INDIA BUDGET 2010-11
HIGHLIGHT
THE TOTAL EXPENDITURE PROPOSED IN THE BUDGET ESTIMATES IS RS.11,08,749 CRORE , AN INCREASE OF 8.6 PER CENT OVER LAST YEAR
THE PLAN AND NON-PLAN EXPENDITURE ESTIMATED AT RS.3,73,092 CRORE AND RS.7,35,657 CRORE RESPECTIVELY, AN INCREASE OF 15 PERCENT IN PLAN EXPENDITURE AND 6 PER CENT IN NON-PLAN EXPENDITURE OVER THE BE OF PREVIOUS YEAR
FISCAL DEFICIT AT 5.5 PER CENT OF GDP WORKS OUT TO BE RS. 3,81,408 CRORE
ROLLING TARGETS FOR FISCAL DEFICIT PEGGED AT 4.8 PER CENT AND 4.1 PER CENT FOR 2011-12 AND 2012-13
NET MARKET BORROWING WOULD BE OF THE ORDER OF RS. 3,45,010 CRORE LEAVING ENOUGH SPACE TO MEET CREDIT NEEDS OF PRIVATE SECTOR
AGAINST A FISCAL DEFICIT OF 7.8 PER CENT IN 2008-09 , INCLUSIVE OF OIL AND FERTILIZER BONDS, THE COMPARABLE FISCAL DEFICIT IS 6.9 PER CENT AS PER RE 2009-10
GROSS TAX RECEIPTS ESTIMATED AT RS.7,46,651 CRORE AND NON-TAX RECEIPT ESTIMATED AT RS. 1,48,118 CRORE
STATUS PAPER GIVING ROAD MAP FOR CURTAILING THE OVERALL PUBLIC DEBT TO BE BROUGHT OUT WITHIN 6 MONTHS
ABOUT RS. 25,000 CRORES TO BE RAISED THROUGH DISINVESTMET PROGRAMM
TO SIMPLIFY THE FDI REGIME, FOR THE FIRST TIME BOTH OWNERSHIP & CONTROL RECOGNISED AS CENTRAL TO THE FDI POLICY.
RS. 16,500 CRORE TO BE PROVIDED TO PUBLIC SECTOR BANKS TO ACHIEVE A MINIMUM 8 PER CENT TIER-
GROWTH OF 127 PER CENT RECORDED IN EXPORTS FROM SEZs TILL DECEMBER, 2009
A FOUR-PRONGED STRATEGY TO SPUR THE GROWTH IN AGRICULTURE SECTOR ENVISAGED. WHICH INCLUDES AGRICULTURAL PRODUCTION, REDUCTION IN WASTAGE OF PRODUCE , CREDIT SUPPORT TO FARMERS AND THRUST TO THE FOOD PROCESSING SECTOR
INFRASTRUCTURE DEVELOPMENT GETS AN ALLOCATION OF Rs. 1,73,552 CRORE, 46 PER CENT OF TOTAL PLAN ALLOCATION , AN INCREASE OF 13 PER CENT IN ROAD TRANSPORT SECTO
INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED’S DISBURSEMENTS TO REACH RS. 20,000 CRORE BY MARCH 2011
ALLOCATION FOR POWER SECTOR INCREASED BY MORE THAN DOUBLED TO RS. 5,130 CROR
NEW TAX INCENTIVES ANNOUNCED FOR INFRASTRUCTURE SECTOR
NATIONAL CLEAR ENERGY FUND FOR FUNDING RESEARCH AND INNOVATIVE PROJECTS IN CLEAN ENERGY TECHNOLOGIES TO BE SET UP.
SPENDING ON SOCIAL SECTOR TO ACCOUNT FOR 37 PER CENT OF TOTAL PLAN OUTLAY AT RS.1,37,674 CROR
ALLOCATION FOR RURAL DEVELOPMENT ENHANCED TO RS.66,100 CRORES.
ALLOCATION FOR NREGA STEPPED UP TO 40,100 CRORE.
RS. 48,000 CRORE ALLOCATED FOR BHARAT NIRMAN PROGRAMME
BACKWARD REGION GRANT FUND ALLOCATION ENHANCED TO RS. 7,300 CRORE.
UNIQUE IDENTIFICATION AUTHORITY OF INDIA TO GET AN ALLOCATION OF RS. 1,900 CRORE. A TECHNOLOGY ADVISORY GROUP FOR UNIQUE PROECT TO BE SET UP
ALLOCATION FOR DEFENCE INCREASED TO RS.1,47,344 CROR
INCOME TAX SLABS BROADENED - 10 PER CENT ON INCOME ABOVE RS 1.6 LAKH TO 5.00 LAKH, 20 PER CENT ON INCOME ABOVE 5.OO LAKH TO 8.00 LAKH , 30 PER CENT ON ABOVE RS. 8.00 LAKH
ADDITIONAL DEDUCTION OF RS. 20,000 FOR INVESTMENT IN INFRASTRUCTURE BONDS
SURCHARGE OF 10 PER CENT ON DOMESTIC COMPANIES REDUCED TO 7.5 PER CEN
MAT INCREASED FROM 15 PER CENT TO 18 PER CENT
INDIA BUDGET 2010-11
Expecting return to 9% GDP
INDIAN federal Budget for fiscal 2010-11 presented by country’s Finance minister Pranab Mukherjee in Parliament on February 26, 2010 would help the Indian economy to return to 9% GDP. The expectation is raised by none else than the country’s Prime Minister Manmohan Singh. The PM has termed the Budget “exceeding well” and patted the FM with “A job well done”. The PM, himself an economist, has allayed the apprehension of the critics that the Budget proposals would fuel inflation.
"You must look at the total picture emerging from the budget. The net revenue gain for the Finance Minister is only Rs 20,000 crore. In an economy as large as India, this resource mobilization effort and balance should not trigger any inflationary expectation. At the same time it gives the muscle needed. The Finance Minister has not called back to the pre stimulus excise duty rate”, the Prime Minister said.
Due to hike in excise duty consumers will have to pay more for petrol, diesel, cars, TVs, cigarettes, tobacco, air-conditioner, gold and silver. On the other hand, mobile accessories, medical equipment energy efficient CFL lamps, set top boxes, compact disc, toys and books will be cheaper on account of some tax concessions offered on these items by Finance Minister Pranab Mukherjee in the Union Budget for 2010-11. "Symptoms of economic recovery are widespread and more clear now," he said.
Mukherjee has substantially cut income tax rates along with other direct tax concessions that would result in a net loss of Rs 26,000 crore to the exchequer.
Armed with the logic that the economy is in the recovery mode, the the Finance minister announced hike in excise duties by 2% to 10% on all non-oil products as part of withdrawal of stimulus measures. Excise duty was cut by 6% in two phases since December 2008 from a peak of 14% earlier to perk up the economy, which came under the impact of deepening financial crisis. However, Mukherjee, in the Budget for 2010-11, retained service tax at the level of 10%. The tax was cut by 2% from 12% as part of stimulus. The tax proposals will pave the way for introduction of Goods and Services Tax by leveling both excise duty and service tax to 10%.
