Comprehensive Code on Resolution of Financial Firms to be Enacted



Comprehensive Code on Resolution of Financial Firms to be Enacted 

Allocation of Rs. 25,000 Crore Towards Recapitalisation of PSBS 

Target of Amount Sanctioned Under Pradhan Mantri Mudra Yojana is Proposed to be Increased to Rs 1,80,000 Crore 


While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that in the financial sector, a comprehensive Code on Resolution of Financial Firms will be enacted. Together with the Bankruptcy and Insolvency Law, this will fill a major systemic vacuum. This is a major reform measure. Announcing more financial sector reforms, he said new derivative products will be developed by SEBI in the commodity derivatives market.  Statutory basis will be provided for a Monetary Policy framework and a Monetary Policy Committee through the Finance Bill 2016. A Financial Data Management Centre will also be set up to facilitate integrated data aggregation and analysis in the financial sector.

SARFAESI Act is to be amended to strengthen Asset Reconstruction Companies. This will help in dealing with stressed assets of Banks. In the plan for revamping of Public Sector Banks (PSB), he announced :–

a.       allocation of Rs. 25,000 crore towards recapitalisation of PSBs;
b.      roadmap to be spelt out for consolidation of PSBs;
c.       considering reduction of Government equity in IDBI Bank to 49% of below;
d.      Debt Recovery Tribunals (DRTs) to be strengthened with computerized processing of court cases.
Target of amount sanctioned under Pradhan Mantri Mudra Yojana is proposed to increased to Rs 1,80,000 crore. General Insurance Companies will be listed in stock exchanges for improving transparency, accountability and efficiency. Comprehensive Central legislation to deal with Illicit Deposit Taking schemes will be enacted.

To provide better access to financial services, especially in rural areas, the government will undertake a massive nationwide rollout of ATMs and Micro ATMs in Post Offices over the next three years, Shri Jaitley announced.

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1500 Multi Skill Training Institutes to be set-up across the country, Rs.1,700 crore provided in the Budget 2016-17

Government to pay EPS contribution of 8.33% for all new employees for first three years of employment; Rs 1,000 crore earmarked in the Budget

100 Model Career Centres to be made operational by end of 2016-17

State Employment Exchanges to be linked with National Career Service Platform

The Government has decided to set-up 1500 Multi Skill Training Institutes across the country for which Rs 1,700 crore has been set aside in the Budget 2016-17. Announcing this in his Budget Speech in the Parliament here today, the Minister of Finance, Corporate Affairs and Information and Broadcasting, Shri Arun Jaitley said that it is the endeavour of the Government to bring entrepreneurship to the doorstep of youth through Pradhan Mantri Kaushal Vikas Yojana (PMKVY).

The Finance Minister said that Skill India Mission seeks to capitalize our demographic advantage. Since its launch, the National Skill Development Mission has created an elaborate skilling eco-system and imparted training to 76 lakh youth. He said that we have decided to set-up a National Board for Skill Development Certification in partnership with the industry and academia .We propose to further scale- up Pradhan Mantri Kaushal Vikas Yojana to skill one crore youth over the next three years, the Minister said.

The Finance Minister Shri Jaitley also stated that Entrepreneurship, Education and training will be provided in 2200 colleges, 300 schools, 500 government ITIs and 50 Vocational Training Centres through Massive Open Online Courses. Aspiring entrepreneurs, particularly those from remote parts of the country, will be connected to mentors and credit markets. (pg12/para66)

In another important announcement, Shri Jaitley said that in order to incentivize creation of new jobs in the formal sector, Government of India will pay the Employee Pension Scheme contribution of 8.33% for all new employees enrolling in EPFO for the first three years of their employment. The Scheme will be applicable to those with salary up to Rs.15,000 per month and a budget provision of Rs.1000 crore has been made for this.

Further, the Finance Bill, 2016 proposes to broaden and liberalize the scope of the employment generation incentive available under section 80JJAA of the Income Tax Act.

A National Career Service was launched in July, 2015. Already 35 million jobs seekers have registered on this platform. In the new Budget, the Government proposes to make 100 Model Career Centres operational by the end of 2016-17. It also proposes to inter-link State Employment Exchanges with the National Career Service platform.

