UNION BUDGET 2009-10

INTRODUCTION….. Finance minister Mr. Pranab Mukherjee presented the

Union Budget 2009-10 in the Lok Sabha on July 6,2009. Union budget is a schematic plan of India’s financial and operational goals. It is an action plan that facilitates allocation of resources in India .

The government recognizes the challenges that this task entails, particularly at a time when the world is struggling with an unprecedented financial crisis and economic slowdown that has also affected India.

CHALLENGES: The first challenges is to lead the economy back to the high

Gross Domestic Product(GDP) growth rate of 9% per annum at the earliest.

The second challenge is to deepen and broaden the agenda for inclusive development.

The third challenge is to re-energize government and improve delivery mechanisms.

TOWARDS ECONOMIC REVIVAL:Short -term measures: Infrastructure developmentHighways and railwaysUrban infrastructurePowerGas Assam gas cracker projectAgricultural developmentDebt relief for farmersAccelerated irrigation benefit

programsRestoring export growth

Medium Term Measures:• Fertilizer subsidy• Petroleum and diesel pricing policy• Taxation• People’s ownership of public sector units• Financial sector• Investment environment

Towards Inclusive Development:• National Rural Employment Guarantee Scheme(NREGS)• National food security • Bharat nirman • Pradhan Mantri Adarsh Gram Yojana• Empowerment of weaker sections • Females literacy• Integrated child development services

• Student loans to weaker sections • Welfare of minorities• Welfare of workers in the unorganized sector• Employment exchanges• Handlooms• Health• Environment and climate change

Towards Building Accountable Institutions:

• National security• One Rank One Pension for ex-servicemen(OROP)• Education• Commonwealth games 2010

BUDGET ESTIMATES:BUDGET at a GLANCE : 2008-2009

Revised Estimates 2009-2010

Budget Estimates

1.    Revenue Receipts562173 614497

2.          Tax Revenue (net to Centre) 465970 474218

3.   Non-tax Revenue 96203 140279

4.   Capital Receipts (5+6+7)$  338780 406341

5.          Recoveries of   Loans 9698 4225

6.   Other Receipts 2567 1120

7.         Borrowings and other

              Liabilities*326515 400996

8.    Total Receipts  (1+4)$ 900953 1020838

9.    Non-plan Expenditure       617996 695689

10.       On Revenue Account  of which, 561790 618834

11.       Interest  Payments 192694 225511

12.         On Capital Account 56206 76855

13. Plan Expenditure 282957 325149

14.         On Revenue Account 241656 278398

15.         On Capital Account 41301 46751

16.   Total Expenditure (9+13) 900953 1020838

17.        Revenue Expenditure

             (10+14)803446 897232

18.        Capital Expenditure

             (12+15)97507 123606

19.   Revenue Deficit (17-1)241273(4.4)

282735(4.8)

20.   Fiscal Deficit

       {16-(1+5+6)}326515(6.0)

400996(6.8)

21.   Primary Deficit (20-11)133821(2.5)

175485(3.0)

BUDGET HIGHLIGHTS: Tax proposals

Direct Taxes : The Direct Taxes Code, along with a Discussion Paper, to be released to the public for debate. The Direct Taxes Code Bill will be finalized for introduction in Lok Sabha sometime during the Winter Session based on the inputs received.

Indirect Taxes : Proposals on indirect taxes to seek to achieve stable framework by maintaining the overall rate structure for customs and central excise duties as well as service tax.

WHAT DOES THE BUDGET DOES? AGRI-COMMODITIES:

Increased target for credit flow set at Rs. 3,25,000 crore for 2009-10 as compared with Rs.2,87,000 crore in 2008-09.

Additional subvention of 1% to be paid as incentive to farmers who repay short-term crop loans on schedule. Additional allocation of Rs 411 crore made.

Abolition of commodities transaction tax.

Investment –linked tax incentives to be provided for setting up and operating ‘cold chain’, warehousing facilities for storing agricultural produce.

AUTO:

Weighted deduction of 150% for expenditure relating to in-house R&D extended.

Specific component to ad valorem duty to now attract uniform rate of Rs.15,000 per unit.

Reduction in excise duty on petrol driven trucks for transport within cities and across short distances to 8% from 20%.

Increase in allocation to defense sector. 

BANKING: IIFCL to refinance 60% of banks loans to PPP.

Target for agricultural credit in FY 10 hiked by 13.2% & additional subvention of 1% for farmers who repay on schedule.

Extension of debt waiver to farmers to repay 75% of their loans extended by six months.

Banks and insurance companies to receive support and capital infusion.

Higher APDRP allocation by 160% to enable higher funding to power projects.

