Poor Monsoon – affected Rabi and Kharif crops
India weathered the crisis well
Supporting and delivering services and not giving directly to the citizens
2009-10 – Challenging year attributed to 2008-09 Q3, Q4
GDP
FY 2008-09 - GDP 6.7 % Substantial fiscal expansion
Q1 2009-10 – GDP 6.1%
Q2 2009-10 - GDP 7.9%
Q3 & Q4 – expected higher than 7.2%
Hope to reach 10% GDP shortly
Negative growth in agriculture
Renewed growth in Manufacturing – Dec 2009 – 18% (highest in past 2 decades)
Since Dec 2009 – food prices transmitted to other non food items
Budget to reflect Govt’s vision for development
Ensure better management of Food security
Move towards Fiscal consolidation
Make growth more broad based and ensure demand supply are better managed and matched
Need to review the public spending, mobilize resources
Exit strategy from Expansionary fiscal stance in past 2 years
Fiscal consolidation
Explicit reduction in Domestic Public Debt FM to come out with a report
To introduce Simple Tax system which includes Voluntary compliance
Direct Tax Code (DTC) – To be in a position to implement DTC from 1-April 2011
GST – To finalize the structure of GST and implement by 1-April-2011
Disinvestment program – PSU
Oil India, NHPC, NTPC, Rural Electrification Corp; NMDC, SVJN
Raise Rs 25000 Cr in FY 2010
Proceed to utilize Capex for social sector for creating new assets
Unlock value for all stakeholders
Adhered to fiscal roadmap
Simplify FDI regime
Defined indirect investment by foreign companies in Indian Companies
Automatic route – Payment for Royalties etc
Clarity and predictability for FDI policy
Banks
To extend geographic coverage of Banks
RBI considering additional banking licensing to Pvt Sectors and NBFC (if meet RBI eligibility criteria)
Rs 1900 Cr as Tier I capital in 4 Pub Banks infused
Rs 16500 Cr infused to maintain min 8% Tier I Capital Ratio in Public sector banks
Increase lending to rural economy
Interest subvention of 2% preshipment export credit – extended to 1 more year (handicraft, handloom, carpet and SMEs)
SEZ
– 127% growth
Ensure continued growth – boost export and employment
AGRICULTURE
Rs 300 Cr – Rashtriya Krishi Vikas yojana
Need greater competition, need to take a firm view of retail trade
Extend period of repayment of loan from Dec 31-2009 to June 30
Additional 1% interest subvention who repaid Crop loan in time increased to 2% (effective rate of 5% P.A
.)
Infrastructure
Rs 1.73 Lakh crore for Infrastructure (46% of plan allocation)
Allocation to Road Transport increased to Rs 19,894 Cr
Allocation of Rs 16,752 Cr for railways
Freight corridor (Del-Mum)
IIFCL authorized to refinance
Rs 48000 Cr for Bharat Nirman
Rs 5400 Cr for urban development
Pollution levels
Development of clean energy
Establish National Clean Energy Fund; Funding for research in clean energy technology
Rs 20 Cr one time grant for Zero liquid discharge; Hosiery exports Tirupur, TN
Rs 200 Cr to Goa – tourism, increase green cover
Mission clean Ganga – double allocation to NGRVA in 2010
Competitive bidding for coal block for Power
Draft food security bill ready
Education
Rs 31,036 Cr for primary school
Plus states to access 3675 Cr for elementary education
Rural Development
Rs 66100 Cr for rural development
NREGA allocation stepped up to Rs 41000 Cr
Rs 22300 Cr for Health Ministry in FY 2011
Rs 10000 for Indira Awas Yojana
To create a slum free India at the earliest
Rs 1.38 Lakh Cr for social sector spending
Khadi reform program with ADB USD 150 million signed in Dec 2009
National social security fund for unorganized sector Rs 1000 Cr (initial allocation) weavers, rickshaw pullers etc
Health insurance cover to below Poverty line 1 Cr smart cards have been issued. Extend to all such MG NREGA beneficiaries who worked for more than 250 days in last year
New Pension scheme –
Govt to contribute to each NPS account Rs 1000/month
Min contribution Rs 1000, Max Rs 12000
Available for another 3 years
Allocation Rs 100 Cr
To benefit 1 lakh NPS subscribers
Appeal St Govt to contribute similarly
Skill development
Target 50 Cr skilled people by 2022
Now 15 Cr
21 high growth sectors
Create 10 lacs skilled manpower
Textile Ministry to train 30 lac person over 5 years
Empowerment of women
Improve female literacy rate – sakshar bharat
Allocation of Minority welfare Rs 2800 Cr
Financial sector legislative Reforms Commission to be set up to reform the Financial Sector and govt organizations
350 recommendations have been implemented and 450 under review.
UID numbers
To meet 1st set of UID numbers in FY 2011
Allocated Rs 1490 Cr to the authority
A SYMBOL for Indian Rupees (just like Dollar, Japanese Yen, Pound Sterling, Euro)
Allocation of Rs 147,344 Cr for Defense (include Rs 60000 Cr for capital exp)
Law and order and security – under control
Recruit 2000 youth in paramilitary forces
Gross Tax receipt Rs 4.76 lakhs
5.5% Fiscal deficit target in FY 2011 [Rs 3,81,408 Cr]
(7.8% in 2008-09, 6.9% per revised estimate)
4.8% Fiscal deficit target in Fy 2012
TAX PROPOSALS
Sound Tax admin
Tax reforms is a process and not an event
Saral II Form for salaried tax payers – simple format of only 2 pages
Income Tax (Personal)
Rs 1.6 lakhs to Rs 5 lakhs – 10%
Rs 5.0 lakhs to Rs 8 lakhs – 20%
More than Rs 8 lakhs – 30%
Additional Deduction of Rs 20,000 for an LT Infrastructure bonds
Contribution to Central Govt health scheme –
Surcharge reduce from 10 to 7.5%
MAT increased to 18%
To encourage R&D – weighted deduction on in house R&D from 150% to 200%
Deduction for payment to National Lab, Research associations, College etc for scientific research of 175% (from 125%)
Weighted deduction – approved research – social 125%
Profit linked deduction – changed to Investment linked deduction
Boost tourism sector –
Investment linked deduction – for 2 star hotels and above
Housing and Real Estate
– pending projects to be completed within 5 (from 4 years) to claim deduction from profits
Tax Audit
40 lacs – audit required – increase to 60 lacs
Receipt exceeding Rs 10 lacs increased to Rs 15 lacs
Presumption tax
Small tax payers increased to Rs 60 lacs
TDS - Rationalize
Allowed if tax is deducted at any time
Increase interest on tax deducted but not deposited from 12% to 18%
LLP
If converted Pvt Companies – not subjected to Capital gains tax
Revenue loss of Rs 26000 Cr in a revenue year
INDIRECT TAX
3 fiscal stimulus package – helped improve significantly
Partially roll back rate reduction of Excise and enhance non petroleum products
Partial rollback in Excise Duty 10% from 8%
Petrol excise duty increased by Rs 1 / lt
Excise duty on Large Cars, SUVs Cars increased to 22%
Restore 5% duty on Crude petroleum
Restore 7.5% duty on Petrol and Diesel
Raised excise duty on all non smoking tobacco
Raised import duty on Gold and Silver
Dearer: Refrigerator, TV, AC, Cigarettes, Jewellery, Cars, Petrol, Mobile Phones,
Cheaper: Toys, Latex, Medicines (16% - 10%), CDs,
Service Tax rate unchanged at 10%
Rev Gain Rs 20500 Cr