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Measures for moving towards a pensioned society

While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that pension schemes offer financial protection to senior citizens. He proposed to make withdrawal up to 40% of the corpus at the time of retirement tax exempt in the case of National Pension Scheme(NPS). In case of superannuation funds and recognized provident funds, including EPF, the same norm of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made after 1.4.2016. Further, the annuity fund which goes to the legal heir after the death of pensioner will not be taxable in all three cases.

He also proposed a monetary limit for contribution of employer in recognized Provident and Superannuation Fund of Rs. 1.5 lakh per annum for taking tax benefit.

He proposed to exempt from service tax the Annuity services provided by the National Pension Scheme (NPS) and Services provided by EPFO to employees. Also, he proposed to reduce service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases.

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FM: Tax Proposals are aimed at Boosting Economic Growth and Employment Generation

The Union Finance Minister Shri Arun Jaitley announcing the tax proposals in the Union Budget today said boosting employment generation through economic growth is a main objective behind these proposals. Other objectives, he said, would be for incentivizing ‘Make in India’, to promote measures for moving towards a pensioned society and for promoting affordable housing.

Such provisions to boost economic growth and employment include-100% deduction of profits for 3 out of 5 years for start-ups, during April, 2016 to March 2019, with certain riders. Similarly to promote innovation, a special patent regime with 10% rate of tax on income from worldwide exploitation of patents developed and registered in India was proposed.

Non-banking financial companies shall be eligible for deduction to the extent of 5 % of its income in respect of provision for bad and doubtful debts.

The corporate income tax rate for the next financial year of relatively small enterprises i.e companies with turnover not exceeding Rs. 5 crores (in the financial year ending March 2015) is proposed to be lowered to 29 % plus surcharge and cess. The new manufacturing companies which are incorporated on or after 1.3.2016 are proposed to be given an option to be taxed at 25% plus surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation.

Service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by Ministry of Skill Development and Entrepreneurship are also proposed to be exempted.

The determination of residency of foreign company on the basis of Place of Effective Management (POEM) is deferred by one year.

To get more investment in Asset Reconstruction Companies (ARCs), which play a very important role in resolution of bad debts, a complete pass through income-tax to securitization trusts including trusts of ARCs has been proposed. The income will be taxed in the hands of the investors instead of the trust.    

The Finance Minister also enunciated a plan for phasing-out various exemptions as the corporate tax is proposed to be reduced from 30% to 25 % over a period. Such graduated plan includes 

a)                  The accelerated depreciation provided under IT Act will be limited to maximum 40 % from 1.4.2017.

b)                  The benefit of deductions for Research would be limited to 150% from 1.4.2017 and 100% from 1.4.2020

c)                  The benefit of section 10AA to new SEZ units will be available to those units which commence activity before 31.3.2020.

d)                 The weighted deduction under section 35CCD for skill development will continue up to 1.4.2020.  

Other objectives enunciated for his tax proposals are: Additional resource mobilization for agriculture, rural economy and clean environment, use of technology for creating accountability, simplification and rationalization of taxation and reduction in litigation for providing certainty in taxation. 

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FM: GDP Accelerates to 7.6%; Budget 2016-17 Built on Agenda ‘Transform India’

            While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that the growth of GDP has accelerated to 7.6% in the current Financial Year.  This was possible notwithstanding the contraction of global exports by 4.4% compared to 7.7% growth in the world exports during the last three years of the previous Government.  He said that the Global growth has slowed down from 3.4% in 2014 to 3.1% in 2015.  Financial markets have been battered and the global trade had contracted.  Amidst these global events, the Indian economy held its ground firmly, due to the inherent strengths and policies of the present Government.


The Finance Minister Shri Jaitley said that the IMF has hailed India as a ‘bright spot’, amidst a slowing global economy.  The World Economic Forum has commented that India’s growth is ‘extraordinarily high’.  He said that it could be achieved inspite of inheriting an economy of low growth, high inflation and zero investor confidence in Government ‘s capability to govern. 

The Finance Minister Shri Jaitley further said that CPI inflation which was 9.4% during the last three years of the previous Government had come down to 5.4%.  This was accomplished despite monsoon shortfall of 13% for two consecutive years.  Calling India’s external situation as robust, Shri Jaitley said that the Current Account Deficit had declined from 18.4 billion US dollars in the first half of last year to 14.4 billion this year, projected to be 1.4% of GDP by the end of this year.  India’s foreign exchange reserves are at the highest level of about 350 billion of US dollars. 

