UnionBudget 2015 -2016
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Transcript of UnionBudget 2015 -2016
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UNION BUDGET ANALYSIS 2105-2106
By,
ABHIJITH R KRISHNAN
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UNION BUDGET 2015 HIGHLIGHTS
-Fiscal deficit seen at 3.9 pc of GDP in 2015/16-Will meet the challenging fiscal target of 4.1 pc of GDP-Remain committed to meeting medium term fiscal deficit target of 3 pc of GDP-Current account deficit below 1.3 per cent of GDP-GDP growth seen at between 8 pc and 8.5 pc in 2015-16
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 346.99 billion rupees for rural employment guarantee scheme
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TaxationTo abolish wealth taxwealth tax with additional 2 pc surcharge on super rich Proposes to cut to 25 per cent corporate tax over next four yearsCorporate tax of 30 per cent is uncompetitiveTo reduce custom duty on 22 items Basic custom duty on commercial vehicle doubled to 20 percent Proposes to increase service tax rate and education cess to 14 per cent from 12.36 per cent
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BLACK MONEY LAW
India will join the league of countries like Singapore, UK and the US with its proposed law to check black money, under which those hiding income and evading tax in relation to foreign assets can be slapped with a prison term of up to ten years.In fact, the proposed imprisonment penalty, as also the monetary penalty, here could be higher than many other countries in most of the cases.The new law would also provide for a penalty for such concealment of income and assets at the rate of 300 per cent of tax, while offenders will not be permitted to approach the Settlement Commission.
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INFRASTRUCTURE
-Investment in infrastructure will go up by 700 bln rupees 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 4,000 MW each-Second unit of Kudankulam nuclear power station to be commissioned-Will need to build additional 100,000 km of road-Ports in public sector will be encouraged to corporatise under Companies Act
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EXPENDITURE-Plan expenditure estimated at about 4.65 trillion rupees-Non-plan expenditure seen at about 13.12 trillion rupees-Allocates 2.46 trillion rupees for defence spending-Allocates 331.5 billion rupees for health sector-If revenue improves, hope to raise budgeted allocations for rural job scheme by 50 billion rupees
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.Finance Minister Arun Jaitley has
unveiled a Budget that seeks to make the Indian economy more robust, the business environment more investor friendly, and economic growth more
inclusive.
It may not have been the 'Big Bang' Budget that most were expecting, but Mr Jaitley has succeeded in creating a pro-growth and pro-investment roadmap, laid the groundwork for the success of Prime Minister Narendra Modi's ambitious 'Make in India' campaign and kick-started thinking on the agenda of 'Healthcare for All'.
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ENCOURAGING INVESTMENTS
The Budget has sought to improve business sentiment and spur investments by domestic as well as overseas players in the country through easier regulations and a simpler and stable tax regime. The gradual reduction of the corporate tax rate from 30 per cent to 25 per cent over four years with a corresponding rationalisation of various tax exemptions is significant. While encouraging private investment, this step also signals a break from an exemption-based regime.
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GSTBy clearing the path for the introduction of the long-pending Goods and Services Tax (GST) from April 1, 2016, the Budget has championed a crucial tax reform that will bring India on par with developed economies. Deferring the implementation of the controversial General Anti-Avoidance Rules (GAAR) by two years and its prospective application will reassure investors and reinforce the business-friendly credentials of the Modi government.
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NEW BANKRUPTCY LAW
The proposed introduction of the new bankruptcy law is a welcome move as it would safeguard stakeholders' interests while ensuring swift liquidation of unviable companies in line with international best practices.In order to enable the 'ease of doing business', the FM has expressed his commitment to do away with multiple approvals for setting up a manufacturing unit. It should pave the way for a 'single window' approval system, which is likely to boost investor confidence.
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Push for 'Make in India‘
While the Budget may not have announced any big bang schemes for 'Make in India', it has most certainly taken a few critical steps to converting 'Make in India' into a growth mantra.
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A major breakthrough this year has been the much needed attention given to the infrastructure sector, which is a prerequisite for Make in India's success. The corpus of Rs 70,000 crore allocated to infrastructure is expected to lead to the development of major infrastructure projects, including road, railway networks and power plants. The proposal to revitalise the PPP model for infrastructure development will definitely yield positive results for the sector. Additionally, tax-free bonds in rail, roads and irrigation projects will bring much-needed funds for this critical sector.THE FM RIGHTLY TOUCHED UPON THE FACT THAT THE 'SKILL INDIA' AND 'DIGITAL INDIA' INITIATIVES ARE THE DRIVERS FOR 'MAKE IN INDIA'.
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‘ JOB SEEKERS' TO 'JOB CREATORS'
Government's initiative towards setting up aRs 1,000-crore Self-Employment and Talent Utilization (SETU) fund for incubating start-ups. This is very encouraging as believe it will help take 'ideas to market' and encourage our youth to become 'job creators' instead of being 'job seekers'..
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INCLUSIVE GROWTH
The move from 'Jan Dhan' to 'Jan Surakhsa' is a big reform that will go a long way in ensuring social security for the poor and senior citizens. The proposed Universal Social Security System is perhaps the most important reform that hope will be linked to universal healthcare in the near future.Enabling India to become a pensioned society from a pension-less society and encouraging health, accidental and life insurance are also landmark initiatives that need to be applauded.
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IN THE FINAL ANALYSIS, THE FM HAS CERTAINLY LAID A VERY POSITIVE ROADMAP FOR REVIVING INVESTOR SENTIMENT, RETURNING INDIA TO A PATH OF ROBUST ECONOMIC GROWTH, AND RESTORING THE COMMON MAN'S EXPECTATIONS FOR BETTER DAYS TO COME.
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