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Budget 2018 seeks to boost investment

Budget 2018: Union Budget 2019 extends the fiscal consolidation glide path with an eye on elections. FM has expanded the fiscal deficit target for FY18 and FY19 to 3.5% and 3.3% of GDP. Focus for FY19 expenditure is primarily towards strengthening agriculture, rural development, health, education, employment, MSME and infrastructure sectors.

Fears of LTCG imposition were mitigated to some extent by a lower rate of 10% as compared to 15% STCG and grandfathering of all gains up to 31st Jan 2018. Fiscal consolidation of 20 bps between FY18 and FY19 will allow a lower net market borrowing for FY19 at Rs 3.9 trn.

The government has taken steps towards doubling farm incomes by 2022. Some of the important reforms announced by the government towards achieving this in Budget FY19 are: (i) MSP for kharif crops at least 1.5x of production cost, (ii) upgrading 22,000 gramin haats into gramin agricultural markets (iii) setting up a Rs 2,000-crore fund for developing agricultural marketing infrastructure.

The government announced that it will spend Rs 14.34 trn on building livelihood and infrastructure in rural areas. This expenditure is expected to create employment of 321 crore person days, rural roads totalling 3.17 lakh km, 51 lakh new rural houses, 1.88 crore toilets, and 1.75 crore new household electric connections.

 

Calculate impact of Arun Jaitley’s Budget 2018 on your tax liability

Acknowledging MSME sector’s employment potential, the government announced provision of Rs 38 bn for the sector. Also, decision to extend benefit of reduced corporate tax rate of 25% to companies with turnover of up to Rs 250 cr will benefit 99% of companies filing returns.

Union Budget 2018: It Will Focus On Strengthening Agriculture, Rural Economy, Says FM Jaitley

 

Further, allocation for the infrastructure sector for FY19 has been hiked to Rs 5.97 trn from Rs 4.94 trn in FY18. Out of this, Rs 1,345 bn has been allocated to the transport sector while total capex by railways stands at Rs 1,485 bn in FY19. Excise duty cut of Rs 2 per litre on petrol and diesel has been moved to road cess which will be dedicated to infrastructure creation. Overall the budget focuses on the urgent need to provide succour to a distressed Bharat.