IANS
New Delhi, Feb 26: Further relief for individual tax payers, a steep hike in allocations for welfare schemes and infrastructure were among the high points of India's budget for 2010-11 presented Friday by Finance Minister Pranab Mukherjee, who said the worst was over and promised high, inclusive growth in the coming years.
"Today, as I stand before you, I can say with some confidence we have weathered this crisis well," Mukherjee told the Lok Sabha, the lower house of parliament, while presenting the federal budget for the next fiscal.
"That is not to say that the challenges today are any less than they were nine months ago, when the UPA (United Progressive Alliance) was voted back to power under the leadership of Sonia Gandhi and Prime Minister Manmohan Singh."
The finance minister proposed the following slabs for individual tax payers: No tax for up to Rs.160,000, a rate of 10 percent for up to Rs. 500,000, then 20 percent for up to Rs.800,000 and finally 30 percent for high income.
"The proposal to reduce the tax slab will benefit 60 percent of all tax payers," he said and added that he wished to hike the minimum alternate tax (MAT) to 18 percent of book profits from the present 15 percent.
Mukherjee said 46 percent of the plan allocation will be set aside for infrastructure, while hiking the outlays for rural and urban development, as also for education and healthcare. He also promised to implement the direct tax code from April next year, assured a simplified foreign investment policy soon.
At the same time, he budgeted a lower fiscal deficit of 5.5 percent of gross domestic product for the next fiscal, against the budget estimates of 6.8 percent for this fiscal, and promised to lower it further to 4.8 percent and 4.1 percent over the next two years.
The finance minister said three challenges he had listed last year remained today -- those of quickly reverting to a high growth path of 9 percent and cross over to double-digit expansion; making growth more inclusive and developing infrastructure; and strengthening food security.
"We hope to breach the 10 percent growth mark in not too distant future," he said, adding that the government will also review the fiscal stimuli to make the country's growth more broad based.
He also said Rs.35,000 crore ($7 billion) was raised by the government by way of divesting stake in public sector enterprises and that more will be accrue to the exchequer during the upcoming fiscal. The minister also promised more banking licenses for the private sector.
Mukherjee said in 2009, when he presented the interim budget in February and the regular budget in July, the Indian economy was facing grave uncertainties, the economy had slowed down and business sentiment was low.
This year, however, the budget has come against the backdrop of the Economic Survey for 2009-10, saying India's growth can go up to double digit levels in four years, with the country emerging as the fastest growing economy in the world.
The market reaction, as the finance minister read his speech was positive, with the sensitive 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.
Those in the packed 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 Mukherjee's fourth budget of his career as finance minister and the second for the United Progressive Alliance (UPA) government in its second straight term after being voted back to office in May last year.
Although the budget speech also contained some policy pronouncements and other steps directed at reforms, it is basically an annual statement of accounts for the upcoming fiscal in terms of receipts and expenditure, along with direct and indirect tax proposals.
The budget was presented after a quick meeting of the federal cabinet inside the parliament house presided over by the prime minister for a customary approval for the proposals.
