 "Finance Minister Arun Jaitley")
Finance Minister Arun Jaitley presented budget 2016-17 with an aim to give boost to agriculture, rural economy and employment generation. The total expenditure in the budget for 2016-17 has been projected at Rs 19.78 lakh crore, consisting of Rs 5.50 lakh crore under Plan and Rs 14.28 lakh crore under Non-Plan.
Major focus on agriculture and farmers’ welfare, massive mission to provide LPG connection to poor households, a new health protection scheme, increased outlay for infrastructure, Rs 2.87 lakh crore grant in aid to gram panchayats and municipalities, setting up of 1500 multi skill training institutes and incentives for jobs creation are major highlights of the budget.
Announcing a number of new schemes and increasing the allocation in various sectors Jaitley underlined that the Government is firm on its course towards fiscal consolidation without compromising on its development agenda. He said 3.5 percent fiscal deficit is targeted for FY 2016- 17.
The financial years 2015-16 and 2016-17 have been and will be extremely challenging for Government expenditure. The next financial year will cast an additional burden on account of the recommendations of the 7th Central Pay Commission and the implementation of Defence OROP. Stating that the Government has to prioritise its expenditure, Jaitley said the Government wants to enhance expenditure in the farm and rural sector, the social sector, the infrastructure sector and provide for recapitalisation of the banks.
The Finance Minister said that the government will undertake three major schemes to help the weaker sections. While it has already launched Pradhan Mantri Fasal Bima Yojana, this budget has proposed a health insurance scheme aimed at protecting one-third of India’s population against hospitalisation expenditure and a new initiative to ensure that the BPL families are provided with a cooking gas connection, supported by a government subsidy.
The government will undertake significant reforms such as the enactment of a law to ensure that all government benefits are conferred upon persons who deserve it, by giving a statutory backing to the AADHAR platform. He added that significant changes will be brought in the legislative framework relating to the transport sector so as to free it from constraints and restrictions.
Other important reforms, the Finance Minister announced included incentivising gas discovery and exploration by providing calibrated marketing freedom; enactment of a comprehensive law to deal with resolution of financial firms; providing legal framework for dispute resolution in PPP projects and public utility contracts; undertaking important banking sector reforms and public listing of general insurance companies and undertaking significant changes in FDI policy.
The Finance Minister said the agenda for the next year will be to ‘Transform India’ in this direction. He highlighted that the budget proposals are built on this transformative agenda with nine distinct pillars which include: agriculture and farmers’ welfare; rural sector; social sector including healthcare; education, skills and job creation; infrastructure and investment; financial sector reforms; governance and ease of doing business; fiscal discipline and tax reforms.
Regarding rural sector, Jaitley announced that a sum of Rs 2.87 lakh crore will be given as grant in aid to gram panchayats and municipalities. It will translate to an average assistance of over Rs 80 lakh per gram panchayat and over Rs 21 crore per urban local body.
In the area of education, the Finance Minister said allocation under Sarva Shiksha Abhiyan will be increased and a Higher Education Financing Agency (HEFA) will be set up with initial capital base of Rs 1,000 crore.
Laying special emphasis on infrastructure, budget has allocated Rs 55,000 crore for roads and highways which will be further topped up by additional Rs 15,000 crore to be raised by NHAI through bonds. The total investment in the road sector including PMGSY allocation would be 97,000 crore during 2016-17. He said together with the capital expenditure of the Railways, the total outlay on roads and railways will be Rs 2,18,000 crore. The Government will enact necessary amendments in the Motor Vehicles Act and open up the road transport sector in the passenger segment.
In the power sector, he said the government is drawing up a comprehensive plan, spanning next 15 to 20 years to augment the investment in nuclear power generation. To augment infrastructure spending further, the government will permit mobilization of additional finances to the extent of Rs 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority through raising of Bonds.
The Minister announced reforms in FDI policy in the areas of insurance and pension, asset reconstruction companies, stock exchanges etc. He said 100 percent FDI will be allowed through FIPB route in marketing of food products produced and manufactured in India.
Expressing concern over problem of stressed assets in public sector banks, the Minister said to support the banks, an allocation of Rs 25,000 crore is being proposed towards recapitalisation of public sector banks.
On the fiscal situation in the country the Minister said the fiscal deficit in RE 2015-16 and BE 2016-17 have been retained at 3.9 percent and 3.5 percent of GDP respectively. He added a redeeming feature of this year’s budget is that the revenue deficit target has been improved upon from 2.8 percent to 2.5 percent of GDP in RE 2015-16.
