New Delhi: The government on Thursday announced the 'world's largest' health insurance scheme for India's 50 crore poor in its last full budget before the General Elections, focusing heavily on uplifting agriculture and rural sectors.
Finance Minister Arun Jaitley presented the budget in Lok Sabha to the repeated thumping of desks by treasury members led by Prime Minister Narendra Modi, who later described it as a vehicle to build a 'new India'.
The FM announced massive spending on rural and urban infrastructure as also lower tax rates for small and medium enterprises.
While continuing the 10-15 percent surcharge on super- rich, he raised the health and education cess, levied on all taxable income, to 4 percent from 3 percent at present.
The centrepiece of the budget was the government's plan to provide universal healthcare through a 'National Health Protection scheme'. It provides a cover of up to Rs 5 lakh per family per year for secondary and tertiary care hospitalisation to 10 crore poor and vulnerable families, or about 50 crore beneficiaries, nearly half of India's population of 125 crore.
Keeping the income tax rates and slabs unchanged, Jaitley introduced a Rs 40,000 Standard Deduction for salaried employees and pensioners in lieu of the present exemption in respect of transport and medical expenses.
At present, no tax is applicable on Rs 19,200 of transport allowance and medical expenditure of up to Rs 15,000. This has now been subsumed into the new Standard Deduction of Rs 40,000 which may mean very little benefit in tax saving considering that health and education cess has gone up.
Jaitley, however, raised customs duties on a host of imported products - from cellphones to perfumes and toiletry, from watches to parts of automobiles, sunglasses to truck and bus tyres, footwear to diamonds and edible oils to fruit juices.
Fourteen years after it was scrapped, he brought back tax on gains made from sale of shares to offset revenue losses.
Capital gains exceeding Rs 1 lakh from shares held for more than a year will be taxed at 10 percent Currently, gains from equity investments held for more than 12 months are exempt from tax.
In July 2004, the government had abolished long-term capital gains tax on shares and replaced it with the securities transaction tax (STT) - a same-day tax credit system that continues.
In the 110 minute speech, in which he kept switching from English to Hindi, Jaitley announced plans for agriculture, rural housing, organic farming, animal husbandry and fisheries with a total allocation of Rs 14.34 lakh crore.
Following are some of the reactions by the industry:
- "Finance Minister Arun Jaitley has placed a huge emphasis on agriculture and rural India, allocating bulk of resources to interior landscape, while helping the middle class, salaried employees along with relief to senior citizens, measures which would boost consumer demand and help revive economic growth," Sandeep Jajodia, President, Assocham said.
- Chanda Kochhar, MD and CEO, ICICI Bank said, "The wide-ranging measures announced for various segments of the rural economy will boost income levels and create gainful and sustainable employment. This, in turn, will help increase consumption levels in the economy."
- "The plan to invest in creating a healthy nation by launching the Ayushman Bharat programme is a welcome step. Such ambitious, out-of-the-box thinking was the need of the hour and the government has not disappointed. The move to cover 10 crore families with 5 lakh per family/per year for secondary and tertiary healthcare will be a game-changer," Apollo Hospitals chairman Prathap Reddy said.
- "NHPS rollout will need an effective gatekeeping system with an immediate focus and strengthening of primary care services. Such systems will ensure equity by judicious referral system to secondary and tertiary care," KPMG India's Nilaya Varma said.
- Bhargav Dasgupta, MD and CEO - ICICI Lombard said, "The government has focused on inclusive measures in the budget, targeting critical areas of agriculture, education , health , power among others. On health insurance, the introduction of Rs. 5 lakh cover for families and increase in medical insurance tax exemption for senior citizens indicate the focus of policymakers to ensure adequate protection against health hazards for India’s populace."
- "As the EV Policy is not a part of the budget, we were not expecting any major announcement related to electric vehicles in today’s budget. However, we are happy to note that there are general announcements made today, which will support the cause. For example air pollution, higher excise duty for indigenization, increase in agriculture infrastructure spends as well as other announcements alike, which will directly and indirectly support the automobiles, especially two-wheelers, hence giving a further boost to EVs. We all know that the new EV policy is in the advance phase of formulation and it will be a separate policy which will come after a few months. It is expected that the policy will be stable in the long term, which will shape up the future of the electric vehicles," Sohinder Gill, Director, Corporate Affairs, Society of Manufacturers of Electric Vehicles said.
- Rita Singh, CMD, Mesco Steel (MISL) said, "We welcome the Union Budget 2018-19 which gives special impetus to the infrastructure sector. With increased spending in infrastructure at Rs 5.97 Lakh crores, the sector is being pegged as a key growth driver.Various initiatives to encourage domestic manufacturing will boost overall investment in infrastructure and in turn drive demand for domestic steel. We welcome the proposal of increased expenditure on smart cities, rail and road sector, affordable housing and leveraging the India infrastructure finance corporation to fund major projects. The budget has also taken a very progressive step in assigning a unique id to individual enterprises on lines of Aadhaar for individuals. However, as steel industry we were hoping for a reduction in duty structure to reduce raw material cost which would, in turn, benefit the industry as well as the economy as a whole."
