▼ NABARD hails Budget micro-irrigation initiatives [02-3-17]
Nabard has hailed the increased focus on irrigation and dairy sectors in the Budget. This includes the hike in the corpus of long term irrigation fund by another INR 20,000 crore, taking the total fund size to INR 40,000 crore.
The FM also announced a dedicated micro irrigation fund which will be set up by NABARD to attain the goal, ‘per drop more crop’, with an initial corpus of INR 5,000 crore.
This will increase the area under irrigation and improve the efficiency of irrigation.
Improving irrigation efficiency is critical for agriculture since there is only 2.4 per cent of the world’s total geographical area and 16 per cent of the world’s population, yet only 4 per cent of the world’s total fresh water resources.
FM Jaitley setting up of a dairy processing and infrastructure development fund at NABARD with a corpus of INR 8,000 crore over three years. The fund will start with a corpus of INR 2,000 crore.
The dairy cooperative network includes:
- 254 cooperative milk processing units,
- 177 milk unions covering 346 districts and
- over 1,55,634 village-level societies.
About 15.1 million farmers have been brought under the ambit of village level dairy corporative societies up to March 2013.
Still, about 80 per cent of this milk is being collected and distributed by unorganised sector.
The budget said the government will provide support to NABARD for computerisation and integration of all 63,000 functional primary agriculture credit societies (PACS) with the core banking system of district central cooperative banks.
This will be accomplished in three years at an estimated cost of INR 1,900 crore, with financial participation from state governments.
▼ Aadhaar-enabled smart cards for senior citizens [02-3-17]
The recent Budget development on Aadhaar is that senior citizens would receive Aadhaar-based smart cards for their health and well-being.
Aadhaar-based smart cards would comprise health details of senior citizens.
The FM further said that the pilot service of these cards would take off in 15 cities initially in India beginning this year.
The announcement for this new initiative shows how the government is focused on the path of making Aadhaar the core platform in different services.
The government recently said that as of now more than 111 crore citizens in the country have an Aadhaar number. This unit covers more than 99 percent of the Indian adult population.
Following demonetization, the enrollment for Aadhaar also increased to 7 to 8 lakh per day as against 5 to 6 lakh till October 2016.
The government also reported a rise of 2.69 crore transactions of Aadhaar-based enabled payments in November 2016, which increased to 3.73 crore in December 2016 and 2.06 crore transactions in the first half of January.
▼ Agriculture and rural development initiatives of Budget 2017-2018 [02-3-17]
The Union Budget was presented by FM Arun Jaitley against plummeting farm incomes despite a good agriculture growth of 4.1 percent and healthy production of rain-fed Kharif crops in 2016-17.
The impacts of demonetization were not that beneficial for the agriculture sector. The incomes of the farm were adversely impacted due to it.
Consequently, it caused a fall in the prices of fruits and vegetables.
Wholesale prices of pulses have fallen below the rate of support prices which are set by the government following a most productive harvest.
The government’s approach of increasing the financing capability of existing institutions by establishing dedicated funds is being seen by experts as good move to secure funds for the government’s farming initiatives without impacting the fiscal roadmap.
The Union Budget 2017 has:
- Opened the doors for market reforms in agriculture,
- Set a higher target for farm credit and
- Increased funding for crop insurance, as the government stepped up to tackle distress in rural India.
The budget for 2017-18 chose National Bank for Agriculture and Rural Development (NABARD), for implementing schemes to develop the dairy sector and improve access to irrigation.
To enhance access to irrigation, the budget allocated INR 20,000 crore for the long-term irrigation fund under NABARD under “per drop, more crop” initiative.
Under the “Har Khet Ko Pani” scheme initiative, the budget allocation of INR 5,000 crore for setting up of a dedicated micro-irrigation fund under NABARD was made.
Additionally, INR 8,000 crore was allocated for the setting up of a dairy development fund under NABARD.
Overall, NABARD’s refinancing capacity has been increased by almost INR 34,900 crore across numerous initiatives.
The finance minister proposed a model on contract farming to help farmers get enhanced value for their produce.
This model law will be circulated among states across the entire country.
The Budget elaborated the government’s previous goal of bringing in more regulated agriculture markets on the electronic National Agriculture Market (e-NAM) platform.
In the budget, it is indicated that the coverage of the electronic National Agricultural Market (e-NAM) would be expanded from the current 250 markets to 585 mandis.
Budget by government has asked state governments to delist perishables produce from Agriculture Produce Marketing Committees (APMCs) and allow farmers to sell such items face to face to consumers to get a better price
There is 24 percent increase in the funding for the rural and agriculture sector in fiscal 2017-18 to INR 1.87 trillion.
The government has made efforts to provide the flagship crop insurance to all farmers.
For this, the budget raised the allocation from INR 5,500 crore to INR 9,000 crore in 2017-18 for scheme Pradhan Mantri Fasal Bima Yojana (PMFBY).
The government plans to bring 40 percent of cropped area under insurance and take it to 50 percent next year.
Programs such as Rashtriya Krishi Vikas Yojana (RKVY) witnessed a 12 per cent reduction in allocation from the 2016-17 Budget Estimate of INR 5,400 crore to INR 4,750 crore in Budget Estimate 2017-2018.
The Union Budget increased the allocation of the Pradhan Mantri Krishi Sinchai Yojana (PMKSY) by 42.1 per cent in the 2017-18 Budget Estimates. This means INR 7,375.92 crore from INR 5,187.01 crore.
This was done with the purpose to accomplish pending projects and taking up new ones Budget has enhanced the target for agricultural credit allocation, crop insurance, and irrigation.
The government raised allocation under MNREGA increased from INR 38,500 crore to INR 48,000 crore.
The road work under Pradhan Mantri Gram Sadak Yojna is accelerated to 133 km roads per day in 2016-17 from 73 km per day during 2011-14.
Increased allocation as per MNREGA would help in strengthening social safety net in the rural economy.
The rise in construction of rural roads would create a further demand for two-wheelers, especially gearless scooters, in the rural areas.
The entry-level passenger vehicle sector also gets 30 percent of its demand from the rural market and likely it will be able to maintain it in future.
