Union Finance Minister Arun Jaitley has claimed that the Budget 2015-16 marks the beginning of cooperative federalism and empowerment of the states.
Presenting the Union Budget for the financial year 2015-16 in Lok Sabha on Saturday, the Finance Minister announced several new schemes. They include Micro Units Development Refinance Agency (Mudra) Bank To refinance micro-finance institutions; Pradhan Mantra Suraksha Bima Yojana to cover accidental death risk of Rs 2 Lakh for just Rs 12 per year premium; Atal Pension Yojana for defined pension wherein government will contribute 50% of the premium and Pradhan Mantri Jeevan Jyoti Bima Yojana to cover both natural and accidental death risk.
The Finance Minister also said that there was a proposal to create Senior Citizen Welfare Fund and National Investment And Infrastructure Fund. He said Tax Free Infrastructure Bonds would be introduced for projects in rail, road and irrigation sectors. He also announced the introduction of SETU (Self-Employment And Talent Utilisation) mechanism to support start-up businesses.
Arun Jaitley said that the Centre would set up five new Ultra-Mega Power Projects in the country. A new Gold Monetisation Scheme has been introduced to replace present gold deposit and gold metal Loan schemes. He also granted Rs 1,000 Crore towards Nirbhaya Fund. He said news institutions including AIIMS, IIT and IIMs will be set up.
The Finance Minister has said that the Indian Economy has turned around dramatically in the last nine months with the real GDP growth expected to accelerate to 7.4% making India the fastest growing large economy in the world. He said macro-economic stability has been restored and conditions have been created for sustainable poverty elimination, job creation and durable double digit economic growth. Jaitley specifically talked about three key achievements of the Government, the Jan Dhan Yojana which brought over 12.5 crores families into financial mainstream in a short period of 100 days, transparent coal block auctions to augment resources of the states and ‘Swachh Bharat’ which has become a movement to regenerate India.
Arun Jaitley said that India has now embarked on two more game changing reforms which are GST and the JAM Trinity-Jan Dhan, Aadhar and Mobile-to implement direct transfer of benefits. He added that GST will put in place a state-of-the art indirect tax system by 1st April 2016 while the JAM Trinity will allow transfer benefits in a leakage-proof, well-targetted and cashless manner.
Describing the declining inflation as one of the major achievements of the Government, the Finance Minister said that this represents a structural shift. He said CPI inflation is expected to remain at close to 5% by the end of the year which will allow further easing of monetary policy. He said a Monetary Policy Framework Agreement has been concluded with the RBI to keep inflation below 6%.
Stating that while based on the new series, estimated GDP growth for 2014-15 is 7.4%, Jaitley said growth in the next financial year is expected to be between 8 to 8.5% and aiming for a double-digit rate seems feasible very soon. The Minister underlined that India has to think in terms of a quantum jump. He said the year 2022 will be the Amrut Mahotsav, the 75th year, of India’s independence. He added the vision of what the Prime Minister has called ‘Team India’ led by the States and guided by the Central Government should include a roof for each family which will require to complete two crore houses in urban areas and four crore houses in rural areas with each house having 24 hour power supply, clean drinking water, a toilet and road connectivity.
He said the vision includes that at least one member from each family should have access to the means of livelihood, substantial reduction in poverty, electrification of the remaining 20,000 villages including off-grid solar power by 2020, connecting each of the 1,78,000 un-connected habitation, providing medical services in each village and city, ensuring a Senior Secondary School within 5 km reach of every child, strengthening rural economy-increase irrigated area, ensuring communication connectivity to all villages, to make India, the manufacturing hub of the world through Skill India and the Make in India Programmes, encourage and grow the spirit of entrepreneurship and development of Eastern and North Eastern regions on par with the rest of the country.
The Finance Minister counted five major challenges faced by the Indian economy which are agricultural income under stress, weak private sector investment in infrastructure, decline in manufacturing, resource crunch in view of higher devolution in taxes to states and maintaining fiscal discipline. He assured that the country will meet the challenging fiscal deficit target of 4.1% of GDP, that the Government had inherited. Talking about the fiscal roadmap, Jaitley said that the Government is firm to achieve fiscal target of 3% of GDP. He added that the journey for fiscal deficit target of 3% will be achieved in three years rather than two years.
Stating that the Government is committed in its resolve, as Indians, to regain its pre-eminence as a just and compassionate country, Arun Jaitley said that what is needed is a well targetted system of subsidy delivery. He emphasized on need to cut subsidy leakages, to achieve which the Government is committed to the process of rationalizing subsidies. He said the direct transfer of benefits, started mostly in scholarship schemes, will be further expanded with a view to increasing the number of beneficiaries from the present 1 crore to 10.3 crore.
