Budget 2015-16 Analysis for Civil Services Aspirants

India’s Chance to Fly- Budget 2015-16 to balance the interests of Industry and common man

(For basics- See at the section basics at the end of the document. )

Introduction

Three Key achievements:

• Financial Inclusion- Financially mainstreaming of 12.5 crores families in 100 days.
• Transparent Coal Block auctions- to increase resources of the States.
• Swachh Bharat- is not only a programme to improve hygiene and cleanliness but has elevated into a movement to regenerate India.

Game changing reforms on the platform:

• Goods and Service Tax (GST)
• Jan Dhan, Aadhar and Mobile (JAM) - for direct benefit transfer.

Amrut Mahotsav - The year 2022, 75th anniversary of Independence Vision for “Team India” led by PM

STATE OF ECONOMY

• GDP- 2015-16 projected to 8-8.5%
• Inflation declined - a structural shift ( CPI inflation projection at 5%)
• Monetary Policy Framework Agreement with RBI, to keep inflation below 6%.

Broad themes :

a) Measures to control black money;
b) Job creation via revival of growth and investment & promotion of domestic manufacturing – “Make in India”
c) Improve ease of doing business - Minimum Government and maximum governance;
d) Swachh Bharat- to improve quality of life and public health;
e) Benefit to middle class tax-payers
f) Various standalone proposals to maximise benefit to the economy.

For Economy

• Direct subsidies to 11.5 Cr beneficiaries, improved MGNREGS allocation, Forward Market Commission to be merged with SEBI, Public Debt Management Agency to be set up

For Business-

• GAAR implementation deferred by two years, Infra investment increased by 70000 Cr., Setting up National Investment and Infrastructure Fund, MUDRA bank for Micro-finance institutions, Electronic Bill discounting platform for MSMEs, Bankruptcy code to be introduced.

For Individuals-

• Various low premium insurances, Tax free infra bonds, Severe penalties for inaccurate disclosure of foreign assets, EPF contribution optional for some employees, Disability deduction u/s 80U raised to 75000. Additional deduction of 50000 for contribution to the new pension scheme u/s 80CCD.

Major dimensions:

i) Major Challenges Ahead-

(a) Five major challenges: Agricultural income under stress, to increase investment in infrastructure, decline in manufacturing, resource crunch in view of higher devolution in taxes to states, maintaining fiscal discipline.

ii) Vision “Team India”-

(a) Electrification of the remaining 20,000 villages including off-grid Solar Power- by 2020.
(b) To strengthen rural economy – increasing the irrigated area and efficiency, ensure value addition and reasonable price for farm produce.
(c) India as manufacturing hub- through Skill India and the Make in India Programmes.
(d) Development of Eastern and North- eastern regions
(e) Housing, Basic facilities, means of livelihood, reduction in poverty, connectivity- digital and infrastructure, sprit of entrepreneurship, senior secondary school within 5km reach- are some of the other emphasized areas.

iii) Fiscal Roadmap

(a) achieve fiscal target of 3% of GDP. (in 3 year rather than 2 year)
(b) Disinvestment to include both disinvestment in loss making units, and some strategic disinvestment.

iv) Good Goverance

(a) Rationalization of subsidies- Cut subsidy leakages
(b) Direct Transfer of Benefits to be extended to 10.3 crore beneficiaries

v) Agriculture

(a) Two critical factor to agriculture production– soil and water : supported by ‘Paramparagat Krishi Vikas Yojana’
(b) ‘Pradhanmantri Gram Sinchai Yojana’ to provide ‘Per Drop More Crop’
(c) Need to create a National Agriculture Market for the benefit farmers, and also to work for creation of a Unified National Agriculture Market.