The Finance Minister affirmed the principle that money with Government belongs to the people and the Government has the sacred responsibility to spend it prudently and wisely for the welfare of people, especially for the poor and the downtrodden.  He said that the Plan expenditure at RE stage has been increased in 2015-16 in contrast to the usual practice of reducing it.  Shri Jaitley pointed-out three serious implications facing the Indian economy.  Firstly, we must strengthen our firewalls against the risks of further global slowdown and turbulence by ensuring macroeconomic stability and prudent fiscal management.  Secondly, since foreign markets are weak, we must rely on domestic demand and Indian markets to ensure that India’s growth does not slow down.  And thirdly, we must continue with the pace of economic reforms and policy initiatives to change the lives of people for the better.

The Finance Minister said that the Government has also to prioritise its expenditure  for the Financial Year 2016-17 on account of the recommendations of 7th Central Pay Commission and the implementation of Defence OROP.  Also, the 14the Finance Commission has reduced the Central share of taxes to 58% from 68%.   Shri Jaitley said that the government wished to enhance expenditure in the farm and rural sector, the social sector, the infrastructure sector and provide for recapitalisation of banks as these sectors need immediate action.

  



 The Finance Minister Shri Jaitley also said that the Government will undertake three major schemes to help the weaker section of the society.  The  Pradhan Mantri Fasal Bima Yojana (PMFBY) will help to protect the farmers from the natural disasters.  The farmer will pay a nominal amount of insurance premium and get the highest ever compensation the event of any loss suffered.  A health insurance scheme which protect about one-third of India’s population against hospitalization expenditure will also be announced.  A new initiative to ensure BPL families are provided with cooking gas connection, supported by a Government subsidy, will also be launched.

Shri Jaitley asserted that the priority of the government is to provide additional resources for vulnerable section, rural areas and social and physical infrastructure creation.  He said the Government shall also endeavour to continue with the ongoing reforms and ensure passage of Constitutional amendments to enable implementation of GST, passage of Insolvency and Bankruptcy law and other pending reform measures.  He also added that the Government shall enact a law to ensure that all benefits given by the government are conferred upon persons who deserve it, by a statutory backing to AADHAR platform.  He added, significant reforms like changes in the legislative framework relating to transport sector, incentivizing gas discovery and exploration, enactment of law to deal with resolution of financial firms, legal framework dispute resolution in PPP projects and public utility contracts, important banking sector reforms and public listing of general insurance companies and significant changes in FDI policy  are also on Government’s agenda.

The Union Finance Minister Shri Jaitley set the agenda for the Financial Year 2016-17 as ‘Transform India’.

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Important Announcements made by Union Finance Minister Shri Arun Jaitley in his Budget speech 2016-17



1.      Big Focus on Agriculture and Farmer’ Welfare

(i)           &nbs p;     Farmer’s income to be doubled by 2022.

(ii)           &nbs p;   28.5 lakh hectares will be brought under irrigation under Pradhan Mantri Krishi Sinchai Yojana.

(iii)           &nbs p; 89 irrigation projects, requiring Rs. 86,500 crore in next five years, to be fast tracked. 23 of these projects to be completed before 31st March, 2017.

(iv)           &nbs p; Dedicated Long Term Irrigation Fund will be created in NABARD with initial corpus of Rs. 20,000 crore.

(v)           &nbs p;   Total outlay on irrigation including market borrowings is R. 12,157 crore.

(vi)           &nbs p; Major programme for Sustainable Ground Water management proposed for multilateral funding at a cost of Rs. 6,000 crore.

(vii)           5 lakh farm ponds and dug wells in rain-fed areas and 10 lakh copost pits for production of organic manure will be taken up.

(viii)         Soil Health Cards will be given to 14 crore farm holdings by March, 2017.

(ix)           &nbs p; 2,000 model retail otlets of fertilizer companies with soil and seed testing facilities, will be opened in the next three years.

(x)           &nbs p;   Unified Agricultural Marketing E Platform to be dedicated to the Nation on the Birthday of Dr. Ambedkar on 14th April, 2016.

