"Farmers are our biggest focus," said Prime Minister Narendra Modi, whose party the BJP faces tough elections in big agriculture states in the next year. "We have seen politics over the poor for a very long time," the PM said adding that today's Budget would power rural India towards economic growth.
In the Budget, Arun Jaitley has also announced measures for small tax payers that he said would help more than two crore people. But there is no change in income tax slabs.
Post Budget, cars and cigarettes will be costlier. Also eating out, buying property and insurance, travelling by air and mobile phone bills from June this year, with Mr Jaitley announcing "Krishi Kalyan or farmer development cess" of 0.5 per cent on all services. This means that the total service tax paid will now be 15 per cent.
Budget 2016 proposes to tax part of Employee Provident Fund (EPF) withdrawals from April 1, 2016, a move that will disappoint nearly six crore people. The government's aim is to encourage the salaried to remain invested in the retirement fund and later invest the kitty in annuity (pension) products to earn regular income.
Stock markets traded choppily through Mr Jaitley's Budget speech, the Sensex sinking at one point by 660 points when the minister announced a 10 per cent tax on dividends of over Rs 10 lakh a year. The markets recovered after the minister ended his speech.
The government is sticking to the roadmap for fiscal consolidation with Mr Jaitley fixing next year's fiscal deficit target at 3.5 per cent of the GDP, but experts are also asking how it intends to do that with the big social sector spends announced today.
Arun Jaitley, who was presenting his third Budget, pledged to "spend prudently and wisely for the people, especially for the poor and downtrodden."
He outlined what he said were the nine pillars on which the government would base its "transformative agenda" for the economy in the coming year, first among them agriculture and farmers' welfare. Mr Jaitley said the key areas of policy focus would be farming, social reforms, infrastructure and recapitalising the banking system.
"We need to give back to our farmers. We need to think beyond food security to income security...will double income of farmers by 2022," the minister said, allocating Rs 35,984 crore for farmers' welfare.
The minister has also announced a 228% jump in funds for rural transformation, allocating Rs 38,500 crores for MGNREGA, a rural employment scheme that was a flagship of the previous Congress-led UPA government.
Among major announcements was one for LPG connections for poor women, which he said would benefit 1.5 crore households this year.
The minister has budgeted Rs 2.18 lakh crore for roads and railways.
In a mixed bag on taxes, the minister has given a rebate of up to Rs 3000 for those with incomes less than 5 lakh a year, and also relief for first time home loan borrowers for loans up to Rs 35 lakh. But he has also hiked a surcharge on incomes above Rs 1 crore a year.
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