Budget 2017-18

Key Features

 

Economy has moved on a high growth path. India’s Current Account Deficit declined from about 1% of GDP last year to 0.3% of GDP in the first half of 2016-17.  FDI grew 36% in H1 2016-17 over H1 2015-16, despite 5% reduction in global FDI inflows.  Foreign exchange reserves have reached 361 billion US Dollars as on 20th January, 2017

CHALLENGES IN 2017-18
  • World economy faces considerable uncertainty, in the aftermath of major economic and political developments during the last year.
  • The US Federal Reserve's , intention to increase policy rates in 2017, may lead to lower capital inflows and higher outflows from the emerging economies
TRANSFORMATIONAL REFORMS IN LAST YEAR
  • Passage of the Constitution Amendment Bill for GST and the progress for its introduction
  • Demonetisation of high denomination bank notes
  • Enactment of the Insolvency and Bankruptcy Code; amendment to the RBI Act for inflation targeting; enactment of the Aadhar bill for disbursement of financial subsidies and benefits.
AGRICULTURE & RURAL SECTOR
  • Target for agricultural credit in 2017-18 has been fixed at a record level of Rs. 10 lakh crores
  • Coverage under Fasal Bima Yojana scheme will be increased from 30% of cropped area in 2016-17 to 40% in 2017-18 and provision Rs. 9000 crore has been made.
  • Aim to bring one crore households out of poverty and to make 50,000 Gram Panchayats poverty free by 2019
  • Pace of construction of PMGSY roads accelerated to 133 km roads per day in 2016-17, against an avg. of 73 km during 2011-2014.
  • Well on our way to achieving 100% village electrification by 1st May 2018.
INFRASTRUCTURE
  • For transportation sector as a whole, including rail, roads, shipping, provision of Rs 2,41,387 crores has been made in 2017-18
  • Railway lines of 3,500 kms will be commissioned in 2017-18.
  • A new Metro Rail Act will be enacted by rationalising the existing laws. This will facilitate greater private participation and investment in construction and operation
  • 2,000 kms of coastal connectivity roads have been identified for construction and development.
  • By the end of 2017-18, high speed broadband connectivity on optical fibre will be available in more than 1,50,000 gram panchayats.
  • Proposed to set up strategic crude oil reserves at 2 more locations in Chandikhole in Odisha and Bikaner in Rajasthan. This will take our strategic reserve capacity to 15.33 MMT
  • Second phase of Solar Park development to be taken up for additional 20,000 MW capacity
  • A new and restructured Central scheme with a focus on export infrastructure, namely, Trade Infrastructure for Export Scheme (TIES) will be launched in 2017-18
DIGITAL ECONOMY
  • 125 lakh people have adopted the BHIM app so far. The Government will launch two new schemes to promote the usage of BHIM
  • A Mission will be set up with a target of 2,500 crore digital transactions for 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards
  • Banks have targeted to introduce additional 10 lakh new POS terminals by March2017. They will be encouraged to introduce 20 lakh Aadhar based POS by September 2017
PRUDENT FISCAL MANAGEMENT
  • Stepped up allocation for Capital expenditure by 25.4% over the previous year
  • Fiscal deficit for 2017-18 is targeted at 3.2% of GDP and Government remains committed to achieve 3% in the following year
  • Revenue Deficit of 2.3% in BE 2016-17 stands reduced to 2.1% in the Revised Estimates. The Revenue Deficit for next year is pegged at  9% , against 2% mandated by the FRBM Act 
ALLOCATIONS FOR KEY SECTORS
TAX PROPOSALS
  • Under the corporate tax, in order to make MSME companies more viable, there is a proposal to reduce tax for small companies with a turnover of up to Rs 50 crore to 25%. About 67 lakh companies fall in this category. Ninety-six % of companies to get this benefit.
  • The Income Tax Act to be amended to ensure that no transaction above Rs 3 lakh is permitted in cash.
  • Proposal to have a carry-forward of MAT for 15 years.
HIGHLIGHTS FOR INDUSTRY
  • Customs Duty reduction of 2.5 % on three critical components (CNC systems, ball screws and linear motion guides), extended to all CNC machine tools under HSS code 8456 to 8463.
  • Over 20 % increase in capital outlay for Defence amounting to Rs. 86,488 crores in 2017-2018.
  • Capital outlay for Indian Ordnance Factories budgeted at Rs. 803.68 in 2017-2018.
  • Capital and development expenditure for Indian Railways pegged at Rs. 1,31,000 crores in 2017-2018.
  • Capital outlay for machinery and plant in Indian Railways budgeted at Rs. 650.99 crores in 2017-2018.
  • Launch of next phase of ‘Skill Strengthening for Industrial Value Enhancement’ (STRIVE) with a cost of Rs. 2,200 crores in 2017-2018.
  • 100 India International Skill Centres to be established across the country in 2017-2018. Pradhan Mantri Kaushal Kendras to be extended to more than 600 districts.
  • Proposal for Innovation fund for secondary education.
  • Debt-to-GDP ratio to be a principal macro-economic anchor of fiscal policy – set at 60 % for combined Union and State Government by 2023.
  • Foreign Investment Promotion Board to be abolished in 2017-18 and further liberalisation of FDI policy is under consideration
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