The Finance Minister Mr. Arun Jaitley, presented the budget for the FY 2018-19 on February 1, 2018. In the pre-election budget, Finance minister has taken earnest efforts to have a proper mix of populism and financial prudence. The budget tries to focus on MSMEs, rural economy, affordable housing, infrastructure spending, healthcare even while continuing its commitment towards prudent fiscal management. The salient features of the budget are grouped below.
Budget 2018-19 – Efforts for Prudent Fiscal Management continues
• Attempts to contain Fiscal Deficit at 3.3% with nominal expenditure growth despite being a pre-election budget.
• Government shows its commitment to FRBM guidelines by declaring to bring down Central Debt / GDP levels of 40% by 2023 against the present 68%.
• Net Market Borrowing (NMB), the key parameter to monitor fiscal health is predicted at Rs. 4.02 lakh crores at 2.1% of GDP ( Rs. 4.8 lakh crore last year).
Budget 2018-19 – Thrust on Rural Economy and agriculture
Budget tries to achieve double farm income by 2022. Following announcements are in that direction:
• To provide health cover of Rs. 5 lakhs per family to 10 crore families
• Target for institutional credit to agriculture is raised to INR 11 lakh crores in FY19
• MSP (Minimum Support Price) to farmers for food articles to be 150% over cost
• Ministry of Food processing allocation increased by by 95% to INR 1400 crores
• Rs. 10,000 crores set aside for fisheries, aquaculture and animal husbandry fund
• Fertiliser subsidy allocation at Rs. 70,000 crores
• Crop Insurance (Pradhan Mantri Fasal Bima Yojana) increases by 21% to Rs 13,000 crores
Budget 2018-19 – MSME sector gets more attention
• Higher target of lending under Mudra loans at Rs. 3 lakh cr (increase of 23% yoy)
• Income Tax for companies with annual turnover upto INR 250 crores (from INR 50 cr earlier) reduced to 25%
• To encourage “Make in India”, increases import duty to 25% on certain import products.
• TReDS platform to provide short term working capital finance to MSMEs.
Pradhan Mantri Awas Yojna is a mission was announced with the aim of ‘Housing For All’ by the year 2022
• 2 crore houses to be built across the country.
• CLSS (Credit Linked Subsidy Scheme) continues– Loan up to Rs. 12-18 lakhs to get 3 to 6.5% interest subsidy
• Government to establish dedicated Affordable Housing Fund in National Housing Bank. To be funded from priority sector lending and fully service bonds authorized by GOI. Outside budget allocation will come from this fund
Budget 2018-19 – Infrastructure continues to be in focus
• Overall infrastructure spend for FY 18-19 at Rs. 5,97,000 cr (up 20% yoy )
• Rail and Road are the primary driver of Infrastructure Push Allocation Strong allocation for railway capex pegged at Rs. 1,46,000 cr (up 22% yoy) of which Budgetary Support is Rs.52,100 cr (up 32% yoy). Allocation to Roads sector is Rs. 1,21,000 cr ( up 10% yoy) of which Budgetary Support is Rs. 59,400 cr (up 17% yoy). to undertake 18000 km of gauge conversion against . average of 2000KM in previous 3 years.
• Allocation to BharatNet Project for Broadband connectivity on optical fiber to connect gram panchayats increased by 43% to Rs. 8170 cr