The government’s ‘fifth and last full Budget’ amidst the upcoming elections in 8 states this year was tough to be pulled through due to various populist demands and constant expectation pressure of higher economic growth for the nation. It seems that the government has a strong focus on creating structural reforms to bring in a growth rate of 8% per annum. This fact is very much evident from this 2018 year’s budget, which directly aims at strengthening agriculture, rural development, health, education, employment, infrastructure sectors and MSME.
Let us take a sneak peek at the key highlights of the budget on various industry sectors:
The government is planning to spend INR 16,000 crore on various schemes in the rural development arena.
– LPG Connection to be provided to 8 crore poor women
– Power connection will be provided to 4 crore poor people under PM Saubhagya Yojana
– Target of year 2022 is set to provide housing to everyone in the country. The government has already built 51 lakh affordable houses in rural area and 50 lakh houses in the urban sector. Further, it has been planned to have 1 crore houses being built under Pradhan Mantri Awas Yojana in rural areas.
The government has focused on generating higher income for farmers by helping them to produce more at a lesser cost.
– Minimum Selling Price (MSP) for the Kharif Crops has been set at 1.5 times the produce price.
– Agricultural market and infra fund of INR 2000 crore fund will be set up to strengthen the market connectivity.
INR 5.97 lakh crore allocation for creating and upgrading infrastructure in the next financial year has been planned.
– Government set to introduce pay-as-you-use system for toll payments.
– 10 prominent tourist sites to be made iconic tourist destinations by infusing private funding, marketing and branding.
Government is focusing on technology to drive and uplift the education system and literacy level of the country.
– INR 1 crore allocated for revitalization and upgrading of education sector with an aim to promote learning based outcomes.
– Aim to remove black boards with digital boards in schools by 2022.
Micro, Small and Medium Enterprises (MSME)
It has been proposed to extend a reduced rate of 25% of
corporate tax to companies reporting annual turnover up to INR 250 crore in FY 2016-17, which was earlier only available to companies with annual turnover of INR 50 crore in FY 2015-16.
– This will allow a saving of 5% for the micro, small and medium enterprises which were in the slab of 30%.
– Out of 4,721 Indian listed companies that reported their numbers for the year ended March 31, 2017, 963 companies (20.3 percent of the total) could be major gainers.
– Companies registered as Farmer Producer companies will get 100% deduction on profits derived from such activities for 5 years starting year 2018-19, if their annual turnover is less than INR 100 crore.
– Footwear and Leather Industry – Deduction of 30% on emoluments paid to new employees to create more employment under Section 80-JJAA to be relaxed to 150 days.
The budget does not offer any benefit for the sector rather imposed a 10% long term capital gain tax (LTCG) on gains above INR 1 lakh in a year.
The other focus areas of budget 2018 include various schemes and plan, some are as follows:
Health Protection Scheme
It is expected to be world’s largest plan which will offer upto INR 5 lakh for secondary and tertiary treatments per family. This scheme will cover over 10 crore poor and vulnerable families.
Investments in Technology Segment
A national program will be initiated on Artificial Intelligence by Niti Aayog. Centre of Excellence will also be created for Artificial Intelligence, Internet of Things and Robotics. Investments of close to Rs 13,000 crores are planned.
The industry has a mixed sentiment to this year’s much awaited budget. The push to the agriculture and health sector has been hailed by industries. Also, for the first time there is a special attention to the ancillary sector including infrastructure which will help the overall consumer and farm sector. However, there is a mixed reaction when it comes to the corporate taxes. Companies who fall in the category of MSME got some relief whereas big companies got no respite in this budget. And at the same time there has been no major impact on the salaried employees too.