The Finance minister presented the federal Budget with fiscal deficit of 5.5% of GDP as he pegged total expenditure at Rs 11.09 lakh crore while the total tax and non-tax revenue estimated at Rs 6.82 lakh crore for the year 2010-11. The deficit is much lower than the budgeted estimate for the current fiscal at 6.8%, which, however, has been revised to 6.7%.
To meet the shortfall, the government has estimated borrowing of Rs 3.81 lakh crore for fiscal 2010-11, lower than the current fiscal's Rs 4.01 lakh crore. "I am happy to report that against a fiscal deficit of 7.8 per cent in 2008-09, inclusive of oil and fertiliser bonds, the comparable fiscal deficit is 6.9 per cent as per the revised estimates for 2009-10,” Mukherjee said.
Focus areas
The Union Budget this year has aimed to focus on inclusive growth and insuring food security. These concerns for aam aadami have gone hand in hand with credible measures for improving investment climate, strengthening infrastructure and fiscal consolidation. As the country looks to ‘quickly revert to high GDP growth path’ in the wake of ‘uncertain times’, concerns for inclusive growth targeting the disadvantaged sections form the defining features of the Budget.
Many new initiatives have been introduced for sustained and inclusive growth. These include setting up of Mahila Kisan Sashaktikaran Pariyojana, Financial Stability and Development Council, Gold Regulatory Authority, Technical Advisory Group for Unique Projects, National Mission for Delivery of Justice and Legal Reforms, Independent Evaluation Office and National Clean Energy Fund,
Presenting the Union Budget 2010-11 in the Lok Sabha today, the Finance Minister Shri Pranab Mukherjee, said that three challenges would continue to engage the Indian policy planners for next few years. The first challenge is to quickly revert to the high GDP growth path of 9 per cent and then find the means to cross the double digit growth barrier. The second challenge is to consolidate recent gains in making development more inclusive. The third challenge is to remove weaknesses at different levels of governance and to improve public delivery mechanism. The Budget, therefore, focuses on fiscal consolidation, making growth more broad-based and ensuring that supply-demand imbalances are better managed.
The Minister expressed the hope that the economy will reach 10 per cent growth in not too distant a future. The Minister explained that after a fall in GDP growth in 2008-09 to 6.7 per cent, the growth has built up and 7.2 per cent growth is expected in 2009-10. The Minister said that the recovery is very encouraging as it has come about despite negative growth in agriculture sector. The growth rate in manufacturing in December 2009 was 18.5 per cent, the highest in past two decades. Similarly, there are also signs of a turnaround in the merchandise exports with a positive growth in November and December 2009 after a decline in about twelve successive months.
Expressing concern at the emergence of double digit food inflation, the Minister said that the Government has set in motion steps in consultation with the State Chief Ministers to bring down the inflation in the next few months and ensure better management of food security.
FISCAL CONSOLIDATION
The Minister said that now that the recovery has taken roots, there is a need to review public spending, mobilize resources and gear them towards building the productivity of the economy.
The government will follow the recommendations of the Thirteenth Finance Commission by capping the government debt. The Commission has recommended a capping of the combined debt of the Centre and the States at 68 per cent of the GDP to be achieved by 2014-15.
For the first time, the Government would target an explicit reduction in its domestic public debt-GDP ratio. A status paper would be brought out within six months, giving a detailed analysis of the situation and a road map for curtailing the overall public debt. This would be followed by an annual report on the subject.
The Finance Minister expressed the hope that a broad consensus would be achieved on the Direct Tax Code and the Goods and Service Tax (GST) and these would be introduced from April 2011.
IMPROVING INVESTMENT ENVIRONMENT
The Finance Minister said that a number of steps have been taken to simplify the Foreign Direct Investment (FDI) regime. The government also intends to make the FDI policy user-friendly by consolidating all prior regulations and guidelines into one comprehensive document. This would enhance clarity and predictability of our FDI policy to foreign investors, he said.
With a view to strengthen and institutionalize the mechanism for maintaining financial stability, Government has decided to set up an apex-level Financial Stability and Development Council. It would monitor macro prudential supervision of the economy, including the functioning of large financial conglomerates.
Towards strengthening the banking system, the Budget provides Rs.16500 crore as Tier-I capital. It would ensure that the Public Sector Banks are able to attain a minimum 8 per cent Tier-I Capital by March 2011. Further capital would also be infused into the Regional Rural Banks (RRBs). The Minister also informed that the RBI is considering giving some additional banking licenses to private sector players. Non Banking Financial Companies could also be considered, if they meet the RBI’s eligibility criteria.
Positive message for reform: CII
In Budget 2010, the Finance Minister has sent out a positive message for reform that will ensure a stable macro-economic environment conducive for growth. In particular, CII appreciates the efforts made towards fiscal consolidation even as stimulus measures for industry have been largely maintained, said Mr Venu Srinivasan, President, CII, commenting on the Union Budget presented in the Parliament today.
The CII President said that the reform measures proposed in the Budget include major areas such as direct and indirect tax reform, accelerated disinvestment of PSUs, more transparent subsidy regime for fertilizers, financial sector consolidation and efforts to strengthen transparency and public accountability. Simplification of Income Tax returns and the automation of Central Excise and Service Tax are most welcome.
The initiative to target an explicit reduction in the government’s debt-GDP ratio, as recommended by the Thirteenth Finance Commission, is a welcome move that will provide confidence to investors, the CII statement issued here said. Indeed, the reduction in the fiscal deficit from the revised estimate of 6.9% of GDP in 2009-10 to 5.5% in 2010-11 has brought relief to the debt market, as it implies a reduction in net government borrowing. This will allow interest rates to remain stable even as there is a recovery in private sector borrowing. CII also welcomes the move away from the practice of issuing bonds to oil and fertilizer companies, and not accounting for these subsidies in the Budget.
With a few exceptions, CII welcomes most of the changes in the direct and indirect tax rates. CII welcomes the reduction in the corporate surcharge from 10% to 7.5% and the increase in deduction against R&D from 150% to 200%. However, the increase in MAT is a retrograde move, as it dilutes the incentives given to companies for various reasons. The change in the slabs for personal taxes is welcome, as it will provide greater disposable income in the hands of taxpayers.
CII is particularly happy that the Finance Minister has sent a clear message that any unwinding of the stimulus would be calibrated, based on the pace of recovery of industry. Extension of interest subvention of 2 per cent to exports for one year for the SME sector is also welcome. The SME sector will also benefit from the increase in the limits for presumptive taxation and the clarification that no capital gains tax would be levied in case of conversion of small companies into LLPs.
Important measures have been taken to consolidate regulation in the financial sector. The establishment of the Financial Stability and Development Council will help inter-regulatory co-ordination while the Financial Sector Legislative Reforms Council will provide an outline for the expected reforms in this sector. The provision of additional banking licenses to private sector entities will enable greater competition in banking even as public sector banks are strengthened through re-capitalisation.