Budget Highlights:
New Delhi, Feb 26: Highlights of 2010-11 budget presented by Finance Minister Pranab Mukherjee in parliament Friday:
- Clean energy cess of Rs.50 per tonne on coal produced in India
- Concessional duty of 4 percent for solar power rickshaw developed by Council of Scientific and Industrial Research
- Concessional customs duty of 5 percent for cable TV operators for importing equipment
- Toys fully exempt from central excise duty
- Service sector tax retained at 10 percent to aid the introduction of GST; more services to be taxed
- Accredited news agencies exempt from service tax
- Net revenue gain Rs.22,500 crore
- Taxes on large cars and SUVs increased 2 percent to 22 percent
- Basic duty of 5 percent on crude oil restored
- Tax on cigarettes, cigars and chewing tobacco increased
- Rs. 26,000 crore revenue loss due to reduction of direct taxes
- Partial roll back of reduction in central excise duty
- Income up to Rs.1.6 lakh per year exempt from income tax; up to Rs.5 lakh to be taxed at 10 percent; income of Rs.5-8 lakh to be taxed at 20 percent and income above Rs.8 lakh to be taxed at 30 percent
- IT returns forms for individual tax payers to be further simplified
- Expenditure in 2010-11 estimated at 11,l8,749 crore
- Fiscal deficit estimated at 5.5 percent in 2010-11; an improvement of 1 percent over 2009-10
- Two more centralised tax processing centres to be set up in addition to the one at Bangalore
- National Social Security Fund created for workers in unorganised sector with allocation of Rs.1,000 crore
- Government to give Rs.1,000 for each National Pension Scheme account opened by workers in the unorganised sector
- Exclusive skill development programme for the textile sector
- Fifty percent hike in allocation for schemes for women and child development
- Rs.4,500 crore allocated for ministry of social justice and empowerment, a hike of 80 percent
- Rs.2,600 crore allocated for ministry of minorities affairs
- Rs.1,900 crore for Unique Identification Authority of India
- Rs.147,344 crore allocated for defence
- 2,000 youth to be recruited in central paramilitary forces
- Draft Food Security Bill prepared and will be put in the public domain
- Allocation on primary education raised from Rs.26,800 crore to Rs.31,300 crore
- Banking facilities to be provided to all habitations with a population of 2,000 and more
- Rs.66,100 crore allocated for rural development in 2010-11; Rs.40,100 crore for National Rural Employment Scheme; RS.48,000 crore for Bharat Nirman
- Rs.1,270 crore allocated for Rajiv Awas Yojana for slum dwellers, up from Rs.150 crore, an increase of 700 percent with the aim of creating a slum free India.
- Forty-six percent of plan allocations in 2010-11 will be for infrastructure development
- Coal Regulatory Authority to be set up to benchmark standards of performance
- Allocation for new and renewable energy sector increased 61 percent from Rs.620 crore to Rs.1,000 crore in 2010-11
- National Clean Energy Fund to be established
- Rs.200 crore allocated as special package for Goa to prevent erosion and increase green cover
- Government committed to growth of SEZs
- Four-pronged strategy for growth of agricultural sector
- Rs.200 crore to be provided in 2010-11 for climate-resilient agricultural initiative
- Involvement of private sector in grain storage to continue for another two years
- In view of drought and floods, debt repayment period extended to June 2010
- Five more mega food processing projects in addition to 10 existing ones
- FDI flows in April-December 2009 $20.9 billion
- FDI policy to be made more user-friendly with one comprehensive document
- Apex level financial stability council to be set up for banking sector
- Indian Banking Association to give additional licences to private players
- Provision for further capital for regional rural banks
- Roadmap for reducing public debt in six months
- Implementation of direct tax code from April 2011
- Government actively engaged in finalising structure of general sales tax regime; hopes to implement it from April 2011
- Rs.35,000 crore raised from divestment in 2009-10; will be higher in 2010-11
- New fertiliser policy from April 2010; will lead to improved productively and more income for farmers
- Economy stabilised in first quarter of 2009-10; strong rebound in second quarter; overall growth at 7.2 and could be higher when Q3 and Q4 are taken into account
- Export figures for January encouraging
- Hope to breach 10 percent growth mark in not too distant future
- Government set in motion steps to bring down food inflation
- Need to review stimulus package; need to make growth more broad-based
- India has weathered global economic crisis well; Indian economy in far better position than it was a year ago. In 2009 Indian economy faced grave uncertainty; delay in southwest monsoon had undermined agricultural production
- First challenge now is to quickly revert to 9 percent growth and then aim for double digit growth; need to make recovery more broadbased
- Second challenge is to make growth more inclusive; have to strengthen food security
- Third challenge is to overcome weakness in government's public delivery mechanism; a long way to go in this
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