Monday, July 6, 2009

Comments on India's Union Budget 2009

The High Lights of the Union Budget presented by the Hon’ble Finance Minister (FM) in Parliament is substantially growth oriented. The FM has analyzed in depth the needs of the Rural poor and has accentuated the Am Admi jargon of the Ruling party. He has provided a sizable stimulus package for the growth of the economy to the tune of more than 1,86,000 crores.

On the social security sector, a provision of 71,000 crores is earmarked for meeting the promise made to the poor of supply of 25 Kgs of Rice/wheat @ Rs.3 per KG and provision of employment on a guaranteed basis for 100 days to the rural Poor. The vision to provide 1.2 million jobs in various sectors is another ambitious programme launched in the Budget.

Under indirect taxes, no substantial change has been made, barring roping in the persons engaged in legal profession also within the net of Service tax. This completes the circuit of all professionals brought within the ambit of service tax.

The thrust on the states to adhere to the plans envisaged under the Jawaharlal Nehru Urban Rural (JNNURM) is another bold step to accentuate uniform distribution of resources throughout the country, without any political agenda.

The allocations for irrigation, debt relief, fertilizer subsidy are another landmark, including the programme to cover almost the entire rural women folk under the Self Help scheme.

Under direct taxes, the notable change is the enhancement of the taxable minimum for senior citizens by Rs.15,000 bringing it to 2,40,000, for women by another Rs.10,000, enhancing the existing limit to Rs.1,95,000 and for others to Rs.1,60,000, with a marginal increase of Rs.10.000. Another laudable feature in the budget is the abolition of the surcharge on individuals whose total income exceeds 10 lakhs.

The Happy News under the Direct taxes is the total abolition of Fringe Benefits Taxes. This would considerably ease the pinch of the Corporate sector, who had viewed with circumspection provision of any incentive to employees; more so, skilled personnel. This is greatly welcomed with a huge sigh of relief.

The Corporate sector has, however got a beating with increase in the Minimum Alternate tax of 15% on the Book profits. This could have been avoided, given the fact, that it is the corporate sector, who are the dominant contributories to the economy and better encouragement to them, could mop up better compliance. Under education though an interest free loan of 5 lakhs is made available for students, there is no significant forecast. Similarly for health also there is no perceptible allocation made. The enhancement for the Defence sector is understandable, in the back drop of the neighboring countries arming to the teeth.

Over all the Budget which has crossed for the first time in our history more than 10 lakh crores, of expenditure is commendable. It is growth oriented with excellent stimulus package for sustained industrial growth. Our congrats to the FM.

Highlights of Union Budget 2009-10 (as reported by PTI)
6 Jul 2009
NEW DELHI:

Following are the highlights of Budget 2009-10.
* Govt plans to bring back economy to high growth of 9%
* GDP growth dipped to 6.7% in FY'09
* FM to make pre-budget talks with state FMs annual affair
* Fiscal deficit up from 2.7% to 6.8% of GDP
* Return to fiscal prudence at the earliest
* 'Aam admi' is focus of all programmes and schemes ( Watch )
* IT exemption limit raised; Rs 15,000 for Sr.citizens ( Watch )
* Limit raised by Rs 10,000 for tax payers, including women
* 10% surcharge on personal income tax scrapped
* Fringe Benefit Tax abolished
* No change in corporate tax ( Watch )
* Defence gets Rs 1,41,703 cr, up 34%
* Total fiscal stimulus in 2008-09 amounts to Rs 1,86,000 cr
* IIFCL to evolve mechanism for increased funding of infra
* IIFCL to re-finance commercial bank loans up to 60 per cent in critical projects through PPP to tune of Rs 1,00,000 cr
* Allocations for highways being stepped up by 23 per cent
* Funds for housing, amenities for urban poor up Rs 3,973 cr
* Funds for JN Urban Renewal Mission up 87% to Rs 12,887 cr
* Assistance for storm-water drainage project up by Rs 300 cr
* Farm credit target up at Rs 3,25,000 cr from Rs 2,87,000 cr
* Interest rates incentive to farmers to repay loans on time
* Additional Rs 1,000 crore for accelerated irrigation scheme
* Export Credit Guarantee scheme extended till March 2010 * 2% interest subvention (IS) scheme extended till March 2010
* IS scheme to cover 7 job-oriented sectors, including textile, handicrafts and handlooms.
* Commodity Transaction Tax abolished
* New pension system trust exempted from STT; DDT
* Minimum Alternate Tax hiked to 15% from 10%
* Tax holiday on petro sector extended to natural gas
* 100% tax deduction on political donation * Stimulus for print media for another six months * Fertiliser subsidy to be nutrient-based, not price
* Expert Grp to form viable pricing for imported petro goods
* Banks and insurance firms to remain in public sector
* Rs 100 cr one-time grant to expand banks in unbanked areas
* Govt committed to provide Rs 100 a day as wages under NREGA
* Allocation of Rs 39,100 cr to be made for NREGA
* NREGA coverage increased to 4.74 crore households in FY'09
* Work National Food Security scheme has begun
* Allocation for Bharat Nirman being raised by 45 per cent
* Rs 2,000 cr rural housing fund under National Housing Bank
* Mission for female literacy with focus on minorities, SC/ST * 50% of all rural women to be brought into SHG programmes
* Full interest subsidy for students in select institutions
* Five lakh students to benefit
* Modernisation of national exployment exchanges
* Action for social security to unorganised sector workers
* New pension benefits for 12 lakh jawans and JCOs from July
* One lakh dwelling units for paramilitary forces personnel
* Unique Identification Card to citizens in 12-18 months
* Provision of Rs 120 crore for UIC project
* Rs 2,113 crore allocated for IITs and new IITs
* Rs 3472 cr for Commonwealth Games from Rs 2112 cr
* Customs, excise and service tax base rates unchanged
* For Indira Awas Yojana, allocation increased 63%
* IT returns to be made simpler
* 8 missions being launched under Plan on climate change
* Allocation for market development assistance scheme up 148%
* Allocation for Rural Health Mission raised by Rs 257 cr above interim budget
* Rs 500 cr for rehabilitation of Sri Lankan Tamils
* Rs 1,000 cr for infrastructure in cyclone-hit area in WB
* Total expenditure crosses Rs 10 lakh cr for first time
* Share of direct taxes in revenue increased to 56% in FY'09
* Fringe Benefit Tax abolished