CII also welcomes the steps taken to encourage agricultural growth. The dual strategy of increasing agricultural productivity on the one hand and initiating reforms in the food supply chain on the other is one that has long been recommended by CII. If implemented well, this can go a long way in overcoming the supply bottlenecks that have been responsible for the current increase in inflation. Incentives provided to the food processing sector will also enable greater investment in this critical area, the press statement said.
CII has always highlighted the need for greater investment in infrastructure which will be a catalyst for growth. Budget 2010 has provided for significant increases in the Plan outlay for the critical infrastructure sectors such as roads, power, housing and rural infrastructure. The National Clean Energy Fund has also been established with an allocation of Rs 1000 crores to promote research and innovation in clean energy. CII is confident that with these measures, there will be a step-up in the amount invested in infrastructure.
AGRICULTURE GROWTH
A four-pronged strategy would be followed to spur growth in agriculture sector. The elements of the strategy are (a) agricultural production; (b) reduction in wastage of produce; (c) credit support to farmers; and (d) a thrust to the food processing sector.
The Budget provides Rs.400 crore for extending the green revolution to the eastern region of the country comprising Bihar, Chattisgarh, Jharkhand, Eastern UP, West Bengal and Orissa, with the active involvement of Gram Sabhas and the farming families.
60,000 ‘pulses and oil seed villages’ will be organized in rainfed areas with an outlay of Rs.300 crore during 2010-11. This will provide water harvesting, watershed management and soil health facilities to enhance to productivity of dryland farming areas. Another Rs.200 crore have been provided in the Budget for conservation farming.
To improve the storage capacity of food grains, Food Corporation of India is being allowed to hire godowns from private parties for a guaranteed period of seven years. This period so far was five years.
The target for farm credit is being raised to Rs.3,75,000 crore in 2010-11 from Rs.3,25,000 crore in the current year.
The period for repayment of loans under the Debt Waiver and Debt Relief Scheme is being extended by six months to June 30,2010.
The interest subvention for timely repayment of crop loans is being raised from 1 per cent to 2 per cent. Thus, the effective rate of interest for crop loans for farmers who repay their crop loan as per schedule will now be 5 per cent per year.
Five more Mega Food Parks will be set up in addition to the 10 already being established. External Commercial Borrowings will henceforth be available for cold storage, farm level pre-cooling and preservation and storage of agricultural and allied produce marine products and meat.
INFRASTRUCTURE
The Budget provides Rs.1,73,552 crore for infrastructure, accounting for over 46 per cent of the total Plan allocation.
The allocation for road transport is being increased by over 13 per cent from Rs 17,520 crore to Rs.19,894 crore.
Disbursement for infrastructure by India Infrastructure Finance Company Ltd(IIFCL) is expected to reach Rs.20,000 crore in 2010-11 as against Rs.9,000 crore this year. Refinancing of bank landing to infrastructure projects by IIFCL is expected to be more than double in 2010-11.
ENERGY
The Plan allocation for power sector is being more than doubled from Rs.2,230 crore in 2009-10 to Rs.5,130 crore in 2010-11.
A Coal Regulatory Authority is proposed to be set up for creating level playing field in the coal sector and resolving various issues.
The Plan outlay for New and Renewal Energy Ministry is being increased by 61 per cent from Rs. 620 crore to Rs.1,000 crore, especially to support the ambitious solar energy programme.
Growth Oriented: FICCI
The Union Budget is growth oriented and forward looking, preparing the Indian economy post global financial meltdown for a sustained course to attain double digit growth. The Finance Minister has done a fine balancing job under trying circumstances, astutely managing fiscal deficit while keeping an eye on growthh, observed Harsh Pati Singhania, President, FICCI.
In the face of pressure for stimulus withdrawal, the Finance Minister has only partially increased the CENVAT rate from 8 percent to 10 percent. Secondly, he has not increased the service tax rate. Thirdly, he has restructured the income tax slabs in a manner which will leave more money in the hands of consumers and thereby encourage demandd, Singhania observed.
By and large, the Finance Minister has provided a stable tax and policy framework for the Indian Economy to move forwardd, he added.
However, industry is disappointed that the Finance Minister had raised the MAT rate from 15 percent to 18 percent when industry was demanding a cut down to 10 percent. Further, the impact of excise duty hike across the board coupled with increase in excise duty on petrol and diesel will add pressure on the price line in current circumstancess, Singhania noted.
However, industry appreciates the need for some fiscal correction. Singhania noted that the Finance Minister has laid out a roadmap for fiscal correction as well as radical reforms of the tax regime through introduction of GST and Direct Tax Code. He has given a little time for preparation for introduction of these from only next year, thereby providing time for further public debate on DTC and fine tuning administrative machinery for GSTT, he said.
FICCI President also noted with satisfaction the emphasis the Finance Minister has placed on overall development of critical sectors such as agriculture and rural development, which FICCI has been emphasizing. Enhanced outlays for infrastructure projects would also add to the growth momentum.
The Finance Ministerrs announcement to infuse more capital into Public Sector Banks is good for credit growth as this will enable banks to lend more for productive economic activities. The reduction of surcharge on corporate tax rate has also been welcomed by Singhania.
INCLUSIVE DEVELOPMENT
Stating that inclusive development is an act of faith for the UPA government, the Finance Minister said that after the Right to Information, Right to Work and Right to Education, the government is now ready with the draft Food Security Bill. A sums of Rs.1,37,674 crore, representing 37 per cent of the total outlay, will be spent on social sector programmes.
Plan Allocation for school education is being increased from Rs.26,800 crore to Rs.31,036 crore to support the children’s rights to free and compulsory education. In addition, States will have an access to Rs. 3,675 crore for elementary education under the Finance Commission grant for 2010-11.
It has been decided to provide appropriate banking facilities to habitations having population in excess of 2000 by March 2012. It is also proposed to extend insurance and other services to the targeted beneficiaries. These provisions are expected to cover 60,000 habitations.
Rs.66,100 crore have been provided for Rural Development. Mahatma Gandhi National Rural Employment Guarantee Scheme gets Rs.40,100 crore and Bharat Nirman Programme, Rs.48,000 crore.
Indira Awas Yojana gets Rs.10,000 crore. The unit cost under this scheme is being raised to Rs.45,000 in
plain areas and Rs.48500 in hilly areas to cover the increase in cost of construction of houses.
The allocation to Backward Region Grant Fund is being enhanced by 26 per cent from Rs.5,800 crore to Rs.7,300 crore. An additional Central assistance of Rs.1,200 crore is being provided for drought mitigation in the Bundelkhand region.
Swarna Jayanti Shahari Rozgar Yojana gets 75 per cent increase in allocation from Rs.3,060 crore to Rs.5,400 crore. In addition, the allocation for Housing and Urban Poverty Alleviation is also being raised from Rs.850 crore to Rs.1,000 crore in 2010-11.
The 1 per cent interest subvention on housing loans upto Rs.10 lakh (where the cost of the house does not exceed Rs.20 lakh) provided in the Budget for 2009-10 has been extended by another year.
Rajiv Awas Yojana, a scheme for housing to slum dwellers and urban poor, gets a huge jump in allocation from Rs.150 crore last year to Rs.1,270 crore in 2010-11.
