The Union Finance Minister Arun Jaitley on 29 February 2016 presented the Annual Financial Statement or the Union Budget for 2016-17 in the Lok Sabha. In his budget speech the minister listed nine pillars on which the Government will focus on in order to transform India into a developed nation.
The nine pillars are - Agriculture and farmers' welfare, rural sector, social sector including healthcare, education, skills and job creation, infrastructure and investment, financial sector reforms, governance and ease of doing business, fiscal discipline, tax reforms to reduce compliance burden.
The following are the new initiatives proposed in the Budget 2016-17 aimed at achieving pudent management of government finances and delivery of benefits to the needy.
• The fiscal deficit in 2015-16 (Revised Estimates) and 2016-17 (Budgetary Estimates) has been retained at 3.9 percentage and 3.5 percentage of GDP respectively.
• Revenue Deficit target is capped from 2.8 to 2.5 percentage in RE 2015-16.
• The total expenditure in the Budget for 2016-17 has been projected at 19.78 lakh crore rupees, consisting of 5.50 lakh crore rupees under Plan and 14.28 lakh crore rupees as Non-Plan expenditure.
• The increase in Plan expenditure is in the order of 15.3 percentage over 2015-16 BE.
• Plan Allocations have given special emphasis to sectors like agriculture, irrigation, social sector including health, women and child development, welfare of SCs and ST, minorities, infrastructure, etc.
• Continuing with the policy of higher empowering States, the total resources being transferred to States are 99681 crore rupees more over RE 2015-16 and 246024 crore rupees more over Actuals of 2014-15.
• To improve the quality of Government expenditure, every new scheme being sanctioned by Government will have a sunset date and outcome review.
• To avoid overlapping of expenditure, 1500 Central Plan Schemes were rationalised and restructured into about 300 Central Sector and 30 Centrally Sponsored Schemes.
Plan vs Non-Plan Expenditure
In order to correct the present skewed allocations in the budget because of Plan and Non-Plan classification of Government expenditure and to facilitate Revenue and Capital classification, the Plan-Non-Plan classification will be done away with from fiscal 2017-18. The Union Finance Ministry will closely work with the State Finance Departments to align Central and State Budgets in this matter.
Committee on FRBM Act, 2003
A committee will be formed to review the implementation of the Fiscal Responsibility and Budget Management (FRBM) Act, 2003. The committee will suggest its opinions on the following issues while remaining committed to fiscal prudence and consolidation.
• To suggest necessary amendments to the Act in the context of the uncertainty and volatility which have become the new norms of global economy
• To looking into introduction of having a fiscal deficit range by replacing the present system of having fixed numbers as targets
• To look into the feasibility of deriving a mechanism whereby fiscal expansion or contraction will be aligned with credit contraction or expansion respectively.
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