The Finance Minister presented the Union Budget 2010. Here are the most important takeaways from this budget:
The finance minister proposed the following slabs for individual tax payers: No tax for up to Rs.160,000, a rate of 10 proportionality for up to Rs. 500,000, then 20 proportionality for up to Rs.800,000 and finally 30 proportionality for broad income.
Presented the wide-ranging discussions already on for the Direct Tax Code (DTC), the Government is set to implement it from April 1, 2011. Also, the centre is discussing with Empowered Committee of State Finance Ministers to finalise the formation of Goods and Services Tax (GST). The aim is to present GST by April, 2011.
The Budget has provision for providing Rs 165 bn to PSU banks as a way of funding them better to meet up increased credit needs in Fiscal Year 2011. This amount would make these PSU banks to attain 8% Tier-I capital by March 31, 2011. RBI is mulling over to give additional banking licenses to private sector and non banking financial companies (NBFCs), if they meet the RBI’s eligibility criteria.
The government will extend existing interest subvention/subsidy of 2% for one more year for exports covering handicrafts, carpets, handlooms and small and medium enterprises.
The government will provide a sum of Rs 1,735 bn for infrastructure development. This is around 46% of the total plan allocation for Fiscal Year 2011. Further, allocation for road transport has been increased by over 13%.
The Budget has provisions for more funds for the progress of the power sector with a view of hurrying up the expansion of new production capacities. Provisions for power sector have been doubled to Rs 51 bn in Fiscal Year 2011. Also, the expenditure for renewable energy has been increased by 61%.
The Budget has provision of Rs 661 bn for rural development. Allocation for Mahatma Gandhi National Rural Employment Guarantee Scheme has been paced up to Rs 401 bn in Fiscal Year 2011. Further, an amount of Rs 480 bn has been to be paid for rural infrastructure programmes under Bharat Nirman.
As for urban development, the provision for the same has been amplified by more than 75% in Fiscal Year 2011. Allocation for housing and urban poverty alleviation has also been elevated by almost 18% in Fiscal Year 2011.
Beside an approximate figure of 6.9% and 5.5% of GDP in Fiscal Year 10 and Fiscal Year 2011 respectively, the aims for fiscal deficit are fixed at 4.8% and 4.1% for Fiscal Year 12 and Fiscal Year 13 respectively. Also because of the various other financing factors for fiscal deficit, the actual net market borrowing of the government in Fiscal Year 2011 would be around Rs 3,450 bn, which would leave adequate room to meet the credit needs of the private sector.
The Budget has reduced surcharge of 10% on domestic companies to 7.5%. However, it has raised the rate of Minimum Alternate Tax (MAT) from the current rate of 15% to 18% of book profits.
The Budget has partially turned back some rate reduction in Central Excise duties. The standard excise duty on all non-petroleum products has been enhanced from 8% to 10%. The duty benefits have also been withdrawn from cement and cement clinker, large cars, multi-utility vehicles and sports-utility vehicles, crude petroleum, and diesel & petrol. Central excise duty on petrol and diesel has been enhanced by Re 1 per litre each.
The market reaction, for budget was positive, with the index (Sensex) of the Bombay Stock Exchange (BSE) ruling at 16,360.90 points, against the previous day’s close at 16,254.2 points, with a gain of 106.7 points, or 0.65 percent.
The house presided over by Speaker Meira Kumar, included Prime Minister Manmohan Singh, United Progressive Alliance (UPA) chairperson Sonia Gandhi and Leader of Opposition Sushma Swaraj.
This was fourth Indian budget presented by Mukherjee in his career as finance minister and the second for the United Progressive Alliance (UPA) government.
Although the India budget 2010 speech contained policy pronouncements, other steps directed at reforms, annual statement of accounts for the upcoming year in terms of receipts and expenditure, along with direct and indirect tax proposals.
The budget was preceded by a quick meeting of the federal cabinet inside the parliament house presided over by the prime minister for a normal support for the budget proposals.