It has been decided to set up a National Social Security Fund for unorganized sector workers with an initial allocation of Rs.1,000 crore. This fund will support schemes for weavers, toddy tappers, rickshaw pullers, bidi workers etc.
The Rashtriya Swasthya Bima Joyana is being extended to all Mahatma Gandhi NREGA beneficiaries who have worked for more than 15 days during the preceding financial year.
The Swavalamban initiative started last year, under which the government contributes Rs.1,000 per year to each New Pension Scheme (NPS) account, will now be available for another three years.
Plan outlay for Women and Child Development is being stepped up by 50 per cent. A Mahila Kisan Sashaktikaran Pariyojana is being launched to meet the specific needs of women farmers.
The Plan outlay of Ministry of Social Justice and Empowerment gets a boost of 80 per cent to Rs.4,500 crore. Besides supporting the programmes for the target beneficiaries, the Ministry will be able to raise the rates for scholarship schemes for SC and OBC students. Similarly, the Ministry of Minority Affairs allocation has been raised by 50 per cent to Rs.2,600 crore.
STRENGTHENING TRANSPARENCY AND PUBLIC ACCOUNTABILITY
The government proposes to set up a Financial Sector Legislative Reforms Commission to rewrite and clean up the financial sector laws to bring them in line with the requirements of the sector.
Rs.1,900 crore has been allocated for the Unique Identification Authority of India.
A Technology Advisory Group for Unique Projects (TAGUP) is proposed to be set up under the Chairmanship of Shri Nandan Nilekani for creation of reliable and secure IT projects.
Defence gets an allocation of Rs.1,47,344 crore. As a one time confidence building measure in Jammu and Kashmir about 2000 youths will be recruited as constable in five Central Para-Military forces in 2010.
Adequate funds will be made available to support the action plan to be prepared by the Planning Commission for development of 33 left wing extremist affected districts.
An Independent Evaluation Office is to be set up to undertake impartial and objective assessment of various public programmes and improve the effectiveness of public interventions in Planning Commission.
A National Mission for Delivery of Justice and Legal Reforms is also to be set up.
Positive, growth oriented: ASSOCHAM
ASSOCHAM President Dr. Swati Piramal while welcoming Budget proposals, termed them as Pragmatic, positive, growth and development oriented as these aim at attaining inclusive growth.
“The Finance Minister has performed the most balancing act under given circumstances by partially rolling out the Stimulus package and at the same time paid adequate attention for development of social sector and more specifically so for rural sector”, said Dr. Piramal.
Mr. Mukherjee has done his best in the budget proposals to fuel consumption and sufficiently incentivised renewable energy, infrastructure, research and development in health and equipped these sectors with reasonably higher allocations.
Dr. Piramal also welcomed a deadline set for introduction of GST and Direct Tax Code, pointing out that these would be major tax reforms which will not only provide tax relief’s to people and industry but also help the government realize higher tax collections.
According to ASSOCHAM, the budget proposals will bring in more money in hands of individuals as several good measures have been introduced in the Finance Bill in the form of tax relief’s to general public. Mr. Mukherjee for the first time in the recent history of budget presentation placed huge faith in the private sector which will come forward to building Indian economy and help it achieve higher growth in years to come.
The ASSOCHAM has also welcomed announcements for bringing in more and more services under the purview of service tax by not tinkering with it’s existing ceiling rate of 10%.
TAX PROPOSALS
The Finance Minister emphasized the need for continued Tax Reforms. The Tax Returns form are being simplified and the Income Tax Department is now ready to notify Saral-2 forms for individual salary tax payers.
The Sevottam project started in four cities to provide a single window system for registration and grievance redressal will be extended to four more cities. Two more centres will be opened for bulk processing of Tax Returns. The Indirect Tax Administrations are being revamped to achieve the roll out of Goods and Services Tax (GST). Rs.1133 crore have been budgeted for a mission mode project to achieve this.
Major relief has been provided to individual tax payers by enhancing exemption limit and reducing tax in different slabs of personal income.. Deduction of an additional amount of Rs.20000 for investment in long term infrastructure bonds will be available in addition to the existing limit of Rs.1 lakh available for specified savings.
The surcharge on domestic companies is being reduced from 10 per cent to 7.5 per cent. However, the minimum alternate tax (MAT) is being increased from 15 per cent to 18 per cent.
Exemptions and deductions have been provided to increase spending on research.
The investment linked deduction to new hotels of two star category and above is being extended to give boost to investment in Tourism sector.
A one time interim relief is being provided to the housing and real estate sector by allowing pending projects to be completed within a period of five years instead of four years for claiming a deduction on their profits.
The Finance Minister has proposed to partially roll back the rate deduction in Central Excise duties and enhance the standard rate on all non-petroleum products from 8 per cent to 10 per cent ad valorem. The specific rates of duty applicable to Portland cement and cement clinker are also being adjusted upwards proportionately. Similarly, the ad valorem component of excise duty on large cars, multi-utility vehicles and sports utility vehicles which was reduced as part of the first stimulus package, is being increased by 2 percentage points to 22 per cent.
The basic duty of 5 per cent on crude petroleum; 7.5 per cent on diesel and petrol and 10 per cent on other refined products is being enhanced. The Central Excise Duty on petrol and diesel is being enhanced by Rs.1 per litre.
Excise duty on non-smoking tobacco is being enhanced. In addition a compounded levy scheme is being introduced by chewing tobacco and branded unmanufactured tobacco based on the capacity of pouch making machines.
A number of duty concessions are being proposed to support agriculture and allied sector. Mechanised handling systems in warehouses will get project import status with a concessional import duty of 5 per cent. Installation and commissioning of such equipment will be fully exempt from service tax. Concessional duty will also be applicable for cold storages, food processing units, specified equipment for food preservation etc. The concessional import duty to specified machinery for use in the plantation sector is being further extended upto March 2011. Testing and certification of agricultural seed is being exempt from service tax.
Tax exemptions have been announced for equipment used in solar systems and wind energy system, LED lights, electric cars, cycle rickshaw, mobile phone components and certain medical equipment.
The rate of tax on services has been retained at 10 per cent.
BUDGET ESTIMATES
The Budget Estimates 2010-11 provides for a total expenditure of Rs. 11,08,749 crore. Out of this, Rs 3,73,092 crore is plan expenditure and Rs.7,35,657 crore is non-plan expenditure. The plan expenditure has increased by 15 per cent while there is only 6 per cent in increase in non-plan expenditure.
The total receipt are estimate Rs.7,46,651 crore.
The Fiscal deficit is pegged at 5.5 per cent. In the Medium Term Fiscal Policy Statement being presented along with other Budget documents in the House today, the rolling targets for fiscal deficit are pegged at 4.8 per cent and 4.1 per cent for 2011-12 and 2012-13, respectively. These projections improve upon the recommendations of the Thirteenth Finance Commission.
