As a financial sector reform, the Budget also proposed to abolish Foreign Investment Promotion Board.
Other measures to perk up the financial sector include further integration of commodities and securities derivatives market and full online process of registration of financial market intermediaries like mutual funds, brokers, portfolio managers to improve ease of doing business.
The total expenditure in the Budget has been placed at Rs 21.47 lakh crore. Defence expenditure, excluding pensions, has been pegged Rs 274,114 crore for FY18 including Rs 86,488 crore for capital.
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With the abolition of plan, non-plan expenditure, the focus will be now on capital and revenue expenditure, Jaitley said.
“I have stepped up the allocation of capital expenditure by 25.4 per cent over the previous year. This will have multiplier effect and will lead to higher growth.
“The total resources being transfered to the states and the Union Territories with legislatures is Rs 4.11 lakh crore against Rs 3.60 lakh crore in Budget Estimate of 2016-17,” he said.
Outlining the fiscal deficit roadmap of 3 per cent recommended by the FRBM committee, the Minister has pegged it for 2017-18 at 3.2 per cent of GDP and said he will remain committed to achieving 3 percent in the following year.
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“With this gradual approach, I have ensured adherence to fiscal consolidation, without compromising the requirements of public investment,” he said.
The net market borrowing of the government has been limited at Rs 3.48 lakh crore after buyback, much lower than Rs 4.25 lakh crore in the current fiscal.
“More importantly, the revenue deficit of 2.3 per cent in BE 2016-17 stands reduced to 2.1 per cent in the revised estimates. The revenue deficit for next year is pegged at 1.9 per cent, against 2 per cent mandated by the FRBM Act,” he said.
As measures for stimulating growth, the Budget extended the concessional withholding rate of 5 per cent on interest earned by foreign entities in ECBs or in bonds and government securities by 3 years to June 2020. This benefit is also extended to rupee denominated masala bonds.
Jaitley reduced the peak rate of income tax for small companies with turnover of upto Rs 50 crore to 25 per cent, benefiting as many as 6.67 lakh firms out of 6.94 lakh which file returns. The concession would lead to a revenue loss of Rs 7,200 crore per annum.
“My direct tax proposals for exemption, etc. would result in revenue loss of Rs 22,700 crore but after counting for revenue gain of Rs 2,700 crore for additional resource mobilisation proposal, the net revenue loss in direct tax would come to Rs 20,000 crore. There is no significant loss or gain in my direct tax proposal,” he said.
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