Defending the Budget, Finance Minister Arun Jaitley said on Monday that it addresses the “harsh reality” of distress in rural India and the farm sector beleaguered by successive poor monsoons.
The Budget that has remained on the committed path of fiscal rectitude and includes a number of deep, though unglamorous structural reforms, addresses not only the structural reforms constituency but also the harsh realities of economic growth through allocations for the social (Rs. 1.51 lakh crore), agriculture (Rs. 35,984 crore), rural (Rs. 87,765 crore) and infrastructure sectors (Rs. 2.21 lakh crore), he said.
“Left-of-centre is a definition that the media gets stuck in….The budget is for the reality of India…the rural India is in distress and agriculture needs attention…in such harsh realities the first right of investment is that of social, rural, infrastructure and agriculture sectors,” Mr. Jaitley said, speaking to reporters after tabling the NDA Government’s third budget.
The higher turnover limit under the presumptive taxation scheme to Rs 2 crore will bring big relief to a large section of the middle class, he said.
Prime Minister Narendra Modi said the “pro-village, pro-poor and pro-farmer” budget would make a qualitative change to the lives of those in the rural areas.
“Several steps have been taken for the farmers. The most important is the Pradhan Mantri Krishi Yojana,” Mr. Modi said commenting on the budget.
Noting that electricity and roads are crucial for villages, he said by 2019, all villages of the country will be connected by roads, while all of them will be electrified by 2018. “There has been a lot of politics over the poor, it is now time to make concentrated efforts to uplift them,” Mr. Modi said.
Changes in structure will take care of people’s fear of taxes: Jaitley
Mr. Jaitley asserted that the budget will take care of the people’s fear of taxation.
Addressing a post-budget press conference, Mr. Jaitley said: “The monumental change in the presumptive taxation regime will eliminate people’s fear of taxation …that takes care of the shopkeepers and small traders.”
The Finance Minister was responding to a question over the criticism in some quarters of the Budget having little for the neo-middle class, the constituency Prime Minister Narendra Modi had reached out to in the run up to the 2014 General Elections and instead focusing on the poor through budgetary allocations along the lines of the Budgets presented by the UPA governments.
The higher turnover limit under the presumptive taxation scheme to Rs 2 crore will bring big relief to a large section of the middle class, he said.
The proposed extension of the simplified presumptive taxation regime to professionals including lawyers, doctors, architects and interior designers who report total gross receipts of less than Rs. 50 lakh under which profits will be deemed to be 50%, said Mr. Jaitley, will further reduce the compliance burden of the middle class.
The increased rent deduction from Rs. 24,000 to Rs. 60,000 and the higher ceiling for tax rebate under Section 87A from Rs. 2,000 to Rs. 5,000, he said, are all relief and benefits for the middle class.
“If I’d raised the income tax threshold that would have been a benefit also for the super rich but what I have done instead is to give relief to the middle class.”
Defending the reliance of the budget on new cesses, including the infrastructure cesses on cars and vehicles, Mr. Jaitley said that since the Government needs resources for building infrastructure it must opt for one of the available levies. “If I have to provide for new roads I can only levy a cess or raise the service tax rate or excise duties on petrol and diesel…the funds will have to come from somewhere.”
The Budget, he said, undertakes the largest ever simplification of taxes, proposes not only strategic disinvestment but also reallocation and recycling of government-owned assets.
“Why should a public sector unit not be allowed to say sell two of the 30 units it runs and then set up two new ones better-suited to its strategy…such readjustments will now be allowed.” In the estimates for non-tax receipts during 2016-17, the Government has budgeted Rs. 20,500 crore from Strategic Disinvestment.
Despite a 15% hike in the plan expenditure allocation for 2016-17, and significant additional provisioning for the outgoes towards the One Rank One Pension and the 7th Pay Commission awards, through efficient expenditure management, the fiscal deficit target for next year has been maintained at 3.5% of GDP.
The fiscal deficit for the current year, 2015-16, is also being kept within the target of 3.9% of GDP. “There are no slips or pauses in the fiscal deficit,” Mr. Jaitley said, turning to structural reforms. These, he said, include the proposal to introduce legislation in Parliament for giving a statutory backing to Aadhaar.
