The Union Budget for 2017-18 has been announced by Mr Arun Jaitley, Union Minister for Finance, Government of India, in Parliament on February 1, 2017. Budget 2017-18 contains three major reforms: advancement of date of presentation, merger of railway budget with general budget, done away with Plan and non-Plan expenditure.

Roadmap and Priorities for 2017-18

• Agenda for 2017-18 is: “Transform, Energise and Clean India” – TEC.
• TEC India seeks to-
  • Transform the quality of governance and quality of life of people;
  • Energise various sections of society, especially the youth and the vulnerable, and enable them to unleash their true potential; and
  • Clean the country from the evils of corruption, black money and non-transparent political funding

Highlights of Union Budget 2017-18

• Overview of the Economy and fiscal deficit
  • Economic growth expected at 6.5 per cent in 2016-17.
  • IMF expects India to grow at 7.2 per cent in 2017 and 7.7 per cent in 2018.
  • CPI inflation has come down to 3.4 per cent in December 2016 from 6.0 per cent in July 2016.
  • Current Account deficit declined from about 1 per cent of Gross Domestic Product (GDP) last year to 0.3 per cent of GDP in the first half of 2016-17.
  • Foreign exchange reserves have reached US$ 361 billion as on January 20, 2017.
  • Government has recommended 3 per cent (of GDP) fiscal deficit target for the next three yeaRs Fiscal deficit for 2017-18 is targeted at 3.2 per cent.
  • Revenue deficit of 2.3 per cent (of GDP) in Budget Estimates (BE) 2016-17 stands reduced to 2.1 per cent in the Revised Estimates (RE). The Revenue deficit for next year is pegged at 1.9 per cent.
• Budget Estimates 2017-18
  • Total receipts (excluding Borrowings and other liabilities) estimated at Rs 15.16 lakh crore (US$ 224 billion), a growth of 6.48 per cent.
  • Revenue receipts comprise of Rs 12.27 lakh crore (US$ 181 billion) of tax revenues and Rs 2.88 lakh crore (US$ 42.7 billion) of non-tax revenues.
  • Total expenditure estimated at Rs 21.47 lakh crore (US$ 317 billion), an increase of 6.57 per cent over previous year.
  • Plan / Non-Plan classification to be done away with from 2017-18. Instead, expenditure will now be classified henceforth into ‘Scheme’ and ‘Non-Scheme’ expenditure. Every new scheme sanctioned to have a sunset date and an outcome review.
  • Total scheme expenditure expected to be Rs 9.45 lakh crore (US$ 139.7 billion).
  • Total non-scheme expenditure expected to be Rs 12.02 lakh crore (US$ 177.6 billion).
  • Expenditure on revenue account is expected to be Rs 18.37 lakh crore (US$ 271.5 billion), or 85.57 per cent of total expenditure.

• Financial Performance 2016-17

  Receipts

  • Total receipts (excluding Borrowings and other liabilities) stood at Rs 14.24 lakh crore (US$ 210.5 billion) in Revised Estimates (RE), which is more than the Budgeted Estimates (BE) of Rs 13.77 lakh crore (US$ 203.6 billion) by Rs 46,540 crore (US$ 6.88 billion), led by higher tax collections.
  • Tax revenues stood at Rs 10.89 lakh crore (US$ 160.9 billion) in RE, which were more than the BE of Rs 10.54 lakh crore (US$ 155.8 billion) by Rs 34,691 crore (US$ 5.13 billion), led by higher excise and service tax collections.
  • There was an substantial increase of 21.6 per cent in collection of Union Excise Duties which stood at Rs 3.87 lakh crore (US$ 57.2 billion) in RE, an increase of Rs 68,700 crore (US$ 10.15 billion) over the BE of Rs 3.18 lakh crore (US$ 47 billion).

  Expenditure

  • Total expenditure was Rs 20.14 lakh crore (US$ 297.7 billion) in RE, which exceeded the BE of Rs 19.78 lakh crore (US$ 292.4 billion) by Rs 36,347 crore (US$ 5.37 billion).
  • Total scheme expenditure expected to be Rs 9.45 lakh crore (US$ 139.7 billion). Total non-scheme expenditure expected to be Rs 12.02 lakh crore (US$ 177.6 billion).
  • Expense on Defence sector was lower by 0.44 per cent or Rs 1,094 crore (US$ 161 million) in RE, while that on Pensions was higher by 3.89 per cent. Significantly, subsidies expenditure RE was lower by 0.5 per cent than BE.