Reiterating that the Government’s commitment to farmers runs deep, the Finance Minister proposed to fully support Agriculture Ministry’s organic farming scheme – “Paramparagat Krishi Vikas Yojana”. Stating that the Pradhanmantri Gram Sinchai Yojana is aimed at irrigating the field of every farmer and improving water use efficiency to provide ‘ Per Drop More Crop’’, Jaitley proposed allocation of Rs. 5,300 crore to support micro-irrigation, watershed development and the Pradhan Mantri Krishi Sinchai Yojana.
In order to support the agriculture sector with the help of effective agriculture credit and focus on small and marginal farmers, the Finance Minister proposed to allocate Rs. 25,000 crore to the corpus of Rural Infrastructure Development fund (RIDF) set up in NABARD, Rs. 15,000 crore for Long Term Rural Credit Fund; Rs. 45,000 crore for Short Term Cooperative Rural Credit Refinance Fund; and Rs. 15,000 crore for Short Term RRB Refinance Fund. He said that the Government has set up an ambitious target of Rs. 8.5 lakh crore of agricultural credit. Stating the Government’s commitment to supporting employment through MGNREGA, The Minister proposed an initial allocation of Rs. 34,699 crore for the programme.
The Finance Minister proposed to create a Micro Units Development Refinance Agency (MUDRA) Bank, with a corpus of Rs. 20,000 crore, and credit guarantee corpus of 3,000 crore, which will refinance Micro-Finance Institutions through a Pradhan Mantri Mudra Yojana,. He added that priority will be given to SC/ST enterprises in lending.
While showing concern over a large proportion of India’s population being without any kind of insurance, Jaitley said that the soon-to-be- launched Pradhan Mantri Suraksha Bima Yojana, will cover accidental death risk of Rs. 2 lakh for a premium of just Rs. 12 per year. Similarly, he said, the Government will also launch the Atal Pension Yojana, which will provide a defined pension, depending on the contribution, and its period. To encourage people to join this scheme, the Government will contribute 50% of the beneficiaries’ premium limited to Rs. 1,000 each year, for five years, in the new accounts opened before 31st December, 2015. The third Social Security Scheme that the Minister announced is the Pradhan Mantri Jeevan Jyoti Bima Yojana which covers both natural and accidental death risk of Rs. 2 lakhs. The premium will be Rs. 330 per year, or less than one rupee per day, for the age group 18-50.
Mentioning about unclaimed deposits of about Rs. 3,000 crores in the PPF and approximately Rs. 6,000 crores in the EPF corpus, the Minister said that the amounts will be appropriated to a corpus, which will be used to subsidize the premiums on these social security schemes through creation of a Senior Citizen Welfare fund in the Finance Bill. He reiterated the Government’s commitment to the on-going schemes for the welfare of SCs, STs and Women.
The Finance Minister underlined the pressing need to increase public investment in infrastructure. He said that he proposes increased outlays on both the roads and the gross budgetary support to the railways, by Rs. 14,031 crore and Rs. 10,050 crore respectively. He said the CAPEX of the public sector units is expected to be Rs. 3,17,889 crore, an increase of approximately Rs. 80,844 crore over RE 2014-15. He also proposed to establish National Investment and Infrastructure Fund (NIIF) with an annual flow of Rs. 20,000 crore. He said that he also intends to permit tax free infrastructure bonds for the projects in the rail, road and irrigation sector. He said the PPP mode of infrastructure development has to be revisited and revitalized.
Arun Jaitley proposed to establish the Atal Innovation Mission(AIM) in NITI which will provide Innovation Promotion Platform involving academicians, and drawing upon national and international experiences. A sum of Rs. 150 crore is proposed to be earmarked for the mission.
The Finance Minister said that the Government is establishing a mechanism to be known as SETU (Self-Employment and Talent Utilisation) which will support all aspects of start-up businesses, and other self-employment activities, particularly in technology-driven areas. Rs. 1,000 crore have been initially earmarked in NITI Aayog for the purpose.
Arun Jaitley said the Government also proposes to set up 5 new Ultra Mega Power Projects each of 4000 MWs in the plug-and-play mode.
In order to promote investment in the country, the Minister proposed to set up a Public Debt Management Agency (PDMA) which will bring both India’s external borrowings and domestic debt under one roof. He also proposed to merge the Forwards Markets Commission with SEBI to strengthen regulation of commodity forward markets and reduce wild speculation. He said enabling legislation, amending the Government Securities Act and the RBI Act is proposed in the Finance Bill, 2015.
