Budget 2016

enincon-india-budget-2016

First comes the thought; then comes the organisation of that thought, into ideas & plans; then transformation of those plans into reality. The beginning, as you will always observe, is in your imagination.Napolean Hill

Taking cues from the legend enincon through its dedicated team of sector consultants and industry specialist would be doing a round up on India Budget 2016 with live feeds, structured surveys and quality polls to offer unmatched point of view to all clients. Watch out this space for continuous updates on India Budget 2016.

BUDGET REACTIONS

  • Pension Scheme Announcements – Budget 2016

    The key announcements in this section are as under:

    • Annuity fund which goes to legal heir will not be taxable
    • Withdrawal up to 40% of the corpus at the time of retirement to be tax exempt in the case of National Pension Scheme during 2016-17
    • Limit for contribution of employer in recognized Provident and Superannuation Fund of  INR 1.5 lakh per annum for taking tax benefit
    • Exemption from service tax for Annuity services provided by NPS and Services provided by EPFO to employees
    • Reduction in service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases
  • ” Make in India ” Announcements – Budget 2016

    The key announcements under this section are as under:

    • Make in India to witness changes in custom and excise duty rates
    • To ignite competition, input costs to be reduced in 2016-17 in sectors such as IT, capital goods, defence production, textiles, mineral fuels & mineral oils, chemicals & petrochemicals, paper, paperboard & newsprint, maintenance repair and overhauling of aircrafts and ship repair

     

  • Tax Reform Announcements – Budget 2016

    The key announcements under this section are as under:

    Relief to small tax payers

    • Raise the ceiling of tax rebate from INR 2000-INR 5000 to reduce the burden on individuals with income INR 5 lakh/ annum
    • Increase in the limit of deduction of rent paid from INR 24,000 TO INR 60,000 for those on rented accommodation
    • Increase in the audit free turnover limit to INR 2 crore in 2016-17 from INR 1 crore for SME business entrepreneurs
    • Preventive presumption tax to decrease

     

    Corporate Tax Rates

    • New manufacturing companies incorporated on or after March 1, 2016 to be to be given an option to be taxed at 25% + surcharge and cess
    • 100% deduction of profits for 3 out of 5 years for startups setup during April, 2016 to March, 2019
    • 10% rate of tax on income from worldwide exploitation of patents developed and registered in India by a resident
    • Complete pass through of income-tax to securitization trusts including trusts of ARCs
    • Lower the corporate tax rate for the next financial year for relatively small enterprises i.e companies with turnover not exceeding `INR 5 crore (in the financial year ending March 2015), to 29% plus surcharge and cess
    • Period for getting benefit of long term capital gain regime in case of unlisted companies is proposed to be reduced from three to two years
    • Non-banking financial companies shall be eligible for deduction to the extent of 5% of its income in respect of provision for bad and doubtful debts
    • Determination of residency of foreign company on the basis of Place of Effective Management (POEM) is proposed to be deferred by one year
  • Fiscal Situation Announcements – Budget 2016

    The key announcements under this section are as under:

    • Fiscal deficit targets to come down from 3.9% in 2015-16  to 3.5% in 2016-17
    • Total capital expenditure for 2016-17 to estimated around INR 19.75 lakh crore
    • Total planned expenditure for 2016-17 stands to be INR 5.50 lakh crore, where as the unplanned expenditure hovers somewhere around INR 14.28 lakh crore for 2016-17
    • The budgetary allocation to the states for 2016-17 stands to be INR 99,861 crore
    • Revenue deficit to target from 2.8% to 2.5% in 2015-16
    • Special emphasis to sectors such as agriculture, irrigation, social sector including health, women and child development, welfare of Scheduled Castes and Scheduled Tribes, minorities, infrastructure
    • Mobilization of additional finances to the extent of INR 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority by raising bonds
    • Rationalized and restructured more than 1500 Central Plan Schemes into about 300 Central Sector and 30 Centrally Sponsored Schemes
    • FRBM Act to be restructured
  • Ease of Doing Business Announcements- Budget 2016

