New Delhi: The government today announced the “world’s largest” health insurance scheme for India’s 50 crore poor in its last full budget before general elections, focusing heavily on uplifting agriculture and rural sectors while paying little attention to the middle class.
Finance Minister Arun Jaitley presented the budget in Lok Sabha to 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 budget is “farmer friendly, common citizen friendly, business environment friendly” and will add to “ease of living and ease of doing business,” Modi said in a televised address.
With chaotic implementation of the Goods and Services Tax and demonetisation causing distress in the economy, Jaitley announced massive spending on rural and urban infrastructure as also lower tax rates for small and medium enterprises.
While continuing the 10-15 per cent surcharge on super- rich, he raised the health and education cess, levied on all taxable income, to 4 per cent from 3 per cent at present.
The opposition slammed the budget, with the Congress calling it “defeatist” and a “big letdown” while the Left parties dubbing it an election-minded “big jumla (rhetoric).”
“It is a campaign for them. We consider it as a ‘big jumla’. We think it is an election campaign as talks are going on for early elections,” CPI(M) Lok Sabha leader Mohd Salim told reporters here.
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.
This, Jaitley said, will be world’s largest health protection scheme.
He committed an expenditure of Rs 1.38 lakh crore on health, education and social protection.
But to fund these, he let go of the fiscal consolidation roadmap. As a result, fiscal deficit for the current fiscal will be 3.5 per cent of the GDP as against the previous target of 3.2 per cent, and 3.3 per cent in 2018-19, as opposed to 3 per cent set earlier.
Fiscal deficit in 2016-17 was 3.5 per cent of the GDP.
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.
Senior citizens will get higher exemptions on income from interest on bank and post office deposits, health insurance premium and critical illness expense.
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 per cent. 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.
Also, credit to agriculture would be raised to Rs 11 lakh crore in the coming fiscal from Rs 10 lakh crore and kisan credit card extended to fisheries and animal husbandry farmers. Rs 2,000 crore will be provided for development of agri market and export of agriculture commodities will be liberalised.
The defence budget was increased by 7.81 per cent to Rs 2.95 lakh crore against last year’s Rs 2.74 lakh crore, belying expectations of a significant hike when the armed forces are facing growing challenge on the borders with both Pakistan and China.
Jaitley, who had in 2015 promised to reduce corporate tax from current 30 per cent to 25 per cent over four years, proposed lower tax rate of 25 per cent for companies with turnover of up to Rs 250 crore in 2016-17.
The Union Budget 2018-19 was the last full budget before the general elections next year, when a vote on account would be presented. The next full budget will be presented by the new government.
With GST and demonetisation pulling down GDP growth rate in Asia’s third largest economy to its lowest level in three years, Jaitley said economic growth was picking up and “firmly on path to achieve 8 per cent plus growth soon”.
Gross domestic product (GDP) is expected to grow at 6.5 per cent to 6.75 per cent in 2017-18.
Jaitley said measures to address bad loans of small and medium enterprises would be announced soon. He proposed setting up Rs 3 lakh crore target for lending to small enterprises.
Three government-owned non-life insurers — National Insurance Co, United India Assurance Co and Oriental India Insurance Co — will be merged into a single entity and listed subsequently.