Finance Ministers have traditionally tried to please everyone during the budget, and this year is no different. However, Arun Jaitley, faced with a long list of demands from investors, also proposed higher investments in social sector schemes such as MNREGA and pensions. At the same time it was business-friendly, by lowering the basic corporate tax rate and excise relief for certain products.
But higher investments in the economy meant that the fiscal deficit target is now up to 3.9 percent for 2015-16, compared with the earlier target of 3.6 percent. For individual taxpayers used to more accommodating tax slabs every year, there was nothing on offer.
Here are the top 13 proposals from Jaitley's speech:
1. Jaitley said the government will construct 2 crore houses in urban areas and 4 crore in rural areas by 2022. All of such houses will have 24-hour power supply, clean drinking water and road connectivity.
2. Infrastructure spending will rise by Rs 70,000 crore in 2015-16 over last year. Jaitley also proposed setting up of five ultra-mega power projects.
3. Pensions funds' exemption limit will now be Rs 1,50,000. Jaitley said he hoped more people will invest in such funds going forward.
4. Jaitley announced a Rs 12 lakh accident insurance for account holders in Jan Dhan Yojana. A new scheme, Atal Pension Yojana, will provide defined pension to the poor with government paying 50 percent of the beneficiary's premium.
Economy And Industry
5. Jaitley announced that a monetary policy committee will be set up by amending the RBI Act, to make sure inflation stays below 6 percent. Inflation is expected at 5 percent this fiscal.
6. Basic corporate tax rate reduced to 25 percent, from the earlier 30 percent. This benefits India Inc. directly.
7. Fiscal deficit target was revised higher to 3.9 percent, from the earlier 3.6 percent for fiscal year 2016. Jaitley said that it would come down to 3 percent by 2018, but it might be over-optimistic given higher public expenditure on infrastructure and social sector items.
8. The Goods and Services Tax (GST) deadline was moved one year further to April 1, 2016. The earlier target was to get the bill passed by April this year but the government failed in the face of opposition from other parties and state governments.
9. Jaitley proposed a tough new law to punish offenders hiding money in off-shore locations. Penalty for concealment of income and assets to be 300% of asset value, and the punishment enhanced to 10 years. The bill is expected to be tabled in the current session of Parliament.
10. New IITs to come up in Karnataka and Jharkhand; IIMs in Jammu & Kashmir and Andhra Pradesh.
11. Jaitley said yoga has been recognised as India's gift to the world and proposed to bring it within the ambit of charitable activities under Section 2(15) of the Income-tax Act.
12. The visa on arrival scheme, which Prime Minister Narendra Modi had expanded to 43 nations last year, will be further extended to 150 nations gradually over the next year. This will help the tourism sector and also give fillip to business travel.
13. Jaitley said he proposes to do away with different types of foreign investment and replace them with composite caps. Foreign investment will now be allowed in alternative investment funds.