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| Costlier petrol, diesel may hit poor hard as Pranab sings peans of growth in Budget 2010-11 | | |
ABID SHAH
NEW DELHI, FEB 26: Union Finance Minister Pranab Mukhejee’s Budget for 2010-11 points to India’s growing fiscal might. His idea behind today’s Budget proposals brought before the Lok Sabha is winning back a higher and robust growth rate.
This had once touched nine percent a year mark of growth in Gross Domestic Product or GDP. And, thus, Finance Minister has tried to fill the air with same or even greater expectations among diverse sections of the society even as many of them grapple with spiraling prices without a corresponding rise in their incomes.
The Budget Estimates 2010-11 provides for a total expenditure of Rs. 11,08,749 crore. Out of this, Rs 3,73,092 crore is plan expenditure and Rs.7,35,657 crore is non-plan expenditure. The plan expenditure has increased by 15 percent while there is only 6 percent increase in non-plan expenditure.
The total receipt are estimate Rs.7,46,651 crore.
The Fiscal deficit is pegged at 5.5 percent. In the Medium Term Fiscal Policy Statement being presented along with other Budget documents in the House today, the rolling targets for fiscal deficit are pegged at 4.8 percent and 4.1 per cent for 2011-12 and 2012-13, respectively. These projections improve upon the recommendations of the Thirteenth Finance Commission.
Talking to media persons after his Budget Speech, Finance Minister said that his Budget had three objectives. The first and foremost of them was to quickly put the economy on the same growth trajectory that had once brought a growth rate of nine percent in GDP. This was before the September 2008 financial crisis that the world faced. And to win this growth turn out once again could well be possible as per the objective that the Pranab Mukherjee said he had in mind while formulating his Budget.
The second objective, according to him, is to ensure fiscal expansion through fiscal consolidation. And the last but not the least is to encourage inclusive growth. For this the Finance Minister said that out of Rs 3.73 lakh crore Plan Expenditure 37 percent would go to social sector and 46 percent for infrastructure development. Out of the last 25 percent would be spent on rural infrastructure.
And to raise money Finance Minister opted to put back custom duty on crude oil import, justifying this that this was curtailed when crude prices were as high as $120 a barrel and now the levy could be back since the prices went down.
Pranab Mukherjee said that he had partially rolled back excise duty on various manufactured items to help industry to recover from the current slowdown brought by the great fiscal bust that hit the West about seventeen months ago or so.
As for to tackle the grave problem of unemployment in Jammu and Kashmir, which has around 300,000 jobless people, the central government on Friday announced that 2,000 youth from the state will be recruited in the central paramilitary forces.
“There was decline in violence in Jammu and Kashmir in the year 2009. We have taken a number of confidence building measures. As one more such measure, the government proposes to recruit about 2,000 youth as constables in five central paramilitary forces in the year 2010,” Finance Minister Pranab Mukherjee said in his budget speech. Unemployment is said to be one of the reasons for the growth of militancy in Jammu and Kashmir.
Moreover, Farooq Abdullah, Union Minister for New and Renewable Energy has been given 61 percent hike for renewable energy sector in the Budget allocations for the year 2010-11. In a statement he thanked the Prime Minister and Finance Minister for considering the financial requirements of the renewable energy sector. He said that the increased allocation will enable his Ministry not only to take up new projects but also to strengthen the existing ones.
The approved outlay of the Ministry of 2009-10 was Rs.620 crore. The same has now been enhanced to Rs.1000 crore for 2010-11, which is an increase of 61 percent over last year’s outlay. This increase is mainly due to the increased thrust being given by the Government on Solar energy utilisation under the Solar Mission.
The Finance Minister in his speech in Parliament today also announced that to address the problem of energy deficiency in the Ladakh region of Jammu and Kashmir which faces a hard and inhospitable climate, the government proposes to set up solar, small hydro and micro power projects at a cost of Rs 500 crore.
Reacting to today’s Budget proposals, President Chamber of Commerce & Industry Jammu YV Sharma termed it as an Industrial friendly innovative and forward looking budget which could stimulate growth and development.
Sharma welcomed the widening of the personal Income Tax slabs which would save tax for ordinary tax payers and would enhance money to spend which in turn could boost growth. The revision of surcharge from 10 percent to 7.5 percent for the corporate sector was also welcomed by him.
According to him, Finance Minister achieved the balancing process very judiciously whereas he gave more funds for almost all the social sectors. He promised to reduce the fiscal deficit to 5.5 percent for the financial year 2011 and to 4.8 percent and 4.1 percent for the financial year 2012 and 2013. This is a significant change from the fiscal deficit of 5.9% for the financial year 2010.
Another welcome step of the budget is the extension of Green Revolution to the North Eastern States for which Rs 400 crores have been earmarked. Similarly outlay for education has been increased significantly and sufficient funds have been given to the Ministry of Social Justice and for Minority affairs. Women and Child development ministry has been given 50 percent more funds vis-à-vis last year and Rs 4,500 crores have been given for social justice and empowerment ministry. It is on account of all these welcome steps that the initial reaction of the Share Market has been very positive and the Bombay Stock Exchange closed with an increase of 175 points.
Sharma however regretted that no industrial incentive package was announced for J&K state, despite a forceful plea by Chief Minister Omar Abdullah and State Industries and Commerce Minister and the representatives of Chamber of Commerce & Industry besides those from the Federation of Industries Kashmir in the Pre-Budget interaction with the Union Finance Minister. He was also apprehensive that the increase in the Excise duty for petrol, diesel etc might lead to a cascading effect on the prices of almost all the essential commodities.