Cabinet approved extending of tenure of loans under Credit Linked Subsidy Scheme of Pradhan Mantri Awas Yojana from 15 to 20 years.
For women empowerment, Mahila Shakti Kendra at village level will be in place in this financial year.
For fulfilling the basic need of electrification, the government has promised to achieve 100 percent village electrification by May 1, 2018.
1,00,00,000 houses will be constructed by 2019 for those residing in kaccha houses.
The union budget announced an extension of tenure of loans under Credit Linked Subsidy Scheme of Pradhan Mantri Awas Yojana from 15 to 20 years.
The government also pledged to double the income of the farmers in 5 years.
▼ BHIM App gets 2 new support schemes as per Budget 2017-2018 [02-3-17]
The BHIM app, or Bharat Interface for Money, is being used by over 125 lakh people, announced Finance Minister Arun Jaitley in the Union Budget 2017-2018.
The budget announcement also puts a significant boost to the idea of enhancing digital payments in India. This is an area where the NDA government has put particular focus.
The government will launch two new scheme to promote the use of the BHIM app.
One will be referral payments for individuals, and another will cashback for merchants who accept payments from BHIM.
The Finance Minister also announced that a Merchant version of Aadhaar-enabled payments will be launched shortly.
The government has also promised an update to the BHIM app as well in order to boost usage.
BHIM was recently integrated with UID and now allows payments using Aadhaar number.
The Unified Payments Interface (UPI)-based app will get biometric-based Aadhaar Pay option as well, but that feature is yet to be launched. It is expected to launch in the coming weeks.
BHIM also allows payments via UPI using the mobile number or UPI address along with Account and IFSC details.
Currently, the government has 14 banks onboard to enhance payments via Aadhaar Pay, with more to join soon.
How to Use the App
About the App
- To make payments via Aadhaar, a user needs to tap on Send money, then on the three dots at the top of the menu.
- Options for Aadhaar Pay and Accounts plus IFSC should open up.
- Tap on Aadhaar as the option, type in the number, then if it is linked to a bank account, they can transfer the required amount.
- The digital payments app BHIM from National Payments Corporation of India (NPCI) was announced by PM Modi on December 30 last year.
- The digital payments app was downloaded more than 5 million times on Android since then.
▼ 5 Important Things to Know About DigiGaon and BharatNet [02-3-17]
FM Arun Jaitley as per Budget 2017 highlighted the importance of India’s telecom sector. The FM announced that the allocation of the aspirational BharatNet project has been raised to INR 10,000 crores.
Additionally, the FM announced that a DigiGaon initiative will be launched that aims for the provision of telemedicine, education and skills with the help of digital technology.
The Finance Minister added that the recently held spectrum auctions have lowered the spectrum scarcity in the country.
Meanwhile, Jaitley said that the government’s agenda for this year will be to modify, energise and enable India (TEC India) and that digital economy will play a huge part in its implementation and achievement.
1. Under the BharatNet Project, OFC has been laid in 1,55,000 km. Allocation for BharatNet Project has been stepped up to INR 10,000 crores in 2017-18.
2. By the end of 2017-2018, high-speed broadband connectivity on optical fibre will be available in more than 1,50,000 gram panchayats, with WiFii hot spots and access to digital services at low tariffs.
3. A DigiGaon initiative will be launched to provide telemedicine, education and skills through digital technology.
4. Telecom sector is an important component of our infrastructure ecosystem.
5. The recent spectrum auctions have removed spectrum scarcity in the country. This will give a major boost to mobile broadband and Digital India for the benefit of people living in rural and remote areas.
▼ Railway sector gets largest ever allocation: Budget 2017 [02-3-17]
First railway budget in 93 years to be announced as part of the Union budget announced the largest ever allocation of INR. 1.3 trillion to Indian Railways, with a gross budgetary support of INR. 55,000 crore.
National carrier will focus on 4 major areas: passenger safety, capital and development works, cleanliness and finance and accounting reforms—matters traditionally announced by the Union railway minister.
A corpus of INR 1 trillion for a rail safety fund to be spent over five years; solar power for 7,000 railway stations;
Redevelopment of 25 railway stations;
70 projects for construction and development through joint ventures with nine state governments;
Commissioning of 3,500km railway lines in 2017-2018, up from 2,800 km in 2016-17.
The budget also proposed stock market listing of railway enterprises like Indian Railways Catering and Tourism Corporation (IRCTC), Ircon International Ltd and Indian Railways Finance Corporation (IRFC), and end-to-end transport solutions by Indian Railways in selected commodities by partnering logistics companies.
The budget also waived service charges on railway e-tickets to encourage cashless transactions and made AC class tickets cheaper by INR 40 and sleeper class by INR 20.
The solar power which will help Indian Railways accomplish its Mission 41K, a plan to save INR 41,000 crore in next 10 years by electrifying 90 percent of railway lines, and also reduce expenditure on power was announced
Railways’ plans to develop 1,000 mega-watt (MW) solar (power) at 7,000 stations creates distributed solar ecosystem across India.
100 percent electrification of rural areas should also integrate solar distributed generation as part of the scheme for better reliability.
Freight loading is expected at 1,165 million tonnes (MT) in 2017-18, which is 71.50MT over revised estimates 2016-17 and earnings at Rs1,18,998 crore.
Railways is expected to earn Rs50,125 crore in passenger traffic, taking total receipts to Rs1,89,498.37 crore.
▼ Skill Development and employment generation focus: Budget 2017 [02-3-17]
Announcements in the Budget 2017 focusing allocation to boost Employment Generation, Skill, and Livelihood initiatives:
INR 17273 crore allocated for Employment Generation, Skill, and Livelihood in Budget 2017.
INR 3016 crores allocated to Ministry of Skill Development and Entrepreneurship(MSDE) for 2017-18 which was INR.1804 crores (revised to INR.2173 crores) in 2016-17.
INR.4,500 allocated for Deendayal Antyodaya Yojana- National Rural Livelihood Mission for promoting skill development and livelihood opportunities for people in rural areas to in 2017-18.
Pradhan Mantri Kaushal Kendras (PMKK) have already been promoted in more than 60 districts which will be extended to 600 districts across India.
