Highlights: Budget 2018 focuses on rural economy ahead of elections

NEW DELHI (Reuters) – India said on Thursday it expected economic growth to surge above 8 percent as it announced a 2018/19 budget that allocated billions of dollars for rural infrastructure and unveiled a health insurance programme for around 500 million poor.

In his last full-year budget before a national election that must be held by May 2019, Finance Minister Arun Jaitley spoke of massive spending on rural infrastructure, to win over voters in the countryside where two-thirds of India’s 1.3 billion people live.

Here are the highlights of Jaitley’s budget for the year starting April 1.

FISCAL DEFICIT
Fiscal deficit for 2017/18 seen at 3.5 percent of GDP

Fiscal deficit for 2018/19 seen at 3.3 pct of GDP

To use fiscal deficit target as key operational parameter for fiscal consolidation

GROWTH
Estimates 7.2 to 7.5 percent GDP growth in second half of current fiscal year

Finance minister says “firmly on path to achieve 8 percent plus growth soon”

EXPENDITURE
Revised expenditure for 2017/18 at 21.57 trillion rupees

Total expenditure for 2018/19 seen at 24.42 trillion rupees

Estimates 1.38 trillion rupees expenditure on health, education and social security

Railway capital expenditure set at 1.49 trillion rupees for 2018/19

TAXATION
To reduce corporate tax to 25 percent for companies who report turnover of up to 2.5 billion rupees as of 2016/17

No change in structure of income tax rates for individuals, allows standard deductions of 40,000 rupees for salaried employees in lieu of transport allowance and miscellaneous medical expenses

Senior citizens get higher exemptions on incomes from interest on bank deposits, health insurance premium

Proposes bringing in long-term capital gains tax on listed equities

Long-term capital gains exceeding 100,000 rupees to be taxed at 10 percent

Proposes to raise import tax on mobile phones to 20 percent from 15 percent, on some of their parts and accessories to 15 percent and certain TV parts to 15 percent

To raise health and education cess to 4 percent from 3 percent

BORROWING
Gross market borrowing seen at 6.06 trillion rupees in 2018/19

Net market borrowing seen at 4.62 trillion rupees in 2018/19

Government to switch 280.6 billion rupees of bonds in 2018/19

INFRASTRUCTURE
To spend 14.34 trillion rupees ($ 225.50 billion) on rural infrastructure

BANKING/FINANCE
To soon announce measures to address bad loans of small and medium enterprises

Proposes setting up 3 trillion rupees target for lending for small enterprises

Reserve Bank of India Act being amended to provide the central bank with leeway to manage excess liquidity

To allow strong regional rural banks to raise capital from the market to help increase credit to rural economy

Does not consider crypto-currencies legal tender, will take all measures to eliminate use of crypto assets as part of payment system

DIVESTMENT/CONSOLIDATION
To merge three government-owned non-life insurers – National Insurance Co, United India Assurance Co and Oriental India Insurance Co – into a single entity and list subsequently

Finance minister says divestment target for 2017/18 has been exceeded, to get 1 trillion rupees

Divestment target for 2018/19 set at 800 billion rupees

Has begun process of strategic sale in 24 state-run cos including privatisation of Air India; to come up with more exchange-traded fund offers including debt ETFs

AGRICULTURE
Finance minister says will focus on strengthening rural, agriculture economy

Sets 10 trillion rupees to 11 trillion rupees credit for “agricultural activities”

Minimum support price of all crops to be increased to at least 1.5 times of production cost

Export of agriculture commodities to be liberalised

To give 100 percent tax deduction for the first five years to companies registered as farmer producer companies with a turnover of 1 billion rupees and above

GOLD
To formulate a comprehensive gold policy

To revamp gold monetisation scheme

HEALTH/POLLUTION
To provide 500,000 rupees per family annually for medical reimbursement under National Health Protection Scheme. Finance minister says the plan will protect 500 million poor people and will be world’s largest health protection scheme.

To implement special schemes for governments around Delhi to address air pollution

Removal of crop residue to be subsidized in order to tackle the problem of pollution due to burning of crop residue

FINANCE MINISTER COMMENTS
“We are now a $ 2.5 trillion economy, and we are firmly on path to achieve 8 percent plus growth soon”.

“We are not only focussing on ‘Ease of Doing Business’ but also ‘Ease of Living’”.

“While making the proposals in this year’s budget, we have been guided by our mission to especially strengthen agriculture, rural development, health, education, employment, MSME (micro, small and medium enterprises) and infrastructure.”

($ 1 = 63.5925 rupees)

(Compiled by Krishna N. Das and Devidutta Tripathy; Editing by Sanjeev Miglani)

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