Union Budget 2015: Highlights | What's Cheaper & What's Costlier

Finance Minister Arun Jaitley on Saturday announced a budget aimed at high growth, saying the pace of cutting the fiscal deficit would slow as he seeks to boost investment and ensure that ordinary people benefit. States to be equal partners in economic growth; move to making India cashless society; social sector programmers to continue. Some of the challenges mentioned by the Finance Minister are: poor agricultural income, decline in manufacturing ; and the need for fiscal discipline.

Here are the highlights of Jaitley’s budget for the fiscal year that begins 1 April.

Fiscal deficit:

• Fiscal deficit seen at 3.9 per cent of GDP in 2015/16

• Will meet the challenging fiscal target of 4.1 per cent of GDP

• Remain committed to meeting medium term fiscal deficit target of 3 per cent of GDP

• Current account deficit below 1.3 per cent of GDP

• Jaitley says have to keep fiscal discipline in mind despite need for higher investment

Growth:

• GDP growth seen at between 8 per cent and 8.5 per cent y/y

• Aiming double digit growth rate, achievable soon

Inflation:

• Expects consumer inflation to remain close to 5 per cent by March, opening room for more monetary policy easing

• Monetary policy framework agreement with the RBI clearly states objective of keeping inflation below 6 per cent

• "One of the achievements of my government has been to conquer inflation. This decline in my view represents a structural shift."

Revenues:

• Revenue deficit seen at 2.8 per cent of GDP

• Non tax revenue seen at Rs 2.21 trillion

• Agricultural incomes are under stress

Disinvestment:

• Government targets Rs 410 billion from stake sales in companies

• Total stake sale in 2015/16 seen at Rs 695 billion

Market reforms:

• Propose to merge commodities regulator with SEBI

• To bring a new bankruptcy code

• Jaitley says will move to amend the RBI act this year, and provide for a monetary policy committee

• To set up public debt management agency

• Proposes to introduce a public contract resolution of disputes bill

• To establish an autonomous bank board bureau to improve management of public sector banks

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 Rs 346.99 billion for rural employment guarantee scheme

Borrowing:

• Gross market borrowing seen at Rs 6 trillion

• Net market borrowing seen at Rs 4.56 trillion

• General anti-avoidance rules (GAAR) 

• Government defers rollout of anti-tax avoidance rules GAAR by two years

• GAAR to apply prospectively from April 1, 2017

• Retrospective tax provisions will be avoided

Taxation:

• To abolish wealth tax

• Replaces wealth tax with additional 2 per cent surcharge on super rich

• Proposes to cut to 25 per cent corporate tax over next four years

• Corporate tax of 30 per cent is uncompetitive

• Net gain from tax proposals seen at Rs 150.68 billion

• Jaitley proposes modification of permanent establishment norms so that the mere presence of a fund manager in India would not constitute a permanent establishment of the offshore fund, resulting in adverse tax consequences.

• Proposes to rationalise capital gains tax regime for real estate investment trusts

• Expects to implement goods and services tax by April 2016

• To reduce custom duty on 22 items

• Basic custom duty on commercial vehicle doubled to 20 per cent

• Proposes to increase service tax rate and education cess to 14 per cent from 12.36 per cent

• Plans to introduce direct tax regime that is internationally competitive on rates without exemptions

• Exemptions for individual tax payers to continue

• To enact tough penalties for tax evasion in new bill

• Tax department to clarify indirect transfer of assets and dividend paid by foreign firms

Infrastructure:

• Investment in infrastructure will go up by Rs 700 billion 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 4,000MW each

• Second unit of Kudankulam nuclear power station to be commissioned

• Will need to build additional 100,000km of road

• Ports in public sector will be encouraged to corporatise under Companies Act

Expenditure:

• Plan expenditure estimated at about Rs 4.65 trillion

• Non-plan expenditure seen at about Rs 13.12 trillion

• Allocates Rs 2.46 trillion for defence spending

• Allocates Rs 331.5 billion for health sector

• If revenue improves, hope to raise budgeted allocations for rural job scheme by Rs 50 billion

Investment:

• Propose to do away with different types of foreign investment caps and replace them with composite caps

• To allow foreign investment in alternative investment funds

• Public investment needed to catalyse investment

Gold:

• To develop a sovereign gold bond

• To introduce gold monetisation scheme to allow depositors to earn interest

• To introduce Indian-made gold coin to reduce demand for foreign gold coins

Subsidies:

• Food subsidy seen at Rs 1.24 trillion

• Fertiliser subsidy seen at Rs 729.69 billion

• Fuel subsidy seen at Rs 300 billion

• We are committed to subsidy rationalisation based on cutting leakages

Finance minister's comments:

• "We inherited a sentiment of doom and gloom. The investment community had almost written us off. We have come a long way since then."

• "We have turned around the economy, dramatically restoring macroeconomic stability and creating the conditions for sustainable poverty elimination, job creation, durable double digit economic growth."

• "While being mindful of the challenges ... this gives us reason to feel optimistic."

• "Domestic and international investors are seeing us with renewed interest and hope."

As we have gone through the list of the union budget. But to let you know in short the list of things that will be cheaper and some list that will be costlier. Go through the list below:

Pay More For:

• Cigarettes and other tobacco products

• Completely built imported commercial vehicles

• Cement

• Aerated, flavoured drinks and packaged water

• Plastic bags and sacks

• Business and executive class air travel

• Visit to amusement and theme park

• Music concerts

• Liquor

• Chit fund and lottery

Pay Less For:

• Leather footwear priced above Rs. 1,000 per pair

• Locally made mobile phones, LED/LCD panels, LED lights and LED Lamps

• Solar Water heater Pacemakers, ambulance and ambulance services

• Computer tablets

• Agarbattis

• Microwave ovens

• Refrigerator compressors

• Peanut butter

• Packaged fruits and vegetables

• Visit to museum, zoo and national park

Do let us know your valuable comment for the Union Budget 2015.

Cheers!!!