Source: Press Information Bureau, Information and Broadcasting Ministry, Government of India
http://www.indiaonestop.com/Federal%20Budget/india_budget-2010-11.htm#top
HIGHLIGHT
THE TOTAL EXPENDITURE PROPOSED IN THE BUDGET ESTIMATES IS RS.11,08,749 CRORE , AN INCREASE OF 8.6 PER CENT OVER LAST YEAR
THE PLAN AND NON-PLAN EXPENDITURE ESTIMATED AT RS.3,73,092 CRORE AND RS.7,35,657 CRORE RESPECTIVELY, AN INCREASE OF 15 PERCENT IN PLAN EXPENDITURE AND 6 PER CENT IN NON-PLAN EXPENDITURE OVER THE BE OF PREVIOUS YEAR
FISCAL DEFICIT AT 5.5 PER CENT OF GDP WORKS OUT TO BE RS. 3,81,408 CRORE
ROLLING TARGETS FOR FISCAL DEFICIT PEGGED AT 4.8 PER CENT AND 4.1 PER CENT FOR 2011-12 AND 2012-13
NET MARKET BORROWING WOULD BE OF THE ORDER OF RS. 3,45,010 CRORE LEAVING ENOUGH SPACE TO MEET CREDIT NEEDS OF PRIVATE SECTOR
AGAINST A FISCAL DEFICIT OF 7.8 PER CENT IN 2008-09 , INCLUSIVE OF OIL AND FERTILIZER BONDS, THE COMPARABLE FISCAL DEFICIT IS 6.9 PER CENT AS PER RE 2009-10
GROSS TAX RECEIPTS ESTIMATED AT RS.7,46,651 CRORE AND NON-TAX RECEIPT ESTIMATED AT RS. 1,48,118 CRORE
STATUS PAPER GIVING ROAD MAP FOR CURTAILING THE OVERALL PUBLIC DEBT TO BE BROUGHT OUT WITHIN 6 MONTHS
ABOUT RS. 25,000 CRORES TO BE RAISED THROUGH DISINVESTMET PROGRAMM
TO SIMPLIFY THE FDI REGIME, FOR THE FIRST TIME BOTH OWNERSHIP & CONTROL RECOGNISED AS CENTRAL TO THE FDI POLICY.
RS. 16,500 CRORE TO BE PROVIDED TO PUBLIC SECTOR BANKS TO ACHIEVE A MINIMUM 8 PER CENT TIER-
GROWTH OF 127 PER CENT RECORDED IN EXPORTS FROM SEZs TILL DECEMBER, 2009
A FOUR-PRONGED STRATEGY TO SPUR THE GROWTH IN AGRICULTURE SECTOR ENVISAGED. WHICH INCLUDES AGRICULTURAL PRODUCTION, REDUCTION IN WASTAGE OF PRODUCE , CREDIT SUPPORT TO FARMERS AND THRUST TO THE FOOD PROCESSING SECTOR
INFRASTRUCTURE DEVELOPMENT GETS AN ALLOCATION OF Rs. 1,73,552 CRORE, 46 PER CENT OF TOTAL PLAN ALLOCATION , AN INCREASE OF 13 PER CENT IN ROAD TRANSPORT SECTO
INDIA INFRASTRUCTURE FINANCE COMPANY LIMITED’S DISBURSEMENTS TO REACH RS. 20,000 CRORE BY MARCH 2011
ALLOCATION FOR POWER SECTOR INCREASED BY MORE THAN DOUBLED TO RS. 5,130 CROR
NEW TAX INCENTIVES ANNOUNCED FOR INFRASTRUCTURE SECTOR
NATIONAL CLEAR ENERGY FUND FOR FUNDING RESEARCH AND INNOVATIVE PROJECTS IN CLEAN ENERGY TECHNOLOGIES TO BE SET UP.
SPENDING ON SOCIAL SECTOR TO ACCOUNT FOR 37 PER CENT OF TOTAL PLAN OUTLAY AT RS.1,37,674 CROR
ALLOCATION FOR RURAL DEVELOPMENT ENHANCED TO RS.66,100 CRORES.
ALLOCATION FOR NREGA STEPPED UP TO 40,100 CRORE.
RS. 48,000 CRORE ALLOCATED FOR BHARAT NIRMAN PROGRAMME
BACKWARD REGION GRANT FUND ALLOCATION ENHANCED TO RS. 7,300 CRORE.
UNIQUE IDENTIFICATION AUTHORITY OF INDIA TO GET AN ALLOCATION OF RS. 1,900 CRORE. A TECHNOLOGY ADVISORY GROUP FOR UNIQUE PROECT TO BE SET UP
ALLOCATION FOR DEFENCE INCREASED TO RS.1,47,344 CROR
INCOME TAX SLABS BROADENED - 10 PER CENT ON INCOME ABOVE RS 1.6 LAKH TO 5.00 LAKH, 20 PER CENT ON INCOME ABOVE 5.OO LAKH TO 8.00 LAKH , 30 PER CENT ON ABOVE RS. 8.00 LAKH
ADDITIONAL DEDUCTION OF RS. 20,000 FOR INVESTMENT IN INFRASTRUCTURE BONDS
SURCHARGE OF 10 PER CENT ON DOMESTIC COMPANIES REDUCED TO 7.5 PER CEN
MAT INCREASED FROM 15 PER CENT TO 18 PER CENT
INDIA BUDGET 2010-11
Expecting return to 9% GDP
INDIAN federal Budget for fiscal 2010-11 presented by country’s Finance minister Pranab Mukherjee in Parliament on February 26, 2010 would help the Indian economy to return to 9% GDP. The expectation is raised by none else than the country’s Prime Minister Manmohan Singh. The PM has termed the Budget “exceeding well” and patted the FM with “A job well done”. The PM, himself an economist, has allayed the apprehension of the critics that the Budget proposals would fuel inflation.
"You must look at the total picture emerging from the budget. The net revenue gain for the Finance Minister is only Rs 20,000 crore. In an economy as large as India, this resource mobilization effort and balance should not trigger any inflationary expectation. At the same time it gives the muscle needed. The Finance Minister has not called back to the pre stimulus excise duty rate”, the Prime Minister said.
Due to hike in excise duty consumers will have to pay more for petrol, diesel, cars, TVs, cigarettes, tobacco, air-conditioner, gold and silver. On the other hand, mobile accessories, medical equipment energy efficient CFL lamps, set top boxes, compact disc, toys and books will be cheaper on account of some tax concessions offered on these items by Finance Minister Pranab Mukherjee in the Union Budget for 2010-11. "Symptoms of economic recovery are widespread and more clear now," he said.
Mukherjee has substantially cut income tax rates along with other direct tax concessions that would result in a net loss of Rs 26,000 crore to the exchequer.
Armed with the logic that the economy is in the recovery mode, the the Finance minister announced hike in excise duties by 2% to 10% on all non-oil products as part of withdrawal of stimulus measures. Excise duty was cut by 6% in two phases since December 2008 from a peak of 14% earlier to perk up the economy, which came under the impact of deepening financial crisis. However, Mukherjee, in the Budget for 2010-11, retained service tax at the level of 10%. The tax was cut by 2% from 12% as part of stimulus. The tax proposals will pave the way for introduction of Goods and Services Tax by leveling both excise duty and service tax to 10%.