    The key announcements under this section are depicted as under:

    • IT enabled government processes
    • Rationalization of employees in government and autonomous body
    • Three specific initiatives for public money to beneficiary
    • Delivery of subsidy by AADHAR framework
    • Direct Benefit Transfer on pilot basis on fertilizer
    •  5.35 lakh fair price shops & additional 3 lakh shops to be automated
    • INR 900 crores for pulses to support MSP
    • Close engagement with states and districts
  • Financial Sector Reform Announcements – Budget 2016

    For Private Sector

    • Public Utility dispute resolution bill to come in effect this fiscal
    • New Guidelines on PPP Concession Agreements in FY 2016-17
    • New Credit mechanism for Infrastructure segment with renewed parameters, to improve the stalled project situation

    FDI Policy

    • FDI Policy for Asset Reconstruction, Insurance Companies & Pension Sectors to change
    • 100% FDI through FAPB route in marketing of food products produced, manufactured & marketed in India to facilitate farmers and food processing industry
    • Government’s Investment policy has been approved for this fiscal. CPSE’s to be encouraged for disinvestment.
    • Niti Aayog to identify CPSE’s which can undergo capital restructuring and can dis-invest this fiscal

    Banking Sector

    • Comprehensive codes for resolution on financial firms to be introduced
    • Deepening of corporate bond market to be the renewed focus
    • Asset reconstruction companies to manage Non-performing Assets (NPAs) of PSU Banks
    • Statutory basis for Monetary Policy Framework and Monetary Policy Committee to be set up
    • Financial Data Management Centre to be set up for data segregation and analysis
    • Amendment of SARFAESI Act 2002 to enable sponsor of an ARC to hold up 100% stake in ARC(Asset Reconstruction Company)
    • Road map for financial reconstruction of PSU Banks and implementation of Indradhanush scheme
    • Allocation of ₹ 25, 000 Crores for recapitalization of PSU Banks
    • Banking Board Bureau will established in FY 2016-17
    • Government’s Stake in IDBI Bank to come down at 50% basis its reformation
    • Pradhan Mantri Mudra Yojana (PMMY) for Banks & NBFCs to witness a grant of ₹ 1,00,000 Crores and will facilitate 2.5 Lakh borrowers
    • In FY 2016-17 a total of ₹ 1.80 Lakh crores to be granted in PMMY
    • Scheme of establishing ATMs and Micro-ATMS in  Post Offices
  • Energy & Infrastructure Segment Announcements – Budget 2016

    Oil & Gas Sector

    • Focus on decreasing the tune of hydrocarbon imports and give impetus to be self-sufficient one of Government’s premiere agenda this fiscal
    • Schemes to incentivise deep sea, ultra deep water projects for new projects of discovery & exploration. This would promote foreign participants which in turn would aid with technology to harness the underlying potential of country’s reserve
    • Calibrated market freedom a new goal to provide smooth business operations for companies operating in Oil & Gas Sector domain
    • Predetermined market price to be established for landed fuels in the segment to make market more profitable

    Coal

    • Highest ever coal produced in the last fiscal. Degree of imports bought down to 100 MT and is further targeted to nil by FY 2017-18
    • Clean Energy Cess to be rechristened as Clean Environment Cess
    • Clean Environment Cess now would be levied at ₹ 400/ton which is increased from erstwhile Clean Energy Cess of ₹ 200/ton

    Power

    •  In the power sector, the govt is drawing up a plan for 15-20 years to augment investment in nuclear power. ₹ 3,000 crore per annum for this shall be spent from this fiscal
    • Mobilisation of further funds shall be done by bonds of agencies like NHAI, IREDA & PFC etc. and to the tune of ₹ 31,000 Crores
    • Service Tax exemption on all Rural Electrification Programmes
  • Energy & Infrastructure Segment Announcements – Budget 2016

