His focus has been on empowering the middle class, particularly the emerging middle class, besides taking care of their health. Bringing cheer to individual taxpayers, Jaitley, in his maiden Budget, has raised the personal income tax exemption limit to R2.5 lakh from R2 lakh. The I-T exemption limit for senior citizens has been raised to R3 lakh. Also, the investment limit under Section 80C has been hiked to R1.5 lakh from the current R1 lakh, while the housing loan interest rate deduction limit has been hiked to R2 lakh. This would surely put more money and more savings in the hands of the common man and fuel consumerism.
The new government seems committed to strengthen investor confidence. The ministers assurances to not introduce any changes retrospectively, besides creating a mechanism to issue clarification on grey areas, are investor-friendly and would help spur growth.
It is also heartening to see that the new government is finally moving ahead with the introduction of the long-pending goods & services tax (GST). The tax, which aims to replace a series of existing taxes such as excise duty, service tax and value added tax, will go a long way in streamlining tax administration and result in higher tax collection for the Centre and states. As per independent estimates, this will provide a stimulus to the economy and could push economic growth up by 2%.
The government has reduced excise duty on machinery used in the manufacture of fruit juices and on packaging machinery from 10% to 6%. This is a positive step. I also welcome the finance ministers renewed focus on improving urban infrastructure, which has been languishing so far. Providing good infrastructure in urban areas, which includes public transport, solid waste disposal, sewerage treatment and drinking water, were mentioned as thrust areas for the new government.
I am quite happy with the government continuing the focus on rural areas and initiating steps not just towards poverty alleviation, but also for skill development of the rural populace. These initiatives would help improve standards of living of people living in such areas, besides ensuring continued demand from rural areas.