The Finance minister presented the federal Budget with fiscal deficit of 5.5% of GDP as he pegged total expenditure at Rs 11.09 lakh crore while the total tax and non-tax revenue estimated at Rs 6.82 lakh crore for the year 2010-11. The deficit is much lower than the budgeted estimate for the current fiscal at 6.8%, which, however, has been revised to 6.7%.
To meet the shortfall, the government has estimated borrowing of Rs 3.81 lakh crore for fiscal 2010-11, lower than the current fiscal's Rs 4.01 lakh crore. "I am happy to report that against a fiscal deficit of 7.8 per cent in 2008-09, inclusive of oil and fertiliser bonds, the comparable fiscal deficit is 6.9 per cent as per the revised estimates for 2009-10,” Mukherjee said.
Focus areas
The Union Budget this year has aimed to focus on inclusive growth and insuring food security. These concerns for aam aadami have gone hand in hand with credible measures for improving investment climate, strengthening infrastructure and fiscal consolidation. As the country looks to ‘quickly revert to high GDP growth path’ in the wake of ‘uncertain times’, concerns for inclusive growth targeting the disadvantaged sections form the defining features of the Budget.
Many new initiatives have been introduced for sustained and inclusive growth. These include setting up of Mahila Kisan Sashaktikaran Pariyojana, Financial Stability and Development Council, Gold Regulatory Authority, Technical Advisory Group for Unique Projects, National Mission for Delivery of Justice and Legal Reforms, Independent Evaluation Office and National Clean Energy Fund,
Presenting the Union Budget 2010-11 in the Lok Sabha today, the Finance Minister Shri Pranab Mukherjee, said that three challenges would continue to engage the Indian policy planners for next few years. The first challenge is to quickly revert to the high GDP growth path of 9 per cent and then find the means to cross the double digit growth barrier. The second challenge is to consolidate recent gains in making development more inclusive. The third challenge is to remove weaknesses at different levels of governance and to improve public delivery mechanism. The Budget, therefore, focuses on fiscal consolidation, making growth more broad-based and ensuring that supply-demand imbalances are better managed.
The Minister expressed the hope that the economy will reach 10 per cent growth in not too distant a future. The Minister explained that after a fall in GDP growth in 2008-09 to 6.7 per cent, the growth has built up and 7.2 per cent growth is expected in 2009-10. The Minister said that the recovery is very encouraging as it has come about despite negative growth in agriculture sector. The growth rate in manufacturing in December 2009 was 18.5 per cent, the highest in past two decades. Similarly, there are also signs of a turnaround in the merchandise exports with a positive growth in November and December 2009 after a decline in about twelve successive months.
Expressing concern at the emergence of double digit food inflation, the Minister said that the Government has set in motion steps in consultation with the State Chief Ministers to bring down the inflation in the next few months and ensure better management of food security.
FISCAL CONSOLIDATION
The Minister said that now that the recovery has taken roots, there is a need to review public spending, mobilize resources and gear them towards building the productivity of the economy.
The government will follow the recommendations of the Thirteenth Finance Commission by capping the government debt. The Commission has recommended a capping of the combined debt of the Centre and the States at 68 per cent of the GDP to be achieved by 2014-15.
For the first time, the Government would target an explicit reduction in its domestic public debt-GDP ratio. A status paper would be brought out within six months, giving a detailed analysis of the situation and a road map for curtailing the overall public debt. This would be followed by an annual report on the subject.
The Finance Minister expressed the hope that a broad consensus would be achieved on the Direct Tax Code and the Goods and Service Tax (GST) and these would be introduced from April 2011.
IMPROVING INVESTMENT ENVIRONMENT
The Finance Minister said that a number of steps have been taken to simplify the Foreign Direct Investment (FDI) regime. The government also intends to make the FDI policy user-friendly by consolidating all prior regulations and guidelines into one comprehensive document. This would enhance clarity and predictability of our FDI policy to foreign investors, he said.
With a view to strengthen and institutionalize the mechanism for maintaining financial stability, Government has decided to set up an apex-level Financial Stability and Development Council. It would monitor macro prudential supervision of the economy, including the functioning of large financial conglomerates.
Towards strengthening the banking system, the Budget provides Rs.16500 crore as Tier-I capital. It would ensure that the Public Sector Banks are able to attain a minimum 8 per cent Tier-I Capital by March 2011. Further capital would also be infused into the Regional Rural Banks (RRBs). The Minister also informed that the RBI is considering giving some additional banking licenses to private sector players. Non Banking Financial Companies could also be considered, if they meet the RBI’s eligibility criteria.
Positive message for reform: CII
In Budget 2010, the Finance Minister has sent out a positive message for reform that will ensure a stable macro-economic environment conducive for growth. In particular, CII appreciates the efforts made towards fiscal consolidation even as stimulus measures for industry have been largely maintained, said Mr Venu Srinivasan, President, CII, commenting on the Union Budget presented in the Parliament today.
The CII President said that the reform measures proposed in the Budget include major areas such as direct and indirect tax reform, accelerated disinvestment of PSUs, more transparent subsidy regime for fertilizers, financial sector consolidation and efforts to strengthen transparency and public accountability. Simplification of Income Tax returns and the automation of Central Excise and Service Tax are most welcome.
The initiative to target an explicit reduction in the government’s debt-GDP ratio, as recommended by the Thirteenth Finance Commission, is a welcome move that will provide confidence to investors, the CII statement issued here said. Indeed, the reduction in the fiscal deficit from the revised estimate of 6.9% of GDP in 2009-10 to 5.5% in 2010-11 has brought relief to the debt market, as it implies a reduction in net government borrowing. This will allow interest rates to remain stable even as there is a recovery in private sector borrowing. CII also welcomes the move away from the practice of issuing bonds to oil and fertilizer companies, and not accounting for these subsidies in the Budget.
With a few exceptions, CII welcomes most of the changes in the direct and indirect tax rates. CII welcomes the reduction in the corporate surcharge from 10% to 7.5% and the increase in deduction against R&D from 150% to 200%. However, the increase in MAT is a retrograde move, as it dilutes the incentives given to companies for various reasons. The change in the slabs for personal taxes is welcome, as it will provide greater disposable income in the hands of taxpayers.
CII is particularly happy that the Finance Minister has sent a clear message that any unwinding of the stimulus would be calibrated, based on the pace of recovery of industry. Extension of interest subvention of 2 per cent to exports for one year for the SME sector is also welcome. The SME sector will also benefit from the increase in the limits for presumptive taxation and the clarification that no capital gains tax would be levied in case of conversion of small companies into LLPs.
Important measures have been taken to consolidate regulation in the financial sector. The establishment of the Financial Stability and Development Council will help inter-regulatory co-ordination while the Financial Sector Legislative Reforms Council will provide an outline for the expected reforms in this sector. The provision of additional banking licenses to private sector entities will enable greater competition in banking even as public sector banks are strengthened through re-capitalisation.
