Making a strong re-election pitch, the Narendra Modi government on February 1 announced the biggest income tax sops for the middle class - including complete exemption for income up to Rs 5 lakh - and Rs 6,000 annual cash dole to poor farmers in a scheme that will cost Rs 75,000 crore per year.

Converting a vote on account speech into an almost full-fledged Budget announcement in the Lok Sabha, Finance Minister Piyush Goyal proposed an array of incentives for both the middle class and farmers, whose disenchantment was said to have cost the BJP dearly in recent Assembly elections.

More than 3 crore salaried class, pensioners, self-employed and small businesses will save Rs 18,500 crore in income tax annually after the exemption limit was doubled to Rs 5 lakh. Also, the standard deduction has been raised to Rs 50,000 from the current Rs 40,000.

The TDS threshold on interest from bank and post office deposits has been raised from Rs 10,000 to Rs 40,000.

Presenting the interim Budget, Goyal said capital gains of up to Rs 2 crore made from the sale of immovable property can now be invested in two residential houses as against the current practice of exempting such income if invested in one house within a year.

However, it can be exercised once in a lifetime, he said, adding the current tax slabs of 20 per cent tax on income between Rs 5 lakh and Rs 10 lakh and 30 per cent tax on earnings of over Rs 10 lakh would continue in the next fiscal year beginning April 1.

The TDS threshold for tax deduction on rent has been increased to Rs 2.4 lakh from the current Rs 1.8 lakh.

As widely anticipated, he announced an income support scheme for 12 crore small and marginal farmers by providing Rs 6,000 in their bank accounts in three equal instalments in a year. The eligibility for the scheme, called Pradhan Mantri Kisan Samman Nidhi, will be ownership of less than 2 hectares of cultivable land.

The scheme will be implemented from the current fiscal year, where it will cost Rs 20,000 crore. For the next fiscal year, the allocation will jump to Rs 75,000 crore.

The farm income support scheme will result in the government breaching its 3.3 per cent fiscal deficit target from the current year.

For the next fiscal, he pegged the fiscal deficit at 3.4 per cent of the GDP, up from the fiscal consolidation roadmap of bringing it down to 3.1 per cent in 2019-20 and 3 per cent in 2020-21.

The fiscal deficit for 2018-19 has been pegged at 3.4 per cent and the current account deficit at 2.5 per cent.

Goyal, who was made the interim finance minister after Arun Jaitley had to rush to New York for medical treatment last month, said what he presented was not merely an interim Budget, but a medium of the country’s development journey.

Goyal raised the allocation of rural employment guarantee scheme MGNREGA to Rs 60,000 crore for 2019-20.

Terming inflation as a hidden and unfair tax, he said the government has “broken the back of back-breaking inflation”. Inflation stood at just 2.1 per cent in December from 10.1 per cent during 2009-14. “If we had not controlled inflation, our families would have been spending 35-40 per cent more on daily use items,” he said.

On non-performing assets, Goyal said Rs 3 lakh crore has been recovered by banks and creditors with the implementation of the Insolvency and Bankruptcy Code.

Goyal said the pace of construction of rural roads has been tripled in the past five years. During 2014-18, 1.53 crore houses have been constructed under the PM Awas Yojana.

He said 10 lakh patients have been treated so far under Ayushman Bharat scheme, the world’s largest health care programme.

The government announced the setting up of Rashtriya Kamdhenu Aayog to enhance the productivity of cows. It provided for 2 per cent interest subvention to farmers involved in animal husbandry and fisheries.

Budget Highlights

Growth/Deficit

* GDP growth in 2018-19 estimated at 7.2 per cent

* Fiscal deficit for 2018-19 seen at 3.4 per cent of GDP

* Fiscal deficit for 2019-20 estimated at 3.4 per cent of GDP

* Fiscal deficit for 2020-21 and 2021-22 estimated at 3 per cent of GDP

* The commitment was to reduce the fiscal deficit to 3.1 per cent of GDP by the end of March 2020, and to 3 per cent by March 2021

* India’s current account deficit for 2018-19 seen at 2.5 per cent of GDP

Borrowing

* Gross market borrowing seen at Rs 7.1 lakh crore in 2019-20

* Net market borrowing seen at Rs 4.73 lakh crore in 2019-20

* Government to buy back Rs 50,000 crore worth of bonds in 2019-20

* India to raise Rs 1.08 lakh crore via cash management bills in 2019-20

* Debt to GDP ratio to be brought down to 40 per cent by 2024-25

Recepits

* Revenue receipts seen at Rs 1.98 lakh crore in 2019-20 (2.2 per cent of GDP)

* Capital receipts seen at Rs 8.06 lakh crore in 2019-20

Expenditure

* Total expenditure in 2019-20 budgeted at Rs 27.84 lakh crore

* Capital expenditure for 2019-20 seen around Rs 3.36 lakh crore in centrally sponsored schemes

* Defence budget raised to beyond Rs 3 lakh crore in 2019-20

* To allocate Rs 64,500 crore for railways’ capital expenditure in 2019-20

* Allocation to Northeast to be increased by 21 per cent over previous fiscal year

Rural Affairs

* Centre to allocate Rs 75,000 crore per year to support farmers’ incomes

* Impact of Rs 20,000 crore in current fiscal year

* Vulnerable farmers to receive Rs 6,000 per year under new scheme

* Farmers affected by natural disasters to receive 2 per cent interest subvention, additional 3 per cent if they repay loans on time

* Centre to provide 2 per cent interest subvention for farmers pursuing animal husbandry and fisheries

* Centre to allocate Rs 19,000 crore for construction of rural roads in 2019-20

Taxation

* Income tax exemption limit raised to Rs 5 lakh in 2019-20

* Benefit of rollover of capital tax gains to be increased from investment in one residential house to that in two residential houses, for a taxpayer having capital gains up to Rs 2 crore; can be exercised once in a lifetime

* Average monthly tax collection at Rs 97,100 crore per month so far this year

* Small and medium-sized businesses registered under GST to get 2 per cent interest subvention on loan of Rs 1 crore

Banking/Finance

* Dividends to government from RBI and public sector financial institutions seen at Rs 82,900 crore in 2019-20

* Dividends to government from RBI and public sector financial institutions revised to Rs 74,100 crore in 2018-19

* Centre expects other banks on Prompt Corrective Action list to be removed soon

Employment

* Centre to launch social security coverage for workers in the unorganised sector

* Scheme to provide assured monthly pension of Rs 3,000 per month, with contribution of Rs 100 per month, for workers in the unorganised sector after 60 years of age

* Scheme will benefit 100 million workers in the unorganised sector

* Centre to allocate Rs 60,000 crore for rural employment scheme in 2019-20