Finance minister Arun Jaitley unveiled a budget that proposes a wider distribution of economic benefits with increased focus on rural economy and digital infrastructure and draws resources from a wider front.
In a new rural shift in his pro-industry government, the finance minister announced aid and health programmes to ensure that the benefits of growth were more widely shared among India's 1.3 billion people.
"We have a shared responsibility to spend prudently and wisely for the people, especially for the poor and downtrodden," the finance minister said in his opening remarks.
The spending package for the 2016-17 fiscal year beginning 1 April marks a radical shift from Prime Minister Narendra Modi's initial focus on big-ticket infrastructure investment to kick-start private-sector investment that remains weak. Growth will now trickle in smaller bouts and mainly from rural development.
The strategy shift, although guided by paucity of resources, could also boost his ruling party in upcoming state elections.
Unveiling the Union Budget 2016-17, the finance minister listed 'nine pillars', including tax reforms, promoting ease of doing business, fiscal discipline and governance reforms that will transform India.
The Budget also focuses increasingly on agriculture and rural economy in general with a view to doubling rural income by 2022.
Jaitley said the government will lay greater emphasis on social sectors, education and skill development to boost jobs and for creation of a knowledge-based and productive economy.
Presenting his third budget and his government's second full budget, Jaitley said he will also focus on infrastructure investment, financial sector reforms, fiscal discipline and tax reforms to reduce compliance burden in Asia's third-largest economy.
He said despite a gloomy landscape, the Indian economy is expected to grow by 7.6 per cent in the current financial year (2015-16).
Jaitley said his priorities are strengthening India's macroeconomic stability and prudent fiscal management, driving growth through domestic demand and reforms to boost economic opportunity.
Finance minister Arun Jaitley proposed to allocate Rs385,000 crore for rural jobs programme in the 2016-17 fiscal.
The finance minister proposed a farmer welfare budget programmes totaling Rs35,984 crore, besides Rs19,000 crore on rural road development, Rs900,000 crore in agricultural credit, Rs150,000 crore in interest subvention towards farm loans.
Besides, Jaitley proposed the enactment of a bankruptcy code for financial firms to be introduced in Parliament in 2016-17 and amendment of the RBI Act for implementing monetary policy framework.
To improve the finances of state-run banks, he said, the government plans to infuse Rs25,000 crore capital into these banks in 2016-17, adding that it will look for ways to find resources for additional capital for banks if required.
Financial sector reforms will enable listing of general insurances companies on stock exchanges.
The government will not resort to retrospective taxation in future, he said, adding that a one-time tax dispute resolution has been proposed for retrospective taxation.
The budget proposes to rationalise corporate tax for new manufacturing companies and implement a general anti avoidance tax rule from 1 April 2017.
For the capital market, the finance minister proposed to raiase security transaction tax on options to 0.05 per cent.
He also proposed to levy an infrastructure cess of 1-4 per cent on certain models of cars and raise factory gate tax on various tobacco products by 10-15 per cent.
For the errant taxpayer, he proposed a limited compliance window on undeclared income of domestic tax payers as also a new dispute resolution scheme to resolve tax disputes.
At the same time, the finance minister also proposed to abolish 13 different levies being imposed by various ministries that yield revenues of less than Rs50 crore a year.