As Finance Minister Arun Jaitley rolled out a Budget focused on farmers and the rural poor today, while boosting jobs and private investment, he has pegged the fiscal deficit target for next year at 3.3 per cent, higher than the earlier 3 per cent goal. Presenting its last full-year budget before the 2019 general elections and ahead of eight state elections this year, the government has made a slew of farm-focused announcements, raising the minimum support price to 1.5 times the production cost for Kharif crops, a key demand of distressed farmers. Mr Jaitley also announced what he called the world’s largest government-funded healthcare scheme to cover 10 crore poor families.
Here is your 10-point cheat sheet to Budget 2018:
- Prime Minister Narendra Modi, who was seen thumping his table as Mr Jaitley spoke in Parliament, later congratulated the finance minister saying today’s budget "is farmer friendly, common citizen friendly, business environment friendly and development friendly. It will add to the ease of living."
- Mr Jaitley said in his budget speech that the flagship National Health Protection Scheme announced today will cover 10 crore poor and vulnerable families in the country, or about 50 crore beneficiaries, with a cover of 5 lakh per family per year for secondary and tertiary care hospitalisation.
- He has also announced that eight crore free gas connections will be given to poor women.
- Mr Jaitley has made no changes in income tax slabs for individuals this year. But all salaried people will get a standard deduction of Rs 40,000 on their income in lieu of medical and transport reimbursements.The finance minister increased cess on personal income tax and corporation tax to 4 per cent from present 3 per cent. "Step by step, in every budget, I have been putting surplus money in the hands of the middle-class taxpayer," Mr Jaitley said at a press conference.
- He announced a new 10% long-term capital gains tax on gains exceeding Rs 1 lakh from investment in equities and equity mutual funds.
- In a key announcement, Mr Jaitley said that the government will contribute 12% in the Employee’s Provident Fund for three years for new employees.
- Corporate tax rate for companies with up to Rs 250 crore turnover has been reduced to 25% from 30%, Mr Jaitley announced.
- The budget speech was watched closely for how the government balanced its need to reach out to voters ahead of eight state elections this year and the national election next year, with keeping investors’ confidence by being seen to contain the fiscal deficit and also increasing spending in key areas of a slowing economy.
- Mr Jaitley said the Narendra Modi government has been consistently focused on fiscal prudence. The revised fiscal deficit target for this year ending March is 3.5% of the GDP, he said, wider than the previous 3.2 per cent target.
- Stock markets, which were up this morning, plunged into the red as Mr Jaitley announced a higher fiscal deficit target for next year and the new capital gains tax. They have now recovered.