For the first time since India gained freedom, its budget allocation reached a record Rs 1 trillion. This is the time in 62 years that India has presented such a huge amount on infrastructure, development, planning, education and various other things.
For the first time since India gained freedom, its budget allocation reached a record Rs 1 trillion. This is the time in 62 years that India has presented such a huge amount on infrastructure, development, planning, education and various other things.
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Finance Minister Pranab Mukherjee created a record of sorts when he tabled the budget in parliament yesterday.
He said the total central government expenditure for the current fiscal year had been stepped up to Rs 10,20,800 crore. R K Shanmukhan Chetty presented India's first budget with allocations of Rs 193 crore.
Seeking to address what he described as triple challenges, Mukherjee presented a revival-oriented budget with more funds for welfare schemes and infrastructure, a promise to restore India's high economic growth and better delivery mechanisms to reach the fruits of development to the poorest.
Amid high hopes from industry and the average citizen alike, the budget also promised new incentives to farmers, a big hike in funds for projects with emphasis on rural reconstruction and employment, more allocation for urban development and a fresh impetus to energy security.
During his 100-minute budget speech in the Lok Sabha, Mukherjee promised a national food security act soon to give 25 kg of rice or wheat per month to the poor at a subsidised price of Rs.3 per kg while promising a 40-percent hike in the health insurance scheme for people below the poverty line.
Dressed in a smart white bandgala suit, the 73-year-old politician - who had presented his last budget as finance minister in the Indira Gandhi government 25 years ago - said the new UPA government would continue to push its agenda of ensuring "inclusive growth and equitable development" while also meeting the "rising expectations of a young India".
"The government also recognises the challenges," Mukherjee said, referring to the task involved in countering the decline of India's high growth rate to 6.7 per cent in the past year from over 9 per cent in the preceding three.
"The first challenge is to bring back the GDP (gross domestic product) growth rate to over 9 per cent per annum," he said, setting the tone of what is his fourth career budget watched by Prime Minister Manmohan Singh and UPA chairperson Sonia Gandhi.
He said the other challenges included better governance and ensuring that the fruits of development reached across regions to touch the lives of every citizen - the "aam admi" (the common man) as he called them.
"The finance minister has done an admirable job," the prime minister said, soon after the budget was presented in the Lok Sabha. "The main aim of the budget is to minimise the impact of global recession," Manmohan Singh added.
"Overall, the strategy of the budget is to ensure that our economy recaptures the rhythm of the accelerated growth process. Simultaneously, it seeks to honour in large measure, the commitments we have made to our people."
The proposals, however, did not go down well with the stock markets, with the sensitive index (Sensex) of the Bombay Stock Exchange falling by over 900 points, or more than 6 percent.
However, India Inc, by and large, welcomed the proposals given the circumstances, but hoped for some more tax sops, while expecting a more definitive pronouncement in the area of selling government stake in state-run enterprises.
Mukherjee said with industry still under the grip of global recession, he was providing additional incentives in the form of both direct and indirect taxes.
He enhanced the customs duty on items like set-top boxes, LCD televisions and premium textile goods to encourage domestic production and value addition. He also reduced the excise duties on large vehicles and trucks.
The proposals on direct taxes, he said, would be revenue neutral, while indirect taxes would yield Rs.2,000 crore for the full fiscal.
Yet, Mukherjee hopes to step up the non-plan expenditure by 37 percent to Rs.6,95,689 crore (Rs.6,956 billion/$140 billion) over the 2008-09 and plan expenditure by 34 percent to Rs.3,25,149 crore (Rs.3,251.49 billion/$65 billion).
The total increase in expenditure, thus, is 36 percent, he said, as he kept the total borrowings at a high level, that will push up the country's fiscal deficit to 6.8 percent of GDP from 6 percent for 2008-09.
Mukherjee said the government will have to overcome all obstacles and create a brave new India. "As we begin this five-journey, the road ahead will not be easy. We will have to manage uncertainties and there will be as many problems as there would be solutions."
Highlights of the union budget for the current fiscal
- Fiscal deficit estimated at 6.8 percent of GDP
- National Housing Bank to get Rs.2,000 crore for rural housing funds
- Higher education outlay increased by Rs.2,000 crore over interim budget
- Geological Survey of India, Botanical and Zoological Survey of India to get Rs.15 crore each.
- National River programmes to get Rs.562 crore, up from Rs.335 crore earlier
- Rs.1,000 crore for reconstruction activities in the Aila-hit areas in West Bengal
- An additional amount of Rs.430 crore allocated to modernise police machinery in states
- Rs.190 crore budgetary support for civil aviation
- One handloom mega cluster each will be set up in West bengal and Tamil Nadu
- One powerloom mega cluster in Rajasthan
- At least 50 percent of the total rural women to be brought under the self-help group (SHG) network
- Banking network to be expanded to "unbankable" areas
-Expert group to be set up to advice on petroleum and diesel prices
- No change in corporate tax rate
-Centralised processing centre at Bangalore to streamline taxation
- Income tax exemption limit for senior citizens increased by Rs.15,000, for women and others by 10,000 each
- New indirect tax will be introduced in 45 days
- Fringe benefit tax abolished
- Duties on life saving drugs reduced
- Excise duty on petrol-driven trucks reduced
- Goods and services tax (GST) will be introduced April 1, 2010
- An alternative dispute settlement mechanism to be set up to settle tax disputes
- Lawyers brought under the ambit of service tax
- Tax exemption on profits in the natural gas sector extended
- Customs duty on LCD TVs reduced to 5 percent from 10 percent
- Five percent customs tax imposed on set-top boxes
- Rs.500 crore for the rehabilitation of displaced Sri Lankan Tamils and reconstruction activities in that country
- Aligarh Muslim University off-campus centres to be set up in Murshidabad in West Bengal and Malappuram in Kerala
- Allocation for the minority affairs ministry raised to Rs.1,740 crore
- Plan expenditure up 34 percent, non-plan spend up 37 percent
- Total spending increased to Rs.10.2 lakh crore
- Rs.420 crore for new IITs and NITs
- Commonwealth Games allocated Rs.3,472 crore
- National unique identification numbers to start rolling out in 12-18 months
- Paramilitary forces such as CRPF to get 100,000 homes
- Banking services in under-banked areas to be increased, scheme allocated Rs.100 crore
- Agriculture debt waiver extended by six months
- Outlay for national rural health mission increased by Rs.2,057 crore from the Rs.12,070 crore provided in the interim budget
- Allocation towards National Rural Employment Guarantee Act increased by Rs.39,100 crore
- Allocation for Bharat Nirman scheme increased by 45 percent
- Rs.20,000 crore for rural housing
- Rural electrification scheme to get Rs.7,000 crore more
- Tax department to work on early introduction of Saral 2 forms
- Stimulus for print media extended from June 13 to Dec 31
- Rs.1,000 crore to accelerate irrigation projects
- Agriculture development fund increased from Rs.2.87 lakh crore to Rs.3.25 lakh crore
- Market development assistance scheme for exporters increased by 148 percent to Rs.124 crore
- Pre-shipment interest subvention set at 2 percent for textile exporters
- Sufficient funds for infrastructure development
- Allocation for national highways development stepped up by 23 percent
- Allocation for urban poor schemes to be raised to Rs.39,730 crore
- LNG infrastructure to be expanded
- Allocation for Jawaharlal Nehru Urban Renewal Mission raised by 87 percent to Rs.12,887 crore
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