CII also welcomes the steps taken to encourage agricultural growth. The dual strategy of increasing agricultural productivity on the one hand and initiating reforms in the food supply chain on the other is one that has long been recommended by CII. If implemented well, this can go a long way in overcoming the supply bottlenecks that have been responsible for the current increase in inflation. Incentives provided to the food processing sector will also enable greater investment in this critical area, the press statement said.
CII has always highlighted the need for greater investment in infrastructure which will be a catalyst for growth. Budget 2010 has provided for significant increases in the Plan outlay for the critical infrastructure sectors such as roads, power, housing and rural infrastructure. The National Clean Energy Fund has also been established with an allocation of Rs 1000 crores to promote research and innovation in clean energy. CII is confident that with these measures, there will be a step-up in the amount invested in infrastructure.
AGRICULTURE GROWTH
A four-pronged strategy would be followed to spur growth in agriculture sector. The elements of the strategy are (a) agricultural production; (b) reduction in wastage of produce; (c) credit support to farmers; and (d) a thrust to the food processing sector.
The Budget provides Rs.400 crore for extending the green revolution to the eastern region of the country comprising Bihar, Chattisgarh, Jharkhand, Eastern UP, West Bengal and Orissa, with the active involvement of Gram Sabhas and the farming families.
60,000 ‘pulses and oil seed villages’ will be organized in rainfed areas with an outlay of Rs.300 crore during 2010-11. This will provide water harvesting, watershed management and soil health facilities to enhance to productivity of dryland farming areas. Another Rs.200 crore have been provided in the Budget for conservation farming.
To improve the storage capacity of food grains, Food Corporation of India is being allowed to hire godowns from private parties for a guaranteed period of seven years. This period so far was five years.
The target for farm credit is being raised to Rs.3,75,000 crore in 2010-11 from Rs.3,25,000 crore in the current year.
The period for repayment of loans under the Debt Waiver and Debt Relief Scheme is being extended by six months to June 30,2010.
The interest subvention for timely repayment of crop loans is being raised from 1 per cent to 2 per cent. Thus, the effective rate of interest for crop loans for farmers who repay their crop loan as per schedule will now be 5 per cent per year.
Five more Mega Food Parks will be set up in addition to the 10 already being established. External Commercial Borrowings will henceforth be available for cold storage, farm level pre-cooling and preservation and storage of agricultural and allied produce marine products and meat.
INFRASTRUCTURE
The Budget provides Rs.1,73,552 crore for infrastructure, accounting for over 46 per cent of the total Plan allocation.
The allocation for road transport is being increased by over 13 per cent from Rs 17,520 crore to Rs.19,894 crore.
Disbursement for infrastructure by India Infrastructure Finance Company Ltd(IIFCL) is expected to reach Rs.20,000 crore in 2010-11 as against Rs.9,000 crore this year. Refinancing of bank landing to infrastructure projects by IIFCL is expected to be more than double in 2010-11.
ENERGY
The Plan allocation for power sector is being more than doubled from Rs.2,230 crore in 2009-10 to Rs.5,130 crore in 2010-11.
A Coal Regulatory Authority is proposed to be set up for creating level playing field in the coal sector and resolving various issues.
The Plan outlay for New and Renewal Energy Ministry is being increased by 61 per cent from Rs. 620 crore to Rs.1,000 crore, especially to support the ambitious solar energy programme.
Growth Oriented: FICCI
The Union Budget is growth oriented and forward looking, preparing the Indian economy post global financial meltdown for a sustained course to attain double digit growth. The Finance Minister has done a fine balancing job under trying circumstances, astutely managing fiscal deficit while keeping an eye on growthh, observed Harsh Pati Singhania, President, FICCI.
In the face of pressure for stimulus withdrawal, the Finance Minister has only partially increased the CENVAT rate from 8 percent to 10 percent. Secondly, he has not increased the service tax rate. Thirdly, he has restructured the income tax slabs in a manner which will leave more money in the hands of consumers and thereby encourage demandd, Singhania observed.
By and large, the Finance Minister has provided a stable tax and policy framework for the Indian Economy to move forwardd, he added.
However, industry is disappointed that the Finance Minister had raised the MAT rate from 15 percent to 18 percent when industry was demanding a cut down to 10 percent. Further, the impact of excise duty hike across the board coupled with increase in excise duty on petrol and diesel will add pressure on the price line in current circumstancess, Singhania noted.
However, industry appreciates the need for some fiscal correction. Singhania noted that the Finance Minister has laid out a roadmap for fiscal correction as well as radical reforms of the tax regime through introduction of GST and Direct Tax Code. He has given a little time for preparation for introduction of these from only next year, thereby providing time for further public debate on DTC and fine tuning administrative machinery for GSTT, he said.
FICCI President also noted with satisfaction the emphasis the Finance Minister has placed on overall development of critical sectors such as agriculture and rural development, which FICCI has been emphasizing. Enhanced outlays for infrastructure projects would also add to the growth momentum.
The Finance Ministerrs announcement to infuse more capital into Public Sector Banks is good for credit growth as this will enable banks to lend more for productive economic activities. The reduction of surcharge on corporate tax rate has also been welcomed by Singhania.
INCLUSIVE DEVELOPMENT
Stating that inclusive development is an act of faith for the UPA government, the Finance Minister said that after the Right to Information, Right to Work and Right to Education, the government is now ready with the draft Food Security Bill. A sums of Rs.1,37,674 crore, representing 37 per cent of the total outlay, will be spent on social sector programmes.
Plan Allocation for school education is being increased from Rs.26,800 crore to Rs.31,036 crore to support the children’s rights to free and compulsory education. In addition, States will have an access to Rs. 3,675 crore for elementary education under the Finance Commission grant for 2010-11.
It has been decided to provide appropriate banking facilities to habitations having population in excess of 2000 by March 2012. It is also proposed to extend insurance and other services to the targeted beneficiaries. These provisions are expected to cover 60,000 habitations.
Rs.66,100 crore have been provided for Rural Development. Mahatma Gandhi National Rural Employment Guarantee Scheme gets Rs.40,100 crore and Bharat Nirman Programme, Rs.48,000 crore.
Indira Awas Yojana gets Rs.10,000 crore. The unit cost under this scheme is being raised to Rs.45,000 in
plain areas and Rs.48500 in hilly areas to cover the increase in cost of construction of houses.
The allocation to Backward Region Grant Fund is being enhanced by 26 per cent from Rs.5,800 crore to Rs.7,300 crore. An additional Central assistance of Rs.1,200 crore is being provided for drought mitigation in the Bundelkhand region.
Swarna Jayanti Shahari Rozgar Yojana gets 75 per cent increase in allocation from Rs.3,060 crore to Rs.5,400 crore. In addition, the allocation for Housing and Urban Poverty Alleviation is also being raised from Rs.850 crore to Rs.1,000 crore in 2010-11.
The 1 per cent interest subvention on housing loans upto Rs.10 lakh (where the cost of the house does not exceed Rs.20 lakh) provided in the Budget for 2009-10 has been extended by another year.
Rajiv Awas Yojana, a scheme for housing to slum dwellers and urban poor, gets a huge jump in allocation from Rs.150 crore last year to Rs.1,270 crore in 2010-11.
