Union Budget 2015: Highlights

Here are the highlights of the Union Budget 2015:

Fiscal deficit

  • Fiscal deficit seen at 3.9 per cent of GDP in 2015/16
  • Will meet the challenging fiscal target of 4.1 per cent of GDP
  • Remain committed to meeting medium term fiscal deficit target of 3 per cent of GDP
  • Current account deficit below 1.3 per cent of GDP
  • Jaitley says have to keep fiscal discipline in mind despite need for higher investment

 Growth

 GDP growth seen at between 8 per cent and 8.5 per cent y/y

  • Aiming double digit growth rate, achievable soon

Inflation

Expects consumer inflation to remain close to 5 per cent by March, opening room for more monetary policy easing

  • Monetary policy framework agreement with the RBI clearly states objective of keeping inflation below 6 per cent
  • “One of the achievements of my government has been to conquer inflation. This decline in my view represents a structural shift.”

Revenues

  • Revenue deficit seen at 2.8 per cent of GDP
  • Non tax revenue seen at Rs 2.21 trillion
  • Agricultural incomes are under stress

Disinvestment

  • Government targets Rs 410 billion from stake sales in companies
  • Total stake sale in 2015/16 seen at Rs 695 billion

Market reforms

  • Propose to merge commodities regulator with SEBI
  • To bring a new bankruptcy code
  • Jaitley says will move to amend the RBI act this year, and provide for a monetary policy committee
  • To set up public debt management agency
  • Proposes to introduce a public contract resolution of disputes bill
  • To establish an autonomous bank board bureau to improve management of public sector banks

Policy reforms

  • To enact a comprehensive new law on black money
  • Propose to create a universal social security system for all Indians
  • To launch a national skills mission soon to enhance employability of rural youth
  • To raise visa-on-arrival facility to 150 countries from 43
  • Allocates Rs 346.99 billion for rural employment guarantee scheme

Borrowing

  • Gross market borrowing seen at Rs 6 trillion
  • Net market borrowing seen at Rs 4.56 trillion

General anti-avoidance rules (GAAR)

  • Government defers rollout of anti-tax avoidance rules GAAR by two years
  • GAAR to apply prospectively from April 1, 2017
  • Retrospective tax provisions will be avoided

Taxation

  • To abolish wealth tax
  • Replaces wealth tax with additional 2 per cent surcharge on super rich
  • Proposes to cut to 25 per cent corporate tax over next four years
  • Corporate tax of 30 per cent is uncompetitive
  • Net gain from tax proposals seen at Rs 150.68 billion
  • Jaitley proposes modification of permanent establishment norms so that the mere presence of a fund manager in India would not constitute a permanent establishment of the offshore fund, resulting in adverse tax consequences.
  • Proposes to rationalise capital gains tax regime for real estate investment trusts
  • Expects to implement goods and services tax by April 2016
  • To reduce custom duty on 22 items
  • Basic custom duty on commercial vehicle doubled to 20 per cent
  • Proposes to increase service tax rate and education cess to 14 per cent from 12.36 per cent
  • Plans to introduce direct tax regime that is internationally competitive on rates without exemptions
  • Exemptions for individual tax payers to continue
  • To enact tough penalties for tax evasion in new bill
  • Tax department to clarify indirect transfer of assets and dividend paid by foreign firms

 

Infrastructure

  • Investment in infrastructure will go up by Rs 700 billion in 2015/16 over last year
  • Plans to set up national investment infrastructure fund
  • Proposes tax-free infrastructure bonds for projects in roads, rail and irrigation projects
  • Proposes 5 “ultra mega” power projects for 4,000MW each
  • Second unit of Kudankulam nuclear power station to be commissioned
  • Will need to build additional 100,000km of road
  • Ports in public sector will be encouraged to corporatise under Companies Act

Expenditure

  • Plan expenditure estimated at about Rs 4.65 trillion
  • Non-plan expenditure seen at about Rs 13.12 trillion
  • Allocates Rs 2.46 trillion for defence spending
  • Allocates Rs 331.5 billion for health sector
  • If revenue improves, hope to raise budgeted allocations for rural job scheme by Rs 50 billion

Investment

  • Propose to do away with different types of foreign investment caps and replace them with composite caps
  • To allow foreign investment in alternative investment funds
  • Public investment needed to catalyse investment

Gold

  • To develop a sovereign gold bond
  • To introduce gold monetisation scheme to allow depositors to earn interest
  • To introduce Indian-made gold coin to reduce demand for foreign gold coins

Subsidies

  • Food subsidy seen at Rs 1.24 trillion
  • Fertiliser subsidy seen at Rs 729.69 billion
  • Fuel subsidy seen at Rs 300 billion
  • We are committed to subsidy rationalisation based on cutting leakages

 

 

Source: http://timesofindia.indiatimes.com/budget-2015/union-budget-2015/Union-Budget-2015-Highlights/articleshow/46404993.cms

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