Finance Minister Arun Jaitley on Thursday defended his 2018-19 Budget loaded in favour of rural and agri economy and doing little for the middle class, saying it is a blend of fiscal prudence with the requirement and needs of the economy. He said since the revenue collection from Goods and Services Tax (GST) comes with a lag of one month, hence the government has to do with GST collections only till February. March revenues under GST will come only in April.
Missing Fiscal Deficit target
This budget blends fiscal prudence with the requirement and needs of the economy today. We had initially targeted 3.2 per cent fiscal deficit for this year. In the past few years, we have regularly tried to maintain these targets. This year there were a series of circumstances. One obviously was the fact that we were getting GST revenue one month less this year. Structural reforms undertaken by the government had their own impact, which varied from spectrum auction to dividend payment by RBI and CPSEs. We covered up a lot through direct tax revenues, we also covered up through some extra disinvestment but there is a small gap which is left behind. But the predominant part really is the 11-month revenue (from indirect taxes because of GST).
On Long Term Capital Gains tax
It is not justifiable to let the super rich go without being taxed. Markets depend on the size and strength of the economy, not on tax sops. Investors have earned a whopping Rs 3.65 lakh crore from equity gains and thus can’t be left untaxed. In the last fiscal Rs 3.67 lakh crore long term capital gain income availed by large corporate groups, both foreign and domestic, was exempted from tax. The society needs funds, hence we propose to tax such long term capital gains exceeding Rs 1 lakh at the rate of 10% without allowing the benefit of any indexation. Since we didn’t want that tax to be retrospective, so we have grandfathered all investments till January 31, 2018.
India committed to ‘Festival of Honesty’
India was facing policy paralysis and corruption when the NDA assumed office and now the situation has reversed with the Modi government implementing a series of fundamental structural reforms. There was a time when corruption was commonplace. The people, especially the youth, are keen to lead their lives honestly. The reforms undertaken by the government have resulted in raising the foreign direct investment and made it easier to do business in the country. Natural resources are now allocated in a transparent and honest manner, the indirect tax system GST has been made simpler, and benefits to the poor have been targeted more effectively with the use of digital technology. The demonetisation of high value currency has reduced the quantum of cash currency and circulation in India. It has increased the taxation base and spurred greater digitisation of the economy. Honest taxpayers took demonetisation as ‘Imandari ka utsav’ (festival of honesty).
Farmers, poor, rural folk, women
We looked at the areas that require the maximum support, and agriculture and rural sectors came foremost in our mind. The government has been guided by mission to especially strengthen agriculture, rural development, health, education, employment, MSME and infrastructure sectors. I am sure the New India which we aspire to create now will emerge. You merge yourselves in the void and disappear, and let new India arise in your place. Let her arise – out of the peasants’ cottage, grasping the plough; out of the huts of the fisherman. Let her spring from the grocer’s shop, from beside the oven of the fruit seller. Let her emanate from the factory, from marts, and from markets. Let her emerge from groves and forests, from hills and mountains.
More money to middle-class taxpayer
Step by step, in every budget, I have been putting surplus money in the hands of the middle-class taxpayer. Last year, we’d reduced the tax rate to 5 per cent for those with an income of less than 5 lakh per annum. This is the lowest anywhere in the world. This year’s budget — “a blend of fiscal prudence with the requirement and needs of the economy” — recognises the contribution of the salaried class for the first time. It proposes to bring back standard deduction, which allows Rs 40,000 in lieu of transport allowance and medical expenses, giving a boost to the average salaryman’s take-home pay. This decision to allow standard deduction shall significantly benefit the pensioners too, who normally do not enjoy any allowance on account of transport and medical expenses.
Crypto currencies not legal, will eliminate their use
All crypto currencies, which include bitcoins, are illegal and the government will take all measures to eliminate their use. However, the government will explore use of blockchain technology proactively for ushering in the digital economy. The government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.