The 2018 Union Budget of India (

ISO ISO is the most common abbreviation for the International Organization for Standardization. ISO or Iso may also refer to: Business and finance * Iso (supermarket), a chain of Danish supermarkets incorporated into the SuperBest chain in 2007 * Iso ...

: ) was the annual financial statement (AFS), demand for grants, appropriation bill and finance bill of India for the financial year 2018–19. It was presented to

Parliament In modern politics, and history, a parliament is a legislative body of government. Generally, a modern parliament has three functions: representing the electorate, making laws, and overseeing the government via hearings and inquiries. Th ...

on 1 February 2018 by

Finance Minister A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation. A finance minister's portfolio has a large variety of names around the world, such as "treasury", ...

Arun Jaitley Arun Jaitley (28 December 1952 – 24 August 2019) was an Indian politician and attorney. A member of the Bharatiya Janata Party, Jaitley served as the Minister of Finance and Corporate Affairs of the Government of India from 2014 to 2019. Jai ...

Premise

The 2018 budget was considered to be a crucial one, as it would be the first since the rollout of the Goods and Service Tax (GST) regime in India. It was widely expected that the budget would either increase the exemption limit, or introduce a standard deduction for salaried people to reduce the tax burden, in addition to a reduction of the tax rate for the – slab from 20% to 10%, and an increase in the 30% band above . The budget also came on the heels of a cut in the corporate tax rate in the

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. Printing of the budget began on 20 January 2018 with the traditional ''Halwa'' ceremony.

Significant announcements

The budget contained a number of significant announcements. It included a healthcare programme called the ''National Health Protection Scheme'' (''

Ayushman Bharat Ayushman Bharat Pradhan Mantri Jan Arogya Yojana ( or PM-JAY'';'' also referred to as Ayushman Bharat National Health Protection Scheme or NHPS) is a national public health insurance fund of the Government of India that aims to provide free acc ...

'') to cover 10 crore (100 million) poor families. The Government proposed to contribute 12% to the Employees' Provident Fund for new employees for three years. It was proposed that the medical allowance and transportation allowance be replaced by a standard deduction of for salaried employees. The allocation to the Ministry of Defence was , with to be spent on the day-to-day running of the armed forces, and on modernisation, with the rest being allocated for pensions. There was no reduction in personal

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

rates, and the Cess on income tax was to be increased from 3% to 4%. A 10% tax on long-term capital gains (LTCG) was reintroduced after a 14-year absence. The Corporate tax was reduced from 30% to 25% for companies with turnover up to . Customs duties were increased for various products. A special scheme to tackle

air pollution in Delhi The air quality in Delhi, the capital territory of India, according to a WHO survey of 1,650 world cities, and a survey of 7,000 world cities by the US-based Health Effects Institute in August 2022, is the worst of any major city in the world. ...

was also introduced. The salaries of

Members of Parliament A member of parliament (MP) is the representative in parliament of the people who live in their electoral district. In many countries with bicameral parliaments, this term refers only to members of the lower house since upper house members of ...

were doubled and their total emoluments are likely to go up from Rs 1.4 lakh to Rs 2.3 lakh per month. Further, the salaries will be increased every five years.

Reactions

Reaction to the budget was mixed-to-positive.

Political

Political reaction to the budget was mixed.

Bharatiya Janata Party The Bharatiya Janata Party (BJP; ; ) is a political party in India, and one of the two major Indian political parties alongside the Indian National Congress. Since 2014, it has been the ruling political party in India under Narendra Mod ...

(BJP) leader and

Prime Minister A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister i ...

Narendra Modi Narendra Damodardas Modi (; born 17 September 1950) is an Indian politician serving as the 14th and current Prime Minister of India since 2014. Modi was the Chief Minister of Gujarat from 2001 to 2014 and is the Member of Parliament fro ...

said that the budget is "development-friendly," focused on the needs of the rural areas and will strengthen the vision of a "new-India". The

Congress A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of ...

leader, former

prime minister A prime minister, premier or chief of cabinet is the head of the cabinet and the leader of the ministers in the executive branch of government, often in a parliamentary or semi-presidential system. Under those systems, a prime minister i ...

and noted economist Manmohan Singh suggested that the arithmetic behind the budget was "faulty". The general secretary of the

Communist Party of India (Marxist) The Communist Party of India (Marxist) (abbreviated as CPI(M)/CPIM/CPM) is a Marxist–Leninist communist political party in India. It is the largest communist party of India in terms of membership and electoral seats and one of the na ...

