Agencies
New Delhi, Feb 29:
In an election budget that gives largesse to different sections, Finance Minister P Chidambaram today announced a waiver of agricultural loans to the tune of Rs 60,000 crore, raised the income tax exemption threshold to Rs 1,50,000 and slashed customs and excise duties on variety of goods.
Presenting his fifth and last full-fledged budget, he also withdrew the controversial banking cash transaction tax but introduced a Commodities Transaction Tax on the lines of Securities Transaction Tax on options and futures. The Central Sales Tax was reduced from three to two per cent.
Under the income tax proposals that will give a minimum relief of Rs 4,000 to all assessees, incomes between Rs 1,50,001 and Rs 3,00,000 will be 10 per cent, those between Rs 3,00,001 and Rs 5,00,000 will be 20 per cent and above Rs 5,00,001 will be 30 per cent.
Senior citizens will pay no tax up to Rs 2,25,000 and women up to Rs 1,80,000. There will be no change in the corporate income tax or the surcharge rate.
While Chidambaram's direct tax proposals are revenue neutral, those on the indirect taxes side are estimated to result in a loss of Rs 5,900 crore.
Raising the Defence budget by 10 per cent from Rs 95,000 crore to Rs 105,600 crore in the coming year, the estimates of Plan expenditure have been fixed at Rs 2,43,386 crore which will be Rs 32.4 per cent of the total expenditure. Non-Plan expenditure has been estimated at Rs 5,07,498 crore.
In cheerful news to the Central Government employees, he announced that the Sixth Pay Commission will give its report by March this year.
Faced with problem of farmers' suicides on account of indebtedness, the Finance Minister announced a scheme of debt waiver and relief under which all loans upto March 2007 and overdue upto December last will be covered. Three crore small and marginal farmers will benefit to the tune of Rs 50,000 crore by the waiver while the one-time settlement for other farmers will cost Rs 10,000 crore.
On the indirect tax proposals side, he made no change in the peak rate of customs duties while reduced it on project imports from 7.5 per cent to five per cent. He also proposed to impose a four per cent special countervailing duty on a few specified projects in the power sector.
While Chidambaram announced measures to expand the market for corporate bonds, he extended the requirement of the Permanent Account Number (PAN) to all transactions in the financial market, subject to threshold exemption limits.
The Finance Minister has doubled the outlays for the Ministry of Minority Affairs to Rs 1,000 crore in 2008-09 for speedy implementation of the recom mendations of the Justice Rajindar Sachar Committee for minority welfare. Besides, government will contribute additional equity of Rs 75 crore to the National Minorities Development and Finance Corporate.
Giving a thrust to water resources and irrigation projects, the budget provides Rs 100 crore as initial corpus for establishing the Irrigation and Water Resoruces Finance Corporation.
Food subsidy under the Public Distribution System will cost the government Rs 32,667 crore. Smart cards will be used for delivery of this subsidy in Haryana and Chandigarh on pilot basis.
Considered as a dream project of UPA Chairperson Sonia Gandhi, the Finance Minister has provided Rs 16,000 crore for the National Rural Employment Guarantee Scheme (NREGS) which will be extended to all 596 rural districts in the country.
Budget to stimulate investment: FM
Finance Minister P Chidambaram today said the Union Budget for 2008-09 would stimulate investment and consequently growth, while pointing out that he had done the best through the budgetary exercise by providing credit facilities to the farm sector.
"Credit is only one element of the story in the farm sector. I provided more credit. Budget can only address credit side... The farm sector has not done too bad this year," he said in his post-Budget comments.
The Finance Minister had announced debt waiver and relief worth Rs 60,000 crore to small and marginal farmers in the Budget, the last full financial statement before the general elections next year. "This Budget will stimulate investment and growth and that growth will create wealth... The economy is growing by 8 per cent, people have become more tax compliant and they are willing to pay taxes," he said on the buoyancy in government's revenues.
India Inc gives thumbs up to Budget
The Indian industry and investment bankers on Friday gave a thumbs up to the Union Budget, saying Finance Minister P Chidambaram has done a "fantastic" job.
"Budget is on the expected lines and the industry has not been penalised although we are disappointed that the corporate tax has not been changed," apex industry body CII's President Sunil Mittal said.
"Corporate taxes are at fair levels. An increase of five per cent on short-term capital gains will make people hold for medium term," Kotak Mahindra Bank [Get Quote] managing director Uday Kotak said.
Industrialist Sajjan Jindal, vice-chairman and MD of JSW Steel [Get Quote] said: "This is a mixed budget and the FM has not touched upon the corporate tax, which we were anticipating.
Although there is a little disappointment on not meeting the concerns on iron ore conservation and the taxes imposed on chrome ore export are also a long-pending demand of ours, which is a welcome step, he added.