- Subho Ray, President, Internet and Mobile Association of India said, "For the second year in running, the Union Budget recognises the importance of digital services and gives a direction. It is now up to the relevant departments to act on these directions and help realise the targets envisaged in the budget."
- Amitabh Khosla, country director, India, International Air Transport Association (IATA) said, “We welcome the focus on airport infrastructure capacity announced in the Budget. In our 20-year passenger forecasts, IATA anticipates India will become the 3rd largest aviation market by 2024. But this is by no means guaranteed. To make this a reality, airport capacity in India needs to be augmented and expanded quickly. IATA has earlier recommended and is supportive of leveraging AAI’s balance sheet for infrastructure creation and expansion. But the big question mark on capacity, and a critical area of concern for IATA continues to be about Mumbai airport. Navi Mumbai airport is still a distant dream. In the meantime, Mumbai continues to fall behind in aviation activity, and Maharashtra state is unable to maximize the economic potential that can be delivered by aviation. We urge the government to urgently look at innovative approaches to bridge the infrastructure shortfall.”
- Bhavish Aggarwal, co-founder and CEO, Ola said, "The budget is progressive, balanced and forward-looking with a well-defined focus on Digital India. Ola is already a partner to some of the Digital India initiatives. Allocation of INR 3073 crore towards Digital India is a significant leg-up. The thrust provided to tourism with the commitment of creating iconic tourist spots, investment earmarked for transport infrastructure, progress made on Smart Cities and creation of more than 5 lakh Wi-Fi hotspots in India is truly welcome. Overall, it is a balanced budget which will further strengthen India’s position as a leading world economy with good livability index and business environment.”
- “Budget 2018 is a holistic one with the Government selecting a combination of benefits, targeted spending and fiscal prudence to put the Indian economy on an accelerated growth trajectory. The lion’s share of the attention has gone towards revitalizing the stressed rural sector – be it the allocation of INR 1400 Crore towards developing 42 state of the art food parks or the stated intent of spending INR 1.4 trillion on developing rural infrastructure, the Government has left no stone unturned to ensure a representative participation of the Indian hinterland in the country’s economic progress," Paul Dupuis, MD and CEO Randstad India said.
- Sashi Kumar, managing director, Indeed India said, "While there was anticipation about a new employment policy, there was no indication of a formal policy being announced anytime soon. However, it is heartening to hear that there have been 70 lakh formal jobs created in the past year and that the government plans to spur job creation in the country through various incentives and reforms that were announced, such as the EPF contribution. Additionally, the EPF reprieve for women employees will improve the female participation rate in the Indian workforce. It is particularly gratifying to see that the government is also taking steps to tackle the issue of talent gap due to a lack of adequate skilling. Given the thrust on reforming the education system, it is safe to say that we will be seeing a much more equipped potential workforce."
- Ujwal Lahoti, chairman, The Cotton Textiles Export Promotion Council (Texprocil) said, "the Budget is pragmatic, growth-oriented and all-inclusive. The government had approved a comprehensive textile sector package of Rs 6,000 crore to boost the apparel and made-up segments The Budget has provided an outlay of Rs 7,148 crore for the textile sector in 2018-19. I hope that the increased funds allocated for the textile sector will cover fabrics also under the rebate on state levies (ROSL) scheme."
- The Clothing Manufacturers Association of India (CMAI) president Rahul Mehta said that the general focus on rural economy, including significant fund allocations, will help in pushing up demand for apparel in the domestic market. He stated that the enhanced economic growth envisaged in the Budget will also help in improving demand for apparel, which is one of the primary needs of the masses.
- RP Sanjiv Goenka group chairman Sanjiv Goenka hailed the budget as a 'landmark document'. "It is a complete budget trying to reflect the values and aspirations of the people of India. His (Jaitley's) budget is also a reflection of the NDA government's resolve to be inclusive. A sharp focus on health sector, agriculture, on food processing, providing electricity connections to everyone. The accent on fabric and resolve to create a social security - the system is brilliant," he said.
- "For the second year in running, the Union Budget recognises the importance of digital services and gives a direction. It is now up to the relevant departments to act on these directions and help realise the targets envisaged in Budget 2018," Subho Ray, president, Internet and Mobile Association of India said.
- Emami Group director Aditya Agarwal said in order to maintain the socio-economic balance of a country it is very important to bring up the quality of life and the income of the lower and middle class. "The budget is in the right direction to bridge this gap," he said.
(With Agency inputs)