    Roads & Highways:

    • 70 languishing road projects to gain momentum in this fiscal which were stalled in past three years. Among these 85% of the projects to be completed this fiscal only with an investments planned at ₹ 1,00,000 Crores
    • Highest rate of motor vehicle production this fiscal likely to be increased
    • ₹ 55,000 funds for new roads & highways allocated in FY 2016-17.
    • NHAI Bonds to raise an additional ₹ 15,000 Crores for national highways and state highway’s up gradation projects 
    • Total Roads & Highways Investments pegged at ₹ 97,000 Crores which is inclusive of PMGSY
    • Total Budgetary Outlay on Roads & Railways in FY 2016-17 to stand at ₹ 2.18 Lakh Crores
    • Total of 10,000 kms of National Highways to be developed in FY 2016-17
    • State Highways of up to 50,000 kms to be upgraded to National Highways
    • Infrastructure Investments for roads pegged at staggering amount of ₹ 2, 21,246 Crores
    • Amendments in Motor Vehicles Act in this fiscal

    Ports Infrastructure

    • Highest ever capital expenditure planned in FY 2016-17 for major ports
    • Sagarmala Project to connect all ports on India’s vast coastal line rolled up in full swing
    • To improve inland waterways transport and inter-connection of rivers ₹ 800 Crores investment planned this fiscal
    • Green field ports to be promoted on both eastern and western coasts of India

    Civil Aviation

    • 160 airports & airstrips on pan India basis to be revived at investment of ₹ 50-100 Crores per project in collaboration with respective State’s
    • 10 of 25 Airports Authority of India (AAI) airports to be developed this fiscal
  • Educational & Skill Development Sector Announcements – Budget 2016

    • Sarv Siksha Abhiyan to have 62 Navodaya Vidalaya opened up this fiscal
    • 10 Private & 10 Public institutions to be developed as world class research facilities
    • Digital Depository for all SLC, Certificates & Degrees etc. to promote transparency for employers
    • To facilitate Skill Development Pradhan Mantri Kaushal Vikash Yojana to get a fund of ₹ 17,000 Crores
    • EPF rates increased to 8.33% for all new employees for first 3 years quantum of their employment
    • 30% of the emoluments can be recovered if monthly income is less than ₹ 30,000 till first three years
    • 100 Model Career Centers to be established on Pan India basis
    • Government to facilitate retail trade for small & medium shops to be operational for all seven days a week
  • Social & Healthcare Sector Announcements – Budget 2016

    • A massive mission for LPG connection to the poor and needy woman to be launched on pan country basis. Grant of ₹ 2,000 Crores for same allocated. 1.50 Lakh Crores BPL family to be covered this FY and 5 Crores BPL families by coming two fiscals.
    • Health protection scheme of up to ₹ 1 Lakh/family and an additional of ₹ 30,000 for senior citizens family aged at 60 or more
    • Pradhan Mantri Jan Aushadhi Yojana to ensure opening of new dispensaries
    • National Dialysis Service Programme to be launched in Government Hospitals at reduced rates. All equipment’s necessary under same get full exemption from duties
    • Stand -Up India to get a funding of ₹ 500 Crores this fiscal
    • SC/ST  class & Women for promoting entrepreneurship to get a fund of ₹ 2.50 Lakh Crores 
    • SC/ST hub in MSME Ministry
  • Rural Economy Boosting Announcements in Budget 2016

    The key announcements under this section is depicted as under:

