India unveils budget with focus on rural economy

India said on Thursday it expected economic growth to surge above 8 percent as it announced a 2018/19 budget that allocated billions of dollars for rural infrastructure and unveiled a health insurance programme for around 500 million poor.

In his last full year budget before a national election that must be held by May 2019, Finance Minister Arun Jaitley spoke of massive spending on rural infrastructure, to win over voters in the countryside where two-thirds of India's 1.3 billion people live.

Here are the highlights of Jaitley's budget for the year starting April 1.

Fiscal deficit

* Fiscal deficit for 2017/18 seen at 3.5 percent of GDP

* Fiscal deficit for 2018/19 seen at 3.3 pct of GDP

* To use fiscal deficit target as key operational parameter for fiscal consolidation GROWTH

* Estimates 7.2 to 7.5 percent GDP growth in second half of current fiscal year

* Finance minister says "firmly on path to achieve 8 percent plus growth soon"

Expenditure

* Revised expenditure for 2017/18 at 21.57 trillion rupees

* Total expenditure for 2018/19 seen at 24.42 trillion rupees

* Estimates 1.38 trillion rupees expenditure on health, education and social security

* Railway capital expenditure set at 1.49 trillion rupees for 2018/19 TAXATION

* To reduce corporate tax to 25 percent for companies who report turnover of up to 2.5 billion rupees

India's Finance Minister Arun Jaitley holds his briefcase as he arrives at the parliament to present the federal budget in New Delhi, India, Feb 1, 2018. Reuters

* Finance minister says "tax buoyancy more than expected, thanks to greater compliance"

* Proposes bringing listed entities under long term capital gains tax

* Long-term capital gains exceeding 100,000 rupees to be taxed at 10 percent

* Proposes to raise import tax on mobile phones to 20 percent from 15 percent

* To raise health and education cess to 4 percent from 3 percent

Borrowing

* Gross market borrowing seen at 6.06 trillion rupees in 2018/19

* Net market borrowing seen at 4.62 trillion rupees in 2018/19

* Government to switch 280.6 billion rupees of bonds in 2018/19

Infrastructure

* To spend 14.34 trillion Indian rupees ($225.50 billion) on rural infrastructure

Banking/Lending

* To soon announce measures to address bad loans of small and medium enterprises

* Proposes setting up 3 trillion rupees plan for lending for small enterprises

* Reserve Bank of India Act being amended to provide the central bank with leeway to manage excess liquidity

Divestment/Consolidation

* To merge government insurance companies into a single entity

* Finance minister says divestment target for 2017/18 has been exceeded, to reach 1 trillion rupees

* Divestment target for 2018/19 set at 800 billion rupees

Agriculture

* Finance minister says will focus on strengthening rural, agriculture economy

* Sets 10 trillion rupees to 11 trillion rupees credit for "agricultural activities"

* Minimum support price of all crops to be increased to at least 1.5 times of production cost

* Export of agriculture commodities to be liberalised

* To give 100 percent tax deduction for the first five years to companies registered as farmer producer companies with a turnover of 1 billion rupees and above

People stand in front of the parliament building in New Delhi, India, Feb 1, 2018. Reuters

Gold

* To formulate a comprehensive gold policy

* To revamp gold monetisation scheme

Health/Pollution

* To provide 500,000 rupees per family annually for medical reimbursement under National Health Protection Scheme. Finance minister says the plan will protect 500 million poor people and will be world's largest health protection scheme.

* To implement special schemes for governments around Delhi to address air pollution

* Removal of crop residue to be subsidized in order to tackle the problem of pollution due to burning of crop residue

Finance minister comments

* "We are now a $2.5 trillion economy, and we are firmly on path to achieve 8 percent plus growth soon".

* "We are not only focussing on 'Ease of Doing Business' but also 'Ease of Living'".

* "Government to take all steps to eliminate use of cryptocurrencies which are being used to fund illegitimate transactions".