A Bold Modified Budget amid a tightrope walk

New Delhi: In what seemed like a balancing act, Finance Minister Arun Jaitley did some tightrope walking as he presented his maiden budget to kickstart the economy. There were some cheer as Jaitley promised  lower level of inflation and a policy regime that will usher in higher growth, low inflation: to achieve 7-8 per cent economic growth rate in next 3-4 years:  “Will leave no stone unturned to create a vibrant India,” he said.  “We have no option but to take some bold steps to spurt economy; these are only the first steps and are directional: , ” he added.

 

BJP’s promise of ending the tax terrorism had a resonance in the budget,   overall subsidy regime will be reviewed, especially food and oil. Marginalised sections and SC/ST to be protected:. In order to reassure the foreign investors, FDI caps on defense and insurance were raised to 49 percent.   The moves announced in the budget like the selling of PSU shares to garner Rs 2.5 lakh crore for funding development. The provision of Rs 7,060 cr for the development of smart cities promises to change the lives of urban Indians who pay high taxes but rue poor infrastructure.

 

Another key steps was to announce the electronic visa schemes at .E-visas at nine airports to promote tourism will bring in foreign tourists. The target of 4.1% of fiscal deficit is daunting but the challenge is accepted. The growth rate of 7 to 8% in next 3-4 years is ambitious but feasible.

 

Jaitley who is a key member of the Modi brain trust had his eyes set on mission UP, to capture power in the state so amongst the new AIIMS, All India Institute of Medical Sciences in Purvanchal, besides in Jharkhand and West Bengal. While IIT will be opened in AP, Kerala, J&K, Madhya Pradesh and Chhatisgarh.  There is a proposal for a Metro for Lucknow following a slew of new highways announced for the state that added 71 seats to Modi’s massive winning tally for Delhi. The Modi government has also promised to have Metro projects for all cities with a population of more than 20 lakhs.  There will be 5 new IIMs in HP, Punjab, Bihar, Odisha & Maharashtra. Amongst other measures included to allocate Rs 150 cr to boost women’s safety.

 

In what was a smart move to reassure minorities  Rs. 100 cr has been set aside fir modernisation of madrasas.

Seeking to boost household savings and to provide some cheer for individual tax , the Finance Minister raised exemption limit for investments by individuals in financial instruments to Rs 1.5 lakh. Presently the investments and expenditures up to a combined limit of Rs 1 lakh get exemptions under Sections 80C, 80CC and 80CCC of the Income-Tax Act. The announcement to hike tax savings limit was made by Finance Minister Arun Jaitley in his speech while presenting the Union Budget, 2014-15. There have been demands from bankers and insurers to hike the tax exemption limit from Rs 1 lakh per annum to encourage household savings. The savings rate has come down from over 38 per cent of GDP in 2008 to 30 per cent in 2012-13. The hike in the exemption limit would provide much needed relief to the salary earners who are reeling under the impact of high inflation. The Direct Taxes Code (DTC) too had recommended that the combined ceiling for investments and expenditures be raised to Rs 1.5 lakh per annum. The financial instruments which enjoy exemption include life insurance premium, public provident fund, employees provident fund, National Savings Certificates, repayment of capital on home loan, equity linked saving schemes sold by mutual funds and bank FDs of five year maturity.