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Over lunch, Finance Minister Arun Jaitley breaks down his Budget. Sheela Bhatt/Rediff.com reports.
What is the biggest takeaway from Union Budget 2015-2016?
Finance Minister Arun Jaitley responded to the question soon after delivering his first full-year Budget on Saturday, while partaking of a lunch of kulcha-chole, saying, "The architecture for the funding of the states is now in place. We believe we will have 15 per cent more revenue generation. More buoyancy will bring in more investment."
Jaitley interacted with a few mediapersons over lunch in his office in Parliament. He was relaxed, but didn't show much exuberance soon after presenting the Budget which Prime Minister Narendra Modi hailed as 'pragmatic, positive and practical.'
When Rediff.com asked the finance minister what the major gains were for the middle class in the Budget, Jaitley said, "Salaried people will get a tax exemption of Rs 9,600 per year. The middle class will get tax benefits in medical and social security too. Also, if anybody invests in pension funds, there will be tax savings."
When Rediff.com asked specifically why he didn't give any direct tax benefit to the salaried class, which could have got him positive headlines, Jaitley said, "I am not looking for headlines."
Giving his logic for not giving direct tax benefits, he said he could not do so because the base of the salaried class was still low in India, at 3.5 crore to 4 crore (35 million to 45 million) taxpayers. He said he wants to bring 10 per cent of Indians into the tax net, and was inspiring the people to save for their future and building the nation.
Jaitley said he was helping the middle class consolidate its financial position under the Budget; in the form of social security, pension, medical benefits etc, people will be able to save and get more benefits.
Asked if the strict legislation against black money and benami properties proposed in today's Budget will be applicable with retrospective effect, Jaitley said it will NOT be applied retrospectively.
Asked if the infamous HSBC list (which has many Indians holding bank accounts with the Swiss branch of HSBC) will come under the purview of this new law, he said, "If that account has money in it, then it WILL come under the purview of the new law."
Asked for his logic to abolish wealth tax, Jaitley said, "Normally rich people who have jewellery and properties will ensure that they are undervalued. Then they would go to the tax authorities and try to pay as less tax on it as possible. The government didn't earn much of wealth tax due to this undervaluation, just above Rs 1,000 crores (Rs 10 billion). Thus, the high-cost items had a low yield for the government. Now, the two per cent surcharge will get the government around Rs 9,000 crores (Rs 9 billion)."
Asked why he has favoured corporates in a big way by slashing the tax on companies from 30% to 25%, Jaitley said, "The corporate tax was 30%, but they had many exemptions. So in effect the government ended up getting 23% of tax in real terms from corporates. Now, by keeping the tax at 25% we will be withdrawing the various existing exemptions in the coming years. All the exemptions given to corporates will go and they will have to pay a net 25% tax."
Jaitley said he has allotted Rs 70,000 crores (Rs 700 billion) for infrastructure, but actually wanted to allot Rs 1 lakh crore (Rs 1 trillion) which he could not do for fear of increase in fiscal deficit.
In this Budget the fiscal deficit has gone up from 3.6% to 3.9%, which will fetch him Rs 25,000 crores (Rs 250 billion) of extra funds for development, he said.
Jaitley was very upbeat about the provision by which it will be possible for industries to be set up without any governmental permission.
He said his Budget, in one stroke, was helping 5.5 crore (55 million)m small-scale industrialists in the country because they will have access to Rs 20,000 crores (Rs 200 billion) under the newly-launched Micro Units Development Refinance Agency, MUDRA.
Interestingly, Jaitley has increased the outlay for the rural employment guarantee scheme which was the United Progressive Alliance government's flagship. "Since the last three to four years the income levels in rural areas have gone down," Jaitley said. "It was necessary to give more money to rural India."
The effect of the financial exercise, he added, would be seen as the goods and services tax will come into effect.
Image: Finance Minister Arun Jaitley at lunch soon after presenting the Union Budget 2015-2016 in the Lok Sabha. Photograph: Sheela Bhatt/Rediff.com