Union Budget 2016-17 : Budget Speech

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Union Budget 2016-17 : Budget Speech by finance minister Sh. Arun Jaitley

Transcript of Union Budget 2016-17 : Budget Speech

  • CONTENTS

    PART - A

    Page No.

    Introduction 1Agriculture and Farmers' Welfare 4Rural Sector 7Social Sector including Health Care 9Education, Skills and Job Creation 11Infrastructure and Investment 13Financial Sector Reforms 17Governance and Ease of Doing Business 19Fiscal Discipline 20

    PART - B

    TAX REFORMSRelief to small tax payers 23Measures to boost growth and employmentgeneration 24Incentivising domestic value additionto help Make in India 26Measures for moving towards apensioned society 26Measures for promoting affordable housing 27Additional resource mobilization for agriculture,rural economy and clean environment 27Reducing litigation and providing certaintyin taxation 29Simplification and rationalization of taxation 31Use of Technology for creating accountability 32Conclusion 33Annexes

  • (ii)

    Annexes to Part AAnnex-I : Proposed Changes/Reforms

    in FDI and Related Policies 34Annex-II : Measures for Deepening

    of Corporate Bond Market 35Annex-III-A : Allocations of Important

    Ministries, Sectors and VulnerableSections 36

    Annex-III-B : Allocations of ImportantSchemes 37

    Annex-III-C : Resources Transferred toState and U.T. Governments 39

    Annexes to Part BDirect Tax 40Indirect Tax 49Other Legislative Amendments 71

  • Budget 2016-2017

    Speech ofArun Jaitley

    Minister of FinanceFebruary 29, 2016

    Madam Speaker,

    I rise to present the Budget for the year 2016-17.

    2. I am presenting this Budget when the global economy is in seriouscrisis. Global growth has slowed down from 3.4% in 2014 to 3.1% in 2015.Financial markets have been battered and global trade has contracted.Amidst all these global headwinds, the Indian economy has held its groundfirmly. Thanks to our inherent strengths and the policies of this Government,a lot of confidence and hope continues to be built around India.

    3. The International Monetary Fund has hailed India as a bright spotamidst a slowing global economy. The World Economic Forum has said thatIndias growth is extraordinarily high. We accomplished this despite veryunfavourable conditions and despite the fact that we inherited an economy oflow growth, high inflation and zero investor confidence in Governmentscapability to govern. We converted these difficulties and challenges intoopportunities.

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  • 25. Our external situation is robust. The Current Account deficit hasdeclined from 18.4 billion US dollars in the first half of last year to 14.4billion this year. It is projected to be 1.4% of GDP at the end of this year.Our foreign exchange reserves are at the highest ever level of about 350billion US dollars.

    6. Our initiatives in the last 21 months have not only placed theeconomy on a faster growth trajectory but have bridged the trust deficit,created by the previous Government. We had to work in an unsupportiveglobal environment, adverse weather conditions and an obstructive politicalatmosphere.

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    7. We believe in the principle that money with the Government belongsto the people and we have the sacred responsibility to spend it prudently andwisely for the welfare of our people, especially the poor and thedowntrodden. We have increased our Plan expenditure at the RE stage in2015-16 in contrast to the usual practice of reducing it. We achieved thisdespite adopting the Fourteenth Finance Commission recommendationswhich increased devolution to the States by 55%.

    8. We must now look ahead. The risks of further global slowdown andturbulence are mounting. This complicates the task of economicmanagement for India. It has three serious implications for us. First, wemust strengthen our firewalls against these risks by ensuring macro-economic stability and prudent fiscal management. Second, since foreignmarkets are weak, we must rely on domestic demand and Indian markets toensure that Indias growth does not slow down. And third, we must continuewith the pace of economic reforms and policy initiatives to change the livesof our people for the better.

    9. We see these challenges as opportunities. The financial years2015-16 and 2016-17 have been and will be extremely challenging forGovernment expenditure. The 14th Finance Commission has reduced theCentral share of taxes to 58% from the 68%. In the financial year 2015-16,we managed to improve upon the budgeted expenditure due to revenuebuoyancy, notwithstanding the steep reduction in the Central share of taxes.The next financial year 2016-17 will cast an additional burden on account ofthe recommendations of the 7th Central Pay Commission and theimplementation of Defence OROP. The Government, therefore, has toprioritise its expenditure. We wish to enhance expenditure in the farm andrural sector, the social sector, the infrastructure sector and provide for

  • 3recapitalisation of the banks. This will address those sectors which needimmediate attention. Once the Government discharges these priorityobligations, it shall then focus on other areas which are also of utmostpriority to the Government.

