JOIN USBudget turns to poor, farmers, rural folk in an election year
Ahead of elections in eight states and in the run up to 2019 Parliamentary polls, Finance Minister Arun Jaitley's Budget turned its gaze to distressed farmers and rural sector and also launched the world's largest healthcare scheme for poor.
It, however, did not pay much attention to the salaried class but gave some relief to small and medium companies by cutting taxes.
For middle income group, Jaitley only increased the standard deduction on income tax to Rs 40,000 for medical reimbursement and transport allowance.
But in a typical case of giving from one hand and taking away from the other, Jaitley proposed to increase health and education cess to 4% from the present 3% which will also be applicable on income and corporate tax.
He also proposed long term capital gains tax (LTCG) of 10% on the profits of more than Rs 1 lakh investments in stock market and equity mutual funds. Until now these investments were tax free.
While Jaitley said about 2.5 crore salaried employees and pensioners would benefit from the proposed standard deduction, the Opposition Congress said for the middle class taxpayers, LTCG took away the gains of standard deduction.
Seeking to sooth the agitating farmers, Jaitley's Budget promised to raise the minimum support price (MSP) for their kharif crop by 1.5 times of production cost.
It also proposed to raise total credit to the agriculture sector this year to Rs 11 lakh crore from Rs 10 lakh crore earlier. Alongside, it gave a 100% tax deduction to companies producing farm products.
Though Jaitley announced the world's largest National Health Protection Scheme to benefit 10 crore poor families, providing health cover of Rs 5 lakh per family per year, his Budget provided only for Rs 1,473 crore this fiscal for such a mammoth programme. Later, talking to media, he said the government will make additional provision for health and farm sector.
Like Obamacare
Jaitley said the country was progressing towards universal health coverage and compared the scheme with 'Obamacare' in the USA.
For senior citizens, the Budget however proposed to exempt interest income on deposits with banks and post offices upto Rs. 50,000 from the current Rs 10,000.
It also raised deduction limit for health insurance premium or medical expenses to Rs 50,000 from the present Rs 30,000. Exemption from deduction of tax from fixed deposits was also proposed.
Facing a major challenge on the job creation front, the Budget proposed to allocate Rs 3 lakh crore for flagship MUDRA Yojana.
Jaitley said the tax reduction of 25% extended to companies with an annual turnover of Rs 250 cr will include most of the small and medium companies which provide the maximum jobs.
The Budget also proposed an increase of over Rs 1 lakh crore on infrastructure and identified 115 backward districts which would be made model for development by investing in irrigation, rural electrification, potable drinking water and access to toilets.
The Budget also announced Rs 1.48 crore for capital expenditure in Railways which is touted to be the highest ever.
It also proposed an investment of Rs 1 lakh crore on education sector in the next four years, mainly on creation of infrastructure and research.