Union Budget 2016 Is Pro-Farmer, Pro-Agriculture & Socialist; But Markets React Negatively As Sensex Falls Flat


#Budget2016Finance Minister Arun Jaitley announced the Union Budget for 2016-17 at the Parliament today. There was intense speculation regarding the budget, as business community, traders, and investors waited with bated breath about new announcements and schemes which will drive the Indian economy.

Overall, the budget can be described as pro-farmer, pro-women, pro-youth with dark shades of socialist policies. Total of Rs 35984 crore has been allocated for agriculture sector, and promises made to cultivate 28.5 lakh hectare of land by 2016 end.

However, markets reacted negatively to the budget as by the time FM Arun Jaitley finished the budget, BSE Sensex had started bleeding as it lost 500 points. At one time, both NSE and BSE had dropped to their 52-week low, before recovering by the end of day.

Overall, BSE lost 152 points today, or 0.5% while NSE lost 47 points; which is not a good sign for the market.

Here are some major highlights:

Tax Announcements:

  • Those who are earning below Rs 5 lakh per annum will get a tax rebate of Rs 3000; this will benefit around 1 crore salaried employees pan India
  • Service tax exempted from general insurance under  Niramayi Swasthya Bima Yojana
  • Good news for those who are not having their own home: Deduction raised from Rs.24,000 to Rs.60,000 under Section 88G
  • Make in India products, notably electronics goods like mobile, LED etc will have less service tax
  • No change in personal income tax slab
  • Additional 0.5% cess called ‘Krishi Kalyan Tax’ for benefitting farmers. This would be applied on all services chargeable by service tax.

Entrepreneurs & Startups:

  • No tax for startups for first three 3 years of their existence (comes with certain riders)
  • Tax exemptions on patents which can earn money worldwide
  • Long term capital gains regime reduced from three to two years (a much needed respite for VCs)
  • Non-banking financial companies deduction to the extent of 5% of its income in respect of provision for bad and doubtful debts.
  • Companies would be registered within one day from now on
  • Rs 1.8 lakh crore to be allocated under MUDRA Bank for entrepreneurs
  • Rs 500 crore allocated to promote entrepreneurship among SC/ST community
  • SMEs which have turnover of less than Rs 5 crore would be taxed at 29% + surcharge; while Manufacturing startups would be taxed at 25% (capped)


  • Overall, Rs 27,000 crore to be spent on roadways pan-India
  • 2.23 lakh kms of highways would be built, at a pace of 100 kms/day
  • Rs 55,000 crore to be spent on roads and highways; overall total of Rs 97,000 crore to be spent on road construction
  • Rs 2.21 lakh crore dedicated for infrastructure projects across India
  • 100% FDI in those food businesses, which produces and markets their products in India

Products which became expensive:

Cigarettes and other tobacco products; Imported commercial vehicles, SUVs, Cement

Aerated, flavoured drinks and packaged water; Plastic bags; Business and executive class air travel; Visit to amusement and theme park; Music concerts; Liquor, chit fund and lottery

Products which became cheap:

Leather footwear priced above Rs. 1,000 per pair; Locally made mobile phones, LED/LCD panels, LED lights and LED Lamps; Solar Water heater; Pacemakers, ambulance services; Computer tablets; Agarbattis; Microwave ovens; Refrigerator compressors

Peanut butter, packaged fruits and vegetables; Visit to museum, zoo and national park


Besides, several interesting announcements were made in education, power, banking and health sector as well, which were primarily driven towards a socialist approach.

Another interesting thing: There was not even a mention of expenses related to defense sector. Last year, FM Arun Jaitley had announced a budget of Rs 2.46 lakh crore for defense sector.

You can access the complete budget speech here.

Do share your opinions and viewpoints related with #Budget2016 right here.

Related: Here are 9 fascinating facts about Union Budget of India

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