Union Budget disappoints equity markets

Finance Minister ArunJaitley on Monday, 29th February' 2016 presented union budget. While there is no change in personal Income Tax slabs in the Union Budget 2016-17, he announced deduction for additional interests of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned in 2016-17 for first time home buyers, where house costs does not exceed Rs 50 lakh.

Mr. Jaitley also proposed to increase the limit of deduction of rent paid from Rs 24,000 per annum to Rs 60,000 spelling respite to those who do not own any house and live in rented accommodation.

For those people who earn less than Rs 5 lakh per annum, Finance Minister announced to raise the ceiling of tax rebate from Rs 2000 to Rs 5000 giving an additional relief of Rs 3000 in their tax liability.

There are numerous challenges in 2016-17. It has been envisioned that there is risks of further global financial crisis and instability. Then there will be additional fiscal burden due to 7th Central Pay Commission recommendations and OROP.

Roadmap & priorities of government:

I. Government has priority to transform India to have a significant impact on economy and lives of people.

II. Government mainly focuses on -

  • Ensuring macro-economic stability and prudent fiscal management
  • Enhancing on domestic demand
  • Continue to economic reforms and policy initiatives to change the living of inhabitants for their betterment.

III. Government focuses on enhancing expenditure in priority areas of farm and ruralsector, social sector, infrastructure sector employment generation andrecapitalisation of the banks.

IV.Government alsogive priority toFocus on Vulnerable sections through:

  • Pradhan Mantri Fasal Bima Yojana
  • New health insurance scheme to protect against hospitalisation expenditure
  • facility of cooking gas connection for BPL families

V. Government also focus on the ongoing reform programme and ensure passage ofthe Goods and Service Tax bill and Insolvency and Bankruptcy law.

VI. Government Undertake important reforms by:

  • Giving a statutory backing to AADHAR platform to ensure benefitsreach the deserving.
  • Freeing the transport sector from constraints and restrictions.
  • Incentivising gas discovery and exploration by providing calibrated marketing freedom.
  • Enactment of a comprehensive law to deal with resolution of financial firms
  • Provide legal framework for dispute resolution and re-negotiations in PPP projects and public utility contracts.
  • Undertake important banking sector improvements and public listing of general insurance companies undertake significant changes in FDI policy.

Vital points in union budget 2016-17 are as under:

  • No change in personal Income Tax slabs
  • 4-month Compliance Window for domestic black money holders; tax, interest on them at 45%
  • Relief for tax payers who earn below Rs 5 lakh; ceiling of rebate u/s 87A raised to Rs 5,000 from Rs 2,000
  • House rent deduction raised from Rs 20,000 to Rs 60,000
  • One-time dispute resolution scheme for retro tax cases, penalty, interest waived
  • High level committee headed by Revenue Secretary to supervise creation of fresh liability using retro tax law
  • Corporate Tax for new manufacturing units fixed at 25%
  • Clean energy cess increased from Rs 200/ton to 400/ton on coal, lignite and peat
  • First home buyers to get additional deduction of Rs 50,000 on interest for loan up to Rs 35 lakh; cost of house should not be more than Rs 50 lakh
  • To achieve fiscal deficit of 3% of GDP by (2017-18)
  • Fiscal Deficit target 3.9% in 2015-16, 3.5% in 2016-17
  • Revenue Deficit to be 2.8% in 2015-16
  • Forex reserves at highest at $350 billion
  • Budget lists 9 transformative pillars including doubling farm income by 2022, infrastructure, investment, reforms
  • Highest ever allocation of Rs 38,500 cr for MGNREGA
  • Certain equipment for dialysis exempt from basic customs duty, excise CVD
  • Govt to circulate Model Shops and Establishment Bill, small retail shops may remain open for 7 days
  • 100% rural electrification by May 1, 2018
  • Govt to pay EPF contribution of 8.33% of new employees for first 3 years.
  • Start-ups to get 100% tax exemption for 3 years except MAT which will apply from April 2016-2019
  • To give statutory status to Aadhaar programme
  • Infrastructure outlay at Rs 2.21 lakh cr
  • Rs 35,984 crore earmarked for farmer welfare; to spend Rs 86,500 crore on irrigation in 5 years
  • Rs 20,000 crore irrigation fund to be set up under NABARD
  • Rs 2,000 crore for LPG connection to poor; scheme for MPG connection for women
  • Stand Up India allocated Rs 500 crore
  • Roads and highways allocation at Rs 55,000 crore; NHAI can issue tax free bonds.
  • Long term capital gains for unlisted companies to be reduced from 3 to 2 years
  • Rs 9,000 crore allocated to Swachh Bharat Abhiyaan
  • Targets 10,000 km national highways, upgradation of 50,000 kms of state highways
  • Incentivise gas production from deep sea, other unutilised deep sources
  • Rs 31,300 cr Infra Bonds to be issued by various agencies -- NHAI, IREDA, NABARD
  • Further relaxation of FDI rules in insurance, pension, stock exchanges, asset reconstruction companies
  • 100% FDI in food products made domestically
  • Rs 25,000 cr for recapitalisation of PSU banks
  • Department of Disinvestment renamed Department of Investment& Public Asset Management
  • NITI Aayog to identify CPSEs for strategic sale
  • To design framework for PSU bank consolidation
  • To consider lowering Govt. stake in IDBI to below 50%
  • Health insurance scheme to provide Rs 1 lakh per family
  • Senior citizens to get additional healthcare cover of Rs 30,000 under the new scheme
  • Comprehensive Code for providing specialised resolution mechanism for bankruptcy of banks/insurance firms
  • To amend Companies Act for registration of firms in a day
  • GAAR to be implemented from April 1, 2017.
  • Legislation to deal with the menace of illicit deposit taking schemes
  • Place of Effective Management rules deferred by a year
  • Withdrawal up to 40% of the corpus at the time of retirement to be tax exempt in the case of NPS
  • Steps to re-vitalise Public-Private-Partnership mode
  • Public Utility (Resolution of Disputes) Bill to be introduced, Guidelines for renegotiation of PPP Concession Agreements
  • New credit rating system for infrastructure projects
  • Interest rate setting Monetary Policy Committee in 2016
  • KrishiKalyan Cess at 0.5% on all taxable services from June 1, 2016
  • Infrastructure cess at 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles, SUVs
  • Excise duties on various tobacco products other than beedi raised by about 10 to 15%
  • RBI to facilitate retail participation in G-Secs
  • New derivative products to be developed by SEBI
  • PSU General Insurers to be listed in stock exchanges
  • Review and rationalisation of Autonomous Bodies
  • Amount sanctioned under Pradhan Mantri Mudra Yojana increased to Rs 1.80 lakh crore
  • Govt to increase ATMs, micro-ATMs in post offices
  • Service Tax to be exempted on general insurance schemes under NIRMAYA Scheme.
  • DBT to be used to transfer subsidy on fertiliser in select districts on pilot basis
  • Plan, non-Plan distinction to be done away with; a Committee to review FRBM
  • Service tax on Single premium Annuity Policies reduced from 3.5% to 1.4% of the premium paid in certain cases
  • 10% tax rate on income from worldwide exploitation of patents developed and registered in India by a resident
  • NBFCs to get deduction of 5% of its income in respect of provision for bad and doubtful debts
  • Basic custom and excise duty on refrigerated containers reduced to 5% and 6%
  • 100% deduction for profits in housing project for flats up to 30 sq metres in four metros; 60 sqmts in other cities, approved during June 2016 to March 2019 and completed in 3 years. MAT to apply.
  • Agriculture credit target highest at Rs 9 lakh crore
  • Unified agriculture market e-platform will be dedicated to the nation on the birthday of B R Ambedkar

    In education area, following budget is proposed:

    • Scheme to get Rs.500 cr for promoting entrepreneurship among SC/ST
    • 10 public and 10 private educational institutions to be made world-class.
    • Digital repository for all school leaving certificates and diplomas. Rs. 1,000 crore for higher education financing.
    • Rs. 1,700 crore for 1500 multi-skill development centres.
    • 62 new NavodayaVidyalayas to provide quality education
    • Digital literacy scheme to be launched to cover 6 crore additional rural households
    • Entrepreneurship training to be provided across schools, colleges and massive online courses.
    • Objective to skill 1 crore youth in the next 3 years under the PM KaushalVikasYojna
    • National Skill Development Mission has imparted training to 76 lakh youth. 1500 Multi-skill training institutes to be set up.

