India will ramp up spending on rural areas, infrastructure and fighting poverty, Finance Minister Arun Jaitley said as he unveiled his annual budget on Wednesday, adding the impact on growth from the government's cash crackdown would wear off soon.
Addressing parliament, Jaitley called his fourth budget one for the poor. Yet, while vowing prudent fiscal management, he also raised his 2017/18 federal deficit target to 3.2 percent of gross domestic product to cover his spending promises.
Here are the highlights of Jaitley's budget for the 2017/18 fiscal year that begins on April 1:
FISCAL DEFICIT
* Projects 2017/18 fiscal deficit at 3.2 percent of GDP
* Government remains committed to 2018/19 fiscal deficit at 3 percent of GDP
* The 2017/18 budget seeks to pursue prudent fiscal management to preserve financial stability
GROWTH
* Jaitley says India seen as an engine of global growth
EXPENDITURE
* Estimates 2017/18 total expenditure at 21.47 trillion rupees
* Capital spending raised by 25.4 percent on year in 2017/18
BORROWING
* 2017/18 net market borrowing estimated at 3.48 trillion rupees
* 2017/18 gross market borrowing seen at 6.05 trillion rupees
* Government to switch 250 billion rupees of bonds in 2017/18
INFLATION
* Consumer price index inflation is expected to remain within the central bank's mandated range of 2 to 6 percent
DEMONETISATION
* Demonetisation "a bold and decisive measure", will make GDP bigger and lead to higher tax revenues - finance minister
* Hit to economy from government decision to outlaw high-denomination notes will be "transient", effects of demonetisation not expected to spill over to next year
* Pace of remonetisation has picked up and will soon reach comfortable levels
* No transaction above 300,000 rupees to be permitted in cash
* Surplus money in the banking system will lower borrowing costs, increase credit flow
TAXATION
* 2017/18 total tax revenue seen at 12.27 trillion rupees
* 2017/18 total revenue receipts seen at 15.16 trillion rupees
* Proposes cuts in personal income tax for those at bottom end of income scale
* Proposes to reduce income tax rate for medium and small enterprises with annual turnover up to 500 million rupees to 25 percent
* Extends relaxation on withholding tax on foreign investor's interest income from debt until June 30, 2020
* Proposes change in capital gains tax in real estate, land
AGRICULTURE
* With a better monsoon agriculture is expected to grow at 4.1 percent in 2016/17
* Agricultural credit target fixed at 10 trillion rupees ($147.88 billion) for 2017/18
* Long-term irrigation fund allocated 400 billion rupees
* Allocates 80 billion rupees for milk processing over 3 years
* Farm insurance to cover 40 percent of net sown area, up from 30 percent last year
* Modern law on contract farming will be drafted and circulated to states
INFRASTRUCTURE
* Allocates 3.96 trillion rupees for infrastructure in 2017/18
* Allocates 2.41 trillion rupees for transport sector in 2017/18
* Proposes 640 billion rupees investments in national and state highways in 2017/18
FOREIGN INVESTMENT
* Decides to abolish foreign investment promotion board
* To exempt some foreign investors from indirect transfer provisions
BANKING
* The government to provide already planned 100 billion rupees capital infusion to state-run banks in 2017/18
* Proposes to raise allowable provision for bad loans in banks to 8.5 percent from 7.5 percent
* To introduce legislation changes for confiscating assets of economic offenders
DEFENCE
* 2017/18 defence expenditure excluding pensions estimated at 2.74 trillion rupees
* Defence capital outlay at 864.88 billion rupees
DIVESTMENT
* Total disinvestment target 725 billion rupees in 2017/18
* Proposes revised mechanism for time bound listing of public sector companies
RURAL SPENDING
* Allocation for rural, agriculture and allied areas to increase by 24 percent to 1.87 trillion rupees
* Allocates 480 billion rupees to rural jobs scheme in 2017/18, versus a revised estimate of 470 billion rupees in the current fiscal year
* Allocates 190 billion rupees for rural road scheme in 2017/18
* On course to complete 100 percent electrification by May 1, 2018, allocating 48 billion rupees for rural electrification scheme
RAILWAYS
* Proposes to invest 1.31 trillion rupees in railways in 2017/18; budget 2017/18 allocates 550 bln rupees for railways
* Dedicated railway safety fund of 1 trillion rupees over next five years
* 3,500 kms of railway lines to be commissioned in 2017-18 as against 2,800 km in 2016-17
* Transformative measures have to be taken to make Indian railways competitive
* Railways to withdraw service charges on online booking of tickets
LABOUR
* Legislative reforms to be undertaken to simplify, rationalise existing labour laws
MANUFACTURING AND TRADE
* Taking steps to make India a global hub for electronics manufacturing; received over 250,000 proposals last year with an investment value of 1.26 trillion rupees
* Announces new trade infrastructure export scheme
WELFARE SPENDING
* India to spend more in rural areas, infrastructure and poverty alleviation
* The government will continue process of economic reforms for the benefit of the poor
* To allocate 40 billion rupees for market-relevant training for youth
* Total allocation for women and children welfare set at 1.84 trillion rupees
* To double lending target under Mudra Yojana (Micro Units Development and Refinance Agency) to 2.44 trillion rupees
* Airports Authority of India to monetize land around certain Tier 2 airports, use funds to upgrade airports
COMMODITIES
* To set up two more strategic oil storage in 2 states; proposes to create integrated oil company
* Halves import tax on LNG to 2.5 percent
* To integrate stock and derivative markets for commodities trading
POLITICAL PARTY FUNDING
* Political transparency in political party funding; parties will need to file income tax returns
* Proposes to amend central bank act for issue of electoral bonds for political funding
* Proposes to limit maximum individual donation at 2000 rupees in cash for political funding
HOUSING
* National housing bank to provide 200 billion rupees for housing loans
* Affordable housing to be given infrastructure status
* Long-term capital gains tax on immovable property to be levied after 2 years instead of 3 years
FINANCE MINISTER'S COMMENTS
* "India stands out as a bright spot in the world economic landscape."
* "My approach in preparing the budget is to spend more on rural areas, infrastructure and poverty alleviation with fiscal prudence."
* "Signs of retreat from globalization have potential to affect exports from many emerging economies, including India."
* "One of the thrust areas of my tax proposals is to stimulate growth, give relief to the middle class, (promote) affordable housing, curb black money, bring transparency in political funding and simplify tax administration."
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