A social activist, writer and commentator on public issues, Daya Sagar, took a more critical view of the Budget. He says that the Union Budget proposals of Pranab Mukherji are totally silent about any plans for increasing the Money Use Efficiency {check on corruption and mismanagement} of the government spending on the welfare programmes and projects and the government infrastructure. This could be the only tool, if used, to increase the funds practically available for public good. The new taxes can simply do no good on their own.
Sagar says that the budget aims at raising money. The duties on the crude imports have been increased. A large part of the petrol/diesel price paid already comprises of the duties. The innocent illiterate rural farmers does not know that what he gets in the form of subsidies/support prices is much less than he has to pay for buying other services /materials for making ends meet for him and his family.
Prices of coal, cement, electricity and fuel will go up. People will have to pay more for materials, rents, travel, education, food, healthcare, ornaments , television, vehicle, and for even getting justice, argues Sagar.
He adds that that income tax slabs have been readjusted to benefit the upwardly mobile section without signifying any gain for the poor. This has been done since the Government “Babu” has moved in quite high salary bracket and his influence is palpable in the Budget.
The Finance Minister has totally ignored the need for immediate surgery on the low level of efficiency of the government machinery. The much low output and performance of the much publicised Rajiv Gandhi Gramin Viduat Yojna could be a very appropriate example for the inefficacy of such projects, according to Daya Sagar.
The common man is not interested in the tricky terms like fiscal deficit, budget deficit, GDP growth, inflation, economic growth rate etc. The common man knows that he cannot even bear the cost of documentation for moving an application in court, common man cannot get health and education from government institutions any more despite trying hard. Villagers are drinking water from ponds but bureaucrats and their political bosses need bottled mineral water that costs Rs 20 a litre, laments the activist. –With inputs from Munish Gupta in Jammu and agencies.
Highlights
• Net revenue gain expected Rs 20,500 crore
• News agencies exempt from service tax
• FY11 net service gains seen at Rs 3,000 cr
• Service tax to GDP ratio 1%
• Fresh services to be brought under service tax
• To waive excise duty on solar panels
• Service tax unchanged, to maintain stimulus
• Excise revenues up, to grow Rs 43,500 cr
• Customs duty on silver at Rs 1500/kg
• Uniform concessioanl duty of 5% on all medical appliances
• Excise duty on CFL halved to 4%
• Rs 50/ton cess on Indian coal
• Wide-ranging excise breaks
• Excise on cigars, cigarettes to go up
• 5% import duty on crude petroleum restored
• To levy excise duty of Re 1/lt on petrol
• Partial rollback of excise duty on cement
• Peak excise duty increased
• Stimulus-led excise duty rollback partially reversed
• Large cars, SUVs excise up to 22% from 20%
• Standard excise rate up from 8 to 10%
• Direct tax receipts to fall by Rs 56,000 cr
• R&D Corp Tax break up to 200%
• Corp Min Alternate Tax up from 15 to 18%
• Rs 20,000 additional tax break for infra bonds
• 20% income tax on Rs 5 - Rs 8 lakh
• 10% income tax on Rs 1.6 - Rs 5 lakh
• No income tax upto Rs 1.6 lakh
• Infotech usage in tax management to be enhanced
• 'Tax paying interface to be de-cluttered'
• 5.5 % fiscal deficit target
• Gross tax receipts: Rs 7.46 lakh cr
• 15% hike in planned expenditure, 6 in non-planned
• Defence allocation at Rs1.4 lakh crore
• National Commission for Delivery of Justice And Legal reform proposed
• First set of UID numbers this year
• Tech advisor group under Nandan Nilekani
• Interest subvention for low-cost housing extended
• Rs 100 cr woman farmer fund scheme
• Pvt sec to meet foodgrain storage deficit
• Textile ministry will train 30 lakh people
• Banks for all villages with population of 2,000
• Health insurance to NREGA beneficiaries
• Smart Card extended to NREGA
• Indira Awaas Yojana at Rs 10,000 cr
• Allocated Rs 2,400 cr for MSMEs
• IIFCL to double refinancing banks for infra
• Rs 3675 cr education grant to states
• NREGA allocation to Rs 40,100 crore
• Power sector allocation doubled to Rs 5130 cr
• FDI regime to be simplified
• Rural development allocation to Rs 61,000 cr
• Health allocation to 22,300 crore
• To build 20 km of highway every day
• Social sector spending up to Rs 1.37 lakh cr
• To provide 2% loan subsidy to farmers
• School education allocation hiked to 31,036 cr
• Tamil Nadu gets Rs 200 cr for textile development
• Rs 500 crore for Clean Ganga mission
• Rs 200 crore to Goa for restoring beaches
• Renewable energy allotment up by 61%
• To establish clean energy fund
• Rs 1.73 lakh crore for infrastructure
• 5 mega food parks to be set up
• Road development allocation: Rs 19484 cr
• Bank farm loan target: Rs 3.75,lakh crore
• Rs 300 cr for agriculture impetus
• 2 per cent loan subsidy for farmers
• Banks have been consistently meeting targets
• Banking licence: Ownership defined in FDI policy
• Banking licence for pvt, NBFC players being considered
• Rs 16,500 cr capital support for PSU banks
• To discuss Kirit Parikh report in due course
• Fertiliser subsidy to be reduced
• Direct tax code in effect from April 2011
• Disinvestment target:Rs 25,000 cr this year
• GST to be in place next year
• Income tax reforms nearly complete
• Govt to consult with CMs to check inflation
• Challenge is to return to high GDP
• Development needs to be more inclusive
• Thrust on rural infrastructure
• High fuel prices added to inflation
• Need to review public spending
• Economy stabilised in Q1 of 2009
• Economy in better position today
• Focus of development has shifted
• Many measures taken to weather storm
• Indian economy has weathered financial stor
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