(CPI (M)),

Sitaram Yechury Sitaram Yechury (born 12 August 1952) is an Indian marxist politician and a leader of the Communist Party of India (Marxist). He is a member of the Politburo of the Communist Party of India (Marxist), the largest communist party in India. Ea ...

said the budget was "unconnected to ground realities". Andhra Pradesh Chief Minister Sri.N.Chandra Babu Naidu is not satisfied with the budget planning as it completely ignored the special status and special package for the state. Aam Aadmi Party (AAP) leader and

chief minister of Delhi The chief minister of the National Capital Territory of Delhi is the head of government of the National Capital Territory of Delhi. According to the Constitution of India, the lieutenant governor is the National Capital Territory of Delhi's ''d ...

Arvind Kejriwal Arvind Kejriwal (Hindi: �ɾʋin̪d̪ ked͡ʒɾiːʋaːl born 16 August 1968) is an Indian politician, former bureaucrat, and activist who is the 7th and current Chief Minister of Delhi since February 2015. Currently, he is the national co ...

said on

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that the budget contained nothing for the middle class and traders. Chief Minister of Bihar,

Nitish Kumar Nitish Kumar (born 1 March 1951) is an Indian politician, who is serving as Chief Minister of Bihar since 22 February 2015, having previous held the office from 2005 to 2014 and for a short period in 2000. The leader of the Janata Dal (Unit ...

, Janta Dal (United) (JDU) leader, praised the budget for the proposals on minimum support price for farmers and the healthcare scheme.

leader and former

finance minister A finance minister is an executive or cabinet position in charge of one or more of government finances, economic policy and financial regulation. A finance minister's portfolio has a large variety of names around the world, such as "treasury", ...

P. Chidambaram Palaniappan Chidambaram (born 16 September 1945), better known as P. Chidambaram, is an Indian politician and lawyer who currently serves as Member of Parliament, Rajya Sabha. He served as the Chairman of the Parliamentary Standing Committee ...

said that Finance Minister Arun Jaitley had failed the fiscal consolidation test, and that there was no relief for the average taxpayer.

Stock market

Both of India's national indices, the

BSE SENSEX The BSE SENSEX (also known as the S&P Bombay Stock Exchange Sensitive Index or simply SENSEX) is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange. The 30 ...

and NIFTY 50, fell sharply in the aftermath of the budget. The government, however, said that the fall in the stock market was not solely due to the budget. Finance and

Revenue Secretary Secretary to the Government of India, often abbreviated as Secretary, GoI, or simply as Secretary, is a post and a rank under the Central Staffing Scheme of the Government of India. The authority for the creation of this post solely rests with ...

, Dr.

Hasmukh Adhia Hasmukh Adhia, IAS (born 3November 1958) is an Indian Banker and a civil servant. He is one of the key persons behind the architecture and roll-out of the Goods and Services Tax & Demonetization scheme announced in 2016. He is an Indian Adminis ...

said that fall in stock indices was due to global market meltdown, and not because of the reintroduction of LTCG tax, he added the government will look into the slump.

Others

Credit rating agency A credit rating agency (CRA, also called a ratings service) is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely principal and interest payments and the likelihood of Default (finance), default ...

, Fitch, said that the budget, whilst supporting growth, does not address the problem of fiscal consolidation, and leaves the problem of India's relatively weak finances, to the next government. Economic Affairs Secretary,

Subhash Chandra Garg Subhash Chandra Garg (IAST: ) (born 16 October 1960) is a 1983 batch IAS officer of Rajasthan cadre. He served as Economic Affairs Secretary and Finance Secretary of India. He has also served as an executive director in the World Bank. Education ...

, said, that the government would try to convince

credit rating agencies A credit rating agency (CRA, also called a ratings service) is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely principal and interest payments and the likelihood of default. An agency may ra ...

, like

Standard and Poor's S&P Global Ratings (previously Standard & Poor's and informally known as S&P) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks, bonds, and commodities. S&P is cons ...

and Fitch, on its commitments to fiscal consolidation.

References

External links

{{Union budget of India Union budgets of India 2018 in Indian economy 2018 government budgets Modi administration