New Delhi: With a focus on agriculture, the rural economy and infrastructure creation, finance minister Arun Jaitley sought to revive India’s growth prospects in his fifth and final budget before the Narendra Modi-led National Democratic Alliance government faces elections in 2019.
The budget targets 7.2% growth in gross domestic product (GDP) in 2018-19, against the 6.5% estimated for 2017-18. With higher exports and services growth, India is on its way to achieving sustained growth of 8%, Jaitley said.
“There are signs of revival of investment activity in the economy and the recent pick-up in the growth of fixed investment can be expected to maintain momentum in the coming year,” the Union finance ministry said in its medium-term fiscal policy statement.
In order to create employment and aid growth, the government’s estimated budgetary and extra-budgetary expenditure on infrastructure for 2018-19 was increased to Rs5.97 trillion against an estimated expenditure of Rs4.94 trillion in 2017-18.
Capital outlay on the Indian Railways was increased by 32.6% to Rs53,000 crore while allocation for the Union ministry of road transport and highways rose 24% to Rs30,000 crore. In total, capital outlay on the infrastructure sector through gross budgetary support increased 21% to Rs1.6 trillion.
To support the Make In India programme and improve job creation, the government increased customs duties on many electronic products such as mobile phones, LCD panels and automobile parts.
Recognizing micro, small and medium enterprises (MSMEs) as the engine of growth and employment generation, Jaitley announced an extension of the reduced corporate tax rate of 25% to companies with a turnover up to Rs250 crore.
Earlier, this scheme was available only to companies with a turnover up to Rs50 crore.
“The lower corporate income tax rate for 99% of the companies will leave them with higher investible surplus which in turn will create more jobs,” Jaitley said.
To address rural distress and double farmers’ income by 2022, Jaitley announced an increase in minimum support prices for agricultural produce, as well as better agricultural and rural infrastructure.
The budget measures announced for the rural economy are expected to increase demand and boost economic growth.
“In the year 2018-19, for creation of livelihoods and infrastructure in rural areas, total amount to be spent by the ministries will be Rs14.34 lakh crore, including extra-budgetary and non-budgetary resources of Rs11.98 lakh crore,” Jaitley said.
The focus on rural support will help sustain India’s long-term growth trajectory, N. Chandrasekaran, chairman of Tata Sons Ltd, said in a statement.
“Similarly, the provisions to enhance farm price support, expand food processing, and liberalize agricultural exports are encouraging; the next leg of reforms in agriculture will have to focus on reducing production risk and addressing yield and storage deficiencies to raise competitiveness,” he added.