100 India International Skills Centres will be established across India. These Centres would offer advanced training and also courses in foreign languages. This will help in raising job opportunities in foreign areas.
Mason skill training to 5 Lakh people in rural areas by 2022 with a present target of training at least 20,000 individuals by 2017-18.
3 times increased allocation for Prime Minister’s Employment Generation Programme (PMEGP) and credit support schemes.
Launch the Skill Acquisition and Knowledge Awareness for Livelihood Promotion programme (SANKALP) at a cost of INR 4,000 crores to provide market relevant training to 3.5 crore youth in 2017-2018.
INR 2,200 Crore allocated for Skill Strengthening for Industrial Value Enhancement (STRIVE) in 2017-18 to focus on improving the quality and market relevance of vocational training provided in ITIs. It willa also strengthen the apprenticeship programmes through industry cluster approach.
INR 500 crores allocated to establish Mahila Shakti Kendra in 14 lakh ICDS Anganwadi Centres in rural areas. This will provide one-stop convergent support services for empowering rural women with opportunities for skill development, employment, digital literacy, health, and nutrition.
▼ Complete rural electrification by May 2019: Budget 2017 [02-3-17]
From poverty free Panchayats to 100 per cent electrification of villages by May 2019 and majorly hiking the MNREGA fund, FM Arun Jaitley focused on rural India in the Budget 2017-2018.
In his Budget speech, the FM said that 100 per cent electrification of villages will be achieved by May 1, 2019.
The government has allocated INR 4,843 crore for electrification in financial year 2017-18.
The Finance Minister also announced 24 per cent hike for Rural Agricultural and allied sectors as compared to last year, allocating INR 1,87,223 crore for financial year 2017-18.
Announcing to build one crore houses in rural areas in the next one year, Jaitley allocated INR 23,000 crore for 2017-18 against RINR 15,000 crore allocated last year.
With one crore households live under poverty, the government aims to make 50,000 Gram Panchayats "poverty free" in next year.
133 km of new rural-roads were paved every day in 2016-17 against 73 km per day during 2011-14. FM Jaitley dedicated INR 27,000 crore for rural roads for financial year 2017-18 against INR 19,000 crore last year.
100 per cent targets for roads were achieved in the Left wing extremist areas during the last financial year.
For MGNREGA, Jaitley informed that participation of women in the scheme has increased from 45 per cent to 55 per cent.
The FM announced that budget for MNREGA has been increased to INR 48,000 crore for 2017-18 from INR 36,500 crore in 2016-17.
He also announced that for better monitoring, geo-tagging of all MGNREGA assets is being done and space technology will be used for better transparency.
He informed that 5 lakh farm ponds and 10 lakh pits were fully achieved in 2016-17 and about 10 lakh farm ponds will be completed by March 2017 under MGNREGA.
▼ 90 percent FDI under automatic route : Budget 2017 [02-3-17]
Foreign Direct Investment is an investment to own a stake or control ownership in a business linked to one country.
It is made by an individual or company from another country.
FDI offers direct control either ‘organically’- where a company expands the operations of its business in a foreign country, or ‘inorganically’ where a company buys a company in a foreign country.
FDI was first introduced in India under the period of radical economic change, the year 1991, where India saw its economy open under Liberalisation Privatisation and Globalisation.
It was under Manmohan Singh as FM.
It was introduced under the Foreign Exchange Management Act (FEMA) and has since been a critical monetary source for economic development and business expansion.
There are two routes by which India gets FDI:
- Automatic route, where FDI is allowed without prior approval by the government or RBI
- Government route, where a prior approval is required– Foreign Investment Promotion Board (FIPB) oversees this route.
In 2014, under PM Modi’s Make in India initiative, the FDI policy for 25 sectors was liberalised.
In defence, FDI beyond 49 percent and up to 100 percent has been permitted through the government approval route.
There is 100 percent FDI under the government route for trading, including e-commerce.
The government has permitted 74 percent FDI under automatic route in existing pharmaceutical ventures, after which an approval will be required to continue beyond 74 percent and up to 100 percent.
The government has allowed 100 percent FDI in India-based airlines, but a foreign carrier can only own up to 49 percent stake in the venture and the rest can come from private investors including those overseas.
Last year’s budget allowed 100 percent foreign investment in processed food retailing on the condition that it was manufactured in India.
Budget 2016 eased FDI in the insurance and pension sectors through the automatic route, from 26 percent to up to 49 percent.
Presently, infrastructure, automobile, services, railway, pharmaceuticals, telecom, aviation, computer hardware and software are some key sectors for FDI.
▼ FIPB to be phased out: Budget 2017 [02-3-17]
FIPB the two-decades-old body that was formed as a leading becon of the economic liberalisation of 1993 will be phased out.
The 93 round of reforms under the P.V. Narasimha Rao regime, for the first time, opened doors to foreign investors.
A major announcement in the budget was the abolition of the FIPB.
Single-window clearance has been put in place for applications of prospective foreign investors in sectors falling in the approval route.
The board has also suggested investment proposals worth up to ₹ 5,000 crore.
FIPB was formed under the PMO in the mid 1990s as part of the leading round of Indian economic reforms.
It was reconstituted in 1996 and transferred to DIPP. It has been under DEA under the Ministry of Finance since 2003.
According to government rules, foreign investments in sectors under the automatic route do not require prior approval from the FIPB and are subject to sectoral rules.
More than 90 percent of the total FDI inflows are now through the automatic route. The Foreign Investment Promotion Board has successfully implemented e-filing and online processing of FDI applications.
India has now reached a stage where FIPB can be phased out.
The decision has been made to abolish the FIPB in 2017-2018.
A roadmap for its abolition is to be announced in the next few months.
Government has shown its clear intent towards fast-tracking inflow of FDI, and the scrapping of FIPB is a notable step that would go a long way in improving ease of doing business.
GoI also plans to pursue more radical liberalisation in Foreign Direct Investment norms.
FIPB: Know More
- The Foreign Investment Promotion Board (FIPB) was a national agency of Government of India.
- It was with the remit to consider and recommend foreign direct investment (FDI) which does not come under the automatic route.
- It used to act as a single window clearance for proposals on foreign direct investment(FDI) in India.
