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Pre-election Budget: Sops for farm sector, seniors, health cover for poor

The finance minister Arun Jaitley also introduced a 10% tax on long-term capital gains over Rs 100,000

Union Budget 2018


Finance Minister Arun Jaitley presented the Union Budget 2018-19 on Thursday while dealing with multiple pressures. The current fiscal year, 2017-18, was a year of severe disruptions, including especially the introduction of the goods and services tax or GST, and Jaitley pointed out that he had lost at least a month of indirect tax revenue as a consequence. General elections are fast approaching, and the agricultural sector needed support. Jaitley thus chose to deviate from the path of fiscal consolidation to which he had previously committed; the fiscal deficit for the ongoing year will be 3.5 per cent of gross domestic product (GDP), and for the coming year is targeted to be 3.3 per cent of GDP as opposed to the original target of 3 per cent. The sovereign bond market reacted sharply as a result, with 10-year government securities spiking up by 18 basis points to 7.61 per cent. Pressure is expected to grow on the Reserve Bank of India to increase interest rates in response to higher yields.
The finance minister also introduced a 10 per cent tax on long-term capital gains over Rs 100,000. Gains till January 31 were grandfathered in, and many retail investors would be kept out of the net, thanks to the floor before the new tax kicked in. The equity markets dropped sharply during and immediately after the FM’s speech, but partially made up their losses over the course of the day. The Sensex closed 58.36 points down at 35,906.

The focus of the Budget was on the farm sector and on less-advantaged groups such as the poor and senior citizens. In a big new initiative, the government said it would introduce health insurance for 500 million Indians called the National Health Protection Scheme. Under this scheme, 100 million vulnerable families would be provided health insurance cover of up to Rs 500,000 a year; Jaitley said it would be the “world’s largest health care programme”, and that it was progress towards universal health coverage, a campaign promise of the Bharatiya Janata Party in 2014. Senior citizens were provided tax sops, including a higher exemption on their interest income on deposits with banks and post offices and a higher deduction limit for health insurance and medical expenditure.

Read More : Budget 2018 highlights 

 
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