2018 Union budget of India

The 2018 Union Budget of India (ISO: 2018 kē liē Bhārat kā Kēndrīya Bajaṭ) was the annual financial statement (AFS), demand for grants, appropriation bill and finance bill of India for the financial year 2018–19.[5]

2018 (2018) Union Budget of India
2018 kē liē Bhārat kā Kēndrīya Bajaṭ
Annual Financial Statement of the Central Government for the year 2018–19
The Appropriation Bill, 2018
The Finance Bill, 2018
Emblem of India
Submitted byArun Jaitley
Submitted toParliament of India
Presented1 February 2018
Passed1 February 2018
Parliament16th (Lok Sabha)
PartyBharatiya Janata Party (BJP)
Finance ministerArun Jaitley
Total revenue₹2,399,147 crore (equivalent to ₹34 trillion or US$420 billion in 2023)[1]
Total expenditures₹2,920,484 crore (equivalent to ₹41 trillion or US$510 billion in 2023) (grand total)[2]
Program Spending₹2,442,213 crore (equivalent to ₹34 trillion or US$430 billion in 2023) (through budget)[3]
Tax cuts5% (in corporate tax for companies with turnover up to ₹250 crore (equivalent to ₹334 crore or US$42 million in 2023))
Debt payment₹575,795 crore (equivalent to ₹8.1 trillion or US$100 billion in 2023)[3]
Deficit₹624,276 crore (equivalent to ₹8.8 trillion or US$110 billion in 2023)[4] (3.3%)[4] (Fiscal deficit) ₹416,034 crore (equivalent to ₹5.8 trillion or US$73 billion in 2023)[4] (2.2%)[4] (Revenue deficit)
WebsiteOfficial website
‹ 2017
2019 ›

It was presented to Parliament on 1 February 2018 by Finance Minister Arun Jaitley.[6][7][8]

Premise

The 2018 budget was considered to be a crucial one,[9][10][11] as it would be the first since the rollout of the Goods and Service Tax (GST) regime in India.[12][13][14] It was widely expected that the budget would either increase the exemption limit, or introduce a standard deduction for salaried people to reduce the tax burden, in addition to a reduction of the tax rate for the ₹5 lakh (equivalent to ₹6.7 lakh or US$8,400 in 2023)–₹10 lakh (equivalent to ₹13 lakh or US$17,000 in 2023) slab from 20% to 10%, and an increase in the 30% band above ₹10 lakh (equivalent to ₹13 lakh or US$17,000 in 2023).[15][16][17] The budget also came on the heels of a cut in the corporate tax rate in the United States.[18][19][20] Printing of the budget began on 20 January 2018 with the traditional Halwa ceremony.[21][22][23]

Significant announcements

The budget contained a number of significant announcements. It included a healthcare programme called the National Health Protection Scheme (Ayushman Bharat) to cover 10 crore (100 million) poor families.[24][25] The Government proposed to contribute 12% to the Employees' Provident Fund for new employees for three years.[26][27] It was proposed that the medical allowance and transportation allowance be replaced by a standard deduction of ₹40,000 (US$500) for salaried employees.[28][29] The allocation to the Ministry of Defence was ₹404,365 crore (equivalent to ₹5.4 trillion or US$68 billion in 2023),[30] with ₹195,947.55 crore (equivalent to ₹2.6 trillion or US$33 billion in 2023) to be spent on the day-to-day running of the armed forces, and ₹99,563.86 crore (equivalent to ₹1.3 trillion or US$17 billion in 2023) on modernisation, with the rest being allocated for pensions.[31][32]

There was no reduction in personal income tax rates,[33][34] and the Cess on income tax was to be increased from 3% to 4%.[35][36] A 10% tax on long-term capital gains (LTCG) was reintroduced after a 14-year absence.[37][38] The Corporate tax was reduced from 30% to 25% for companies with turnover up to ₹250 crore (equivalent to ₹334 crore or US$42 million in 2023).[39][40] Customs duties were increased for various products.[41][42] A special scheme to tackle air pollution in Delhi was also introduced.[43][44] The salaries of Members of Parliament were doubled and their total emoluments are likely to go up from Rs 1.4 lakh to Rs 2.3 lakh per month.[45][46] Further, the salaries will be increased every five years.[47][48]

