Budget 2018 maintained a fair balance between fiscal prudence and the developmental needs of a fast-growing nation.
Budget 2018 maintained a fair balance between fiscal prudence and the developmental needs of a fast-growing nation. It reflects the government's emphasis on rural development and empowerment as a growth driver, with a focus on healthcare, education, infrastructure, social sectors and Ujjwala. The thrust continues to be on developmental expenditure through higher tax collections by expanding the direct and indirect tax base. As regards the oil and gas sector, overall there is no change in excise duty on petroleum products. The change has been only in the nomenclature of duty from ‘additional excise duty' to ‘road and infrastructure cess'. While reducing the excise duty amount by Rs 2 per litre on petrol and diesel, there is an increase in the rate of road and infrastructure cess to Rs 8 per litre without any change in the total duty. Hence, it will not have any impact on the pump price of petrol or diesel. However, in the case of crude oil, there is a change in NCCD (National Calamity Contingent Duty) from the earlier rate of Rs 51.5 to Rs 55 per metric tonne.
The inclusion of petrol, diesel and ATF under the ambit of GST is, in any case, to be considered by the GST Council separately. The other direct measures in the oil and gas sector pertain to increase in the target for release of deposit-free LPG cooking gas connections to women from BPL households under Pradhan Mantri Ujjwala Yojana (PMUY) from five crore to eight crore. The three OMCs led by Indian Oil have already released about 3.3 crore PMUY connections since May 2016, achieving over 60% of the current target of five crore connections.
The increase in target to eight crore is a welcome step and will go a long way in improving the health and wellbeing of more BPL families, especially in rural areas. Indian Oil will once again be at the forefront in the implementation of this scheme and will ensure that the target is met within time. On the direct taxes front, long-term capital gains on cross holdings in oil PSUs, if any, from this Budget date, will now be subject to 10% tax. Besides, there is a marginal increase in corporate tax incidence due to increase in cess from 3% to 4%.
The government's ambitious agenda under Project UDAN, with enhanced regional connectivity, and multi-fold increase in airport capacities, will create additional demand for aviation fuels and services. There are several measures for boosting other sectors. For example, the biggest healthcare scheme covering 50 crore citizens under the National Health Protection Scheme and the intention of the government to ensure that farmers' incomes are 1.5 times the cost of production would enhance their well-being and disposable incomes. Ambitious plans for construction of 35,000 km of roads under phase-1 of Bharatmala project, and houses and toilets at a never before scale will also give the desired boost to the connected sectors in particular and the overall economy and well-being of the people in general.