Press Information Bureau
Government of India
Ministry of Finance
29-February-2016 13:03 IST
Budget 2016-17 presented in Parliament; major focus on agriculture and farmers’ welfare 28.5 lakh Hectares to be brought under irrigation

Rs. 2.87 lakh crore Grant in Aid to Gram Panchayats and Municipalities

100% village electrification by 1st May 2018

A massive mission announced to provide LPG connection to poor households

A massive mission announced to provide LPG connection to poor households

New Health Protection Scheme to provide Health cover upto Rs. 1 lakh per family

1500 Multi Skill Training Institutes to be set up

Emphasis on Infrastructure Development

Total expenditure projected at Rs. 19.78 lakh crore



Major focus on agriculture and farmers’ welfare, massive mission to provide LPG connection to poor households, a new health protection scheme, increased outlay for infrastructure, Rs. 2.87 Lakh crore Grant in Aid to Gram Panchayats and Municipalities, setting up of 1500 Multi Skill Training Institutes and incentives for jobs creation are major highlights of the General Budget 2016-17 presented in Lok Sabha today by Union Finance Minister Sh. Arun Jaitley. Announcing a number of new schemes and increasing the allocation in various sectors Sh. Jaitley underlined that the Government is firm on its course towards fiscal consolidation without compromising on its development agenda. He said 3.5% fiscal deficit is targeted for FY 2016- 17.

Stating that the IMF has hailed India as a ‘bright spot’ amidst a slowing global economy, the Finance Minister said the growth of GDP has now accelerated to 7.6% compared to the last three years of the previous Government when growth had decelerated to 6.3% . He said this was accomplished despite two consecutive years of monsoon shortfall of 13% compared to normal rainfall in the last three years of the previous Government. He added that the country’s external situation is robust and the Current Account deficit has declined from 18.4% billion US dollars in the first half of last year to 14.4 billion this year.

While cautioning about the risks of further global slowdown and mounting turbulence, he said this complicates the task of economic management for India. He said the financial years 2015-16 and 2016-17 have been and will be extremely challenging for Government expenditure. He said the next financial year will cast an additional burden on account of the recommendations of the 7th Central Pay Commission and the implementation of Defence OROP. Stating that the Government has to prioritise its expenditure, Sh. Jaitley said the Government wants to enhance expenditure in the farm and rural sector, the social sector, the infrastructure sector and provide for recapitalisation of the banks.

The Finance Minister said that the Government will undertake three major schemes to help the weaker sections. He said the Pradhan Mantri Fasal Bima Yojana has already been announced. The farmer will pay a nominal amount of insurance premium and get the highest ever compensation in the event of any loss suffered. Sh. Jaitley announced a health insurance scheme which will protect one-third of India’s population against hospitalization expenditure. He also announced that the Government is launching a new initiative to ensure that the BPL families are provided with a cooking gas connection, supported by a Government subsidy.

Shri Jaitley said the Government will undertake significant reforms such as the enactment of a law to ensure that all Government benefits are conferred upon persons who deserve it, by giving a statutory backing to the AADHAR platform. He added that significant changes will be brought in the legislative framework relating to the transport sector so as to free it from constraints and restrictions. Other important reforms, the Finance Minister announced included incentivizing gas discovery and exploration by providing calibrated marketing freedom; enactment of a comprehensive law to deal with resolution of financial firms; providing legal framework for dispute resolution in PPP projects and public utility contracts; undertaking important banking sector reforms and public listing of general insurance companies and undertaking significant changes in FDI policy.

The Finance Minister said the agenda for the next year will be to ‘Transform India’ in this direction. He highlighted that the budget proposals are built on this transformative agenda with nine distinct pillars which include: Agriculture and Farmers’ Welfare; Rural Sector; Social Sector including Healthcare; Education, Skills and Job Creation; Infrastructure and Investment; Financial Sector Reforms; Governance and Ease of Doing Business; Fiscal Discipline and Tax Reforms.

Sh. Jaitley announced that the Government will reorient its interventions in the farm and non-farm sectors to double the income of the farmers by 2022. He said total allocation for Agriculture and farmers’ Welfare is Rs. 35,984 crore. Stating that the ‘Pradhan Mantri Krishi Sinchai Yojana’ has been strengthened and will be implemented in mission mode, he said 28.5 lakh hectares will be brought under irrigation under this Scheme. He also underlined that the implementation of 89 irrigation projects under AIBP, which have been languishing will be fast tracked.