    10. While increasing the outlay of various social sector programmes, theGovernment will undertake three major schemes to help the weaker sectionsof the society. The Pradhan Mantri Fasal Bima Yojana has already beenannounced to protect the farmer from the adverse consequences of nature.The farmer will pay a nominal amount of insurance premium and get thehighest ever compensation in the event of any loss suffered. A healthinsurance scheme which protects one-third of Indias population againsthospitalisation expenditure is also being announced. The Government isalso launching a new initiative to ensure that the BPL families areprovided with a cooking gas connection, supported by a Governmentsubsidy. This will significantly improve the health of women and those BPLfamilies who suffer adversely from the ill-effects of Chulha cooking.

    11. The Annual Budget is also an opportunity for the Government tooutline its priorities for the year to come. The priority of our Government isclearly to provide additional resources for vulnerable sections, rural areasand social and physical infrastructure creation. The Government shall alsoendeavour to continue with the ongoing reform programme and ensure thepassage of the Constitutional amendments to enable the implementation ofthe Goods and Service Tax, the passage of Insolvency and Bankruptcy lawand other important reform measures which are pending before theParliament.

    12. Additionally, as I will elaborate later, we will undertake significantreforms, such as the enactment of a law to ensure that all Governmentbenefits are conferred upon persons who deserve it, by giving a statutorybacking to the AADHAR platform; bringing significant changes in thelegislative framework relating to the transport sector so as to free it fromconstraints and restrictions; incentivising gas discovery and exploration byproviding calibrated marketing freedom; enactment of a comprehensive lawto deal with resolution of financial firms; providing legal framework fordispute resolution in PPP projects and public utility contracts; undertakingimportant banking sector reforms and public listing of general insurancecompanies; and undertaking significant changes in FDI policy.

    13. Our agenda for the next year is, therefore, to Transform India in thisdirection. My Budget proposals are, therefore, built on this transformativeagenda with nine distinct pillars. These include:

  • 4(i) Agriculture and Farmers Welfare: with focus on doublingfarmers income in five years;

    (ii) Rural Sector: with emphasis on rural employment andinfrastructure;

    (iii) Social Sector including Healthcare: to cover all under welfareand health services;

    (iv) Education, Skills and Job Creation: to make India aknowledge based and productive society;

    (v) Infrastructure and Investment: to enhance efficiency andquality of life;

    (vi) Financial Sector Reforms: to bring transparency and stability;(vii) Governance and Ease of Doing Business: to enable the people

    to realise their full potential;(viii) Fiscal Discipline: prudent management of Government

    finances and delivery of benefits to the needy; and(ix) Tax Reforms: to reduce compliance burden with faith in the

    citizenry.

    In each of these themes, I shall outline specific policy measures andinitiatives which would have a transformative impact on our economy andthe lives of our people.

    I. Agriculture and Farmers' Welfare

    14. Let me first take up Agriculture and Farmers Welfare. We aregrateful to our farmers for being the backbone of the countrys food security.We need to think beyond food security and give back to our farmers asense of income security. Government will, therefore, reorient itsinterventions in the farm and non-farm sectors to double the income of thefarmers by 2022. Our total allocation for Agriculture and Farmers welfareis ` 35,984 crore.15. We need to address issues of optimal utilisation of our waterresources; create new infrastructure for irrigation; conserve soil fertility withbalanced use of fertilizer; and provide value addition and connectivity fromfarm to markets.

    16. Irrigation is a critical input for increasing agriculture production andproductivity. Out of 141 million hectares of net cultivated area in thecountry, only 46% is covered with irrigation.

  • 517. The Pradhan Mantri Krishi Sinchai Yojana has been strengthenedand will be implemented in mission mode. 28.5 lakh hectares will be broughtunder irrigation under this Scheme.

    18. Implementation of 89 irrigation projects under AIBP, which havebeen languishing, will be fast tracked. This will help to irrigate 80.6 lakhhectares. These projects re