A labourer stacks bricks on his head at a construction site in Kolkata yesterday. Jaitley has announced plans for a universal social security system that would give poor people access to subsidised insurance and pensions.

Agencies/New Delhi


Finance Minister Arun Jaitley yesterday announced plans for a universal social security system that would give poor people access to subsidised insurance and pensions.
A new insurance scheme will provide coverage for accidents and death for just Rs12 a year for the poorest.
The government also plans to set up a basic pension scheme for the millions of people currently unable to afford to put money aside for their old age, Jaitley said.
He also pledged major investment in infrastructure, saying it was time for the economy to “fly.”
Jaitley said the government had inherited an economy dominated by “doom and gloom” when it took power last year, trumpeting its achievements in conquering inflation and kick-starting growth.
“The credibility of the Indian economy has been re-established. The world is predicting this is India’s chance to fly,” he said.
Jaitley said the government would increase spending on the country’s crumbling roads, railways and ports by $11.3bn in 2015/16 as it seeks to win back investment and boost growth.
He pledged to complete 100,000km of roads currently under construction, build another 100,000km and commission five “ultra mega” power projects to help end electricity shortages.  
The government will set up tax-free infrastructure bonds to finance its plans through a national fund that will receive a Rs200bn ($3.2bn) injection of public money.
Despite new figures showing the economy is growing at a faster clip than previously thought, many ordinary people have yet to feel the benefit.
Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) last month suffered a drubbing in Delhi state elections, its first major defeat at the polls since it stormed to power, with critics saying Indians were tired of waiting for change.
Jayshree Sengupta, senior fellow at the Observer Research Foundation, said the budget was surprisingly focused on poverty.
“I was thinking that this budget would be very pro-industry, pro-corporate sector. But very surprisingly, the budget has a lot for the common person in India,” she said.
“It has gone into schemes which will actually bring about a welfare system for all, especially the poor.”
The government has forecast that growth for 2014/15 will reach 7.4%, making it the world’s fastest growing major economy.
India’s economy has been seen as stagnating in recent years and the dramatic turnaround is due partly to a change in the way GDP data is calculated.
But economists say low oil prices and reduced inflation have given India a genuine growth boost.
India’s government heavily subsidises food and fuel and there had been speculation Jaitley would seek to slash the multi-billion rupee subsidy bill.
Instead, he pledged to make the schemes more efficient and reduce corruption by accelerating the rollout of biometric cards and expanding direct cash transfers.
He also said he would make it easier for small businesses to obtain credit through microfinance institutions.
“Just as we are banking the unbanked, we are also funding the unfunded,” he said.
Meanwhile, the allocation of the women and child development ministry has been slashed by 44%.
While the allocation for the ministry in 2014-15 was Rs185bn, it was reduced to Rs103bn.
Jaitley promised to provide additional funds of Rs15bn to the Integrated Child Development Scheme (ICDS) and Rs5bn to Integrated Child Protection Scheme (ICPS) in case of more revenue collection due to tax buoyancy.
“I hope to garner some additional resources during the year from tax buoyancy. If I am successful, then over and above the budgetary allocation, I will endeavour to enhance allocations to ICDS by Rs1,500 crore, ICPS by Rs500 crore,” Jaitley said.
The allocation for ICDS has been increased from Rs410mn to Rs900mn, according to budget documents.
The budget allocation for National Commission for Women has been reduced from Rs270mn to Rs230mn. Business Page 1

Service tax hike makes air travel
and eating out more expensive


The budget presented by Finance Minister Arun Jaitley yesterday has the potential to increase what you pay for some commodities while also reducing it for certain categories.
Like in the past the levy on tobacco products has been hiked, making it more expensive for smokers and other tobacco product users.
Excise duty on cigarettes has been increased by 25% for cigarettes of length not exceeding 65mm and by 15% for cigarettes of other lengths.
This is the fourth consecutive budget which has raised excise duty on tobacco by more than 18% hike in duty.
Similar increases are proposed on cigars, cheroots and cigarillos. Last year, the finance minister had hiked duty by 22%. Even customs duty on tobacco has been increased to Rs70 per kg from the Rs60.
The finance minister also proposed to hike service tax from 12.36% to 14%, making air travel, eating out and mobile bills more expensive. Going out for concerts and sports events will mean paying more due to the service tax hike.
Even aerated sugary drinks like colas and packaged water are likely to pinch the pocket a bit more harder. The duty on aerated water has been proposed to increase from 17.5% to 18%.
In the last budget the excise duty on aerated sugary drinks hiked by 5%.
Jaitley has proposed to make leather footwear, India-made mobile phones, tablets, microwave, peanut butter, packaged fruits and agarbattis cheaper.
Service tax exemption has also been proposed for ambulance services, entry to zoo and cold storage facilities.
Imported medical devices like medical video endoscopes and pacemakers are set to become cheaper, as the budget has proposed reduction of customs and countervailing duty (CVD).
Similarly imported LCD/LED television panels may also get cheaper due to reduction in customs duty.
The items which are set to become costlier are:
• Aerated water, iced tea, lemonade and other beverages
• Condensed milk in containers
• Peanut butter
• Sacks and bags (including cones) of plastics
• Cement
Items which are set to become cheaper are:
• Wafers for manufacture of integrated circuit (IC) modules for smart cards LED drivers and MCPCB for LED lights, fixtures and lamps
• Agarbattis
• Pacemakers
• Tablet computers
• Ambulances
• Leather footwear priced over Rs1,000 per pair
• Imported LCD/LED television panels


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