- FIPB is now abolished as announced by Finance Minister Arun Jaitley during 2017-2018 budget speech in Lok Sabha.
- Secretary, Department of Economic Affairs - Chairman
- Secretary, Department of Industrial Policy & Promotion - Member
- Secretary, Department of Commerce - Member
- Secretary, (Economic Relation), Ministry of External Affairs - Member
▼ Individuals cannot donate more than INR 2000 to political parties: Budget 2017 [02-3-17]
Union budget presented by finance minister Arun Jaitley launched a lot of measures including political funding reforms.
The budget capped anonymous cash donations to political parties at INR 2,000.
This is one-tenth the current level, in accordance with a recommendation by the EC.
Jaitley’s speech mentioned a proposal by the Reserve Bank of India (RBI) to allow parties to issue electoral bonds to raise money.
The FM also announced an INR 3 lakh cap on cash transactions. It is also proposing a law to confiscate properties of offenders, including those suspected of economic crimes, who flee the country.
Modi government's agenda for the next year is ‘Transform, Energise and Clean India,’ that is, TEC India, to rid the country of “the evils of corruption, black money and non-transparent political funding”.
The EC has suggested a reduced cap of INR 2,000 and an additional amendment has been proposed to the RBI Act to enable issuance of electoral bonds.
Under this scheme, a political donor can purchase bonds from authorization given banks. However, those securities can be redeemed only via registered accounts of a political party in a prescribed time.
Political parties will be able to receive donations by cheque or digitally and will have to report them to the tax department in IT returns.
▼ Union Budget 2017 takeaways for digital economy [02-3-17]
The Budget 2017 has identified digital economy as one of the key drivers of the economy. Accordingly, Finance Minister Arun Jaitley announced following initiatives:
- The FM informed that the Union Government has accepted a suggestion by SIT Team on Black Money to ban cash transactions above INR 3 lakhs. An amendment to the Income-tax Act has been proposed in the Finance Bill.
- The Government will launch two new Schemes to promote the usage of BHIM App namely Referral Bonus Scheme for individuals and a Cashback Scheme for merchants.
- A merchant version of Aadhar Enabled Payment System, named as Aadhar Pay, will be launched shortly. The system will be beneficial for those who lack have debit cards, mobile wallets and mobile phones.
- A Mission will be set-up with a target of INR 2500 crore digital transactions for 2017-18 through
3. Aadhar Pay,
4. IMPS and
5. Debit cards.
- Exemption has been proposed on BCD, Excise/CV duty and SAD on miniaturised POS card reader for m-POS, micro ATM standards version 1.5.1, Finger Print Readers/Scanners and Iris Scanners.
- Approval has been given to create a Payments Regulatory Board in the Reserve Bank of India(RBI) by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems.
- Steps would be taken to promote and possibly mandate petrol pumps, fertilizer depots, municipalities, block offices, road transport offices, universities, colleges, hospitals and other institutions to have facilities for digital payments, such as BHIM App.
- It has been proposed that the presumptive income tax for small and medium tax payers with turnover proceeds up to INR 2 crore will be reduced from the present 8 per cent, which is counted as presumptive income, to 6 per cent in respect of turnover got by non-cash means.
- Banks have targeted to introduce extra 10 lakh new PoS terminals by March 2017. The aim is to introduce 20 lakh Aadhar based PoS by September 2017.
- Arun Jaitley also proposed to limit the cash expenditure allowable as deduction, both for revenue as well as capital expenditure, as high as to INR 10000.
- The limit of cash donation which can be received by a Charity Trust is being reduced from INR 10000 to INR 2000.
- The Union Government also plans to encourage SIDBI to refinance credit institutions. This is a body which will provide unsecured loans, at reasonable interest rates, to borrowers on the basis of their transaction history.
▼ Union Budget 2017: Key Highlights [02-3-17]
To achieve this objective, the Union Budget has found the following 10 key areas to make a difference to the economy. Some of the initiatives announced for these sectors include -
1. Rural Infrastructure
2. Education, skill and Employment
- 50000 Gram Panchayats will be free of poverty by 2019.
- MGNREGS allocation is up from INR 38500 crore rupees to INR 48,000 crore rupees for 2017-18. This is the maximum ever allocation for the scheme.
- Pradhan Mantri Gram Sadak Yojana will be allocated around INR 27000 crore.
- Proposal to complete 1,00,00,000 houses by 2019 for houseless and those living in kuccha houses is also in place.
- 100 percent village electrification will be achieved by 1 May 2019.
- The Union Grants Commission (UGC) will be revamped.
- The focus of the Budget 2017 is on improving innovation especially among school-going kids.
- An autonomous National Testing Agency will be created, which will be a unified agency to conduct all national level entrance examinations.
- This move will let other agencies like AICTE to focus on managerial aspects of education.
4. Financial Sector
- Total allocation for infrastructure is pegged at INR 3,96,134 crore.
- The Foreign Investment Promotion Board can be phased out. T
- 3500 kilometres of railway lines will be commissioned this year, up from 2,800 km last year.
- Proposal for setting up of a Rail Sanraksha Kosh with corpus of INR 1 lakh crore rupees in place.
- Railways to offer competitive, affordable ticket booking facility. No service charges for tickets booked through IRCTC.
- INR 2,41,387 crore rupees allocated for the transportation sector in 2017-18.
- 3,500 km of railway lines to be commissioned this year up from 2,800 km last year.
- New metro rail policy to be announced with fresh modes of financing.
5. Digital Economy
- INR 10,000 crore allocated for re-calibration of banks; additional funds to be allocated if required.
- Pradhan Mantri Mudra Yojana lending target is estimated at INR 2.44 lakh crore for 2017-18.
- The target of 2500 crore digital transactions will be attained by March 2018.
- A Payment Regulatory Board will be set up for overseeing regulatory aspects of cashless transactions.
- Banks will introduce additional 10 lakh Point of Sale (PoS) machines by March 2017.
6. Tax administration
- Accepting a suggestion by SIT on Black Money to ban cash transactions above INR 3 lakhs, the FM has proposed an amendment to the Income-tax Act in the Finance Bill.
- The Government will launch two new Schemes to promote the usage of BHIM App i.e, Referral Bonus Scheme for individuals and a Cashback Scheme for merchants.
