FROM THE BAGGAGE OF FINANCE MINISTER.

HIGHLIGHTS OF UNION BUDGET 2015-2016

BEGINNING OF BUDGET: COMMENTARIES FROM FINANCE

MINISTER.

"The world is predicting it's India's time to fly" "We inherited a sentiment of doom and gloom. The investment community had almost written us off. We have come a long way since then." "We have turned around the economy, dramatically restoring macroeconomic stability and creating the conditions for sustainable poverty elimination, job creation, and durable double digit economic growth." "While being mindful of the challenges ... this gives us reason to feel optimistic." "Domestic and international investors are seeing us with renewed interest and hope."

FISCAL DEFICIT

Fiscal deficit seen at 3.9 % of GDP in 2015/16 Will meet the challenging fiscal target of 4.1 % of GDP Remain committed to meeting medium term fiscal deficit target of 3 % of GDP Current account deficit below 1.3 % of GDP Jaitley says have to keep fiscal discipline in mind despite need for higher investment

GROWTH

GDP growth seen at between 8 % and 8.5 % y/y Aiming double digit growth rate, achievable soon

INFLATION

Expects consumer inflation to remain close to 5 percent by March, opening room for more monetary policy easing Monetary policy framework agreement with the RBI clearly states objective of keeping inflation below 6 percent

POLICY REFORMS

Propose to create a universal social security system for all Indians Propose to merge commodities regulator with SEBI Allocates 346.99 billion rupees for rural employment guarantee scheme in 2015/16 To bring a new bankruptcy code in 2015/16 Jaitley says will move to amend the RBI act this year, and provide for a monetary policy committee To set up public debt management agency To raise visa-on-arrival facility to 150 countries from 43

TAXATION

Corporate tax rate to be cut to 25% over next four years Expects to implement goods and services tax by April 2016 Plans to introduce direct tax regime that is internationally competitive on rates without exemptions Transport allowance, which is currently 800 per month, has been increased to 1600 per month To provide social safety net, pension, additional deduction of Rs 50,000 to be provided for new pension scheme To raise limit of deduction of health insurance premium to Rs 25,000

100% tax deduction for Swachh Bharat, Clean Ganga schemes To increase clean energy cess to Rs 200 per metric tonne of coal To increase service tax to 14% To increase threshold for transfer pricing to Rs 20 crore To increase excise duty to 12.5%; excise duty cut on leather footwear To defer GAAR by two years To reduce customs duty on 22 items To abolish wealth tax; Two percent additional surcharge on INCOME OF OVER RS 1 crore known as super rich tax. To modify permanent establishment norms To rationalize capital tax regime Quoting of PAN number mandatory for any transaction over Rs 1 lakh To allow tax pass-through for Alternative investment funds

INFRASTRUCTURE

Investment in infrastructure will go up by 700 bln rupees in 2015/16 over last year Plans to set up national investment infrastructure fund Proposes tax-free infrastructure bonds for projects in roads, rail and irrigation projects Proposes 5 "ultra mega" power projects for 4,000 MW each Second unit of Kudankulam nuclear power station to be commissioned in 2015/16 Will need to build additional 100,000 km of road

Ports in public sector will be encouraged to corporatize under Companies Act

EXPENDITURE

If revenue improves, hope to raise budgeted allocations for rural job scheme by 50 billion rupees in 2015/16

INVESTMENT

Propose to do away with different types of foreign investment and replace them with composite caps To allow foreign investment in alternative investment funds

GOLD

To introduce gold monetization scheme to allow depositors to earn interest To introduce Indian-made gold coin with Ashoka Chakra to reduce demand for foreign gold coins

SUBSIDIES

We are committed to subsidy rationalization based on cutting leakages