Interim Budget, Pranab disappoints; no tax sop

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Interim Budget for 2009-10

External Affairs Minister Pranab Mukherjee, who is also managing the finance ministry, said in Parliament on Monday while presenting the Interim Budget for 2009-10 that tax rates must fall and our ability to pay taxes must rise.

However, he disappointed big time by not announcing any relief in taxes or change in the tax structure to bring relief to the common man.

So, in effect, the tax structure for the common man remains what it was the last year.

He did not announce any major sops and stuck to highlighting the achievements of the United Progressive Alliance government and just reading out a lackluster statement of accounts and achievements of the government over the last five years.

The stock markets sank as Mukherjee's speech continued, especially concerned over no fiscal measures or duty cuts or tax sops being announced.

Of particular concern to the industry and the markets is the rising fiscal deficit and the fact that the nation will have to wait for a full Budget to get any relief.

He said:

Rs 40,000 crore (Rs 400 billion) relief extended through tax cuts to counter economic slowdown.

Allocation for Unique Identification programme has been pegged at Rs 100 crore (Rs 1 billion).

Plan expenditure in 2009-10 may have to be increased substantially at the time of presentation of overall budget if we have to give economy the stimulus it needs.

Allocation for JNNURM programme raised to Rs 11,842 crore (Rs 118.42 billion). Bharat Nirman programme gets Rs 40,900 crore (Rs 409 billion) in 2009- 10.

Rajiv Gandhi Rural Drinking Water Mission gets Rs 7,400 crore (Rs 74 billion) in 2009-10.

Integrated Child Development Scheme gets Rs 6,705 crore (Rs 67.05 billion) in 2009-10.

Allocation for Sarva Shiksha Abhiyan programme increased to Rs 13,100 crore (Rs 131 billion).

Flagship NREGA scheme gets Rs 30,100 crore (Rs 301 billion) in 2009-10.

Budgetary support increased for Ministries of Rural Development, Road Transport & Highway, Power, Railways, Industrial Policy & Promotion and IT.

Budget estimate for expenditure for 2009-10 put at Rs 953,231 crore (Rs 9532.31 billion). This includes Rs 285,145 crore (Rs 2851.45 billion) for plan expenditure while non-plan spend put at Rs 668,883 crore (Rs 668.83 billion).

Revised fiscal defict esimated at 6 per cent of GDP as against 2.5 per cent in the Budget estimate. Revised revenue deficit placed at 4.4 per cent as against 1 per cent in the Budget estimate for 2008-09.

Fiscal deficit has gone up from Rs 133,287 crore (Rs 1332.87 billion) in the budget estimates to Rs 326,515 crore (Rs 3265.15 billion) in the revised estimates for 2008-09.

Tax collections down by Rs 60,000 crore (Rs 600 billion) over budget estimates for 2008-09.

Fertiliser subsidy increased by Rs 44,863 crore (Rs 448.63 billion) from about Rs 14,000 crore (Rs 140 billion) during 2008-09.

Central plan expenditure increased from Rs 2,43,386 crore (Rs 2,433.86 billion) to Rs 2,82,957 crore (Rs 2,829.57 billion).

Revised budget estimates for 2008-09 increased to Rs 909,053 crore (Rs 9,090.53 billion) from Rs 750,884 crore (Rs 7,508.84 billion).

Rs 632 crore (Rs 6.32 billion) provided for recaptalisation of Regional Rural Banks.

Non-performing assets of public sector banks have fallen from 7.8 per cent in 2007 to 2.3 per cent in March 2008.

India's GDP clocked 9% in 08

Export growth rate in first nine months of 2008-09 touched 17.1 per cent.

Industrial production fell by 2 per cent in 2008 on a year to year basis. World economy, according to forecasts, will fare worse in 2009 than in 2008.

Inflation rate fell to 4.4 per cent on Janaury 31, 2009.

Domestic investment rate at 37.7%

The annual rate of growth in agriculture was 3.7 per cent.

Foodgrain production increased by 10 million tonnes each year to all time high of 230 million tonnes in 2007-08.

Foreign trade rose from 23.7 per cent of GDP to 35.5 per cent of GDP in 2007-08.

Gross domestic savings rate increased from 29.8 per cent in 2003-04 to 30.7 per cent in 2007-08.

Tax to GDP ratio increased from 9.2 per cent 2003-04 to 4.5 per cent 2007-08, says Mukherjee.

In the first four years of UPA government, the economy has shown a dream run with growth rates booming throughout the tenure.

The per capita income also registered the fastest growth rate during the last four years.

The fiscal deficit dropped to 2.7 per cent, while the revenue deficit grew.

The investment rate grew to 39 per cent and domestic savings rate showed great improvement at 37.7 per cent.

The tax to GDP ratio roie to 12.5 per cent.

UPA was focussed on delivering 7 per cent plus growth throughout its tenure. Pranabg Mukherjee was the finance minister from 1982 to 1984.

IITs in Madhya Pradesh and Rajasthan will start functioning in 2009-10.

Student loans increased from Rs 4,500 crore on March 31, 2004 to Rs 24,260 crore (Rs 242.60 billion) as on September 30, 2008.

Rural infrastructure development scheme to be expanded through suitable allocations.

60.4 lakh (6.04 million) houses constructed under Indira Awas Yojana during the year.

Minimum support price for wheat increased from Rs 630 to Rs 1,080 per qunital.

The government will continue interest subvention scheme for farmers for loans up to Rs 3 lakh (Rs 300,000).

Rs 65,300 crore (Rs 653 billion) in loans waived for farmers during 2008-09. It benefitted 3.6 crore (Rs 36 million) households.

Agriculture credit has been increased by three fold to Rs 250,000 crore.

Six new IITs started functioning in 2008-09. Two more

Export growth rate in first nine months of 2008-09 touched 17.1 per cent.

Industrial production fell by 2 per cent in December.

India Infrastructure Finance Company to raise Rs 10,000 crore (Rs 100 billion) from market by end of March 2009.

Fifty infrastructure projects worth Rs 67,700 crore (Rs 677 billion) given in-principle or final approval.

Need for accelerating pace of policy reforms, particularly in financial sector.

The FDI inflow between April-Nov 2008 was $23.3 billion, a growth of 45 per cent compared with that during the same period in 2007.

The government has relaxed the Fiscal Responsibility Budget Management (FRBM) targets to counter global economic slowdown.

source: rediff.com