2.      Rs. 27,000 crore including State’s share to be spent on PMGSY in 2016-17. Target date of completion of PMGSY advanced from 2021 to 2019.

3.      Rs. 9 lakh crore will be given as Agricultural credit in 2016-17.

4.      FCI will undertake online procurement of food grains. This will bring transparency and convenience to farmers through prior registration and monitoring of procurement.

5.      Pashudhan Sanjeevani, an animal wellness programme, will be undertaken. Nakul Swasthya Patras to be issued.

6.      Rural Sector

(i)           &nbs p;     R. 2.87 lakh crore will be given as Grant in Aid to Gram Panchayats and Municpalities as per the recommendations of the 14th FC. This translates to Rs. 81 lakh per gram panchayat and over Rs. 21 crore per Municipality.

(ii)           &nbs p;   Every Block in drought and rural distress areas will be taken up under Deen Dayal Antoyodaya Mission.

(iii)           &nbs p; 300 Rurban Clusters will incubate growth Centres in Rural Area.

(iv)           &nbs p; All villages will be electrified by 1st May, 2018.

(v)           &nbs p;   A new Digital Literacy Mission scheme will be launched for rural India to cover around 6 crore households in next three years.

(vi)           &nbs p; Modernisation of Land Records through revamped National Land Records Programme.

(vii)           Rashtriya Gram Swaraj Programme to be launched.

7.      Targeted Delivery of Government subsidies and benefits to ensure that they reach the poor and the deserving.

(i)           &nbs p;     New law fpr targeted delivery of financial and other subsidies etc. using Aadhar framework will be enacted.

(ii)           &nbs p;   DBT in fertilizer will be launced on pilot basis.

(iii)           &nbs p; Of the total 5.35 lakh fair price shops in the country, 3 lakh shops to be automated by March,2017.

8.      MUDRA – Loan target of 1,80,000 crore in 2016-17.

9.      Social Sector

(i)           &nbs p;     Massive Mission to provide LPG connection to poor households will be launched. 1.5 crore poor households will benefit in 2016-17. Scheme will continue for two more years to cover a total of 5 crore BPL households. LPG connection to be given in the name of woman member of the family.

(ii)           &nbs p;   New Health Protection scheme will be launched. Health cover up to Rs. 1 lakh per family and additional Rs. 30,000 for senior citizens to be provided.

(iii)           &nbs p; 3000 stores under Prime Minister’s Jan Aushadhi Yojana will be opened in 2016- 17.

(iv)           &nbs p; National Dialysis Services Programme will be launched. Tax exemptions given to certain parts of dialysis equipments.

(v)           &nbs p;   A new Eco System for SC/ST entrepreneurs will be set up. SC/ST Hub to be set up in MSME Ministry.

10.  Education

(i)           &nbs p;     62 new Navaodaya Vidyalayas to be opened in remaining uncovered districts in next two years.

(ii)           &nbs p;   An enabling regulatory architecture will be provided to 10 public and 10 private institutions to emerge as world class teaching and research institutions.

(iii)           &nbs p; Higher Education Financing Agency will be set up with an initial capital base of Rs. 1,000 crore.

(iv)           &nbs p; Digital Depository will be set up for educational certificates, mark-sheets, awards etc.

11.  Skills

(i)           &nbs p;     1500 Multi Skill Training Institutes will be set up under Pradhan Mantri Kaushal Vikas Yojana

(ii)           &nbs p;   National Board for Skill Development Certification will be set up in partnership with industry and academia.

(iii)           &nbs p; Entrepreneurship education and training will be provided in 2200 colleges, 300 schools, 500 govt. it is and 50 vocational training centres through open online courses.

12.  Job Creation

(i)           &nbs p;     Government of India will pay EPS contribution of 8.33% for all new employees enrolling in EPFO for the first three years of employment. Applicable to those with salaries  of Rs. 15,000 per month

(ii)           &nbs p;   Section 80 JJAA of Income Tax Act being amended to broaden the scope of employment generation incentives.

(iii)           &nbs p; Interlinking of State Employment Exchanges with National Career Service Platform.

(iv)           &nbs p; Small and medium shops to be permitted to remain open all 7 days a week on voluntary basis. New jobs in retail sector.

