Finance minister Arun Jaitley spoke on the key reform measures in his Budget speech 2016-17 but the budget was silent on details of defence spending. There was nothing to prop up troop morale after the Pathankot attack nor was there any mention of accelerated technology induction and defence modernisation.
With looming threats from across the boarders and in the Indian Ocean region, there was no proportionate budget allocation to mitigate existing and potential threats.
All that the finance minister wanted the public to know that the government is well on course towards fiscal consolidation without compromising on its development agenda – the 3.5 per cent fiscal deficit is targeted for FY 2017 with no spending allocation.
Total budget allocation for agriculture, farmers' welfare and irrigation set at Rs47,912 crore, is nearly twice the allocation of the previous year.
The finance minister also announced a New Health Protection scheme that would provide health cover up to Rs1 lakh per family and additional Rs30,000 for senior citizens.
Government will provide free LPG connections in the name of woman member of a family to 15 million BPL households in 2016-17 and to continue the scheme for two more years so as to cover 50 million households in total.
The Budget also proposed a massive increase in public spending on infrastructure to Rs2,21,000 crore, an increase of 22.5 per cent over the previous year.
Jaitley also proposed the setting up of a Higher Education Financing Authority, with an initial capital base of Rs1,000 crore to promote higher education. In addition, the government envisages 10 public and 10 private institutions emerging as world-class teaching and research institutions.
The finance minister proposed a tax-friendly regime, minimising hassles due to litigation through a New Dispute Resolution Scheme with low or zero penalties, which will also hear and settle ongoing tax cases.
Jaitley proposed an increase in relief for middle-class tax-payers by raising the ceiling of tax rebate under Section 87A to Rs5,000 for individuals with income less than Rs5 lakh and by raising the limit of deduction of rent paid under section 80GG to Rs. 60,000.
The Budget proposes to enact a new law and a new social security platform, using Aadhar, to directly provide financial and other subsidy benefits to people who deserve them.
In order to boost formal sector employment the government has made provisioning of Rs1,000 crore towards contributing 8.33 per cent on behalf of all new employees enrolling in EPFO for the first three years of their employment.
Budget's pro-market tax measures include laying out the roadmap of phasing out of exemptions under corporate taxes, abolishing small cesses, providing complete pass through of income tax to securitisation trusts and reducing period of obtaining long-term capital gains treatment for unlisted companies to three years.
Promoting entrepreneurship by increasing the turnover limit under presumptive taxation scheme to Rs2 crore, targeting to disburse loans worth Rs1,80,000 crore under PM Mudra Yojana and providing 100 per cent deduction of profits for 3 out of 5 years for start-ups are some of the measures to promote business and enterprise.
Facilitating affordable housing by 100 per cent tax exemption for profits from small projects, not subjecting distribution REITs and INVITs to dividend distribution tax and encouraging small first-time home buyers by waiver of an additional interest of Rs50,000 from tax net are other measures to boost investment.
For reducing the pressure of black money, the government has introduced a scheme to declare undisclosed income by paying 45 per cent tax in a given compliance window.
Besides, the finance minister proposed to strengthen the financial sector by allocating Rs25,000 crore towards recapitalisation of public sector banks (PSBs), listing government-owned General Insurance companies, and spelling out a roadmap for consolidating PSBs.