vi) Funding the Unfunded

(a) Micro Units Development Refinance Agency (MUDRA) Bank, responsible for refinancing all Micro-finance Institutions
(b) With respect to ease of doing business: Comprehensive Bankruptcy Code of global standards to be brought in fiscal 2015-16

vii) From Jan Dhan to Jan Suraksha

(a) Pradhan Mantri Suraksha Bima Yojna- to cover accidental death risk, Atal Pension Yojana- to provide a defined pension, Pradhan Mantri Jeevan Jyoti Bima Yojana to cover both natural and accidental death

viii) Infrastructure

(a) National Investment and Infrastructure Fund (NIIF),
(b) Atal Innovation Mission (AIM) to be established in NITI to provide Innovation Promotion Platform
(c) Ports in public sector will be encouraged, to corporatize, and become companies to attract investment and leverage the huge land resources

ix) Financial Markets

(a) Public Debt Management Agency (PDMA) will manage both external and domestic borrowings
(b) Forward Markets commission to be merged with SEBI.
(c) Vision of putting in place a direct tax regime, having internationally competitiveness on rates, without exemptions.

x) Monetising Gold

(a) Gold monetisation scheme to allow the depositors of gold to earn interest
(b) Sovereign Gold Bond, as an alternative to purchasing metal gold scheme
(c) Indian gold coin, to carry the Ashok Chakra

xi) Investment

(a) Removing the distinction between different types of foreign investments, especially between FPI and FDI
(b) A project development company for facilitating to set up manufacturing hubs in CMLV countries, namely, Cambodia, Myanmar, Laos and Vietnam.

xii) Safe India

(a) Nirbhaya Fund earmarked 1000 crores to

xiii) Tourism

(a) Visas on arrival to be increased to 150 countries in stages.

xiv) Green India

(a) Renewable energy capacity target- revised to 175000 MW till 2022: 100000 MW Solar, 60000 MW Wind, 10000 MW Biomass and 5000 MW Small Hydro.
(b) A need for procurement law to contain wrongdoing in public procurement.

xv) Skill India

(a) Deen Dayal Upadhyay Gramin Kaushal Yojana to elevate the employability of rural youth.
(b) Less than 5% of our potential work force receive formal skill training
(c) Various new IITs, AIIMS, post graduate institutions, NIPER to be established
(d) Special assistance to Bihar & West Bengal similar to Andhra Pradesh
(e) Made in India and the Buy and the make in India- to achieve greater self-sufficiency in the area of defence equipment including air-craft.

xvi) Digital India

(a) The National Optical Fibre Network Programme (NOFNP) to be speeded up

xvii) Budget Estimates

(a) Gross Tax receipts estimated- 14,49,490 crore. Centre- 9,19,842, States- 5,23,958.
(b) Non-Plan expenditure estimates - 13,12,200 crore. Plan expenditure estimated to be- `4,65,277 crore, which is very near to the R.E. of 2014-15.

Basics

Budget document comprises of Fin Min’s speech and 15 other documents including Annual Finance statement, Demands for Grants, Appropriation bill, Finance bill, an explanatory memorandum, Macro-economic framework, Fiscal policy strategy statement. Important one mentioned below with their functions.

• Annual Financial Statement under Art. 112: shows estimated receipts and expenditure of the GOI for 2015-16. The receipts and disbursements, under three parts (i) Consolidated Fund (U/A 266), (ii) Contingency Fund (U/A 267)-500Cr. (iii) Public Account.
• Demands for Grants U/A 113: estimates of expenditure from the Consolidated Fund of India
• Appropriation Bill U/A 114(3): no amount can be withdrawn from the Consolidated Fund without its enactment.
• Finance Bill U/A 110(a)- (a money bill) detailing the imposition, abolition, remission, alteration or regulation of taxes proposed in the Budget. A Finance Bill is a Money Bill as defined in Article 110 of the Constitution.

Under the budget- following documents presented under FRBM Act 2003:

• Macro-economic framework for the relevant financial year- contains an assessment ofthe growth prospects of the economy with specific underlying assumptions.

• Fiscal Policy Strategy Statement for the financial year: Strategic priorities of Government in the fiscal area. Explains how the current policies are in conformity with sound fiscal management principles and gives the rationale for any major deviation in key fiscal measures.

• Medium Term Fiscal Policy Statement: (three-year rolling target) an assessment of sustainability relating to balance between revenue receipts and revenue expenditure and the use of capital receipts including market borrowings for generation of productive assets.

• Medium Term Expenditure Framework Statement: (three-year rolling target) to provide a closer integration between budget and the FRBM Statements.

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