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The Union Budget is the blueprint of the Government’s revenue and expenditure for the fiscal, starting from 1st April of one year to 31st March of the following year. According to Article 112 of the Indian Constitution, it is an extensive financial statement that presents the Government’s estimation of revenue sources and estimated expenses for the year. It is classified into two parts – revenue budget and capital budget.
The Union Budget for 2017-18 presented a noticeable shift in more ways than one. The date of its presentation was shifted from the last working day of February to the first working day of the month. The Railway Budget also became an integral part of the Union Budget, a break from the 92-year old tradition of the Railway Budget being treated as a separate entity.
The first Union Budget of India, a concept introduced by the British Colonialists, was presented on 7th April, 1860, by the then Finance Minister of India, James Wilson. The first Union Budget of Independent India was presented by Sir R.K. Shanmugham Chetty, on November 26, 1947.
The first Union Budget was presented amidst widespread riots that followed the partition. This budget was planned for seven and a half months, after which the next budget was expected to be implemented from 1st April, 1948. It was also decided that India and Pakistan would both share the same currency till September 1948.
After the resignation of Sir Chetty, the baton was passed on to his successor, John Mathai, who presented the 1949-50 and 1950-51 Union Budgets. The Union Budget of 1949-50 holds the record of being the first budget for a United India, which included all the princely states.
Revenue Budget: It concerns the Government's revenue receipts and expenditure. Revenue Receipts can be further divided into two categories - tax and non-tax revenue. Revenue expenditure refers to the regular expenses incurred from the daily functioning of the Government and the range of services offered to citizens. The government incurs a revenue deficit if the revenue expenditure outdoes the revenue receipts.
Capital Budget: It refers to payments of the government and capital receipts. Some of the leading sources of government receipts are loans from the citizens, Reserve Bank of India (RBI) and foreign governments. Capital expenditure includes the expenses on development and maintenance of equipment, machinery, building, education, health facilities, etc. When the government's expenditure is higher than the total revenue collected, it suffers from a fiscal deficit.
The below are the highlights of the Union Budget 2018-19 across sectors.
Double the income of farmers than its current value and also raise the minimum support price (MSP) for Kharif crops by 1.5 times. In case farmers receive lower market prices than the MSP, they will be offered the right prices by the government.
Rs.11 lakh crore will be offered as credit to the farming sector.
A budget of Rs. 500 crores has been allocated for Operation Green.
Emphasise on organic farming, bamboo farming, cluster development model for agriculture, as well as fisheries and animal husbandry.
Install gas connections in 6 crore rural households.
Allocate 16 crores for providing free electricity to 4 crore rural households for the Pradhan Mantri Saubhagya Yojana.
Extend Swachh Bharat initiative to 2 crore toilets in rural households.
Construct 51 lakh houses in rural areas under the Pradhan Mantri Awas Yojana
Allocation of Rs.75,000 crore as loans for women’s self-help groups.
Allocation of Rs.14.34 lakh crore for livelihood, housing and infrastructure projects in the rural areas.
Emphasise on integrating technology into education.
Eklavya schools in villages with over 20,000 inhabitants and over 50% scheduled tribes by the year 2022.
Offer universal health coverage to be made available to every citizen.
Implement two new models of schools in terms of infrastructure and planning.
Control brain drain by offering top performers from leading engineering schools to study at IIScs and IITs.
Open 60 crore bank accounts under the Jan Dhan Yojana.
Allocate Rs. 1 lakh for improving the overall infrastructure of the education sector.
Construct at least one medical college per every three parliamentary constituencies.
Allocate Rs. 52,719 crores for the welfare of the scheduled castes.
Allocate Rs. 3,794 crores as capital support and subsidy for the Micro, Small, and Medium Enterprises (MSME) sector.
Implement Excise cut on fuel.
No changes to the income tax rates for individuals in the salaried class.
Reintroduction of standard deduction of Rs. 40,000 from salary income of employees.
Discontinuation of transport allowance and medical reimbursement from salary income.
