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Arun Jaitley presents budget aiming growth, reducing fiscal deficit

by IBNS 10 Jul 2014, 11:44 am

New Delhi, July 10 (IBNS) Aiming to take the growth of Indian economy to over 7 percent in next few years and reducing fiscal deficit, Union Finance Minister Arun Jaitley presented the Budget for 2014-15, the maiden of the Narendra Modi government, with a big focus on the rural and agriculture sectors and announcing a clutch of infrastructure schemes and measures to woo foreign investors by welcoming FDI in defence and insurance sectors.

Jaitley also raised the income tax limit for the common man to Rs 2.5 lakh from the existing Rs 2 lakh and did not make any changes in the direct taxes.

Jaitley announced an increase in the FDI in defence to 49% from the existing 26%. FDI in Insurance sector was also raised to 49 percent.

"We shall leave no stone unturned in creating a vibrant and strong India,"  Arun Jaitley told parliament presenting the budget.

He said the government aimed to take the pace of economic growth to  7-8 percent in three to four years from less than 5 percent now while they are committed to achieving a fiscal deficit of 4.1 percent for 2014-15.

Jaitley said that India has a strong urge to grow and free itself from the curse of poverty. The people are in no mood to suffer unemployment, inadequate basic amenities, lack of infrastructure and apathetic governance. The Indian economy will have to maneuver its way through a sluggish global recovery, he added.

The Finance Minister  said that the Government intends to usher in a policy regime that would bring the desired growth, lower inflation, sustained level of external sector balance and prudent policy stance. The Finance Minister pointed out that the present economic
situation presents a challenge of slow growth in manufacturing, in infrastructure and also the need to introduce fiscal prudence. The tax to GDP ratio must be improved and non-tax revenues increased. He has set a target of fiscal deficit of 3.6 per cent for 2015-16 and 3 per cent for
2016-17.
 
After the budget speech ended there was sharp recovery in the Sensex as it was up by 400 points from the day's lows.

Jaitley, who was not too well while presenting the budget and sought five minutes break and then delivered the rest of the speech sitting down, gave a big focus on rural areas and agriculture with various schemes.

He also laid emphasis on social sectors, women safety and education in Budget 2014-15, announcing new IITs and IIMs. He also announced more AIIMS like healthcare centres in several cities and assuring to have them in all cities in coming years. He focused on Northeast also and announced schemes for the physically challenged people.

Jaitley called for setting up of smart cities and allocated more than Rs 7000 crore for that.

The personal income tax exemption limit has been raised by Rs 50,000 at Rs 2.5 lakh. The same for senior citizens has been raised to Rs 3 lakh.

Jaitley said there will be changes in direct taxes.

 Housing loan interest exemption has been increased to Rs.2 lakh from Rs.1.5 lakh, said Jaitley.

Finance Minister also raised the popular tax saving scheme Public Provident Fund (PPF) ceiling from current Rs 1 lakh to Rs 1.5 lakh.  

The outlay on defence  for the coming financial year has been hiked to Rs. 2, 29 lakh crore.

Jaitley said the indirect tax proposals in the budget will yield Rs. 7520 crore more revenue.

Jaitley said the subsidy regime, particularly in food and fuel, will be overhauled.

Jaitley said that the Government will constitute an Expenditure Management Commission to look into every aspect of expenditure reform. The Government also intends to overhaul the subsidy regime while providing full protection to the marginalized, he said.

The Finance Minister said that the Government would like to introduce Goods and Services Tax (GST) to streamline the tax administration, avoid harassment of business and ensure higher revenue collection.

The focus was on social sector and agriculture too.

A sum of Rs 1,000 crore will be provided to Pradhan Mantri Krishi Sinchayee Yojana to provide assured irrigation in rain fed areas.

He said the Central Government will also focus on Swatchh Bharat Abhiyan, under which, total sanitation will be provided to every household by the year 2019 to mark 150th year of the Birth anniversary of Mahatma Gandhi.

Shyama Prasad Mukherji Urban Mission will be launched in rural areas on the lines of Gujarat. This will include economic activities and skill development in the PPP mode. To further improve rural life, the Government will launch the Deen Dayal Upadhyay Gram Jyoti
Yojana to augment power supply at a cost of Rs. 500 crore.

`3P India’, an Institution to provide support to mainstreaming PPPs will be set up to give necessary thrust to infrastructure. Also, 16 new port projects are proposed to be awarded this year with a focus on port connectivity for which Rs.11, 635 crore has been allocated. To promote
inland waterways, `Jal Marg Vikas’ a project on river Ganga, between Allahabad and Haldia, will be developed.

Airports Authority of India will support Airport modernization projects in Tier I and Tier II cities. To further improve connectivity, the Government will provide Rs. 37,880 crores for road construction by National Highways Authority of India. 8,500 KMs of roads will be added in this Financial Year.

To promote clean and efficient thermal power, Rs. 100 crores will initially be provided for a new Scheme - `Ultra-Modern Super Critical Coal Based Thermal Power Technology’. It is hopeful that the existing impasse in the coal and mining sectors will be resolved. To facilitate
this, changes in the MMDR Act, 1957 would be introduced.

The Finance Minister stressed that new and renewable energy deserves a very high priority. A scheme will be launched to drive agricultural pump sets and water pumping stations with solar energy for which Rs. 400 crore will be provided.

In the budget, Defence gets Rs. 2,29,000 crore. Rs. 1,000 crore have been allocated for implementing One Rank One Pension policy. Capital outlay for defence has been raised by Rs. 5,000 crore over the amout provided in the interim budget. This includes Rs. 1,000 crore for the accelerating the development of the Railway system in the border areas. Rs. 100 crore have been provided for setting up a Technology Development Fund to provide resources to public and private sector companies to support research and development of defence systems.
The Finance Minister has also announced setting up a War Memorial, a War Museum and a National Police Memorial.

Major Highlights:

GOVERNMENT COMMITTED TO ACHIEVE FISCAL DEFICIT OF 4.1% FOR 2014-15.