    • 228% quantum jump in rural funds from last fiscal in FY 2016-17 to facilitate gram panchyats and villages
    • Under MGNREGA Scheme Pradhan Mantri Krishi Sichai Yojana to get an additional grant of ₹ 38, 500 Crores in FY 2016-17 which is highest ever till date
    • Pradhan Mantri Gram Sadak Yojana (PMGSY) to get an additional ₹ 19,000 Crores which is 60% of the total cost. The remaining 40% of the cost to be paid by States respectively taking to a total investment of ₹ 27,000 Crores under PMGSY this fiscal.
    • 2.23 Lakh kms of road to be constructed under PMGSY this fiscal taking the rate of addition to 100 km/day
    • Rural Clusters to be identified under Shayama Prasad Mukherjee Yojana for their better development
    • As on 23rd February 2016, 5,542 additional villages are electrified out of 18,852 non-electrified villages in the country. 100% electrification of the villages by 1st May 2017.
    • Deen Dayal Grameen Jyoti Yojana to get a grant of ₹ 8,000 Crores
    • To Swach Bharat Abhiyan a grant of ₹ 9,000 Crores is allocated this fiscal
    • National Digital Literacy Mission to cover Crore households w.e.f 1st April 2016. For Digital India initiative a grant of ₹ 150 Crores to be provided
    • Rashtriya Gram Swaraj Abhiyan to get a grant of ₹ 650 Crore
    • Total funds for rural development in this budget pegged at ₹ 87,500 Crores
  • Agriculture & Farmers Welfare – Announcements in Budget 2016

    • Income Security of Farmers: The income of farmers is slated to go up by two times their current income by 2020. A grant of ₹ 3,584 Crores allocated for same.
    • 141 MillionHa. of cultivable land exists in India out of which currently 46% only is covered to irrigation. Plan to add 28.5 Lakh Ha. land under Pradhan Mantri Irrigation Yojana in land under irrigation by 2016-17. Total land to be irrigated would stand at 80.6 Lakh Ha. with a pegged investments of ₹ 17,000 Crores this fiscal & ₹ 86,500 Crores by 2020. Additional ₹ 20,000 Crores to be added in NABARD for irrigation purpose scheme.
    • To improve ground water situation funds of ₹ 60,000 Crores allocated
    • City waste to be utilized as new Compost Policy to convert city waste into compost in line
    • Organic farming to be promoted with a fund ₹ 412 Crores under Paramparagat Krishi Yojana & Organic Value Chain Development
    • ₹ 500 Crores specially to facilitate pulses
    • Unified Agricultural Scheme as e-platform to be launched on April 14, 2016 & APMC Act to be reformed
    • Loan repayment burden reduction towards interest subvention to be at ₹ 15,000 Crores
    • Benefits of MSP (Minimum Selling Price) directly to reach farmers through following schemes:
      • Decentralised Procurement
      • Online Portal by FCI
      • Pulse Procurement
    • Dairy Projects to get an investment of ₹ 850 Crores
  • Key Numbers & Announcements Highlighted in India Budget 2016

    • GDP Growth – Increased from 6.3% to 7.6% in FY 2015-16 from FY 2015-16
    • Global Exports decreased from 7.6% to 4.4% 
    • CPI Inflation brought down at 5.4%
    • Current Account Deficit (CAD) is bought down to $ 14.4 Billion from $ 18.4 Billion, to be pegged at 1.4% of GDP for FY 2016-17
    • Forex Growth at $ 350 Billion
    • Planned expenditure devolution to State’s increased to 55%
    • Central Share of Taxes reduced to 58% from 68% 
    • Recommendations of Seventh Pay Commission & Application of OROP to further constrain corpus of Government by 10-15%
    • Pradhan Mantri Fasal Bima Yojana (PMFBY) launched for farmers experiencing any losses
    • BPL families to get LPG connections
    • Insolvency & Bankruptcy Law to be in place this FY
    • Incentives for Gas Discovery & Exploration to improve domestic produce
    • Public Listing Insurance Companies 
  • Make In India (MII) Initiatives & Other Announcements to bring more to Indian Railways

