NEW DELHI, Feb. 1 (Xinhua) — India Wednesday unveiled its annual Budget, pledging to boost rural spending and pull more people out of poverty, introducing tax cuts for individuals as well as small and medium-sized industries, and enforcing a curb on political funding.
The Budget came three months after India abolished higher denomination currency notes to curb the menace of black money, a move which caused chaos in the economy, hurting farmers and the poor most, and shortly after the Economic Survey admitted the cash ban had been bad for economy in short term.
Presenting the General Budget in Parliament, along with the Railway Budget for the first time, Indian Finance Minister Arun Jaitley pegged the fiscal deficit for 2017-18 at 3.2 per cent, and announced allocation of funds to bring more irrigation, roads, power and sanitation to villages.
India’s biggest anti-poverty scheme, the Mahatma Gandhi National Rural Employment Guarantee Act, which provides jobs to an estimated 50 million households, also got a boost.
Jaitley announced plans to spend a record 7.09 billion U.S. dollars on the scheme guaranteeing every rural household 100 days of work each year. “Overall rural and farm spending will be increased by 24 per cent as part of the government’s plan to double farm incomes over five years,” he added.
The government also spelt out plans to halve income tax rates for people earning between 250,000 rupees to 500,000 rupees (3,700 U.S. dollars to 7,400 U.S. dollars) annually.
“The move should encourage more people to pay tax. The present burden of taxation is mainly on taxpayer and the salaried employees who are showing their income correctly. We also proposed to reduce income tax for smaller companies to 25 per cent from 30 per cent,” the Finance Minister said.
In a major reform, the Minister announced scrapping of the Foreign Investment Promotion Board, what is seen as a major hurdle for foreign investors.
In an effort to curb illegal funding to political parties, the Indian government also put a cap on the maximum cash donation that any political party can receive from one person at 2,000 Indian rupees (15 U.S. dollars).
Announcing the Railway Budget, the Finance Minister stressed on passenger safety and announced a slew of measures, keeping the passengers fare intact for the next fiscal. “Unmanned railway crossings to be eliminated by 2020,” he said.
The Budget has been advanced by a month, which Jaitley said would help government departments start schemes right from the start of the fiscal year.