Today in New Delhi, India
Dec 13, 2018-Thursday
New Delhi
  • Humidity
  • Wind

Here are the key takeaways from Jaitley's Union Budget 2015-16

Finance minister Arun Jaitley laid out on Saturday a budget aimed at reigniting rapid growth, seeking to offer respite to the highly-taxed corporates as well as a promise of abundant jobs and social security to millions of Indians.

business Updated: Mar 01, 2015 01:39 IST
Krittivas Mukherjee
Krittivas Mukherjee
Hindustan Times
Union Budget,Union Budget 2015-16,Budget 2015 highlights

Finance minister Arun Jaitley laid out on Saturday a budget aimed at reigniting rapid growth, seeking to offer respite to the highly-taxed corporates as well as a promise of abundant jobs and social security to millions of Indians.

Many investors had hoped Prime Minister Narendra Modi would use his strong election mandate to unleash far-reaching reforms comparable to the opening up of the economy in 1991. Others expected him to work a miracle to create employment and improve lifestyles.

On balance, the budget appears wide-ranging and inclusive, one that offers a glimpse into the government’s medium-term economic roadmap. Much of this could rely on public spending to drive growth, slowing down the process of bridging deficits, but the government’s market borrowing plans suggest it is looking to raise revenue through additional resources such as gold bonds and share sale in state-run firms.

While the devil could be in the detail, here are the top takeaways from Jaitley’s budget speech.

Clear measures to revive investment cycle

To restart the investment cycle that can create the millions of jobs India needs, the government has proposed to cut corporate tax from 30% to 25% over the next four years. Specific plans to streamline the regulatory process and a new bankruptcy code could also help increase the ease of doing business in India.

In efforts to boost India’s global competitiveness, Jaitley has also raised the threshold for the application of transfer pricing rules to Rs. 200 million from the current Rs. 50 million level. For non-banking financial companies, the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act) law will be seen as a positive. The proposal to rationalise capital gains tax regime for real estate investment trusts is also a positive as also is the rationalisation of the wealth tax.

Push for infrastructure

Much of the government’s push for growth is expected to come from investing in infrastructure, a move that could address the most important structural deficiency in the economy. The budget proposed to hike investment in the sector by Rs 700 bln in 2015/16 over the last year. The proposed national investment infrastructure fund and the tax-free infrastructure bonds for projects in roads, rail and irrigation projects could be central to the government’s growth revival plans. The fund would receive a 200-billion-rupee injection of public money.

The budget has also proposed five new ultra-mega power projects for 4,000 MW each besides also aiming to build an additional 100,000 km of road. The proposal to corporatise public sector ports could also improve efficiency.

Hard decision to fight black money

The budget appeared to deliver on what has been a cornerstone in Modi’s election campaign - fighting black money and corruption. Jaitley announced introducing new laws to deal with the menace of slush funds and tax evasion that would include 10-year rigorous imprisonment for hiding foreign assets and dis-incentivising cash dealings in real estate transactions.

The government will also take steps to encourage the use of credit and debit cards and put a cap on cash transactions. Quoting PAN will be mandatory for all sale and purchase of over Rs 1 lakh. Offenders will not be permitted to approach the Settlement Commission. The budget also proposed to bring a new bill to curb domestic black money. The Benami Transactions (Prohibition) Bill will be introduced in the current session of parliament.

Move towards universal social security

A large proportion of India's population is without insurance of any kind - health, accidental or life. Jaitley announced plans for a universal social security system that would give poor Indians access to subsidised insurance and pensions. Tax benefits were proposed on health insurance, raising the exemption ceiling to Rs. 25,000 from Rs. 15,000. For senior citizens, the exemption would be up to Rs. 30,000. The finance minister also proposed to provide coverage for accidents and death to the poor for just Rs. 12 a year.

Jaitley raised the tax incentive limit for investment in pension fund by Rs. 50,000, taking it to Rs. 1.5 lakh.

First Published: Feb 28, 2015 14:58 IST