The government on Friday said the 2016-17 Budget will have to make provision of Rs 1.10 lakh crore for implementation of Seventh Pay Commission recommendations and One Rank One Pension (OROP) scheme along with providing more incentives for the agricultural sector.
“During the financial year 2016-17, the central government has to make provision for about Rs 1.10 lakh crore in order to meet the liabilities on account of implementation of Seventh Pay Commission recommendations and One Rank One Pension Scheme,” finance minister Arun Jaitley said while addressing the meeting of Consultative Committee on Budget Suggestions.
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The finance minister added that even though the expenditure has been more than the Budget estimate this year, the government will manage its fiscal deficit targets.
“We will be able to contain the fiscal deficit as per the target fixed for the current financial year 2015-16…this was also the first time that the real expenditure amount was higher than the Budget proposal…this year we have spent more but still, we will very well manage our deficit targets,” a finance ministry statement said.
Concerns of a slippage from fiscal consolidation road map have surfaced due to a likely shortfall in direct tax collections and disinvestment proceeds this year.
The Seventh Pay Commission has recommended 23.55 per cent overall hike in pay, allowances and pensions of government employees with effect from January 1, 2016. The government on Wednesday had said OROP scheme will cost Rs 7,500 crore per year as against the earlier estimate of Rs 8,300 crore and that the defence pension outlay will increase by 20 per cent in 2016- 17.
In February last year, Jaitley had redrawn the fiscal consolidation road map, stretching the time to reach the fiscal deficit figure of 3 per cent of GDP from two years to three years and setting the fiscal deficit target at 3.9 per cent for 2015-16, 3.5 per cent for 2016-17 and 3 per cent for 2017-18.
Highlighting the low farm growth in last two years due to insufficient monsoons, the finance minister said “highest ever” amount was provided to states for drought relief during this financial year and more incentives will be given next year to increase farm productivity.
Commenting on India’s declining exports, Jaitley said the country’s economy has been affected due to “uncertain and fragile situation” of the world economy. But, India continues to be “one of the fastest growing economies in the world” and there is still potential to grow at a “much faster pace.”
He added, “silver lining is low international commodities and oil prices which in turn has helped in better macroeconomic situation of the country.”
Increase in tax exemption limit for salaried class from existing Rs 2.5 lakh to Rs 4 lakh, more stress on widening of tax base, severe punishment for those evading taxes, increase in threshold limit for mandatory PAN card requirement for any transaction above Rs 2 lakh to Rs 5 lakh, were among the several suggestions for Budget made during the meeting.
The participants also suggested raising service tax exemption limit from Rs 10 lakh to Rs 25 lakh, exemption of sale receipts and skill development related education institutions from service tax and accountability of assessing officers for passing unreasonably high tax liability orders which are later turned down by the Appellate authorities.
Higher allocation for agricultural sector, more clarity in crop insurance scheme, relief to industries to set up sewage and affluent treatment plants in order to keep the environment clean were among the other suggestions made for next year’s Budget.