7. Indian farming sector
- The Individuals tax rates slashed on income from 2.5 lakh to 5 lakh reduced to 5 percent as against 10 percent.
- 0 percent tax liability on income up to 3 lakhs.
- 10 percent Surcharge on individuals with income between 50 lakh to 1 Crore.
- 15 percent surcharge on individuals with income of 1 cr and more.
- No cash transaction on more than INR 3 lakhs to reduce black money.
- Holding period for long-term capital gains for immobile assets lowered from 3 years to 2 years; base year for indexation to be 2001.
- In the year 2017-18, agriculture is expected to develop at 4.1 per cent.
- Target for agricultural has been fixed at a massive INR 10 lakh crore for FY 2017-18.
- In the current year, around INR 10 lakh crore will be provided as credit to the farmers with 60 days interest waiver.
- Provision of adequate flow of credit to farmers in eastern states and the small and marginal farmers across India.
- The Cabinet gave approval for extension of tenure of loans under Credit Linked Subsidy Scheme of the Pradhan Mantri Awas Yojana from 15 to 20 year.
- A dedicated micro-irrigation fund will be set up by NABARD to achieve the goal of 'Per Drop More Crop' with initial corpus will be INR 5000 crore.
▼ The Budget 2017 has identified key areas to transform the economy. [02-3-17]
Highlights of Education, Employment and Skill Development
SANKALP and STRIVE
- Quality education will energise Indian youth.
- Annual Learning Outcomes will be the basis for allocation of resources.
- Emphasis will be on science education.
- Innovation fund for secondary education to boost local innovation including ICT enabled transformation.
- Focus on educationally backward areas
- UGC reform will be taken up.
- Revised framework will be in place for outcome based accreditation.
- SWAYAM to online courses access will be widened with Direct to Home channel.
- National Testing Agency, an autonomous body will be created.
- AICTE will also focus on administration
- PM Kaushal Kendras will be extended to different areas.
- In 2017-2018, SANKALP programme will be launched with focus will be on vocational training.
- Industry Cluster Approach will be adopted and 5 Special Tourism zones will be set up.
- The Finance Minister said that in 2017-18, a programme SANKALP (Skill Acquisition and Knowledge Awareness for Livelihood Promotion Programme) will be launched.
- It will be at a cost of INR 4,000 crore.
- SANKALP will provide market relevant training to 3.5 crore youth.
- Next phase of skill strengthening for industrial value enhancement (STRIVE) will be launched in 2017-18 at a cost of INR 2,200 crore.
- STRIVE will focus to improve on the quality and the market relevance of vocational training provided in ITIs.
- It will strengthen the apprenticeship programme through industry-cluster approach.
▼ Finance Ministry announces allocations for infrastructure: Budget 2017 [02-3-17]
Union Finance Minister Arun Jaitley announced a total allocation of INR 3,96,134 crore for the infrastructure sector for the year 2017-2018.
For transportation sector, including rail, roads, shipping, Budget 2017 provides INR 241387 crores in 2017-18.
The Budget allocation for the sector has been increased for Highways from INR 57976 crores in BE 2016-17 to INR 64900 crores in 2017-18.
Furthermore, 2000 kms of coastal connectivity roads have been selected for construction and development to improve and better connectivity with ports and remote villages.
The total length of roads, including those under Pradhan Mantri Gram Sadak Yojana (PMGSY), built from 2014-15 till the present year is around 140000 kilometres, which is significantly higher than previous three years.
Civil Aviation infrastructure:
The select airports in Tier 2 cities will be taken up for operation and maintenance in the Public Private Partnership mode.
The AAI Act will be amended to enable effective monetization of land assets. The resources will be utilized for upgradation of airports.
Telecom sector: T
The allocation for the BharatNet Project has been stepped up to INR10000 crores in 2017-2018.
Also, 155000 kms of Optical Fiber Cables have been laid. By the close of of 2017-2018, high speed broadband connectivity on optical fiber will be present in more than 150000 gram panchayats, with WiFi hot spots and access to digital services at affordable tariffs.
A DigiGaon initiative will be launched to provide tele-medicine, education and skills through digital technology.
For 2017-18, the total capital and development expenditure on Railways has been estimated at INR 131000 crores. This includes INR 55000 crores as provided by the Union Government.
As per the Finance Minister, the Railways will focus on four major areas:
- Passenger safety,
- Capital and development works,
- Cleanliness, and
- Finance and accounting reforms.
Railway lines of 3500 kms will be commissioned in 2017-18, as against 2800 kms in the previous fiscal.
500 stations will be made accessible to differently-abled by providing lifts and escalator.
Service charge on e-tickets booked through IRCTC has been taken back. Cashless reservations has risen from 58 per cent to 68 per cent.
A new Metro Rail Policy will be put in place with focus on innovative models of implementation and financing, along with standardization and indigenization of hardware and software.
The ‘Coach Mitra’ facility, a single window interface for registering all coach related complaints and requirements, is to be launched.Energy sector:
The Union Government has taken the decision to set up Strategic Crude Oil Reserves.
In the first phase, 3 such Reserve facilities have been established. It is proposed that these will be set up at 2 more locations, namely, Chandikhole (Odisha) and Bikaner (Rajasthan), during the second phase.
This will bring the India’s strategic reserve capacity to 15.33 MMT.
The Finance Minister also suggested to create an integrated public sector oil major, which will match the global standards.
Announcement for the second phase of Solar Park development was also proposed to be taken up for extra 20000 MW capacity.
Allocation for incentive schemes like M-SIPS and EDF have been considerably increased to an all-time high of INR 745 crores in 2017-18.
Further, a new and restructured Central scheme, called Trade Infrastructure for Export Scheme (TIES) will be launched in 2017-18 to aim for export infrastructure in a competitive world.
▼ Union Budget 2017 : First budget where rail and general budget merged [02-3-17]
This fourth budget of the Modi sarkar and the 87th budget in Independent India was presented on Feb 1, 2017.
The Budget 2017 is the first budget after introducing key changes to the budget process namely:
- Combining of the Rail Budget with the General Budget,
- Eliminating the classification of plan and non plan expenditure
- Moving the budget presentation date by one month.