    • Bid for ₹ 40,000 Crores already done on highly transparent mode for manufacturing locomotives in the state of Bihar. 
    • Employment potential to get enhanced in eastern region due to the planned locomotive manufacturing facilities
    • Small & medium ancillary manufacturing units to get a push
    • To facilitate capacity expansion moves like ease of business in collaboration with state’s to improve overall rail infrastructure
    • Project sanction time reduced to 6-8 months which erstwhile was 24 months
    • All procurement to be done through e-route with embedded transparency
    • Ministry of Coal & NTPC to have collaborations with Ministry of Railways to promote better infrastructure in the country
  • Infrastructure Improvements Announced in Rail Budget 2016

    • Bankable Railway Projects: Such projects to increase in numbers in this fiscal with improvements in institutional finances with LIC planning to invest ₹1.5 Lakh Crores upon same. This would be higher by a margin of 20% than previous year
    • 2800 km of new railway track to be completed in FY 16-17
    • Broad Gauge expansion rate to be improved at 13 km/day from previous best of 7 km/day in FY 16-17. Targets for following year of 2017-18 kept at 17 km/day
    • 1600 km of fresh electrification of tracks planned with least capital investments and in partnership with Ministry of Power in 2016-17. Same capacity to be up to 2000 km in 2017-18
    • Dedicated Freight Corridor (DFC) touted as the largest infrastructure project for the country to witness award of all Civil contracts by end of FY 2015-16. Delhi – Chennai and Kharagpur – Mumbai part of DFCs to see completion in this fiscal
    • Port Connectivity under Coastal Connectivity Program the ports of Jaigad, Dighi & Paradip to be included under the program. Nargol & Hazira to be further developed under PPP routes
    • Better connectivity in North-East corridor of the country. Loomding – Silchar route work in progress; to be completed in this fiscal. Mizoram & Manipur to be soon under broad gauge 
    • Northern Region to get a boost with Katra – Banihal section tunneling work completed up to 35 km out of 95 km
    • De-congestion work in terms of track doubling and increased bridges network on under Jalandhar – Jammu section
    • National Rail Plan:Integrated planning for cost optimization to come into effect for long-term
    • 1 GW of Solar Projects to be developed by Railways in FY 2016-17
  • What’s New for Common Man in Rail Budget 2016-17?

    enincon’s endeavor was to analyze the budget and filter what was new for common man in this year’s budget and whether the long standing plight of common man has got an addressal. Our QQR specialist team has quickly analyzed and came up with a conclusion that at large it was a win-win proposition for common man. Following are the key announcements:

    • For Unreserved Passengers 
      • Deen Dayalu value coaches to be added in busy route trains to facilitate the common man travel
      • Antyodaya Yojana on dense routes
    • For Reserved Passengers 
      • Humsafar : Fully 3 AC sleeper service exclusively launched 
      • Tejas : Operating Speed increased up to 130 km with embedded entertainment services, local cuisine and wi-fi enabled services
      • Overnight Double Decker Train Services: UDAY Express to run in busy routes on pan India basis
      • Hand-held terminals to TTE’s : To facilitate on-spot booking
      • Platform tickets to be available from ticket vending machine
      • Vending Machines to accept international debit and credit to facilitate foreign tourists
      • Vikalp facility to gain further momentum
      • “Clean my Coach” service through SMS by indivduals
  • Power Procurement Improvements for Railways announced in Rail Budget 2016-17

    Key announcements in Rail Budget for Power Procurement in Rail Budget 2016-17

    • Planned savings of ₹ 3,000 in 2016-17 through efficient usage of electricity
    • Railways to procure more power under Deemed Distribution Licensees route
    • ₹ 17,00 Crores savings to come in effect using direct procurement of power from Generation companies by Railways
    • ₹ 300 Crores of savings planned to come in effect through Demand Side Management (DSM) measures
  • Rail Budget 2016 Live Feed

    What’s New in Rail Budget 2016?