CEMENT AND CONSTRUCTION:

Customs duty exemption on concrete batching plants of capacity 50 cubic meters per hour or more has been withdrawn. Such plants will now attract customs duty of 7.5%.

Allocation under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) increased by 87% YoY to Rs 1.3 lakh crore in 2009-10.

Allocation for housing and provision of basic amenities to urban poor enhanced to Rs 3970 crore.

Allocation to National Highways Authority of India(NHAI) for the National Highway Development Programme (NHDP) increased by 23%.

 

EDUCATION : Increase in provision for scheme ‘Mission in Education ‘

through ICT to Rs 900 crore.

Rs 827 crore allocated to open one Central University in each uncovered state.

Rs 2,113 crore allocated for IITs and NITs.

Higher education overall Plan budget hiked by Rs 2,000 crore over interim BE 2009-10.

Benefits to access higher education to enable economically weaker students.

National Mission for Female Literacy to be launched with focus on minorities ,SC, ST, and other marginalized groups.

Allocation of Rs 13,100 crore to Sarva Shiksha Abhiyan (SSA).

FMCG & FOODSAllocation under NREGs hiked by 144%.

Goods and Services Tax (gst) to come in effect from 1st April ,2010.

4% duty maintained on paper, paperboards, biscuits, cakes and pastries.

Increase in tax exemption on personal income.

Fringe benefit tax (FBT) abolished.

Minimum alternate tax (MAT) on book profits hiked to 15% from 10%

PHARMACEUTICALS:

Customs duty on nine specified life savings drugs to 5%.These drugs exempt from excise and CVD.

Provision for the National Rural Health Mission increased by Rs 2,050 crore over and above Rs 12,070 crore provided in the Interim Budget.

SOFTWARE: Tax deductions under STPI scheme extended by one more

year.Rate of minimum alternate tax (MAT) on book profits

increased from 10% to 15% carry-forward provision for tax-credit extended to 10 years.

 

HOTELS:

The outlay for Commonwealth Games to be stepped up from Rs2100 crore in the Interim Budget to Rs 3500 crore

Greater focus on infrastructure development . Also , the Budget has indicated getting the GDP growth rate back on track.

TELECOM:Allotted Rs 39,100 crore for the National Rural

Employment Guarantee Scheme (NREGS),an increase of 144%.

Full exemption of the countervailing duty (CVD) OF 4% on accessories, parts and components imported for the manufacture of mobile phones has been reintroduced for another year.

HOW THE BUDGET WILL IMPACT YOUR BUDGET?Prices of daily use items such as soaps, hair oils, toothpaste

may increase marginally on impending commodity price increase.

The increase in customs duty on gold and silver, never mind the exemption of branded jewellery from excise levy.

Prices of MP3 and MP4 players are likely to fall, furniture products would become expensive.

Price of cooking oil will rise because o non-imposition of customs duty o imports.

VIEWS:A M NAIK – CMD, Larsen & Toubro “The plethora of infrastructure investments

and other investments and other outlays will help stimulate growth for infrastructure companies and the economy in general. But there is nothing for the power sector. At L&T, we expect our order intake and sales to continue to maintain growth as per our guidance levels.

KRIS GOPALKRISHNAN – CEO& MD, Infosys “I ‘m positive on the budget at the highest

level through the impact on the IT sector is minimal. It could have been better, it’s still positive. The proposals on FBT , corporate and personal tax and reforms in the tax system and transfer pricing will help.”

S NAKANISHI – CEO&MD, Maruti Suzuki Ltd “It is a progressive Budget. The focus on rural

and infrastructure development will usher in opportunity for growth industries , including auto mobiles.

TUSHAR PODDAR- VP& Chief India Economist, Goldman Sachs

“ The fiscal proposals are commendable and a short-term increase in deficit is warranted. Financing the deficit will not be difficult. There were hopes of structural reforms, which were not met. The short-term policy objective of stimulating demand will likely be achieved.”

MANOJ KOHLI - CEO , Bharti Airtel Ltd “The budget signals significant demand

stimulus emanating from rural and infrastructure sectors.”

CONCLUSION:

Union Budget 2009-10 can be termed as Rasna delivered in a Mirinda bottle. Functionally there are no problems with the Budget 2009-10, but it certainly didn’t meet the expectations that India Inc had with it. It simply lacked the expected Fizz!

However, it would appreciate that a single budget

speech cannot solve all our problems nor is the union budget the only instrument to do so, yet it is an important means to share the vision of the government.

SOURCES:

BIBLIOGRAPHY: Websites-www.indiabudget.nic.comwww.economywatch.comwww.personalmoney.inwww.indiainfoline.comwww.thehindubusinessline.com Magazine and newspapers-Competition success review.Economic times.