13.  Measures in the sectors of Infrastructure, Investment, Banking, Insurance etc.

(i)           &nbs p;     Rs. 2,18,000 crore will be spent on capital expenditure of roads and railways in 2016-17.


Includes: Rs. 27,000 crore PMGSY

                     55,000 crore Road Transport and highway

                     15,000 crore NHAI Bonds

                     1,21,000 crore Railways

(ii)           &nbs p;   Unserved and underserved airstrips to be revived by AAI and also in partnership with State Governments.

(iii)           &nbs p; Road transport sector (passenger segment) to be opened up by removing permit system. This will benefit the poor and middle class, encourage new investment, promote start up entrepreneurs and create new jobs. This is a major reform measure.

(iv)           &nbs p; Discovery and exploration of fas in difficult areas will be incentivized by giving them calibrated marketing freedom. This is a major reform measure.

(v)           &nbs p;   To promote private participation in infrastructure projects, Public Utility (Resolution of Disputes) Bill will be introduced; and guidelines for renegotiation of PPP agreements will be issued, without compromising transparency.

(vi)           &nbs p; Changes in FDI Policy.

(vii)           For the benefit of farmers, 100% FDI through FIPB route will be permitted for marketing of food products, produced and manufactured in India. This will give big encouragement to food processing industry and create new jobs.

(viii)         Guidelines for strategic disinvestment have been approved and will be spelt out.

(ix)           &nbs p; Individual units of CPSEs can be disinvested to raise resources for investment in new projects.

(x)           &nbs p;   In the financial sector, a comprehensive Code on Resolution of Financial Firms will be enacted. Together will the Bankruptcy and Insolvency Law, this will fill a major systemic vacuum. This is a big reform measure.

(xi)           &nbs p; SARFAESI Act to be amended to strengthen Asset Reconstruction Companies. This will help in dealing with stressed assets of Banks.

(xii)           Public Sector Banks (PSB) – (a) Recapitalisation of PSBs; (b) roadmap to be spelt out for consolidation of PSBs; (c) considering reduction of Government equity in IDBI Bank to 49% of below; (d) DRTs to be strengthened with computerized processing of court cases.

(xiii)         General Insurance Companies will be listed in stock exchanges for improving transparency, accountability and efficiency.

(xiv)         Comprehensive Central legislation to deal with Illicit Deposit Taking schemes will be enacted.

14.  ‘Ek Bharat Shreshtha Bharat’ will be launched to link States and Districts.

15.  Technology Driven Platform for Government procurement of goods and services will be set up by DGS&D. This will improve transparency, efficiency and reduce cost of procurement.

16.  Fiscal Discipline

(i)           &nbs p;     Fiscal deficit target of 3.5% of GDP in 2016-17

(ii)           &nbs p;   Committee for review of FRBM Act.

(iii)           &nbs p; Removal of -/Non Plan classification from 2017-18

(iv)           &nbs p; Rationalisation of Central Plan Schemes. More than 1500 Central Plan schemes have been restructured to about 300 Central sector and 30 centrally sponsored Schemes.


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Fiscal Deficit Retained at 3.9 percent in RE 2015-16 and at 3.5 percent in BE 2016-17 

Adhering to the fiscal targets, the fiscal deficit in RE 2015-16 and BE 2016-17 have been retained at 3.9% and 3.5% of GDP respectively.  While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that he has weighed the policy options of either in favour of fiscal consolidation and stability or for a less aggressive consolidation and for boosting growth.  He has decided that prudence lies in adhering to the fiscal targets but while doing so, it has been ensured that the development agenda has not been compromised.

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100 Crore each allocated for celebrating Birth Centenary of Pt Deen Dayal Upadhyay and 350th Birth Anniversary of Guru Gobind Singh 

General Budget 2016-17 has proposed allocation of initial sums of Rs. 100 Crore each allocated for celebrating Birth Centenary of Pt Deen Dayal Upadhyay and 350th Birth Anniversary of Guru Gobind Singh. While presenting the General Budget 2016-17 in Lok Sabha today, the Union Finance Minister Shri Arun Jaitley said that in 2017, the country will also celebrate the 70th Anniversary of our Independence. Government will chalk out milestones for nation’s journey beyond the 70th Anniversary of Independence.   

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