The Finance Minister announced creation of a dedicated Long Term Irrigation Fund in NABARD with an initial corpus of about Rs. 20,000 crore. To achieve all these, a total provision of Rs. 12,517 crore has been made through budgetary support and market borrowings in 2016-17. He also said, simultaneously a major programme for sustainable management of ground water resources has been prepared with an estimated cost of Rs. 6,000 crore and proposed for multilateral funding. The Minister said at least 5 lakh farm ponds and dug wells in rain fed areas and 10 lakh compost pits for production of organic manure will be taken up by making use of allocations under MGNREGA.

Sh. Jaitley said the Soil Health Card Scheme will cover all 14 crore farm holdings by March 2017. He said 2,000 model retail outlets of fertilizer companies will be provided with soil and seed testing facilities during the next three years.

The Finance Minister announced that the allocation under Pradhan Mantri Gram Sadak Yojana has been increased to Rs. 19,000 crore and it will connect remaining 65,000 eligible habitations by 2019.

In the budget special focus has been given to ensure adequate and timely flow of credit to the farmers. Against the target of Rs. 8.5 lakh crore in 2015-16, the target for agricultural credit in 2016-17 will be an all-time high of Rs. 9 lakh crore. To reduce the burden of loan repayment on farmers, a provision of Rs. 15,000 crore has been made in the BE 2016-17 towards interest subvention.

The Finance Minister informed that for effective implementation of Prime Minister Fasal Bima Yojana, Rs. 5,500 crore have been provided in the Budget 2016-17. He said to make dairying more remunerative to the farmers, four new projects will be taken up: First the ‘Pashudhan Sanjivani’, an animal wellness programme and provision of Animal Health Cards (‘Nakul Swasthya Patra’); Second , an Advanced breeding technology; Third, Creation of ‘E-Pashudhan Haat’, an e market portal for connecting breeders and farmers; and Fourth, a National Genomic Centre for indigenous breeds. These projects will be implemented at a cost of Rs. 850 crores over the next few years.

Regarding rural sector, Sh. Jaitley announced that a sum of Rs. 2.87 lakh crore will be given as Grant in Aid to Gram Panchayats and Municipalities. It will translate to an average assistance of over Rs. 80 lakh per Gram Panchayat and over Rs. 21 crore per Urban Local Body.

Sh. Jaitley said every block under drought and rural distress will be taken up as an intensive Block under the Deen Dayal Antyodaya Mission. He announced allocation of Rs. 38,500 crore for MGNREGS. He said 300 Rurban Clusters will be developed under the Shyama Prasad Mukherjee Rurban Mission. He declared that the Government is committed to 100% village electrification by 1st May, 2018. Regarding Swachh Bharat Mission, Sh. Jaitley said Rs. 9,000 crore has been provided for it. He said a new Digital Literacy Mission Scheme for rural India will cover around 6 crore additional households within the next 3 years. In order to develop governance capabilities of Panchayati Raj Institutions on the Sustainable Development Goals, the Minister announced a new scheme namely ‘Rashtriya Gram Swaraj Abhiyan”, for which Rs. 655 crore is being set apart. For rural development as a whole, Rs. 87,765 crore have been allocated.

The Finance Minister announced a massive mission to provide LPG connection in the name of women members of poor households for which Rs. 2000 crore have been earmarked. This will benefit about 1 crore 50 lakh households below the poverty line in 2016-17. The Scheme will be continued for at least two more years to cover a total of 5 crore BPL households.

Sh. Jaitley also announced a new health protection scheme which will provide health cover up to Rs. One lakh per family for economically weak families. For senior citizens of age 60 years and above belonging to this category, an additional top-up package up to Rs. 30,000 will be provided. In order to make quality medicines available at affordable prices, 3000 stores under Prime Minister’s Jan Aushadhi Yojana will be opened during 2016-17. He said that a ‘National Dialysis Services Programme’ will be started to provide dialysis services in all district hospitals.

In the area of education, the Finance Minister said allocation under Sarva Shiksha Abhiyan will be increased. 62 new Navodaya Vidyalayas will be opened in the remaining uncovered districts over the next two years. In order to empower Higher Educational Institutions to help them become world class teaching and research institutions, an enabling regulatory architecture will be provided to ten public and ten private institutions to emerge as world-class Teaching and Research Institutions. The Finance Minister said that the Government has decided to set up a Higher Education Financing Agency (HEFA) with initial capital base of Rs. 1,000 crore.