    • “Chalo Milkar kuch naya karein” is the tag line for development in railway infrastructure through tariff and non-tariff mechanisms. Under which three innovative measures to be taken as below:
      • Nav Arjan : Identification of new sources of revenue channels for Indian railways to improve the infrastructure
      • Nav Manak : Optimal budgetary planning, effective proactive practices and optimize the operations
      • New Sangrachna: Co-operative approach, collaboration and improved connectivity with new structure implementation
    • Operating ratio will be at 92% in FY 2016-17

    Working expenditure to be at 11% in FY 2016-17

    The working expenditure which was at staggering 32% in the event of application Sixth Pay Commission in FY 2008-09, which would be at 11%, thereby improving by a quantum of 21% in FY 206-17

    Railway Saving Plans for FY 2016-17

    • ₹ 827 Crores saving planned in current FY
    • Long-term power purchase agreements to ensure low payouts in terms of power cost to Indian Railways
    • Effective usage of funds and cost optimization

    Investment Updates for FY 2016-17 in Rail Budget

    • Rate of capital investment increased in last quarter of FY 15-16
    • Capital Investment in 2009-14 was at ₹ 48,000 Crores 
    • Capital Investment in FY 2016-17 planned at ₹ 1.21 Lakh Crores which is double the average so far witnesses in the country

    Major Initiatives announced in Rail Budget 2016 to Improve Investments

    • Joint Ventures (JV) with States to augment infrastructure on pan India basis
    • Rupee Bonds to be floated to get additional funds
    • PPP Initiatives to be boosted for enabling infrastructure
    • Securing International funds on priority to give impetus to R&D projects in country

    What’s there for Common Man in Rail Budget 2016-17?

    By 2020 following long felt desires of common man likely to get addressed with improved and concrete steps planned in Budget 2016-17

    • Reservation to be available on demand
    • Elimination of all unmanned gates, to improve safety norms
    • Mail express trains to witness an improvement in average speed up to 80 km/hr.
    • Zero direct discharge to be implemented
    • For better running efficiency of goods the freight trains average up to 50 km/hr.
    • Ensuring 95% efficiency in productivity from railways for common services
    • Dedicated IVRS calls to customers to ensure better feed back and grievance redressal mechanism
    • Social media application for enhanced redressal of grievances 

    Swach Rail & Swach Bharat to gain further momentum: With fitting of 17,000 bio-toilets planned to be installed in trains this FY is focusing on ensuring priority to PM’s pet scheme of Swach Bharat Mission

    Wi-fi enabled station’s count will go up to 100 this fiscal and at 400 in FY 2017-18 in partnership with Google

     

  • Individual Taxpayers Expectations from Budget 2016

    • Tax Ecosystem Improvements on Cards: Timely processing of Income Tax Returns (ITR) & timely payments of refunds and intimating same to the individuals prior to setting off any outstanding demand for which the refund is due.
  • Individual Taxpayers Expectations from Budget 2016

    • Basic Exemption Limit to Increase for Individual: Basic exemption limit for individuals is likely to increase from ₹2,50,000 to ₹3,00,000
    • Deduction for expenses likely to be allowed from salary income: Relief to the common middle class on cards as FM may allow deductions for expenses from salary income
    • Basic Exemption Limit to Increase for Individual: Basic exemption limit for individuals is likely to increase from ₹2,50,000 to ₹3,00,000
    • Standard deduction for expenses to be set at ₹ 1,00,000 per annum
  • Private Sector Participation Opening for Commercial Coal Mining

    • Commercial Coal Mining Operationalisation: One of the pinnacle point of interest under India Budget 2016 would be actual operationalisation of private sector participation in commercial coal mining as it would open host of opportunities for the country to address its increasing coal requirements with enhanced production efficiency and better quality technology application. However, regulation front of same would grab eyeballs in years to come.
  • Key Expectation of India Budget 2016 for Renewable Energy Sector

    • National Clean Energy Fund Utilisation: With increase observed in clean energy cess in last fiscal the track of enhanced NCEF to drive the large Renewable Energy targets of GoI by various financing tools like seed capital for solar parks, supporting power evacuation from RE capacity dedicated transmission grids and moves like creation of sovereign hedge funds would be under scanner for Budget 2016.