Union Finance Minister Arun Jaitley presents the Union Budget at Parliament, in New Delhi on Thursday. Photograph:( PTI )
Finance Minister Arun Jaitley presented his last full year Budget on Thursday which, as expected, was friendly to rural India and agriculture.
Jaitley's biggest announcement of Thursday was the creation of the world's largest health insurance programme.
Jaitley said Thursday that the government would insure 10 crore families or approximately 50 crore people. Each of those families would be insured up to Rs 5 lakh per year. (Fifty crore or 500 million is close to half the country's population.)
Jaitley added Thursday that the government would spend lakhs of crore rupees on kick-starting the rural sector. One of the biggest outlays would go towards pushing up the minimum support price of all Kharif crops to 1.5 times their production cost. (Critics of the government have been talking about wide-ranging distress in the rural sector, and the country will go to elections sometime before May next year.)
Other announcements included the distribution of 8 crore free gas connections to women (up from 5 crore connections), and 4 crore free electricity connections to the poor.
Jaitley added that the government would contribute 12% of payments to the Employees Provident Fund for all new employees for 3 years. And the contribution of women to the EPF would be reduced to 8% but with no corresponding decrease in the government's contribution.
But to fund all of this, Jaitley had to let go of the fiscal deficit. Jaitley announced Thursday that the fiscal deficit target this year would increase to 3.3%, higher than the earlier 3%. Most experts had expected a 3.2% target.
Jaitley, in that sense, had to try and balance his budget speech -- by both reaching out to the rural poor, a bloc the BJP has traditionally not done well with, while at the same time keeping his investors happy.
The stock markets did not react well to the finance minister's revised fiscal deficit target, or his announcement that long-term capital gains above Rs 1 lakh from the sale of equities and equity mutual funds would be taxed at 10% -- the Sensex fell close to 440 points after opening higher than Wednesday's closing.
Also read: Top takeaways from Union Budget 2018
Also read: Key highlights of Budget 2018
Jaitley also lowered the corporate tax rate for small, micro and medium enterprises with turnover of up to Rs. 250 crore to 25 per cent from current 30 per cent.
While keeping personal income tax rates and slabs unchanged, Jaitley introduced a Rs 40,000 standard deduction for salaried employees and pensioners in lieu of transport and medical expenses.
Jaitley said the government's focus would be on agri sector, infrastructure and education sector as he promised to provide education holistically without segmentation from pre-nursery to Class 12 and to move from the blackboard to the digital board.
Over 9,000 kms of national highways will be completed in 2018-19 and allocation of over Rs. 1.48 lakh crore has been planned for the railways, Jaitley added.
Jaitley said that when the NDA government took over, India was considered one of the fragile five economies of the world but that the Modi-led government has reversed that with the country today being among the world's fastest-growing five economies.
"India is today fastest growing economy... India is today a USD 2.5 trillion economy and will become fifth largest economy in the world from the present seventh largest," Jaitley said, projecting exports growth at 15 per cent.
"In the second half (October-March) the growth is expected to be 7.2-7.5 per cent and firmly on path to achieve 8 per cent growth," he added.
(With inputs from PTI)