The Finance Minister while laying emphasis on skill development said the Government wants to bring entrepreneurship to the doorsteps of youth through Pradhan Mantri Kaushal Vikas Yojana (PMKVY). 1500 Multi Skill Training Institutes will be set up for which Rs. 1700 crore have been set aside.

Shri Jaitley said that in order to incentivize creation of new jobs in the formal sector, the Government 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. This will incentivize the employers to recruit unemployed persons and also to bring into the books the informal employees.

The Finance Minister laid special emphasis on Infrastructure and Investment. He said the process of road construction has speeded up. An allocation of Rs. 55,000 crore in the Budget for Roads and Highways has been proposed which will be further topped up by additional Rs. 15,000 crore to be raised by NHAI through bonds. The total investment in the road sector including PMGSY allocation would be 97,000 crore during 2016-17. He said together with the capital expenditure of the Railways, the total outlay on roads and railways will be Rs. 2,18,000 crore. He said 10,000 kms. of National Highways are expected to be approved in 2016-17. He further said abolition of permit-raj will be the medium term goal. The Government will enact necessary amendments in the Motor Vehicles Act and open up the road transport sector in the passenger segment. Shri Jaitley said, an enabling eco-system will be provided for the States which will have the choice of adopting the new legal framework.

In the port sector, the Finance Minister said the Sagarmala Project has already been rolled out. The Government is planning to develop new greenfield ports. The work on National Waterways is also being expedited. He said Rs. 800 crore has been provided for these initiatives.

In the Civil Aviation Sector action plan is being drawn up to revive unserved and underserved airports. There are about 160 airports and air strips with the State Governments which can be revived at an indicative cost of Rs. 50 crore to Rs. 100 Crore each.

In the power sector, he said the Government is drawing up a comprehensive plan, spanning next 15 to 20 years to augment the investment in nuclear power generation.

To augment infrastructure spending further, the Government will permit mobilization of additional finances to the extent of Rs. 31,300 crore by NHAI, PFC, REC, IREDA, NABARD and Inland Water Authority through raising of Bonds.

The Minister announced reforms in FDI Policy in the areas of Insurance and Pension, Asset Reconstruction Companies, Stock Exchanges etc. He said 100% FDI will be allowed through FIPB route in marketing of food products produced and manufactured in India. The Minister said a new policy for management of Government investment in Public Sector Enterprises, including disinvestment and strategic sale has been approved.

Shri Jaitley announced a number of financial sector reforms. A comprehensive Code on Resolution of Financial Firms will be introduced as a Bill in the Parliament during 2016-17. He said the RBI Act 1934 is being amended to provide statutory basis 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.

Expressing concern over problem of stressed assets in Public Sector Banks, the Minister said several steps have been taken in this regard. He said to support the banks, an allocation of Rs. 25,000 crore is being proposed towards recapitalization of Public Sector Banks.

Stating that the Government is giving unparalleled emphasis to good governance, Shri Jaitley said a task force has been constituted for rationalization of human resources in various Ministries. He added a comprehensive review and rationalization of autonomous bodies is also underway. The Minister said a bill will be introduced for Targeted Delivery of Financial and Other Subsidies Benefits and Services by using the Aadhar framework. He said it is proposed to introduce DBT on pilot basis for fertilizer in a few districts across the country. The Minister said automation facilities will be provided in 3 lakh Fair Price Shops by March 2017.

Shri Jaitley announced that “Ek Bharat Shreshtha Bharat” programme will be launched to link States and Districts in an annual programme that connects people through exchanges in areas of language, trade, culture, travel and tourism.

On the fiscal situation in the country the Minister said the prudence lies in adhering to the fiscal targets. Consequently, he said, the fiscal deficit in RE 2015-16 and BE 2016-17 have been retained at 3.9% and 3.5% of GDP respectively. He added a redeeming feature of this year’s Budget is that the Revenue Deficit target has been improved upon from 2.8% to 2.5% of GDP in RE 2015-16.

The total expenditure in the Budget for 2016-17 has been projected at Rs. 19.78 lakh crore, consisting of Rs. 5.50 lakh crore under Plan and Rs. 14.28 lakh crore under Non-Plan.