

The government announced adequate resources to bolster healthcare with a plan to provide health insurance of upto Rs. 1 lakh per family and this will be followed by a top up of Rs. 35,000 for people above 60 years. The finance minister also proposed opening of 3,000 stores for generic drugs. Bringing relief to pensioners and retiring employees, the government said that a 40 percent withdrawal of funds, at the time of retirement, under the National Pension Scheme will be tax exempted. Mr Jaitley also announced setting up of ‘National dialysis service programme under PPP model. LPG connection for women members of rural homes.’

National Digital Literacy Mission

Giving impetus to one of the flagship programmes of the government, the ‘Digital India’ initiative, Mr Jaitley announced setting up of National Digital Literacy Mission’.

Economic Reforms

Focusing on the state of the economy, Mr Jaitley said that the government was committed to reining the fiscal deficit target to 3.5 percent. Mr Jaitley laid out a roadmap for restructuring Public Sector Banks. He also said that ‘Department of Disinvestment’ will be to be renamed as ‘Department of Investment and Public Asset Management’.
Here are some highlights from Mr Jaitley’s union budget speech on February 29 2016:

Highlights

Total outlay for infrastructure development stands at Rs 2.21 lakh crore in FY17.
We see external challenges as an opportunity. Risk of global turbulence is mounting; India must brace for tough times
Govt to allocate Rs 5,500 crore for crop insurance scheme
All retail shops will be allowed to operate all 7 days of the week
Objective to skill 1 crore youth in the next 3 years under the PM Kaushal Vikas Yojana.
We will work for passage of insolvency and bankruptcy laws. We will undertake significant reforms
We will enact a law to confer benefits on deserving sections on Aadhar platform
62 new Navodaya vidyalayas to be opened in next two years
Govt to provide Rs 500 crore for Stand Up India scheme
Digital literacy scheme to be launched to cover 6 crore additional rural households
Government to allow 100 per cent FDI through FIPB in marketing of food products produced and manufactured in India
Govt to pay 8.33% towards employee pension fund for first three years
A fund of Rs 900 crore started for stabilising market crisis of pulses
Start-ups to get 100 per cent tax exemption for 3 years except MAT which will apply from April 2016-2019 for creation of jobs

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