- Making the base year for indexing 2001
The Budget 2017 has identified financial sector as a leading driver of the Indian economy.
- The Finance Minister announced that the Foreign Investment Promotion Board (FIPB) will be phased-out in the coming fiscal. Bill will soon be tabled in Parliament to protect the poor and vulnerable investor.
- More 90 per cent of the total FDI inflows are now through the automatic route.
- It is also proposed to allow systemically important NBFCs regulated by RBI and above a certain net worth, to be known as as Qualified Institutional Buyers (QIBs) by SEBI at equivalence with the banks and insurance companies.
- The threshold limit for audit of business entities that opt for presumptive income scheme has been stepped up from INR 1 crore to INR 2 crore.
- The threshold for the maintenance of books for individuals and HUF is proposed to rise from turnover of INR 10 lakhs to INR 25 lakhs or income from INR 1.2 lakhs to INR 2.5 lakhs.
- The Foreign Portfolio Investor (FPI) Category I and II will be exempted from indirect transfer provision as per the IT Act.
- A common application form for registration, opening of bank and demat accounts, and issue of PAN cards will be launched for Foreign Portfolio Investors/FPIs.
- Also, high net worth NBFCs can also now participate in IPOs akin to the the banks and insurance companies.
- The commodities and securities derivative markets will be further integrated by uniting the participants, brokers, and operational frameworks.
- The shares of Railway Public Sector Enterprises (PSEs) like IRCTC, IRFC, IRCON and others will be listed in stock exchanges.
- The individual insurance agents will be exempted from the TDS provision of 5 per cent being deducted from commission payable. This is after filing a self-declaration that their income is below taxable limit.
- The budget target under the Pradhan Mantri Mudra Yojana (PMMY) has been increased by double to INR 2.44 lakh crores.
- INR 10000 crores has been set aside for recapitalisation of Banks in 2017-18. The Finance Minister also given need based additional allocation.
- Also on the anvil is an integrated public sector ‘oil major,’ which will be able to match the performance of international and domestic private sector oil and gas companies.
▼ Union Budget pegs fiscal deficit at 3.2 percent in 2017-2018 [02-3-17]
Union Budget: Fiscal Expenditure
Budget 2017 identified and found fiscal expenditure as one of the key drivers of the economy. As per the budget, FM Arun Jaitley indicated following initiatives:
- Fiscal deficit for 2017-18 estimated at 3.2 per cent of GDP.
- The total resources being transferred to the States and the UTs with Legislatures is INR 4.11 lakh crore in 2017-2018, as against INR 3.60 lakh crore in 2016-2017.
- The allocation for Scientific Ministries has risen to INR 37435 crore in 2017-18.
- The Revenue Deficit of 2.3 per cent in BE 2016-17 fell to 2.1 per cent in the Revised Estimates.
- The Revenue Deficit for 2017-18 is estimated at 1.9 per cent, against 2 per cent as per the FRBM Act.
- Commitment has been made to achieve 3 per cent fiscal deficit in the fiscal year 2018-19.
- A provision of INR 3000 crore has been allocated the DEA to implement various Budget announcements and other New Schemes in 2017-18. The total expenditure for 2017-18 has been pegged at INR 21.47 lakh crore.
- The allocation for Capital expenditure has been increased by 25.4 per cent over the previous year with the aim of fiscal consolidation.
- A sum of INR 274114 crores, including INR 86488 crores for Defence capital, has been sanctioned for Defence expenditure. This excludes pensions.
▼ Budget 2017 identifies public service sector as the key driver of economy [02-3-17]
The Budget 2017 has identified the PSU sector as one of the key drivers of the economy.
FM Arun Jaitley announced following initiatives for the Public Service sector in the Annual Budget 2017-2018.
- Good impact of Direct Benefit Transfer scheme in LPG.
- Citizens in far-flung, isolated regions find it tough to obtain passports, therefore, head post offices will now be used as front offices.
- A Centralised Defence Travel System will be in place where tickets can be booked by soldiers and officers easily in a hassle-free manner.
- For Public Servants, it will now become easy to get recruitment in a central government office. A 2-tier system of examination will be there.
- Introduction of a legislative changes will be there for all the economic offenders who are fled the country through confiscation of their property.
- Web-based pension distribution system put in place for defense pensioners.
- Union Government will celebrate Champaran Satyagraha centenary in the year 2017.
▼ Taxation takeaways from Union Budget 2017 [02-3-17]
FM Arun Jaitley, per Union Budget 2017, presented these taxation reforms.
The Fresh Tax Slabs proposed in Budget 2017
|New Tax Rate
|Up to 3 lakhs
|Between 3 and 5 Lakhs
|Between 5 and 10 lakhs
|Above 10 lakhs
Benefit of New Tax system
- The Individual tax rates were cut. On income from INR 2.5 lakh to 5 lakh reduction was to 5 percent instead of 10 percent.
- 0 percent tax liability on income approximating INR 3 lakh.
- 10 percent surcharge on persons with income between INR 50 lakh to 1 Crore.
- 15 percent surcharge on persons with income of INR 1 crore and higher.
- No cash transaction allowed beyond INR 3 lakhs or higher, to reduce black money
- Holding period for long-term capital gains for immobile assets reduced from 3 to 2 years. The base year for indexation to be 2001.
- A single one-sheet form for filing IT returns for income which can be taxed up to INR 5 lakh rupees except for businesspersons.
- Time period of revising tax return to be lowered to 12 months
- Income tax changes put in place for small companies with an annual turnover of INR 50 crore. They will now to pay 25 percent rather than 30 percent and save 5 percent
- Maximum amount of cash donation political party can receive from an individual to be INR 2000 rupees from a single source.
|INR 2.5 lakhs
|INR 3 lakhs
|INR 5 lakhs
|INR 6 lakhs
▼ Economic Survey 2016-2017 advocates Universal Basic Income [02-2-17]
The Economic Survey 2016-17 tabled in Parliament today by the Union Finance Minister Shri Arun Jaitley has advocated the concept of Universal Basic Income (UBI).
This is as an alternative to the various social welfare schemes in an effort to reduce poverty.
The survey juxtaposes the benefits and costs of the UBI scheme.
