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Financial News: India's Budget 2018-19 Gives Big Boost To Agriculture,

India's Budget 2018-19 Gives Big Boost To Agriculture, Healthcare

02/01/2018 - 07:24:00 (RTTNews)

(RTTNews) - The Indian Finance Minister Arun Jaitley tabled a largely rural-focused Union Budget for fiscal 2018-19 on Thursday.

Jaitley said that the 2.5 trillion Indian economy is expected to become the fifth largest economy soon.

The minister expects the economy to grow at 7.2 - 7.5% in the second of the current financial year and is confident of achieving 8% growth soon.

Saying that the budget would focus on agriculture and rural economy, health and infrastructure, the minister spelled out a series of proposals aimed at lifting these sectors.

Expressing government's commitment on welfare of farmers, the minister said the government aims to double farmers' income by 2022.

Indian stocks started off on a firm note but plunged sharply after the finance minister announced re-introduction of Long Term Capital Gains tax. It recovered swiftly with some major initiatives announced earlier in the day wooing investors back to the ring, but gave up gains once again to eventually settle in negative territory.

The Sensex shed 58.36 points or 0.16% as it settled at 35,096.66, after touching a high of 36,256.83 and a low of 35,501.74 intraday. The Nifty50 of the National Stock Exchange ended down 10.80 points or 0.1% at 11,016.90, after swinging between 10,878.80 and 11,117.35.

The budget has proposals including higher minimum support prices for crops, higher farm credit, setting up of a Rs.2,000 crore fund for developing agricultural markets, allocation of Rs.200 crore for cultivation and related industry, Rs.500 crore for 'Operation Green' and setting up of state of the art facilities in 42 mega food parks.

As per the budget proposal, the government will invest Rs.1 lakh crore on education infrastructure over four years.

The budget proposed spending of Rs.5.97 lakh crore for infrastructure in the coming year, upwardly revised from Rs.4.94 crore in the current financial year.

Jaitley proposed a capital expenditure of Rs.1.48 lakh crore for the railways, Rs. 40,000 for upgradation of Mumbai train systems and Rs.17,000 crore for a suburban rail line in Bengaluru.

Free cooking gas for 80 million households, higher spending on rural sanitation, dedicated fund for affordable housing were among the other major proposals in the budget.

The biggest move by the government was the introduction of health insurance scheme for over 10 crore families or about 50 crore people with a cover of Rs.5 lakh a year.

On the tax front, the minister did not propose any changes in income tax slabs for individuals, but raised standard deduction to Rs.40,000 for the salaried for transport and health. He also proposed to raise deduction for health insurance to Rs.50,000 for senior citizens.

The levy on health and education has been raised to 4% from existing 3%.

Coporate tax was reduced to 25% for companies with an annual turnover of Rs 250 crore or less.

Jaitley brought back the Long-Term Capital Gains Tax on equity gains as per which gains above Rs 1 lakh shall be taxed at a rate of 10%. The rate of short-term capital gains tax on shares sold within a year of purchase was left unchanged.

The budget proposed a 5% hike in customs duty on mobile phones to 20%. Customs duty on certain mobile and television parts has been raised to 15%, while customs duty on raw cashew has been reduced by 2.5%.

The finance minister said fiscal deficit for 2017-18 is likely to be 3.5% of the GDP, up from 3.2% targetted earlier. As of January 15, 2018, direct tax collections were up 18.6% in the year.

The minister raised disinvestment target to Rs.80,000 crore for the next financial year, saying the government will raise more than Rs 1 lakh crore through divestment in the current financial year, as against the original target of Rs.72,500 crore.

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