• Farmers -
  • Target for agricultural credit in 2017-18 has been fixed at a record level of Rs 10 lakh crore (US$ 147.8 billion).
  • Farmers will also benefit from 60 days’ interest waiver announced on December 31, 2016.
  • Coverage under Fasal Bima Yojana scheme will be increased from 30 per cent of cropped area in 2016-17 to 40 per cent in 2017-18 and 50 per cent in 2018-19 for which a budget provision of Rs 9,000 crore (US$ 1.33 billion) has been made.
  • The Long Term Irrigation Fund already set up in NABARD to be augmented by 100 per cent to take the total corpus of this fund to Rs 40,000 crore (US$ 5.9 billion).
  • Dedicated Micro Irrigation Fund in NABARD to achieve ‘per drop more crop’ with an initial corpus of Rs 5,000 crore (US$ 739 million).
  • Coverage of National Agricultural Market (e-NAM) to be expanded from 250 markets to 585 APMCs. Assistance up to Rs 75 lakhs (US$ 110,872) will be provided to every e-NAM.
  • Dairy Processing and Infrastructure Development Fund to be set up in NABARD with a corpus of Rs 2,000 crore (US$ 296 million) and will be increased to Rs 8,000 crore (US$ 1.2 billion) over 3 years.

• Rural Population- Allocation: Rs 1,87,223 crore (US$ 27.7 billion)
  • Over Rs 3 lakh crore (US$ 44.3 billion) were spent on rural areas every year for rural poor.
  • According to Mission Antyodaya, 10 million households will be brought out of poverty and 50,000 gram panchayats will be made poverty-free by 2019.
  • Under the Prime Minister Gram Sadak Yojana, Rs 19,000 crore (US$ 2.8 billion) has been allocated along with states, while Rs 27,000 crore (US$ 4 billion) is expected to be spent in FY18.
  • Under the Pradhan Mantri Awas Yojana, Rs 23,000 crore (US$ 3.4 billion) is allocated for 2017-18 to complete 10 million houses by 2019 for the houseless and those living in kutcha houses.
  • A sum of Rs 48,000 crore (US$ 7.1 billion) allocated for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).
  • Rural livelihood mission has been allocated Rs 4,500 crore (US$ 665 million).
  • A 100 per cent village electrification target looks achievable by May 1, 2018
  • PMGSY roads construction accelerated to 133 km roads per day in 2016-17, against 73 km during 2011-14.
  • Women participation in MGNREGS has increased to 55 per cent from less than 48 per cent.

• Youth
  • Skill Acquisition And Knowledge Awareness for Livelihood Promotion program (SANKALP) will be launched at a cost of Rs 4,000 crore (US$ 591 million) providing market relevant training to35 million youth.
  • Pradhan Mantri Kaushal Kendras to be extended to more than 600 districts across the country for imparting skill education. About 100 India International Skills Centres will be established across the country.
  • SWAYAM platform to be launched with at least 350 online courses enabling students to virtually attend courses taught by best faculty.
  • Next phase of Skill Strengthening for Industrial Value Enhancement (STRIVE) will also be launched in 2017-18 at a cost of Rs 2,200 crore (US$ 325 million).
  • Incredible India 2.0 campaign will be launched across the world to promote tourism and employment.

• The Poor and the underprivileged:

  • Mahila Shakti Kendra will be set up with an allocation of Rs 500 crore (US$ 73.9 million) in 1.4 million Integrated Child Development Scheme (ICDS) Anganwadi Centres. This will provide one stop convergent support services for empowering rural women with opportunities for skill development, employment, digital literacy, health and nutrition.
  • Under Maternity Benefit Scheme Rs 6,000 (US$ 89) each will be transferred directly to the bank accounts of pregnant women who undergo institutional delivery and vaccinate their children.
  • National Housing Bank will refinance individual housing loans of about Rs 20,000 crore (US$ 2.9 billion) in 2017-18.
  • Government has prepared an action plan to eliminate Kala-Azar and Filariasis by 2017, Leprosy by 2018, Measles by 2020 and Tuberculosis by 2025.
  • The allocation for Scheduled Castes has been increased by 35 per cent compared to BE 2016-17. The allocation for Scheduled Tribes has been increased to Rs 31,920 crore (US$ 4.7 billion) and for Minority Affairs to Rs 4,195 crore (US$ 620 million).
  • Action plan has been prepared to reduce Infant Mortality Rate (IMR) from 39 in 2014 to 28 by 2019 and Maternal Mortality Rate (MMR) from 167 in 2011-13 to 100 by 2018-2020.