Reactions

Reaction to the budget was mixed-to-positive.[49][50]

Political

Political reaction to the budget was mixed.[51] Bharatiya Janata Party (BJP) leader and Prime Minister, Narendra Modi said that the budget is "development-friendly," focused on the needs of the rural areas and will strengthen the vision of a "new-India".[52] The Congress leader, former prime minister and noted economist Manmohan Singh suggested that the arithmetic behind the budget was "faulty".[53] The general secretary of the Communist Party of India (Marxist) (CPI (M)), Sitaram Yechury said the budget was "unconnected to ground realities".[54] Andhra Pradesh Chief Minister Sri.N.Chandra Babu Naidu is not satisfied with the budget planning as it completely ignored the special status and special package for the state.

Aam Aadmi Party (AAP) leader and chief minister of Delhi, Arvind Kejriwal said on Twitter that the budget contained nothing for the middle class and traders.[55] Chief Minister of Bihar, Nitish Kumar, Janta Dal (United) (JDU) leader, praised the budget for the proposals on minimum support price for farmers and the healthcare scheme.[56] Congress leader and former finance minister P. Chidambaram said that Finance Minister Arun Jaitley had failed the fiscal consolidation test,[57] and that there was no relief for the average taxpayer.[58]

Stock market

Both of India's national indices, the BSE SENSEX and NIFTY 50, fell sharply in the aftermath of the budget.[59][60][61] The government, however, said that the fall in the stock market was not solely due to the budget.[62][63] Finance and Revenue Secretary, Dr. Hasmukh Adhia said that fall in stock indices was due to global market meltdown, and not because of the reintroduction of LTCG tax,[64] he added the government will look into the slump.[65]

Others

Credit rating agency, Fitch, said that the budget, whilst supporting growth, does not address the problem of fiscal consolidation, and leaves the problem of India's relatively weak finances, to the next government.[66][67] Economic Affairs Secretary, Subhash Chandra Garg, said, that the government would try to convince credit rating agencies, like Standard and Poor's and Fitch, on its commitments to fiscal consolidation.[68][69]