    Reviewing the budget 2016-17, it is imagined that Budget 2016 will provide motivation to nation's economy and decrease the inflation. News report indicated that according to Union Finance Minister, Indian economic growth was amazingly high. They converted difficulties and challenges into opportunity.

    Prabhu presented India's rail budget for 2016-17

    Railway budget was presented by Railway Minister, Suresh Prabhu on 25th February' 2016. Basic theme of the budget was to overcome challenges and reorganize, restructure, revitalise Indian Railways system.

    Three pillars of the strategy are Nav Arjan - New revenues, Nav Manak - New Norms, Nav Sanrachna - New Structures.

    Vision of this railway budget is that by 2020, long-felt desires of the common man to be fulfilled i.e, reserved accommodation on trains available on demand, time tabled freight trains, technological advancement to improve safety record, elimination of all unmanned level crossings, improve punctuality, higher average speed of freight trains, semi high speed trains running along the golden quadrilateral, zero direct discharge of human waste.

    Railway Minister announces a capital plan of Rs. 1,21,000 crore for 2016-17.

    Main focus of the Union Railway Budget 2016-17 is on capacity creation in the rail sector, and on completion of the ongoing projects instead of announcing new ones.

    Highlights of Railway Budget 2016-17

    • No hike in railway fares.
    • The companies owned by Railways to come under a holding company.
    • Two dedicated freight corridors by 2019.
    • Drones to be used for remote monitoring of ongoing projects.
    • 33% sub-quota for women under all reserved categories.
    • Social media being increasingly used to ensure transparency
    • Online booking of retiring rooms made possible.
    • WiFi facilities at 100 more stations this year and 400 stations next year.
    • 2,800 km of broad gauge track conversion envisaged.
    • Seven km of broad gauge lines to be commissioned every day during 2016-17.
    • Anticipation to commission 19 km of new broad gauge track every day by 2018-19.
    • Rs.8.8 lakh crore to be spent on infrastructure in five years.
    • Rs.40,000 crore expected from the government as budgetary support.
    • It is appraised that budget reflects the expectations of whole nation.
    • Railways to generate 9 crore mandays of employment in 2017-18 and 14 crore mandays in 2018-19.
    • To increase lower berth quota for senior citizens by 50 percent.
    • Fully unreserved trains to be operated on high-density corridors.
    • Smart coaches are to be introduced. It will offer facilities like automatic door barcode readers, bio vacuum toilets, water level indicator, accessible dustbin, vending machine, agronomic seating, improved aesthetic, entertainment screens, LED lit boards for advertising.
    • Railway display network: GPS based digital display to provide real time information about upcoming station should be installed.
    • Sarathi seva, Service will be started to aid old and disabled people.
    • India's first railway auto hub will be inaugurated in Chennai to tap the automobile sector.
    • Braille-enabled train wagons to be implemented for differently-abled people. Online booking of wheelchairs enabled.
    • Mandatory catering services will be available on trains. Local cuisines of choice will be made available to passengers.
    • Overnight double-decker Uday expresses to be introduced on busiest routes.
    • National academy of Indian railways at Vadodara identified as first institution which will be upgraded to a full-fledged rail university.
    • Railside logistics parks and warehouses to be created in public-private partnerships.
    • Rakshak, it is a device that will intimate about approaching trains, will be provided to all gang men.
    • Rail Bandhu magazine shall be made available in all regional languages.
    • Aastha circuit trains to connect important pilgrim centres.
    • All major stations to be brought under CCTV surveillance in a phased manner.
    • Cleaning of coach on demand soon.
    • E-ticketing facility on foreign debit/credit cards
    • Deen Dayal coaches for long distance trains for unreserved passengers. These coaches will include potable water and higher number of mobile charging points.
    • Beautification stations at pilgrimage centres, including Ajmer, Puri, Varanasi, Nagapattinam.
    • FM Radio stations to provide train borne entertainment.
    • Sale of tickets through hand held terminals soon.
    • Optional travel insurance for rail passengers.
    • SPV with Japan for Ahmedabad-Mumbai Bullet train.
    • Children's menu, baby foods, baby boards to be made available for travelling mothers.
    • Will open cancellation facility through 139 helpline number.
    • Railways to introduce- Humsafar, Tejas and Uday Express.
    • Railway stations to be renovated under PPP model.

    Budget is designed to fulfil dream of Prime Minister Narendra Modi. Major objective is to grow, create jobs and provide service.