The Survey says the UBI, based on the principles of universality, unconditionality and agency, is a conceptually appealing idea.
Economic Survey points out that the districts where the needs are greatest are precisely the ones where State capacity is the weakest.
This suggests that a more efficient way to help the poor would be to provide them resources directly, through a UBI.
Exploring the principles and prerequisites for successful implementation of UBI, the Survey points out that the two prerequisites for a successful UBI are:
a. functional JAM (Jan Dhan, Aadhar and Mobile) system as it ensures that the cash transfer goes directly into the account of a beneficiary
b. Centre-State negotiations on cost sharing for the programme.
The Survey says that a UBI that reduces poverty to 0.5 percent would cost between 4-5 percent of GDP.
This is assuming that those in the top 25 percent income bracket do not participate.
On the other hand, the existing middle class subsidies and food, petroleum and fertilizer subsidies cost about 3 percent of GDP.
▼ Economic Survey: New Inter-State Labour Mobility High [02-2-17]
New estimates of labour migration in India have revealed that inter-state labor mobility is significantly higher than previous estimates.
This was stated in the Economic Survey 2016-17.
The study based on the analyses of new data sources and new methodologies also shows that the migration is accelerating and was particularly pronounced for females.
The data sources used for the study are the 2011 Census and railway passenger traffic flows of the Ministry of Railways and new methodologies including the Cohort-based Migration Metric (CMM) .
The new Cohort-based Migration Metric(CMM) shows that inter-state labor mobility averaged 5-6.5 million people between 2001 and 2011.
This is yielding an inter-state migrant population of about 60 million and an inter-district migration as high as 80 million.
The first-ever estimates of internal work-related migration using railways data for the period 2011-2016 indicate an annual average flow of close to 9 million migrant people between the states.
Both these estimates are significantly greater than the annual average flow of about 4 million suggested by successive Censuses and higher than previously estimated by any study.
Migration for work and education is also accelerating.
There is also a doubling of the stock of inter-state out migrants to nearly 12 million in the 20-29year old cohort alone.
Higher growth and a multitude of economic opportunities could therefore have been the catalyst for such an acceleration of migration.
Language does not seem to be a demonstrable barrier to the flow of people.
Fourth, the patterns of flows of migrants found in this study are broadly consistent with what is expected - less affluent states see more out migration migrating out while the most affluent states are the largest recipients of migrants.
Policy actions to sustain and maximize the benefits of migration include:
- Ensuring portability of food security benefits,
- Providing healthcare and a basic social security framework for migrants - potentially through an inter-state self-registration process.
Redistributive Resource Transfer and the Economic Survey
Economic Survey also calculates Redistributive Resource Transfers’ (RRT) from the Centre (between 1994 and 2015) and value of natural resources for Indian States (over 1980 and 2014).
It correlates these with several economic outcomes and an index of governance.
Redistributive Resource Transfer or RRT to a state (from the Centre) is defined as gross devolution to the state adjusted for the respective state’s share in aggregate Gross Domestic Product(GDP).The top 10 recipients are:
- Arunachal Pradesh,
- Jammu and Kashmir
- Himachal Pradesh
▼ Economics Survey 2016-2017 uses Big Data for the first time [02-2-17]
For the first time, the Economic Survey has used Big Data Analysis to shed new light on the flow of goods and people within India.
Survey produces first estimate of the flow of goods across states within India, based on analyzing transactions level data provided by the Goods and Services Tax Network (GSTN),
Survey furnishes exciting new evidence on the flows of migrants within India.
This is based on detailed origin-destination passenger data provided by the Ministry of Railways and on a new methodology for analysing the Census data.
This year’s Economic Survey does not carry the usual statistical tables on the economy’s performance.
The survey seems to have compensated this by the use of Big Data and intensive data-mining of multiple datasets.
The survey has used individual tax filings administered by the Goods and Service Tax Network to estimate state-level (both inter and intra) trade.
Railway station-wise unreserved passenger traffic data provided by the Indian Railways has been used to arrive at estimates of work-related migration.
Satellite imagery has been used to calculate built-up area and estimate potential property tax collections (and hence losses being incurred).
Machine generated large scale data sets have been used more intensively. NSSO statistics has been used to generate insights on spatial concentration of poverty and welfare beneficiaries.
Official statistical machinery has moved past surveys to include administrative data.
The new approach towards using diverse datasets is definitely an important first step towards better decision-making.
Marrying satellite imagery about properties data with something like income tax data for India’s top 50 cities and house-size census data can generate rich insights about Indian cities.
▼ Indian economy to recover post demonetisation: Economic Survey [02-2-17]
The Indian economy will recover in 2017-18 after the cash supply is replenished post demonetisation.
Following the demonetisation of Rs. 1,000 and old Rs. 500 notes, country’s gross domestic product (GDP) is expected to grow in the range of 6.75-7.5 per cent, the Economic Survey 2016-17 tabled on 31st Jan 2017 said.
Demonetisation led to temporary slowdown in the GDP growth.
Economy will reap benefits in terms of increased digitalisation, greater tax compliance and a reduction in real estate prices.
This could increase long-run tax revenue collections and GDP growth.
The Survey, however, said the cash squeeze will have significant implications for the GDP, reducing 2016-17 growth by ¼ to ½ percentage points compared to the baseline of 7 per cent.
The GDP may not be able to gauge the impact of demonetisation on the informal sector.
The Survey illustrated a sector-wise impact of demonetisation.
It stated demonetisation led to job losses, decline in farm incomes and social disruption, especially in cash intensive sectors.
According to the Survey, the weighted average price of real estate in eight major cities, which was already on a declining trend, fell further after demonetisation was announced on November 8.
The Survey suggested a few measures to maximise long term benefits and minimise short-term costs due to demonetisation:
One such is fast remonetisation and especially, free convertibility of cash to deposits including through early elimination of withdrawal limits.
This would reduce the GDP growth deceleration and cash hoarding.
Land and real estate should be brought under the Goods and Services Tax following demonetisation.
Demonetisation: Know More
On 8 November 2016, the Government of India announced the demonetisation.
This was of all ₹500 (US$7.40) and ₹1,000 (US$15) banknotes of the Mahatma Gandhi Series.