References
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  2. "SUMMARY OF EXPENDITURE" (PDF). Ministry of Finance, Government of India. Retrieved 29 January 2018.
  3. "Expenditure of Government of India" (PDF). Ministry of Finance, Government of India. Retrieved 29 January 2018.
  4. "Debt and Deficit Statistics" (PDF). Ministry of Finance, Government of India. Retrieved 29 January 2018.
  5. "Part V of the Constitution of India- The Union – Articles 110(a), 112, 113 and 114(3)" (PDF). Ministry of Law and Justice, Government of India. pp. 44–49. Archived from the original (PDF) on 24 August 2015. Retrieved 30 January 2018.
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  7. Taneja, Richa, ed. (29 January 2018). "Budget 2018 To Be Presented By Finance Minister Arun Jaitley: Time, Date, All Details Here". NDTV. New Delhi. Retrieved 30 January 2018.
  8. "Union Budget 2018 to be presented on February 1". The Times of India. New Delhi. TIMESOFINDIA.COM. 5 January 2018. OCLC 23379369. Retrieved 16 February 2018.
  9. Seetharaman, G. (28 January 2018). "Budget 2018: Here are the basics of this key annual event". The Economic Times. OCLC 61311680. Retrieved 30 January 2018.
  10. Sultana, Nasrin (29 January 2018). "Economic Survey, Budget 2018 to be keenly watched in crucial week for markets". Live Mint. Mumbai: HT Media Ltd. Retrieved 30 January 2018.
  11. "Union Budget 2018: How Modi government can create more jobs? here is the answer". The Financial Express. New Delhi. FE Online. 23 January 2018. OCLC 30000665. Retrieved 30 January 2018.
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  14. "First post-GST budget likely on February 1". The Times of India. New Delhi. Press Trust of India. 3 December 2017. OCLC 23379369. Retrieved 30 January 2018.
  15. Dutta, Prabhash K (15 January 2018). "Union Budget 2018: What you may expect on income tax front from Arun Jaitley". India Today. New Delhi. ISSN 0254-8399. Retrieved 4 February 2018.
  16. "Income Tax Sops For Middle Class, Rural Focus Likely In Budget 2018: 10 Points". NDTV. NDTV Profit Team. 31 January 2018. Retrieved 4 February 2018.
  17. "Budget 2018: Middle class can hope for tax relief". The Hindu. Business Line. New Delhi. Press Trust of India. 9 January 2018. ISSN 0971-7528. OCLC 456162874. Retrieved 4 February 2018.
  18. Beniwal, Vrishti; Chaudhary, Archana; Zhao, Yinan; Cislo, Connor; Li, Cynthia (29 January 2018). "India's Budget Squeeze May Put Corporate Tax Cuts on Hold". Bloomberg Politics. Bloomberg. Retrieved 16 February 2018.
  19. Roychoudhury, Arup (22 December 2017). "US tax cut may find echo in Budget". Business Standard. New Delhi. OCLC 496280002. Retrieved 16 February 2018.
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  21. "Printing of Budget documents begins with 'Halwa' ceremony". Business Line. Press Trust of India. 20 January 2018. ISSN 0971-7528. OCLC 456162874. Retrieved 30 January 2018.
  22. "Printing of Budget documents begins with 'Halwa' ceremony". Business Standard. New Delhi. Press Trust of India. 20 January 2018. OCLC 496280002. Retrieved 30 January 2018.
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  24. Kumar, N. Ravi (1 February 2018). "Ayushman Bharat: the big budget scheme". The Hindu. Hyderabad. ISSN 0971-751X. OCLC 13119119. Retrieved 9 February 2018.
  25. Ghosh, Abantika; Mathew, George (2 February 2018). "Union Budget 2018: Rs 5 lakh health cover for 10 crore poor, prescription awaited". The Indian Express. New Delhi/Mumbai. OCLC 70274541. Retrieved 9 February 2018.
  26. Surabhi (1 February 2018). "Budget 2018: Centre to foot 12% PF contribution for new job entrants". The Hindu. Business Line. New Delhi. ISSN 0971-7528. OCLC 456162874. Retrieved 9 February 2018.
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  29. "Budget 2018: No I-T relief but Rs 40,000 standard deduction on transport, medical expenses". Hindustan Times. New Delhi. Press Trust of India. 1 February 2018. Retrieved 9 February 2018.
  30. Behera, Laxman K. (2 February 2018). "Defence Budget 2018–19: The Imperative of Controlling Manpower Cost". Institute for Defence Studies and Analyses. Retrieved 19 February 2018.
  31. Peri, Dinakar (1 February 2018). "Modest hike in defence budget, pensions see sharp rise". The Hindu. New Delhi. ISSN 0971-751X. OCLC 13119119. Retrieved 19 February 2018.
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  35. Motiani, Preeti (1 February 2018). "Budget 2018 hikes cess on income tax to 4 per cent from 3 per cent: Here's how much more you will pay". The Economic Times. OCLC 61311680. Retrieved 9 February 2018.
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  37. Dhawan, Sunil (2 February 2018). "Budget 2018: FM proposes to re-introduce LTCG tax on gains above Rs 1 lakh". The Economic Times. OCLC 61311680. Retrieved 9 February 2018.
  38. Chowdhury, Abhijit Roy (1 February 2018). "India to Propose Long-Term Capital Gains Tax on Equities". Bloomberg Markets. Bloomberg. Retrieved 9 February 2018.
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