Union Budget 2015-16 Highlights

Finance Minister Arun Jaitley present Union budget to make way for high economic growth and favorable environment for business investment. Key highlights are:
Fiscal Deficit and Growth Related

  • GDP growth seen at between 8% and 8.5% year on year

  • Aiming double digit growth rate, achievable soon

  • Fiscal deficit seen at 3.9% of GDP in 2015/16

  • Will meet the challenging fiscal target of 4.1% of GDP

  • Remain committed to meeting medium term fiscal deficit target of 3% of GDP

  • Current account deficit below 1.3% of GDP

  • To Keep fiscal discipline in mind despite need for higher investment



Inflation Related

  • Expects consumer inflation to remain close to 5% by March, opening room for more monetary policy easing

  • Monetary policy framework agreement with the RBI clearly states objective of keeping inflation below 6%


 
Revenues, Expenditure and Borrowing Related

  • Revenue deficit seen at 2.8% of GDP

  • Non tax revenue seen at 2.21 trillion rupees

  • Agricultural incomes are under stress

  • Gross market borrowing seen at 6 trillion rupees

  • Net market borrowing seen at 4.56 trillion rupees

  • Plan expenditure estimated at about 4.65 trillion rupees

  • Non-plan expenditure seen at about 13.12 trillion rupees

  • Allocates 2.46 trillion rupees for defence spending

  • Allocates 331.5 billion rupees for health sector

  • If revenue improves, hope to raise budgeted allocations for rural job scheme by 50 billion rupees


 
Disinvestment Related

  • Government targets 410 billion rupees (USD 6.7 billion) from stake sales in companies in 2015/16

  • Total stake sale in FY 2015-16 seen at 695 billion rupees

  • Sets stake sale target for FY2016-17 at 550 billion rupees

  • Revises down stake sale target for 2014/15 to 313.5 billion rupees


 
 
Market and Policy Reforms Related

  • Propose to merge commodities regulator with SEBI

  • To bring a new bankruptcy code

  • To amend the RBI act this year, and provide for a monetary policy committee

  • To set up public debt management agency

  • Proposes to introduce a public contract resolution of disputes bill

  • To establish an autonomous bank board bureau to improve management of public sector banks

  • To enact a comprehensive new law on black money

  • Propose to create a universal social security system for all Indians

  • To launch a national skills mission soon to enhance employability of rural youth

  • To raise visa-on-arrival facility to 150 countries from 43

  • Allocates 346.99 billion rupees for rural employment guarantee scheme


 
 
Taxation Related

  • To abolish wealth tax

  • Replaces wealth tax with additional 2 pct surcharge on super rich

  • Proposes to cut to 25% corporate tax over next four years

  • Corporate tax of 30% is uncompetitive

  • Net gain from tax proposals seen at 150.68 billion rupees

  • Modification of permanent establishment norms so that the mere presence of a fund manager in India would not constitute a permanent establishment of the offshore fund, resulting in adverse tax consequences.

  • Proposes to rationalize capital gains tax regime for real estate investment trusts

  • Expects to implement goods and services tax by April 2016

  • To reduce custom duty on 22 items

  • Basic custom duty on commercial vehicle doubled to 20%

  • Proposes to increase service tax rate and education cess to 14% from 12.36%

  • Plans to introduce direct tax regime that is internationally competitive on rates without exemptions

  • Exemptions for individual tax payers to continue

  • To enact tough penalties for tax evasion in new bill Tax dept to clarify indirect transfer of assets and dividend paid by foreign firms


 
 
Infrastructure Related

  • Investment in infrastructure will go up by 700 bln rupees in 2015/16 over last year

  • Plans to set up national investment infrastructure fund

  • Proposes tax-free infrastructure bonds for projects in roads, rail and irrigation projects

  • Proposes 5 "ultra mega" power projects for 4,000 MW each

  • Second unit of Kudankulam nuclear power station to be commissioned

  • Will need to build additional 100,000 km of road

  • Ports in public sector will be encouraged to corporatise under Companies Act


 
Subsidy Related

  • Food subsidy seen at 1.24 trillion rupees

  • Fertiliser subsidy seen at 729.69 billion rupees

  • Fuel subsidy seen at 300 billion rupees

  • Major subsidies estimated at 2.27 trillion rupees

  • We are committed to subsidy rationalisation based on cutting leakages


Others

  • Government defers rollout of anti-tax avoidance rules GAAR by two years

  • GAAR to apply prospectively from April 1, 2017 andRetrospective tax provisions will be avoided

  • To develop a sovereign gold bond

  • To introduce gold monetisation scheme to allow depositors to earn interest

  • To introduce Indian-made gold coin to reduce demand for foreign gold coins