Farmers get complete waiver
Finance Minister P Chidambaram today announced a Rs 60,000-crore relief package for farmers, including complete waiver of loans given to small and marginal farmers.
Presenting his fifth Budget and the last one before the general elections, Chidambaram announced waiver of Rs 50,000 crore worth of loans to small and marginal farmers and a settlement scheme for other farmers that would cost the exchequer another Rs 10,000 crore.
Chidambaram said that according to estimates, three crore marginal and small farmers would benefit from the government's amnesty.
Under the one-time settlement scheme that will benefit another one crore farmers, the government will give a rebate of 25 per cent on payment of outstanding loans.
Chidambaram said that according to estimates, three crore marginal and small farmers would benefit from the government's amnesty.
Under the one-time settlement scheme that will benefit another one crore farmers, the government will give a rebate of 25 per cent on payment of outstanding loans. The agricultural credit of scheduled banks is estimated at Rs 2,40,000 crore in the current fiscal and it would go up to Rs 2,80,000 crore in 2008-09.
Sensex down 240 pts
Mumbai: The budget 2008-09 gave mixed signals to markets but the proposal to hike the short-term capital gains tax did not go down well as the benchmark Sensex dipped by more than 240 points on Friday.
The 30-share index on the Bombay Stock Exchange recovered from steep intra-day lows and ended the day at 17,578.72, a fall of 245.76 points, or 1.38 per cent, from its last close.
Marketmen said while the proposed hike in levy on securities held for less than a year poured water on investor sentiments, some other encouraging proposals for sectors like auto, infrastructure, pharma and agriculture was welcomed with cheers.
However, the markets took the proposal to keep corporate and surcharges unchanged with a pinch of salt.
Marketmen said a tardy 8.4 per cent GDP growth for the third quarter of the fiscal, confirming fears of a slowdown expressed in the Economic Survey, also weighed down on the market sentiments.
The Sensex, in a knee-jerk reaction to the budget proposal of a hike in short-term capital gain tax to 15 per cent, had plunged by about 500 points to a low of 17,337.46 in the afternoon trade.
HIGHLIGHTS
* Rs. 60,000 crore agricultural debt relief package; complete loan waiver for small and marginal farmers; 4 crore farmers to benefit
* Rs.2,80,000 crore target set for farm credit in 2008-09; short term crop loan to continue at 7 per cent interest
* Irrigation and water resources finance corporation to be set up; rainfed area development programme to be started
* Rs.3, 966 crore for schemes for SCs and STs; Rs. 18,983 crore for schemes earmarking 20 per cent funds for SCs and sts
* Multi-sectoral development plans for all 90 minority concentration districts
* All women self help groups credit-linked to banks to be covered under Janashree Bima Yojana
* National rural employment guarantee scheme to cover all 596 rural districts
* A national programme to be launched for the elderly
* Rashtriya Swasthya Bima Yojana for workers under BPL category in unorganized sector
* A statement on child related scheme introduced in the budget for the first time
* Mid-day meal scheme to be extended to upper primary classes in all blocks
* Special mechanism for north-eastern border areas
* Government to establish 16 central universities
* 3 IITs, 2 IISERs and 2 schools of planning and architecture to be established
* 6,000 high quality model schools to be opened
* New scholarship scheme for promoting innovations in science
* Each district to have a Nehru Yuva Kendra
* Schools in water deficient habitations to have drinking water systems
* Subsidy on houses under Indira Awas Yojana increased from Rs. 25,000 to Rs. 35,000 in plain areas and from Rs. 27,500 to Rs. 38,500 in hill/difficult area
* Rs. 1000 crore provided for Aam Admi Bima Yojana
* Allocation under Indira Gandhi old age pension scheme increased from Rs. 2392 crore to Rs. 3443 crore
* Rs. 32,667 crore provided for food subsidy under public distribution system
* Rs. 1000 crore provided for establishing a non-profit corporation for skill development
* Rs. 750 crore allocated for upgrading 300 ITIs
* Six mega-clusters planned for handlooms, powerlooms and handicrafts
* Government to provide Rs. 16,436 crore as equity support and Rs. 3,003 crore as loans to central public sector enterprises
* Backward region grant fund retained at Rs. 5,800 crore; Bihar , Orissa and Uttar Pradesh to get nearly 45 per cent of the amount
* Income tax exemption limit hiked to Rs. 1.5 lakh; 10 per cent tax for income between Rs. 1.5 lakh and Rs. 3 lakh; 20 per cent between Rs. 3 lakh and Rs. 5 lakh. Income above Rs. 5,00,001 to attract 30 per cent income tax
* Exemption limit in IT for women, senior citizens Rs. 1,80 lakh & Rs.2.25 lakh
* No change in corporate income tax rates and surcharge
* No change in the peak rate of customs duty