The government claimed that the action would curtail the shadow economy.
It would also crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism.
▼ NPAs to now be tackled with PARA: Economic Survey [02-2-17]
To tackle with the problems of increasing Non-Performing Assets (NPAs) of the banking system and declining credit and investment, the Economic Survey 2016-17 on recommended a centralised Public Sector Asset Rehabilitation Agency (PARA).
PARA will aim to look at the largest, most difficult cases, and make politically tough decisions to reduce debt.
As per the Survey, gross NPAs have climbed to almost 12 per cent of gross advances for public sector banks at end-September 2016.
At this level, India’s NPA ratio is higher than any other major emerging market, with the exception of Russia.
The consequent squeeze of banks has led them to slow credit growth to crucial sectors-especially to industry and medium and small scale enterprises (MSMEs)-to levels unseen over the past two decades.
As this has occurred, growth in private and overall investment has turned negative.
A decisive resolution is urgently needed before the ‘Twin Balance Sheet’ problem becomes a serious drag on growth.
Public discussion of the bad loan problem has focused on bank capital.
A far more problematic issue is that of finding a way to resolve the bad debts.
“Some debt repayment problems have been caused by diversion of funds.
But the vast majority has been caused by unexpected changes in the economic environment after the Global Financial Crisis.
This caused timetables, exchange rates, and growth rate assumptions to go seriously wrong.
This concentration creates a challenge since large cases are difficult to resolve, but also an opportunity.
The large debtors have many creditors, with different interests.
A professionally-run central agency with the government backing could overcome the coordination and political issues that have impeded progress so far.
▼ Economic Survey: India attains 5th position in wind power installation [02-2-17]
India has attained the fourth position globally in installed wind power capacity.
It is after China, US and Germany as a result of various steps in the right direction, the Economic Survey said.
With the legal framework in place for the International Solar Alliance (ISA) by Prime Minister Narendra Modi and launched during the UN climate summit in Paris, ISA will be a "major" international body headquartered in India.
It said that currently, India's renewable energy sector is undergoing transformation with a target of 175 GW of renewable energy capacity to be reached by 2022.
In order to achieve the target, the major programmes on implementation of :
- Solar Park,
- Solar Defence Scheme,
- Solar scheme for Central Public Sector Undertakings,
- Solar photovoltaic (SPV) power plants on canal bank and canal tops, solar pump, solar rooftop among others have been launched.
A capacity addition of 14.30 GW of renewable energy has been reported during the last two and half years under Grid Connected Renewable Power.
This includes 5.8 GW from Solar Power, 7.04 GW from Wind Power, 0.53 GW from Small Hydro Power and 0.93 GW from Bio-power.
On October 31, 2016, India achieved 46.3 GW grid-interactive power capacity, 7.5 GW of grid-connected power generation capacity in renewable energy.
It also has small hydro power capacity of 4.3 GW.
Besides this, 92,305 solar pumps were installed and Rs 38,000 crore worth of Green Energy Corridor is being set up to ensure evacuation of renewable energy.
With India's initiative, ISA envisaged as a coalition of solar resource-rich countries to address their special energy needs, will provide a platform to collaborate.
It will focus on addressing the identified gaps through a common and agreed approach.ISA: Know More
24 countries have signed the Framework Agreement of ISA after it was opened for signature on November 15, 2016.
ISA is expected to become inter-governmental treaty-based organization.
It will be registered under Article 102 of the UN charter after 15 countries ratify the Agreement.
With legal framework in place, ISA will be a major international body headquartered in India
▼ Economic Survey 2016-2017 tabled in budget session [02-2-17]
Survey was prepared by CEA in Finance Ministry, Arvind Subramaniam. The survey projects growth rate of 6.75 to 7.25 percent in the fiscal 2017-2018.
This marks the transitional adverse impact of demonetisation on on GDP growth.
Highlights of Economic Survey 2016-2017
Gross domestic product (GDP) growth in 2016-17 pegged at 6.5%, down from 7.6% in last fiscal 2015-16.
Economic growth to rebound to 6.75 to 7.5% in 2017-18.
Farm sector to grow at 4.1% in 2016-17, up from 1.2% in 2015-16.
Growth rate of industrial sector estimated to moderate to 5.2% in 2016-17 from 7.4% in 2015-16.
Service sector is estimated to grow at 8.9% in 2016-17 GST, other structural reforms should take the growth rate trend to 8-10%.
The adverse impact of demonetisation on GDP growth will be transitional.
It will affect growth rate by 0.25-0.5%, but to have long-term benefits
It may affect supplies of certain agricultural products like sugar, milk, potatoes and onions.
Remonetisation will ensure that the cash squeeze is eliminated by April 2017.
Universal Basic Income (UBI):
Advocates the concept of UBI as an alternative to the various social welfare schemes in an effort to reduce poverty.
It will be alternative to plethora of state subsidies for poverty alleviation. UBI would cost between 4 and 5% of GDP
Prescribes cut in individual Income Tax rates, real estate stamp duties.
IT net could be widened gradually by encompassing all high income earners.
Time table for cutting corporate tax should be accelerated.
Tax administration could be improved to reduce discretion and improve accountability.
Goods and Services Tax (GST):
Fiscal gains from GST will take time to realise.
Implementation of muted tax receipts, wage hike to put pressure on fiscal deficit in 2017-18.
For fiscal health of the economy fiscal prudence for both centre and states is needed.
Fiscal windfall from low oil prices to disappear in 2017-18.
The average consumer price index (CPI) inflation rate declined to 4.9% in 2015-16 from 5.9% in 2014-15.
CPI-based core inflation remained sticky around 5% in the 2016-17.
Oil prices, seen rising by one-sixth in 2017-18 over the previous fiscal 2016-17 prices which could dampen India’s economic growth.
Monetary easing headroom may be capped due to sharp rise in prices in 2017-18.
Market interest rates seen lower in 2017-18 due to demonetisation.
Government Debt to GDP ratio:
It was 68.5% in 2016, down from 69.1% in 2015.
Suggests setting up public sector asset rehabilitation agency (PSARA) to take charge of large bad loans in banks.
With government backing, PSAR can overcome coordination and political issues on bad loans.