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In the Narendra Modi government's maiden budget, the finance minister Arun Jaitley has hit the ground running.
In his Budget speech for FY15 he said that the government's immediate target is to lower inflation, lessen the fiscal deficit and reduce the cuurent account deficit to manageable levels.
He has warned of the "bitter medicine" needed to nurse the economy back to health from high inflation and the worst slowdown since free-market reforms in the early 1990s unleashed an era of rapid growth. He said that the FY15 fiscal deficit will be 4.1%.
At the same time, Jaitley vowed to adhere to the "daunting" budget deficit target of 4.1% of gross domestic product that the new government inherited from its predecessor
"I have decided to accept this challenge - one fails when one stops trying," Jaitley told a hushed lower house of parliament.
Read the complete speech here:
He said the government aims to achieve 7-8% economic growth rate in next 3-4 years. The FY16 fiscal deficit target has been set at 3.6% of GDP and that of FY17 at 3% at GDP.
No changes in personal income tax rates have been announced apart from the increase in personal income tax exemption to Rs 2.5 lakh per annum.
He announced that a new urea regime will be implemented. He said that the government needs to revive growth particularly in manufacturing sector and infrastructure after slow decision making by the previous government. "Overall subsidy regime will be reviewed, especially food and oil. Marginalised sections and SC/ST to be protected," the Finance Minister said in his speech.
"Two years of sub-five per cent growth has led to challenges to the economy," he said and added that green shoots of recovery are seen in global economy.
He announced a raise in composite cap of FDI in insurance to 49% from 26% while that in defence sector has also been set at 49%. The government plans to set up five more IITs and IIMs for which Rs 500 crores have been allocated. Four more AIIMS institutes have also been announced in Andhra Pradesh, West Bengal, Vidarbha and Purvanchal for which Rs 500 crores have been allocated. Each state where there is no AIIMS will be added in the coming years, he said.
Expenditure Management Commission will be constituted to look at expenditure reforms, Jaitley announced. Rs 2.29 lakh crore has been allocated for the Defence sector. Rs 14,389 crore has been provided for Pradhan Mantri Gram Sadak Yojana.
Tax laws
Jaitley spoke at length about the contentious tax laws, especially the retrospective tax law.
"This government will not ordinarily change policies retrospectively, which creates a fresh liability. All future indirect transfers under the retro tax regime will be scrutinised by a high level committee of CBDT before action is taken. We are committed to providing stable tax regime which is investor friendly. We are committed to providing stable tax regime which is investor friendly," he said.
He further added that the govt will set up a high-level Committee to interact with industry to bring about changes in tax laws if required. He proposed to enhance the scope of income tax settlement commission.
Banks
In the middle of his speech Jaitley took a five-minute break during which the Lok Sabha was adjourned.
"Our banking system needs to be further strengthened. Public sector banks need Rs 2.40 lakh crore equity to conform with Basel-III norms by 2018," he said.
He said that bank capital will be raised through retail sale of shares and that the government will continue to hold majority in PSU banks.
"The government will examine proposal to give additional autonomy to banks and make them more responsible," he said.
Jaitley announced setting up of Infrastructre Investment Trust to finance infrastructure projects and reduce burden on banks.
Among other major announcements, Jaitley proposed setting up of 100 smart cities, for which the government will provide Rs 7,060 crore.
E-visas will be introduced at nine airports in the country. He said the government expects PSUs to invest Rs 2,47941 crore this fiscal. He raised the ceiling of PPF to Rs 1.5 lakh as against the existing Rs 1 lakh.
The Budget proposes Rs 1,000 crore for Pradhanmantri Krishi Seechai Yojana to improve irrigation facilites.
National multi-scale programme 'Skill India' will be introduced to provide training and support for employment.
Rs 200 cr has been set aside for the Sardar Patel statue project in Gujarat
"Deen Dayal Upadhaya Gram Jyoti Yojana will be launched to augment power supply in rural areas as the government is committed to providing 24x7 power supply to all homes," Jaitley announced.
The pension scheme for senior citizens is being revived. The government approved minimum monthly pension of Rs 1,000 per month under EPS-95 scheme run by EPFO.
Rs 50,548 cr have been proposed for SC development.
EPFO will launch a unified account scheme for portability of Provident Fund accounts.
The government will launch 'Beti Bachao, Beti Padhao' scheme for which Rs 100 crore has been set aside.
The government increased wage ceiling for EPFO schemes to Rs 15,000 from existing Rs 6,500 per month.
Rs 3,600 crore has been provided for safe drinking water in 20,000 habitations in villages that are facing problem of impure drinking water. The Budget proposes National Housing Banking programme for which Rs 8,000 crore is being given.
'Kisan' TV channel to be launched by Doordarshan at cost of Rs 100 crore
Jaitley proposed National Rural Internet and Technology Mission for which Rs 500 crore is being provided for.
Metro rail services will be launched in Lucknow and Ahmedabad, a project for which Rs 100 crore has been set aside.
