February 1, 2018 / 6:27 AM / 23 days ago

HIGHLIGHTS-India's budget focuses on rural economy ahead of elections

(Adds details)

NEW DELHI, Feb 1 (Reuters) - India said on Thursday it expected economic growth to surge above 8 percent as it announced a 2018/19 budget that allocated billions of dollars for rural infrastructure and unveiled a health insurance programme for around 500 million poor.

In his last full-year budget before a national election that must be held by May 2019, Finance Minister Arun Jaitley spoke of massive spending on rural infrastructure, to win over voters in the countryside where two-thirds of India’s 1.3 billion people live.

Here are the highlights of Jaitley’s budget for the fiscal year starting April 1.

GROWTH/FISCAL DEFICIT

* GDP growth in 2017/18 seen at 6.7 percent, 2018/19 growth seen at 7.2 percent

* Finance minister says “firmly on path to achieve 8 percent plus growth soon”

* 2017/18 fiscal deficit seen at 3.5 percent of GDP, 2018/19 at 3.3 percent, 2019/20 at 3.1 percent and 2020/21 at 3.0 percent

EXPENDITURE

* Revised expenditure for 2017/18 at 21.57 trillion rupees

* Total expenditure for 2018/19 seen at 24.42 trillion rupees

* Revenue expenditure seen at 21.42 trillion rupees, capital expenditure through budget at 3 trillion rupees in 2018/19

* Defence sector outlay seen at 2.83 trillion rupees in 2018/19, 1.38 trillion rupees for health, education and social security

* Railway capital expenditure set at 1.49 trillion rupees for 2018/19

* Food subsidy seen at 1.69 trillion rupees, fertiliser subsidy seen at 701 bln rupees in 2018/19 RECEIPTS

* Gross tax revenue seen at 22.71 trillion rupees in 2018/19

* Non-tax revenue seen at 2.45 trillion rupees in 2018/19

TAXATION

* To reduce corporate tax to 25 percent for companies which report turnover of up to 2.5 billion rupees as of 2016/17

* No change in structure of income tax rates for individuals, allows standard deductions of 40,000 rupees for salaried employees in lieu of transport allowance and miscellaneous medical expenses

* Senior citizens get higher exemptions on incomes from interest on bank deposits, health insurance premium

* Proposes 10 percent long-term capital gains tax on listed equities from Feb. 1 on gains exceeding 100,000 rupees

* Proposes to raise import tax on mobile phones to 20 percent from 15 percent, on some of their parts and accessories to 15 percent and certain TV parts to 15 percent

* To raise health and education cess to 4 percent from 3 percent

BORROWING

* Gross market borrowing seen at 6.06 trillion rupees in 2018/19

* Net market borrowing seen at 4.62 trillion rupees in 2018/19

* Government to switch 280.6 billion rupees of bonds in 2018/19 INFRASTRUCTURE

* To spend 14.34 trillion rupees ($225.50 billion) on rural infrastructure

BANKING/FINANCE

* To soon announce measures to address bad loans of small and medium enterprises

* Proposes setting up 3 trillion rupees target for lending for small enterprises

* Reserve Bank of India Act being amended to provide the central bank with leeway to manage excess liquidity

* To allow strong regional rural banks to raise capital from the market to help increase credit to rural economy

* Government does not consider crypto-currencies as legal tender, will take all measures to eliminate use of crypto assets as part of payment system

STAKE SALE/CONSOLIDATION

* To merge three government-owned non-life insurers - National Insurance Co, United India Assurance Co and Oriental India Insurance Co - into a single entity and list subsequently

* Finance minister says stake sale target for 2017/18 has been exceeded, to get 1 trillion rupees

* Stake sale target for 2018/19 set at 800 billion rupees

* Has begun process of strategic sale in 24 state-run cos including privatisation of state-run carrier Air India; to come up with more exchange-traded fund offers including debt ETFs AGRICULTURE

* Government to focus on strengthening rural, agriculture economy

* Allocates up to 11 trillion rupees credit for “agricultural activities”

* Minimum support price of all crops to be increased to at least 1.5 times of production cost

* Export of agriculture commodities to be liberalised

* To give 100 percent tax deduction for the first five years to companies registered as farmer producer companies with a turnover of 1 billion rupees and above

GOLD

* To formulate a comprehensive gold policy

* To revamp gold monetisation scheme

* To levy charge equivalent to 3 percent of import taxes on gold and silver

HEALTH/POLLUTION

* To provide 500,000 rupees per family annually for medical reimbursement under National Health Protection Scheme

* Finance minister says the plan will protect 500 million poor people and will be world’s largest health protection scheme

* To implement special schemes for state governments around Delhi to address air pollution

* Removal of crop residue to be subsidized in order to tackle the problem of pollution due to burning of crop residue

FINANCE MINISTER COMMENTS

* “We are now a $2.5 trillion economy, and we are firmly on path to achieve 8 percent plus growth soon”.

* “We are not only focussing on ‘Ease of Doing Business’ but also ‘Ease of Living’”.

* “While making the proposals in this year’s budget, we have been guided by our mission to especially strengthen agriculture, rural development, health, education, employment, MSME (micro, small and medium enterprises) and infrastructure.” ($1 = 63.5925 Indian rupees) (Compiled by Krishna N. Das and Devidutta Tripathy; Editing by Sanjeev Miglani)

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