Gujarat government delivers election-friendly budget

Sets higher allocation for education, health, MSMEs and infrastructure

Ahead of the state assembly elections in December this year, Gujarat deputy chief minister Nitin Patel, who also holds the finance portfolio, delivered a state budget for 2017-18 that looked to appease all sections of the society, while keeping its finances intact.

Amid recent agitations over unemployment and criticism over favouritism towards large industries, the state budget made higher allocations towards education, youth, health, micro, small and medium enterprises (MSMEs) and infrastructure. As a result, the budget was prepared on the theme of 'optimum inclusive development of human resources and trunk infrastructure through effective and transparent implementation'.

A first by the chief minister Vijay Rupani-led government, the budget size stood at Rs 1.72 lakh crore for FY 2017-18, up by Rs 20,327 crore as against last year, along with surplus estimates of Rs 521.3 crore. Education saw the highest allocation of Rs 25,000 crore, followed by tribal development at Rs 14,560 crore and urban development and urban housing at Rs 11,500 crore. Overall the social sectors allocation stood at 67.73 per cent of the total budget size as against 66.64 per cent last year.

In the revised estimates for the 2016-17 budget, Patel mentioned that as against the expected surplus of Rs 245.49 crore for the year 2016-17, the same was expected at Rs 1342.93 crore in the revised estimates due to net transactions.

For the year, 2017-18, total revenue expenditure is estimated at Rs 1,25,455.63 crore, while capital expenditure is estimated at Rs 45,376.34 crore. The revenue receipts are estimated at Rs 1,31,521.23 crore and the capital receipts are estimated at Rs 33,974.90 crore.

Ahead of the possible implementation of the goods and services tax (GST), Gujarat government chose to keep the the existing value added tax (VAT) unchanged. However, Patel announced that payment of taxes exceeding Rs 10,000 would be made mandatory through e-payment.

Focusing on several social sector categories and schemes, Patel made special announcements for students in the state by offering cycles for 45,000 female students of class IX under Vidya Sadhna Yojana, free uniform and textbooks to over six million primary students and subsidised electronic tablets for about 350,000 first year college students. The government will also waive 100 per cent tuition fees for female medical students.

Having lost seats in the rural areas in the panchayat polls in December 2015, the state government looked to appease farmers and rural citizens. This was done from tax cut in tractors used for agricultural purposes to power subsidies.

Patel not only subsidised power to farmers with an allocation of Rs 4,011 crore as well as Rs 400 crore for free power to village water works but also made allocation of Rs 5,100 crore to take Narmada water to Kutch region. Apart from providing assistance to install solar pump sets, the state government will also provide farm loans at the one per cent interest rates, which Patel maintained would be a big relief for farmers.

In the tax section, the state government proposed to simplify the motor vehicle tax structure by introducing levy of a lump sum tax for new vehicles registered on or after April 1, 2017, apart from providing an option of lump sum payment over and above recurring payments for old vehicles registered before April 1, 2017. The government proposed a reduced and uniform lump sum tax of seven per cent of the sales price of goods vehicles with gross vehicle weight of over 7.5 tonnes, and eight per cent of sales price of private vehicles.

Patel also proposed levy of lump sum tax at 3.5 per cent of sales price of buses run by educational institutes and two per cent on stage carriage buses. Proposal of a uniform lump sum tax rate of 12 per cent of the sales price of ordinary and luxury maxi cab.

Construction equipment vehicles and tractors used for other than agricultural purpose having unladen weight not exceeding 7.5 tonnes attracted a lump sum tax rate of three per cent on the sales price.

Agricultural tractors, however, attracted a downward revision in lump sum tax at three per cent, from 3.5 per cent, thereby resulting in direct benefit of at least Rs 3,000 for farmers. As per the government, the proposal would help 25,000 new vehicles being registered every year to benefit by visiting transport office only once for lump sum tax payment.

Meanwhile, terming the budget "complementary to the union budget", Patel offered a Rs 1000 crore special package for micro-small and medium enterprises (MSMEs).