Proposal to introduce a Dividend Distribution Tax (DDT) on equity-oriented mutual funds at 10%.
Long-term capital gains will be taxed at 10% for investments that are above Rs. 1 lakh. Short-term capital gains tax will remain at 15%, while long-term capital gains will be taxed at 10% for investments that are above Rs. 1 lakh.
Tax exemption limit has been increased to Rs. 50,000 on interest income for bank deposits of senior citizens.
Income from post office schemes and bank FDs has been limited to 10%.
Utilise Rs.1,48,528 crore that has been allocated towards the capital expenditure for the Indian Railways.
Revamp the infrastructure of some railway stations through the installation of escalators at all stations that receive a footfall of 25,000 passengers.
Install CCTV cameras and Wi-Fi connectivity in trains.
Utilise Rs.17,000 crore allocated for Bengaluru Metro and Rs.11,000 crore for revamp and maintenance of the entire Mumbai rail network.
Encourage venture capital financing and angel investors.
Allow large enterprises meet one-fourth of their debt requirements from bond markets.
Initiate a merger of National Insurance Co., Oriental Insurance Co. and United India Assurance Co.
Target a fiscal deficit of 3.3% of the GDP.
Increase in customs duty of electronic products like televisions and mobile phones to boost the Make in India initiative.
Imposition of 10% social welfare surcharge on imports
Develop and beautify ten key tourist places to make them reach an iconic status.
Utilise Rs.5.35 lakh crore for Phase 1 of the Bharatmala project.
Allocation of Rs.3,073 crore for Digital India.
Allocate Rs.10,000 crore for the installation of up to 5 lakh Wi-Fi connections in the rural parts of the country.
Prevent the circulation of cryptocurrencies.
Airport capacities will be increased to 5 times its existing value.
Enforce the UDAN scheme to connect 64 airports across the country to encourage low-cost flying.
What is Fiscal Policy?
Fiscal policy is an amendment in government taxing or spending designed to boost economic activity. It is a step towards controlling the aggregate demand in the economy by keeping a watch on the size of the budget deficit or surplus, and volume of spending. Governments introduce and implement changes in taxation, volume of spending, and size of the budget deficit or surplus to affect public expenditure.
What is Monetary Policy?
The decision to amend the supply of money and the interest rate, introduced by the Reserve Bank of India (RBI), which initiates a change in the economic activity is called the Monetary Policy. By regulating the level of money or liquidity in the economy, the Government aims to meet the desired policy objectives like improving the balance of payments, controlling inflation, price stability, etc.
What is Balance of Payments?
The gap between the demand and supply of the currency of a country in the foreign exchange market is called the Balance of Payments.
What is Fiscal Consolidation?
It is the policy that focuses on controlling government deficits and debt accumulation.
What is the Finance Bill?
A Finance Bill is a roadmap for new taxes, amendments in the existing tax structure or continuation of the current tax structure beyond the approved timeline, introduced by the Government. These financial proposals are laid down before the Parliament in the form of a bill. Once the Finance Bill is approved by the Parliament for a period of 1 year, it becomes a Finance Act.
What is the Central Plan Outlay?
It refers to the division of monetary resources across different sectors in the economy and the government ministries.
What are direct and indirect taxes?
Taxes levied directly on the income of business organisations and individuals. For example, Corporate Tax, Income Tax, Inheritance Tax, etc. Corporate Tax refers to the tax that enterprises pay on their earned income, while Income Tax is the tax that individuals pay on their income from sources like salary, investments, interest, etc. are called as direct taxes.
Indirect taxes are those taxes that customers pay while purchasing goods and services. Goods and Services Tax (GST), Excise and customs duties are examples of Indirect Taxes. A Customs Duty is the fee levied on imported goods, which is paid either by the importer or the exporter. GST, Excise duty, on the other hand, is a fee paid by customers on the purchase of goods that are manufactured within the country.
What is Gross Domestic Product (GDP)?
It is the market value of all goods and services, produced in a country within a certain period of time, that have been officially recognised as the final product. GDP per capita is usually considered as the measurement of the standard of living of a country.