Regarding the Employees Provident Fund (EPF), the Minister said the employees need to be provided two options, EPF or the New Pension Scheme (NPS). He said, for employees below a certain threshold of monthly income, contribution to EPF should be optional, without affecting or reducing the employer’s contribution.
Stating that India is one of the largest consumers of gold in the world, Arun Jaitley proposed to introduce a Gold Monetisation Scheme, which will replace both the present Gold Deposit and Gold metal Loan Schemes. The New scheme will allow the depositors of gold to earn interest in their metal accounts and the jewelers to obtain loans in their metal account. Banks/other dealers would also be able to monetize this gold. He also proposed a Sovereign Gold Bond, as an alternative to purchasing metal gold. He also announced commencing work on developing Indian Gold Coin, which will carry the Ashok Chakra on its face.
Highlighting need for increasing investments from all sources, the Finance Minister proposed to allow foreign investments in Alternate Investment Funds. He said in order to catalyze investments from the Indian Private Sector in South East Asia, a Project Development Company will set up manufacturing hubs in Cambodia, Myanmar, Laos and Vietnam.
In order to support Programmes for women security, advocacy and awareness, the Minister proposed to provide another Rs. 1,000 crore to the Nirbhaya Fund.
Arun Jaitley said resources will be provided to start work along landscape restoration, signage and interpretation centres, parking, access for the differently abled, visitors’ amenities, including securities and toilets, illumination and plans for benefiting communities around them at various heritage sites.
Expressing concern over environmental degradation, the Minister said that the target of renewable energy capacity has been revised to 1,75,000 MW till 2022. He said the Government is also launching a Scheme for Faster Adoption and manufacturing of Electric Vehicles (FAME) with an initial outlay of Rs. 75 crore.
Arun Jailtely emphasized on formal skill training and said the Government will soon launch a National Skills Mission which will consolidate skill initiatives spread across several Ministries. He said Rs. 1,500 crore has been set apart for Deen Dayal Upadhyay Gramin Kaushal Yojana. He proposed to set up a fully IT based Student Financial Aid Authority to administer and monitor Scholarship as well Educational Loan Schemes, through the Pradhan Mantri Vidya Lakshmi Karyakram.
The Finance Minister proposed to set up several New Institutions. An IIT will be set up in Karnataka and Indian School of Mines, Dhanbad will be upgraded in to a full-fledged IIT. New All India Institutes of Medical Sciences (AIIMS) will be set up in J&K, Punjab, Tamil Nadu, Himachal Pradesh and Assam. Another AIIMS like institution will be set up in Bihar. A post graduate institute of Horticulture Research & Education will be set up in Amritsar. Three new National Institutes of Pharmaceutical Education and Research will be set up in Maharashtra, Rajasthan and Chattisgarh and one institute of Science and Education Research will be set up in Nagaland and Odisha each. IIMs will be setup in J&K and Andhra Pradesh.
Arun Jaitley said India is making good progress towards digital India. He said the National Optical Fibre Network Programme (NOFNP) of 7.5 lakh kms networking 2.5 lakh villages is being further speeded up by allowing willing States to undertake its execution.
The Finance Minister said that in spite of the large increase in the devolution to states, adequate provision is being made for the schemes for the poor with allocation of Rs. 68,968 crore to the education sector including mid-day meals, Rs. 33,152 crore to the health sector and Rs. 79,526 crore for rural development activities including MGNREGA, Rs. 22,407 crore for housing and urban development, Rs. 10,351 crore for women and child development, Rs. 4,173 crore for Water Resources and Namami Gange. He said that adequate funds have been provided for the needs of the armed forces. As against likely expenditure of this year of Rs. 2,22,370 crore the budget allocation for 2015-16 is Rs. 2,46,727 crore.
Arun Jaitley while giving the budget estimates for 2015-16 said Non-Plan expenditure estimates for the Financial Year are Rs. 13,12,220 crore. Plan expenditure is estimated to be Rs. 4,65,277 crore, which is very near to the R.E. of 2014-15. Total Expenditure has accordingly been estimated at Rs. 17,77,477 crore. Gross Tax receipts are estimated to be Rs. 14,49,490 crore. Devolution to the States is estimated to be Rs. 5,23,958 crore. Share of Central Government will be Rs. 9,19,842 crore. Non Tax Revenues for the next fiscal are estimated to be Rs. 2,21,733 crore. He said with the above estimates, fiscal deficit will be 3.9 percent of GDP and Revenue Deficit will be 2.8 percent of GDP.