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What the Budget holds for us: Highlights of the Union Budget 2018-19

Author: Team Finapolis/Monday, February 19, 2018/Categories: Economy

What the Budget holds for us: Highlights of the Union Budget 2018-19

The Union Budget 2018-19 came at a time when eight states in the country are due for Assembly elections and a general election is scheduled next year. Preceding this event was the Gujarat state elections where BJP faced a rude shock when it lost votes in the rural areas. Consequently, Budget 2018 was framed with these aspects in mind. The government doled out a number of incentives to the rural sector to boost demand which in turn is set to bolster economic growth and create jobs. The government has announced a slew of measures including assured minimum support price, increased expenditure in rural housing and infrastructure and export liberalisation.

Some of the key policy announcements in Budget 2018-19 are:

Agriculture and rural economy

  • NITI Aayog to implement an appropriate mechanism of realising better prices for farmers with cooperation from the central and state governments
  • Minimum support price of agricultural crops raised to 1.5 times that of production cost
  • Operation Green to be launched in lines of Operation Flood for perishable commodities like tomato, onion and potato with a budgetary outlay of Rs 500 crore
  • National Bamboo Mission to be launched with an outlay of Rs 1,290 crore to promote and protect the bamboo sector
  • Eight crore free gas connections allotted to women under UJJWALA scheme


  • Programme to revitalise infrastructure and systems in education by 2022
  • To introduce digital means of imparting education and training teachers to improve the quality of education


  • National Health Protection Scheme to be launched across the country to provide medical cover for secondary and tertiary hospitalisation for 10 crore families of up to Rs 5 lakh per family per annum
  • The government to upgrade district hospitals to establish 24 government medical colleges and hospitals
  • Tourism and medical healthcare to further get a boost with promotion of seaplane activities


  • Establishing a housing fund under the National Housing Bank to support government’s credit-linked subsidy to ensure affordable housing for all

Customs, cess and income tax

  • No change in tax slabs for individual taxpayers
  • Standard deduction for salaried employees under medical expenses and transport allowance increased to Rs 40,000
  • Hike in education cess from 3% to 4% of tax and surcharge
  • Higher tax benefits for senior citizens
  • Long Term Capital Gains tax of 10% introduced on gains exceeding Rs 1 lakh
  • Customs duty on mobile phones to be raised from 15% to 20%
  • Central Board of Excise and Customs (CBEC) to be renamed Central Board of Indirect Taxes and Customs (CBIC)


  • Bid to provide a framework for growth of Fintech companies in India
  • Large corporate houses to raise one-fourth funding through the bond market
  • Strict action to be taken against use of cryptocurrencies
  • Corporate tax axed to 25% for firms with turnover of Rs 250 crore


  • Rs 1.48 lakh crore capital expenditure outlayed for Indian Railways


  • Emoluments for India’s President, Vice President and Governors revised


  • Rs 3.794 crore allocated to provide credit support to Medium, Small and Micro Enterprises (MSMEs)


  • Airport capacity to be enhanced by five times under Nabh Nirman programme to handle a billion trips a year


  • Rs 80,000 crore to be raised through disinvestment in 2018-19
  • Three public sector insurance firms — National Insurance Co Ltd, United India Assurance CO Ltd and Oriental India Insurance Co Ltd — to be merged into one entity and consequently listed in the bourses

Despite the attempts of the government through budgetary sanctions, the pace of growth of the economy will largely depend on factors outside the budget, says Crisil Research. 

“Growth has bottomed out, so the key drivers in fiscal 2019 will be the improved ability to benefit from strong global growth as domestic headwinds from demonetisation and GST implementation fade, enhanced ability of the banks to lend following recapitalisation and normal monsoons,” says a CRISIL report.  

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