• Infrastructure

  • Provision has been made of Rs 241,387 crore (US$ 35.7 billion) in 2017-18 for transportation sector as a whole, including, rail, roads and shipping.
  • For 2017-18, the total capital and development expenditure of Railways has been pegged at Rs 1,31,000 crore (US$ 19.4 billion). This includes Rs 55,000 crore (US$ 8.1 billion) provided by the Government.
  • For passenger safety, a Rashtriya Rail Sanraksha Kosh will be created with a corpus of Rs 1 lakh crore (US$ 14.8 billion) over a period of 5 years.
  • Railway lines of 3,500 kms will be commissioned in 2017-18.
  • It is proposed to feed about 7,000 stations with solar power in the medium term.
  • In the road sector, Budget allocation for highways increased from Rs 57,976 crore in BE 2016-17 to Rs 64,900 crore (US$ 9.6 billion) in 2017-18.
  • Total length of roads, including those under PMGSY, built from 2014-15 till the current year is about 1,40,000 kms which is significantly higher than previous three years.
  • Second phase of Solar Park development to be taken up for additional 20,000 MW capacity.
  • For creating an eco-system to make India a global hub for electronics manufacturing a provision of Rs 745 crore (US$ 110 million) in 2017-18 in incentive schemes like Modified-Special Incentive Package Scheme (M-SIPS) and Electronic Development Fund (EDF).

• Financial sector
  • Lending target under Pradhan Mantri Mudra Yojana to be set at Rs 2.44 lakh crore (US$ 36.1 billion). Priority will be given to Dalits, Tribals, Backward Classes and Women.
  • In line with the ‘Indradhanush’ roadmap, Rs 10,000 crore (US$ 1.48 billion) for recapitalisation of Banks provided in 2017-18.
  • Foreign Investment Promotion Board (FIPB) to be abolished in 2017-18 and further liberalisation of Foreign Direct Investment (FDI) policy is under consideration.
  • A Computer Emergency Response Team for our Financial Sector (CERT-Fin) will be established.
  • Government will put in place a revised mechanism and procedure to ensure time bound listing of identified Central Public Sector Enterprises (CPSEs) on stock exchanges. The shares of Railway PSEs like IRCTC, IRFC and IRCON will be listed in stock exchanges.

• Digital Economy
  • A Mission will be set up with a target of 25 billion digital transactions for 2017-18 through Unified Payment Interface (UPI), Unstructured Supplementary Service Data (USSD), Aadhar Pay, Immediate Payment Service (IMPS) and debit cards. A task force has been constituted for rationalisation of human resources in various Ministries.
  • Banks have targeted to introduce additional 1 million new Point-of-Sales (POS) terminals by March 2017. They will be encouraged to introduce 2 million Aadhar based POS by September 2017.
  • Aadhar Pay, a merchant version of Aadhar Enabled Payment System, will be launched shortly.
  • 12.5 million people have adopted the Bharat Interface for Money (BHIM) app so far. The Government will launch two new schemes to promote the usage of BHIM; these are Referral Bonus Scheme for individuals and a Cashback Scheme for merchants.

• Public Service
  • A Centralised Defence Travel System has been developed through which travel tickets can be booked online by our soldiers and officers.
  • Web based interactive Pension Disbursement System for Defence Pensioners will be established.

• Prudent fiscal management
  • Capital expenditure allocation has been stepped up by 25 per cent over the previous year.
  • Total resources being transferred to the States and the Union Territories with Legislatures is Rs 4.11 lakh crore (US$ 60.8 billion), against Rs 3.60 lakh crore (US$ 53.2 billion) in BE 2016-17.
  • Fiscal Responsibility and Budget Management (FRBM) Committee has recommended 3 per cent fiscal deficit for the next three years, keeping in mind the sustainable debt target and need for public investment, fiscal deficit for 2017-18 is targeted at 3.2 per cent of GDP and Government remains committed to achieve 3 per cent in the following year.
  • Net market borrowing of Government restricted to Rs 3.48 lakh crore (US$ 51.4 billion) after buyback in 2017-18, much lower than Rs 4.25 lakh crore (US$ 62.8 billion) of the previous year.
  • Revenue deficit of 2.3 per cent in BE 2016-17 stands reduced to 2.1 per cent in the Revised Estimates. The Revenue Deficit for next year is pegged at 1.9 per cent, against 2 per cent mandated by the FRBM Act.

