Rupeedesk Consultancy

Highlights of Union Budget for the Fiscal Year 2016-2017

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Highlights of Union Budget for the fiscal year that begins on April 1.2016

FISCAL DEFICIT 

* Fiscal deficit seen at 3.9 percent of GDP in 2015/16 

* Fiscal deficit seen at 3.5 percent of GDP in 2016/17 

* Plan expenditure seen at Rs 5.5 trillion in 2016/17 

* Proposes to set up panel to review fiscal responsibility management act 

RURAL ECONOMY 

* Rural jobs programme allocated Rs 385 billion rupees ($5.61 billion) in 2016/17 

* Farmer welfare budget to total Rs 359.84 billion  

* Rural road development to get Rs 190 billion 

* Target of agriculture credit at Rs 9 trillion 

* Interest subvention towards farm loans at Rs 150 billion 

POLICY REFORMS 

* Bankruptcy code for financial firms to be introduced in parliament in 2016/17 

* RBI act is being amended for implementing monetary policy framework 

* To list general insurances companies on stock exchanges 

BANKING REFORMS 

* Government to infuse Rs 250 billion capital into state-run banks in 2016/17; will find resources for additional capital for banks if required 

TAXATION 

* Will not resort to retrospective taxation in future; one time tax dispute resolution proposed for retrospective taxation 

* To rationalise corporate tax for new manufacturing companies 

* To implement general anti avoidance tax rule from April 1, 2017 

* Security transaction tax on options raised to 0.05 percent 

* Proposes to levy infrastructure cess of 1-4 percent on certain models of cars

 * Raises factory gate tax on various tobacco products by 10-15 percent 

* Proposes limited compliance window on undeclared income of domestic tax payers 

* Proposes new dispute resolution scheme to resolve tax disputes 

* Proposes to abolish 13 different levies 

BORROWING 

* Gross market borrowing seen at 6 trln rupees for 2016/17 

INFRASTRUCTURE 

* Allocates Rs 2.21 trillion for infrastructure development for 2016/17 

* Allocation for roads and highways development at Rs 550 billion  

* Capital expenditure on roads and rail development at Rs 2.18 trillion 

INVESTMENT 

* 100 percent foreign direct investment to be allowed in food processing industry 

* Promises further reforms in foreign direct investment policy in insurance, pension, asset recast companies 

DIVESTMENT 

* To encourage central public enterprises to divest own assets for raising resources for new projects 

MARKET REACTION 

* India's benchmark 10-year bond yield falls 5-6 bps as Jaitley sets 2016/17 fiscal deficit target at 3.5 percent of GDP 

* India's state-owned banks shares pare gains after Jaitley announces lower-than-expected capital infusion; SBI down 0.5 percent 

* Indian rupee gains sharply to 68.61/dollar from around 68.70 levels on 2016/17 fiscal deficit target

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