| Budget Announcement |
Budget Impact |
| Fiscal Deficit for 2017-18 pegged at 3.5% of GDP versus 3.2% target |
- The 30 bps spill over is lower than anticipated and even the 2018-19 fiscal deficit is pegged at just 3.2%
- However, higher fiscal deficit indicates more borrowings and that will push up the bond yields in the market
|
| Infrastructure outlay fixed at Rs.5.97 lakh crore for the full year |
- India needs close to $800 billion to bring its infrastructure to South East Asian standards
- Infrastructure spending has a multiplier effect on growth and is also a GDP booster
|
| The budget has allocated Rs.148,000 core to the Indian Railways |
- The focus of the railway spending will be largely on capital renewals and on safety measures
- The government is also envisaging dedicated rail freight corridors in the mineral rich sector
|
| Big focus on improving the quality of life in the rural areas |
- The budget promises 4 crore fresh electricity connections and another 8 crore cooking gas connections
- The allocation to rural livelihood as an alternate to farming has been set at Rs.14.34 lakh crore
|
| Farmers to get assured MSP at 1.5 times the cost of production |
- This will be a boon for Indian farmers as they have been getting paltry market prices on their Kharif crop
- However, implementation could be the big challenge as MSP is very hard to enforce in practice
|
| The budget to connect 470 APMCs as part of the National Agri Market |
- The eNAM will enable farmers to get a much better price without relying on brokers at the mandis
- Eventually, this will enable farmers to hedge their price risk through the use of futures markets
|
| The Budget envisages the world’s largest National Healthcare Plan |
- Over 10 crore families are expected to be covered up to Rs.5 lakh per family under this scheme
- However, the allocation of Rs.2000 crore appears to be quite small considering the magnitude of the project
|
| Disinvestment target for fiscal 2018-19 set at Rs.80,000 crore |
- A total of 24 CPSEs will be divested and will be a mix of minority stake sale and strategic sales
- In the fiscal 2017-18, the government is expected to exceed the divestment target by 35%, which is a good portent
|
| Cuts corporate taxes for firms up to turnover of Rs.250 crore to 25% |
- This will leave out most of the mid-sized and large companies in the Indian market which will not qualify
- There are currently 800 listed companies which have a turnover of less than Rs.250 crore
|
| Imports to get costlier via the imposition of 10% surcharge |
- The social welfare surcharge will be a shift wherein the duties on imports are being actually increased
- The Budget has focused on increasing the contribution of customs duty in the indirect tax kitty
|
| Customs duties on a large number of non-essential items increased |
- This could make a lot of items like mobile phones, LCD TVs, smart watches and footwear more expensive
- The customs hike has been kept out of inputs products and focused more on non-essential consumer items
|
| Senior citizens to benefit from the increase in interest tax limit |
- The limit for tax on interest on deposits has been raised from Rs.10,000 per annum to Rs.50,000 per annum
- In addition, the TDS also will not be deducted up to this level which makes the process a lot simpler
|
| Medical insurance limits for senior citizens also has been raised |
- The Section 80D limit for senior citizens has been raised from Rs.30,000 to Rs.50,000
- This is a tax incentive for tax payers to get their parents brought under the ambit of medical insurance
|
| Income tax rates have been kept static but cess is up from 3% to 4% |
- This will be applicable across the board for all income levels and will be uniformly spread across
- The cess hike is being compensated by standard deduction of Rs.40,000 but medical and transport allowance go away
|
| Budget announces introduction of tax on LTCG on equities and equity MFs |
- Only annual LTCG above Rs.1 lakh will be taxed at the rate of 10% on the excess amount
- However there is indexation benefit and investors can sell until March 31st without attracting capital gains tax
|
| Equity mutual funds to attract dividend distribution tax at 10% |
- This becomes a kind of double taxation as DDT is already applied in case of equities
- This is likely to increase the preference for growth funds over dividend options
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| FM clarifies that crypto currencies are not legal tender |
- This is a caution to the HNIs investing in Bitcoins to be prepared for punitive taxation on these products
- However, the government has expressed its intent to use the Blockchain technology for government records
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| The Budget has given a big focus on education with Rs.1 trillion outlay |
- The budget looks to spread education across villages through the use of technology
- This lateral approach under the Eklavya program will help spread education much faster
|
| Budget has also proposed an Aadhar like digital id for all businesses |
- This will again be extremely useful in tracking transactions and preventing leakage of taxes
- This will also aid the process of digitization as companies will also be able to use Aadhar as a valid id
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| Government to use InvITs for monetizing assets of CPSEs |
- This will be a boost for the InvIT concept which has huge applications in infrastructure projects
- The government will be using InvITs to conduct strategic sale by using the InvIT route
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| Budget extends Kisan Credit Cards to fisheries and dairy farming |
- This puts these dairy and aqua farmers at par with the farmers of Kharif and Rabi crops
- While agriculture has been lagging, dairy and fisheries have been growing at a rapid pace of nearly 10%
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