Highlights of budget 2015

Highlights of budget 2015

India’s Finance Minister Arun Jaitley announced the budget 2015. Here the highlights of budget 2015:
Fiscal deficit seen at 3.9 per cent of GDP in 2015/16
Will meet the challenging fiscal target of 4.1 per cent of GDP
Remain committed to meeting medium term fiscal deficit target of 3 per cent of GDP
Current account deficit below 1.3 per cent of GDP

Growth
GDP growth seen at between 8 per cent and 8.5 per cent y/y
Aiming double digit growth rate, achievable soon

Inflation

Expects consumer inflation to remain close to 5 per cent by March, opening room for more monetary policy easing
monetary policy framework agreement with the RBI clearly states objective of keeping inflation below 6 per cent

Revenues

* Revenue deficit seen at 2.8 per cent of GDP

* Non tax revenue seen at Rs 2.21 trillion

* Agricultural incomes are under stress

Disinvestment

* Government targets Rs 410 billion from stake sales in companies

* Total stake sale in 2015/16 seen at Rs 695 billion

Market reforms

* Propose to merge commodities regulator with SEBI

* To bring a new bankruptcy code

* To set up public debt management agency

* Proposes to introduce a public contract resolution of disputes bill

* To establish an autonomous bank board bureau to improve management of public sector banks

Policy reforms

* To enact a comprehensive new law on black money

* Propose to create a universal social security system for all Indians

* To launch a national skills mission soon to enhance employability of rural youth

* To raise visa-on-arrival facility to 150 countries from 43

* Allocates Rs 346.99 billion for rural employment guarantee scheme

Borrowing

* Gross market borrowing seen at Rs 6 trillion

* Net market borrowing seen at Rs 4.56 trillion

General anti-avoidance rules (GAAR)

* Government defers rollout of anti-tax avoidance rules GAAR by two years

* GAAR to apply prospectively from April 1, 2017

* Retrospective tax provisions will be avoided

Taxation

* To abolish wealth tax

* Replaces wealth tax with additional 2 per cent surcharge on super rich

* Proposes to cut to 25 per cent corporate tax over next four years

* Corporate tax of 30 per cent is uncompetitive

* Net gain from tax proposals seen at Rs 150.68 billion

* Proposes to rationalise capital gains tax regime for real estate investment trusts

* Expects to implement goods and services tax by April 2016

* To reduce custom duty on 22 items

* Basic custom duty on commercial vehicle doubled to 20 per cent

* Proposes to increase service tax rate and education cess to 14 per cent from 12.36 per cent

* Plans to introduce direct tax regime that is internationally competitive on rates without exemptions

* Exemptions for individual tax payers to continue

* To enact tough penalties for tax evasion in new bill

* Tax department to clarify indirect transfer of assets and dividend paid by foreign firms

Infrastructure

* Investment in infrastructure will go up by Rs 700 billion in 2015/16 over last year

* Plans to set up national investment infrastructure fund

* Proposes tax-free infrastructure bonds for projects in roads, rail and irrigation projects

* Proposes 5 “ultra mega” power projects for 4,000MW each

* Second unit of Kudankulam nuclear power station to be commissioned

* Will need to build additional 100,000km of road

* Ports in public sector will be encouraged to corporatise under Companies Act

Expenditure

* Plan expenditure estimated at about Rs 4.65 trillion

* Non-plan expenditure seen at about Rs 13.12 trillion

* Allocates Rs 2.46 trillion for defence spending

* Allocates Rs 331.5 billion for health sector

* If revenue improves, hope to raise budgeted allocations for rural job scheme by Rs 50 billion

Investment

* Propose to do away with different types of foreign investment caps and replace them with composite caps

* To allow foreign investment in alternative investment funds

* Public investment needed to catalyse investment

Gold

* To develop a sovereign gold bond

* To introduce gold monetisation scheme to allow depositors to earn interest

* To introduce Indian-made gold coin to reduce demand for foreign gold coins

Subsidies

* Food subsidy seen at Rs 1.24 trillion

* Fertiliser subsidy seen at Rs 729.69 billion

* Fuel subsidy seen at Rs 300 billion

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