It has been decided to set up a National Social Security Fund for unorganized sector workers with an initial allocation of Rs.1,000 crore. This fund will support schemes for weavers, toddy tappers, rickshaw pullers, bidi workers etc.
The Rashtriya Swasthya Bima Joyana is being extended to all Mahatma Gandhi NREGA beneficiaries who have worked for more than 15 days during the preceding financial year.
The Swavalamban initiative started last year, under which the government contributes Rs.1,000 per year to each New Pension Scheme (NPS) account, will now be available for another three years.
Plan outlay for Women and Child Development is being stepped up by 50 per cent. A Mahila Kisan Sashaktikaran Pariyojana is being launched to meet the specific needs of women farmers.
The Plan outlay of Ministry of Social Justice and Empowerment gets a boost of 80 per cent to Rs.4,500 crore. Besides supporting the programmes for the target beneficiaries, the Ministry will be able to raise the rates for scholarship schemes for SC and OBC students. Similarly, the Ministry of Minority Affairs allocation has been raised by 50 per cent to Rs.2,600 crore.
STRENGTHENING TRANSPARENCY AND PUBLIC ACCOUNTABILITY
The government proposes to set up a Financial Sector Legislative Reforms Commission to rewrite and clean up the financial sector laws to bring them in line with the requirements of the sector.
Rs.1,900 crore has been allocated for the Unique Identification Authority of India.
A Technology Advisory Group for Unique Projects (TAGUP) is proposed to be set up under the Chairmanship of Shri Nandan Nilekani for creation of reliable and secure IT projects.
Defence gets an allocation of Rs.1,47,344 crore. As a one time confidence building measure in Jammu and Kashmir about 2000 youths will be recruited as constable in five Central Para-Military forces in 2010.
Adequate funds will be made available to support the action plan to be prepared by the Planning Commission for development of 33 left wing extremist affected districts.
An Independent Evaluation Office is to be set up to undertake impartial and objective assessment of various public programmes and improve the effectiveness of public interventions in Planning Commission.
A National Mission for Delivery of Justice and Legal Reforms is also to be set up.
Positive, growth oriented: ASSOCHAM
ASSOCHAM President Dr. Swati Piramal while welcoming Budget proposals, termed them as Pragmatic, positive, growth and development oriented as these aim at attaining inclusive growth.
“The Finance Minister has performed the most balancing act under given circumstances by partially rolling out the Stimulus package and at the same time paid adequate attention for development of social sector and more specifically so for rural sector”, said Dr. Piramal.
Mr. Mukherjee has done his best in the budget proposals to fuel consumption and sufficiently incentivised renewable energy, infrastructure, research and development in health and equipped these sectors with reasonably higher allocations.
Dr. Piramal also welcomed a deadline set for introduction of GST and Direct Tax Code, pointing out that these would be major tax reforms which will not only provide tax relief’s to people and industry but also help the government realize higher tax collections.
According to ASSOCHAM, the budget proposals will bring in more money in hands of individuals as several good measures have been introduced in the Finance Bill in the form of tax relief’s to general public. Mr. Mukherjee for the first time in the recent history of budget presentation placed huge faith in the private sector which will come forward to building Indian economy and help it achieve higher growth in years to come.
The ASSOCHAM has also welcomed announcements for bringing in more and more services under the purview of service tax by not tinkering with it’s existing ceiling rate of 10%.
TAX PROPOSALS
The Finance Minister emphasized the need for continued Tax Reforms. The Tax Returns form are being simplified and the Income Tax Department is now ready to notify Saral-2 forms for individual salary tax payers.
The Sevottam project started in four cities to provide a single window system for registration and grievance redressal will be extended to four more cities. Two more centres will be opened for bulk processing of Tax Returns. The Indirect Tax Administrations are being revamped to achieve the roll out of Goods and Services Tax (GST). Rs.1133 crore have been budgeted for a mission mode project to achieve this.
Major relief has been provided to individual tax payers by enhancing exemption limit and reducing tax in different slabs of personal income.. Deduction of an additional amount of Rs.20000 for investment in long term infrastructure bonds will be available in addition to the existing limit of Rs.1 lakh available for specified savings.
The surcharge on domestic companies is being reduced from 10 per cent to 7.5 per cent. However, the minimum alternate tax (MAT) is being increased from 15 per cent to 18 per cent.
Exemptions and deductions have been provided to increase spending on research.
The investment linked deduction to new hotels of two star category and above is being extended to give boost to investment in Tourism sector.
A one time interim relief is being provided to the housing and real estate sector by allowing pending projects to be completed within a period of five years instead of four years for claiming a deduction on their profits.
The Finance Minister has proposed to partially roll back the rate deduction in Central Excise duties and enhance the standard rate on all non-petroleum products from 8 per cent to 10 per cent ad valorem. The specific rates of duty applicable to Portland cement and cement clinker are also being adjusted upwards proportionately. Similarly, the ad valorem component of excise duty on large cars, multi-utility vehicles and sports utility vehicles which was reduced as part of the first stimulus package, is being increased by 2 percentage points to 22 per cent.
The basic duty of 5 per cent on crude petroleum; 7.5 per cent on diesel and petrol and 10 per cent on other refined products is being enhanced. The Central Excise Duty on petrol and diesel is being enhanced by Rs.1 per litre.
Excise duty on non-smoking tobacco is being enhanced. In addition a compounded levy scheme is being introduced by chewing tobacco and branded unmanufactured tobacco based on the capacity of pouch making machines.
A number of duty concessions are being proposed to support agriculture and allied sector. Mechanised handling systems in warehouses will get project import status with a concessional import duty of 5 per cent. Installation and commissioning of such equipment will be fully exempt from service tax. Concessional duty will also be applicable for cold storages, food processing units, specified equipment for food preservation etc. The concessional import duty to specified machinery for use in the plantation sector is being further extended upto March 2011. Testing and certification of agricultural seed is being exempt from service tax.
Tax exemptions have been announced for equipment used in solar systems and wind energy system, LED lights, electric cars, cycle rickshaw, mobile phone components and certain medical equipment.
The rate of tax on services has been retained at 10 per cent.
BUDGET ESTIMATES
The Budget Estimates 2010-11 provides for a total expenditure of Rs. 11,08,749 crore. Out of this, Rs 3,73,092 crore is plan expenditure and Rs.7,35,657 crore is non-plan expenditure. The plan expenditure has increased by 15 per cent while there is only 6 per cent in increase in non-plan expenditure.
The total receipt are estimate Rs.7,46,651 crore.
The Fiscal deficit is pegged at 5.5 per cent. In the Medium Term Fiscal Policy Statement being presented along with other Budget documents in the House today, the rolling targets for fiscal deficit are pegged at 4.8 per cent and 4.1 per cent for 2011-12 and 2012-13, respectively. These projections improve upon the recommendations of the Thirteenth Finance Commission.
Source: Press Information Bureau, Information and Broadcasting Ministry, Government of India
http://www.indiaonestop.com/Federal%20Budget/india_budget-2010-11.htm#top
No comments:
Post a Comment