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Budget 2009 - Highlights simplified

Highlights

Taxes

· Surcharge of 10% on personal income tax removed
· No change in Corporate taxes
· Increase exemption on personal income tax by Rs 15,000 to Rs 2,40,000 for senior citizens
· Increase exemption on personal income tax by Rs 10,000 to Rs 1,90,000 for women
· Increase in exemption on personal income tax by Rs 10,000 to Rs 1,60,000 for all others
· Surcharge of 10% on personal income tax removed
· Propose to phase out surcharge on Direct Taxes
· To remove Fringe Benefit Tax
· To remove Fringe Benefit Tax
· States agree on basic structure of Goods and Services Tax
· To raise Minimum Alternate Tax(MAT) TO 15 % of book profit
· MAT hiked from 10% to 15%
· Commodity Transaction Tax scrapped
· Carry Forward Tax credit on MAT to 10 year
· To exempt Pension trust from Securities Transaction Tax
· To create Alternate Tax disputes resolution mechanism for foreign companies
· Software Technology Parks of India (STPI) extended by a year
· GST to be a dual regime with Central and state terms
· No Securities Transaction Tax (STT) on sale/purchase of shares by NPT

Reforms, Tax reforms

· To work on Saral 2 form to make income tax procedure simple
· Tax reform system to be completed in 4 years
· Balanced approach to financial de-regulation in justified
· Review and aims of the budget
· It a mandate we accept with humility and will do all we can for the welfare of the nation
· Strong mandate for growth
· Sensitive to the challenges of a young India
· The govt has to sustain a growth of 9% create 12 mn jobs per year
· Reduce poverty levels by half by 2014 infrastructure investment to more than 9% by 2014
· Focus to sustaining momentum in exports
· Strengthen primary healthcare delivery
· Plan to strengthen primary health care
· Broaden inclusive growth agenda
· Our target of agricultural growth at 4%
· Signs of revival of domestic industry
· Fiscal deficit has widened from 2.7 % to 6.2% of GDP
· Institutional reforms to bring the fiscal deficit under control

Challenges

· To get the GDP growth to 9% at the earliest
· To deepen the process of inclusive development
· To reenergise govt, govt must provide service with accountability
· Growth driver in the last 5 yrs has been private investment
· Structure of Indian economy has changes in last 10 yrs
· Now services constitutes more than 50% of GDP
· Increase investment in infrastructure to 9% by 2014
· To focus on infrastructure development
· Growth co-operative effort of Centre and States
· Job growth rate hit by dip in GDP
· Integration of Indian economy with the world has opened up new opportunities and new challenges
· Aim to return to FRBM target at the earliest

For revival

· Govt provided three stimulus package
· RBI took monetary measures to meet the needs of productive sector
· This led to fiscal deficit to rise to 6.2% in 08-09
· We achieved a growth of 6.7% of GDP last fiscal
· Signal of recovery visible in the last few months
· Uncertainty about revival of global economy remains

Infrastructure

· We had set up IFFCL to provide financial assistance to infra companies
· IIFCL will be given greater flexibility
· IIFCL will refinance 60% of bank loans in critical sectors
· IIFCL will evolve a take-out financing schemes for incremental funding in infra
· Fiscal stimulus at 3.5% of GDP helped economy revive
· Sensitive to the needs of young India
· Endeavour to make Budget participatory and ensure continuity
· Significant increase in capital inflows needs
· PPP to be encouraged especially in infrastructure
· Need to improve and strengthen regulatory framework
· To speed up Golden Quadrilateral Project
· Total investment of 100000 CFR in infrastructure
· Need to remove bottlenecks for speedy implementation of infra projects
· Highways allocated 23% more than 08-09
· Rs 15800cr for Railways
· JNURM allocation increased by 80% to Rs 12887 cr
· Basic amenities for urban poor to get more than 3000 cr to make country slum free in 5 yrs
· Provision for housing urban poor at Rs 3973 cr
· Allocation to NHAI increased to 23& Y-O-Y
· Fiscal deficit has widened to 6.7% of GDP
· Target agriculture credit inflows ay Rs 3.25 lakh cr
· Focus of NCC, Gammon for highway development
· JNNURM to get more than Rs 12000 cr up 87%
· Basic amenities for urban poor to get more than 3000 cr to make country slum free in 5 yrs.
· Provision for housing urban poor at Rs 3973 cr
· Allocation to NHAI increased to 23& Y-O-Y
· Fiscal deficit has widened to 6.7% of GDP
· Target agri credit inflows ay Rs 3.25 lakh cr
· Focus of NCC, Gammon for highway development
· Rural electrification allocation up 27%