• Promoting affordable housing and real estate sector
  • Under the scheme for profit-linked income tax deduction for promotion of affordable housing, carpet area instead of built up area of 30 and 60 Sq.mtr. will be counted.
  • The 30 Sq.mtr. limit will apply only in case of municipal limits of 4 metropolitan cities while for the rest of the country including in the peripheral areas of metros, limit of 60 Sq.mtr. will apply.
  • Reduction in the holding period for computing long term capital gains from transfer of immovable property from 3 years to 2 years. Also, the base year for indexation is proposed to be shifted from 1.4.1981 to 1.4.2001 for all classes of assets including immovable property.
  • Between November 8 and December 30, 2016, deposits between Rs 2 lakh (US$ 2,957) and Rs 80 lakh (US$ 118,263) were made in about 10.9 million accounts with an average deposit size of Rs 5.03 lakh (US$ 7,436). Deposits of more than 80 lakh (US$ 118,263) were made in 148,000 accounts with average deposit size of Rs 3.31 crore (US$ 489,313).

• Measures for stimulating growth
  • Concessional withholding rate of 5 per cent charged on interest earned by foreign entities in external commercial borrowings or in bonds and Government securities is extended to June 30, 2020, including rupee denominated (Masala) Bonds.
  • In order to make Micro, Small and Medium Enterprises (MSME) companies more viable, income tax for companies with annual turnover upto Rs 50 crore (US$ 7.4 million) is reduced to 25 per cent.
  • For the purpose of carry forward of losses in respect of start-ups, the condition of continuous holding of 51 per cent of voting rights has been relaxed subject to the condition that the holding of the original promoter/promoters continues. Also the profit (linked deduction) exemption available to the start-ups for 3 years out of 5 years is changed to 3 years out of 7 years.
  • Minimum Alternate Tax (MAT) credit is allowed to be carried forward up to a period of 15 years instead of 10 years at present.
  • Basic customs duty on Liquefied Natural Gas (LNG) reduced from 5 per cent to 2.5 per cent.
  • Allowable provision for Non-Performing Asset (NPA) of banks increased from 7.5 per cent to 8.5 per cent.

• Promoting digital economy
  • Under scheme of presumptive income for small and medium tax payers whose turnover is up to Rs 2 crore (US$ 295,658) at present, 8 per cent of their turnover which is counted as presumptive income is reduced to 6 per cent in respect of turnover which is by non-cash means.
  • No transaction above Rs 300,000 (US$ 4,435) will be permitted in cash subject to certain exceptions.

• Transparency in electoral funding
  • A political party can receive a maximum of Rs 2,000 (US$ 30) in cash from one person.
  • Every political party would have to file its returns within the time prescribed in accordance with the provision of the Income-tax Act.
  • Existing exemption to the political parties from payment of income-tax would be available only subject to the fulfilment of these conditions.

• Ease of doing business
  • Threshold limit for audit of business entities who opt for presumptive income scheme increased from Rs 1 crore (US$ 147,829) to Rs 2 crore (US$ 295,658). Similarly, the threshold for maintenance of books for individuals and HUF increased from turnover of Rs 10 lakhs (US$ 14,783) to Rs 25 lakhs (US$ 36,957) or income from Rs 1.2 lakhs (US$ 1,774) to Rs 2.5 lakhs (US$ 3,696).
  • Under scheme for presumptive taxation for professionals with receipt upto Rs 50 lakhs (US$ 73,914) p.a. advance tax can be paid in one instalment instead of four.
  • Time period for revising a tax return is being reduced to 12 months from completion of financial year, at par with the time period for filing of return.

• Personal income-tax
  • Existing rate of taxation for individual assesses between income of Rs 2.5 lakhs (US$ 3,695) to 5 lakhs (US$ 7,391) has been reduced to 5 per cent from the present rate of 10 per cent.
  • Surcharge of 10 per cent of tax payable will be levied on categories of individuals whose annual taxable income is between Rs 50 lakhs (US$ 73,914) and Rs 1 crore (US$ 147,829). The surcharge of 15 per cent for annual taxable income above Rs 1 crore remains.
  • Individuals having taxable income upto Rs 5 lakhs (US$ 7,391) other than business income can file a simple one-page form as income tax return.

• Goods and services tax (GST)
  • The GST Council has finalised its recommendations on almost all the issues based on consensus on the basis of 9 meetings held.
  • Preparation of IT system for GST is also on schedule.
  • The extensive reach-out efforts to trade and industry for GST will start from April 01, 2017 to make them aware of the new taxation system.

• RAPID (Revenue, Accountability, Probity, Information and Digitisation)
  • Maximise efforts for e-assessment in the coming year
  • Enforcing greater accountability of officers of Tax Department for specific act of commission and omission.

Exchange Rate Used: INR 1 = US$ 0.0148 as on February 01, 2017

Click here for more details on the Union Budget 2017-18.

Click here for the full speech of the Union Budget 2017-18.