* Customs duty on project imports slashed from 7.5 per cent to 5 per cent
* Duty on steel and aluminium scrap abolished
* Excise duty on pharmaceutical sector reduced from 16 per cent to 8 per cent
* Small cars, two and three wheelers, buses and their chassis to cost less
* Non filter cigarettes to cost more, excise on non filter cigarettes will be at par with filter cigarettes
* Four more services brought under service tax net
* Threshold limit of exemption for small service providers increased from Rs. 8 lakh to Rs. 10 lakh
* Customs duty on crude and unrefined sulphur brought down from 5 to 2 per cent
* Export duty on chrome ore increased from Rs. 2000 to Rs. 3000 per metric tonne
* Cenvat on all goods reduced from 16 to 14 per cent
* Central sales tax proposed to be reduced to 2 per cent from April 08
* Excise duty on bulk cement brought on par with packaged cement; clinkers to attract excise duty of Rs. 450 per metric tonne
* Pan made compulsory for all transactions in the financial market subject to suitable exemption limit
* Allocation for defence increased by 10 per cent from 96,000 crore to Rs. 105,600 crore
* Revenue deficit estimated at Rs. 55,184 crore
* Fiscal deficit pegged at 2.5 per cent of GDP
LEADERS' TAKE ON BUDGET:
Debt waiver is revolutionary step: Sonia
UPA chairperson Sonia Gandhi today termed the waiver of farmer loans a "revolutionary step".
"Today is a very happy occasion. The waiver of loans on farmers by the UPA government is a revolutionary step, Sonia said while addressing a large gathering of farmers who descended at her 10 Janpath residence soon after the announcement of the debt relief in the Union Budget 2008-09.
Budget lacks long term perspective: CPI
CPI secretary D Raja on Friday criticised the Budget 2008-09 saying it lacked long term perspective and gave the indication that the direction in which economic reforms were going could be "dangerous".
Terming the exercise as a "stunt", the party said the budget was silent on the four per cent interest rate on loans to farmers and demand for setting up of National Debt Relief Commission.
Budget silent on inflation, price rise: Yashwant Sinha
Yashwant Sinha, Former Finance Minister and BJP leader said, "Clear attempts have been made to make the budget appear "people friendly". However, the Budget is completely silent on three major issues - the staggering inflation, rising prices of essential commodities, rising spending in the infrastructure sector.
Debt relief given to the farmers in the budget should have comer earlier: George Fernandes
"Historic budget": Laloo Prasad
Union Railway Minister Laloo Prasad, "The 2008 Budget has equally addressed the concerns of senior citizens, marginalized farmers, women and the minority community. It's a historic budget, as it is for the first time that the debt waiver to the tune of Rs 60,000 cr for farmers has been announced by our government."
`Divine gift` to farmers: Karunanidhi
Reacting to the Union Budget, Tamil Nadu Chief Minister M Karunanidhi said, "It's a "divine gift" to farmers as it had waived Rs 60,000 crore of their outstanding loans."
Demands partially fulfilled: Shiv Sena
Manohar Joshi, former Lok Sabha Speaker, and Shiv Sena leader, "It's not an happy budget at all. Every one knows that we have long championed for the causes of farmers.
Centre's move commendable: Maheshwari
Joint president of MP Chambers of Commerce and Industries, Prafulla Kumar Maheshwari, welcoming the budget, said that the move to waive off loans of farmers is commendable. Besides, the Central government has done appreciably well by making provisions in education and social sectors. Increase in budgetary allocation for Information Technology will prove beneficial for rural areas. In fact,it would aid in the all-round development of the villages. The establishment of over one lakh centres with broadband internet facility will improve communication facilities.
Maheshwari also welcomed the reduction in Central Sales Tax. However, the industries sector has not been provided the much needed relief so as to face global competition. Neither there has been any relief in interest rate for the industries nor the central excise has been slashed.
Budget insufficient for farmers
Chief Minister, Shivraj Singh Chouhan, giving his reactions to the Union budget, said that the provisions in the budget are not sufficient for farmers and Madhya Pradesh. Chouhan said that the Finance Minister had not understood the coordinated infrastructure for agriculture and that he expected cooperation of the farmers to achieve 4pc growth in the 11th Five Year plan.
Reliefs to check prices
President of Madhya Pradesh Congress Committee, Suresh Pachauri, said that the reliefs given in various taxes on commodities will help check rising prices. Provisions for relief in Income Tax as also commencement of insurance scheme for senior citizens and workers of unorganized sector is a unique initiative, he added.
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