Agriculture

· Interest subvention scheme for agriculture loans to continue
· 60% population depended on agri
· Sustained increased in plan allocation
· Target credit flow Rs 325000 cr
· Loans upto 3 lakh at 7% per annum
· Those who pay their loans in time will get loans at 6%
· Task force set up to look into farmer suicides in Maharashtra
· Rajiv Gandhi Krishi Vikas Yojana allocation up by 30%
· Fertilizer subsidy to go to farmers directly
· To move towards Nutrient based subsidy regime
· Additional allocation of Rs 1,000 crore for accelerated irrigation project
· Central assistance for storm-water drainage project increased to Rs 500 crore from Rs 200 crore in the interim Budget

Exports

· Market development assistance schemes allocation up by 180% to 124 cr
· Interest subvention extended to march 2010 for employment extensive export sector
· Special fund for small industries development bank of Rs 400 cr
· Focus to sustain momentum in exports
· 2% Interest subvention for exporters
· Extension of interest subvention scheme extended upto March 2010 to cover sectors like handicrafts and handlooms
· Allocation for market development assistance scheme enhanced by 148 per cent
· To set up handloom mega clusters in Rajasthan, West Bengal and Tamil Nadu
· Export Credit Guarantee scheme extended till March 2010

Oil and gas

· Domestic oil prices should be in sync with global crude
· National gas grid to be set up
· Outlay for Assam Gas Project increased
· Effective interest rate is 8% for farmers with foreclosures
· Expert group to be set up petro product pricing
· Domestic oil prices should be in syncy with global crude
· To develop National Gas Grid

PSUs, banks and Insurance

· To hike promoter shareholding in PSUs
· Encourage people participation in disinvestment
· Banks and insurance will remain in public sector and will get all support
· Banking network to be expanded
· One banking centre in every block planned
· 160% hike in ADPRP
· Capital in fusion in PSU banks to keep them competitive

Inclusive development

· Creating entitlements backed by legal authority to provide basic facility to the aam aadmi
· NREGA gave employment to 4.4 cr household
· Reserve wage of RS 100 per day as an entitlement under NREGA
· Rs 39100 cr for 09-10 for NREGA an increase of 140%
· NREGA allocation increase at 144%
· New scheme PMAGY for integrated development of under developed villages

Pilot project this year

· Poverty eradication goal by 2014-15
· Interest subsidy to poor families for loans upto Rs 1 lakhs

Pension

· Substantially improve pension for armymen
· Pension benefit extended to war wounded being liberalised
· One Rank One Pension committee recommendations accepted

National Food Security

· BPL entitled by law for Rs 25 kg of rice/wheat at Rs 3 kilo
· Bharat Niraman allocation up 45%
· PM Gram Sadak Yojana allocation up to Rs 12000 cr
· Indira Gandhi Awas Yojana allocation up by 63%

Women and child development

· Focus on women self help groups
· 22 lakhs such groups of women active today, aim to link such self help groups to banks
· Corpus for such schemes to be raised to Rs 500 cr in this fiscal
· Aim to reduce female literacy by half in 3 years
· New scheme to give interest subsidy to poor students pursue any recognised course

Climate change

· Rs 562 cr for national river and lakes conservation

To build accountable institutions:

· RTI act an important step in ushering in accountability
· Unique ID project is major step in this regard: it also marks a beginning of the private involvement in projects of national importance

Police and security

· Rs 430 cr for police modernisation
· 1 lakh housing units for central paramilitary forces
· Borders: 2284 cr for strengthening of borders

Education

· Rs 50 crore for Chandigarh University
· Interest subsidy on loans for higher education
· Rs 2130 crore to set upto more IITs and IIMs
· Spending on higher education raised to Rs 2010 crore

Minorities

· Allocation hiked from Rs 1000 cr to 1700 cr in 09-10
· Scholarships for minorities
· AMU to get Rs 25 cr for each of its new campuses
· Rs 1740 crore outlay for minorities

Budget estimates

· Rs 1020838 cr total budget allocation for 09-10
· Out this more than Rs 6000 cr is planned expenditure while the rest is non-plan
· Increase in non-plan expenditure was due to pay commission and food subsidy
· Interest payment consists of 36% of non-plan expenditure
· Defence outlay up from Rs 105600 cr in 08-09 to 104703 cr in 09-10
· Total tax receipts expected at Rs 641079 cr
· Revenue deficit is estimated at 4.8% and 4.6 as per provisional account for 09-10
· Revenue deficit as percentage of GDP is pegged at 6.8%
· To spend Rs 10.20 lakh crore as total expenditure in 2009-10, crossing the Rs 10 lakh mark for the first time in history
· Increase in plan expenditure 34 %, non-plan at 37 %
· Revenue deficit projected at 4.8% in FY 10
· Fiscal deficit projected at 6.8 % in FY 10

Others

· DEPB scheme for print media extended
· Stimulus package for print media extended to Dec 31
· Hike in allocation for management of Mumbai Floods
· New project for modernisation of employment exchange
· A national web portal for the same
· New programme for rehabilitation of those effected by cylone Alia

Margaret da Costa
Avenues Incorporated
www.avenues-inc.com


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