Monday 6 July 2009
Just what is the Union Budget?
The Union Budget is the annual report of India as a country. It contains the government of India's revenue and expenditure for the end of a particular fiscal year, which runs from April 1 to March 31.
The Union Budget is the most extensive account of the government's finances, in which revenues from all sources and expenses of all activities undertaken are aggregated. It comprises the revenue budget and the capital budget. It also contains estimates for the next fiscal year.
Union finance minister Pranab Mukherjee presented the Union budget 2009-10 in the Lok Sabha today. Here are the highlights:
• Government plans to bring back the economy to the high GDP growth rate of nine per cent at the earliest, Mukherjee said.
• Growth rate in 2008-09 dipped to 6.7% from the average 9% growth in previous three fiscal years, he said.
• Mukherjee intends to make pre-budget consultations with state finance ministers an annual affair.
• Fiscal deficit grew from 2.7% to 6.8% of GDP.
• Total fiscal stimulus during 2008-09 amounts to Rs1,86,000 crore.
• Indian Infrastructure Financial Corporation Limited (IIFCL) to evolve financing mechanism for giving increased support to infrastructure projects.
• Allocations for highways being stepped up by 23%.
• Indian Infrastructure Finance Company Limited will re-finance commercial bank loans upto 60% in critical projects through public-private partnership to the tune of Rs1,00,000 crore, to raise investment in the sector.
• Allocation for urban poor for provision for housing and basic amenities to be raised to Rs3,973 crore in the current year.
• Allocation for Jawaharlal Nehru Urban Renewal Mission increased by 87% to Rs12,887 crore.
• Central assistance for storm-water drainage project increased to Rs500 crore from Rs200 crore in the interim budget.
• Target for agriculture credit raised to Rs3,25,000 crore in 2009-10 from Rs2,87,000 crore.
• Incentives in interest rates to farmers to pay back agriculture loans on time.
• Additional allocation of Rs1,000 crore for accelerated irrigation project.
• Export Credit Guarantee scheme extended till March 2010.
• Allocation for market development assistance scheme enhanced by 148%.
• Extension of interest subvension scheme extended to March 2010 to cover sectors like handicrafts and handlooms.
• Extension of stimulus package for print media by another six months beyond June 30 in view of the economic downturn.
• To return to FRBM target for fiscal discipline at the earliest, says Mukherjee.
• Subsidy regime for fertilisers to change to nutrient-based rather than price-based.
• Expert committee to be set up to advise on viable and sustainable pricing system for imported petroleum products.
• IT returns to be made simpler.
• Banks and insurance firms to remain in the public sector.
• Rs100 crore to be given as one-time grant in aid to expand banks in unbanking areas.
• Aam admi is the focus of all our programmes and schemes, says Mukherjee.
• Government committed to provide Rs100 a day as wages under NREGA.
• Work on National Food Security scheme for providing food at cheaper rates to the poor has begun, says FM.
• An allocation of Rs39,100 crore to be made for NREGA in 2009-10, an increase of 144%.
• NREGA coverage increased from 3.39 crore households in 2007-08 to 4.74 crore households in 2008-09.
• Allocation for flagship Bharat Nirman progamme being raised by 45%.
• For Indira Awas Yojana, allocation to be increased by 63%in 2009-10, to touch Rs8,800 crore.
• Rs2,000 crore for rural housing fund under National Housing Bank.
• Rashtriya Mahila Kosh corpus to be raised from Rs100 crore to Rs500 crore.
• National Mission for Female Literacy with emphasis on minorities, scheduled castes and scheduled tribes to be launched. Fifty per cent of all rural women to be brought into self-help group programmes.
• Full interest subsidy for students taking courses in approved institutions. Five lakh students to benefit.
• Modernisation of national exployment exchanges to be carried out.
• Action initiated to provide social security to unorganised sector workers.
• Allocation for National Rural Health Mission to be raised by Rs257 crore over and above the outlay in the interim budget.
• Under National Action Plan on climate change, eight national missions are being launched. For one of the missions, National Ganga Project, the government proposes to increase allocation to Rs562 crore.
• First Unique Identification Card to citizens to roll out in 12-18 months. I propose provision of Rs120 crore for the project, says Finance Minister.
• New pension benefits for 12 lakh jawans and junior commissioned officers from July.
• Allocation for Commonwealth Games increased to Rs3,472 crore from Rs2,112 crore.
• I propose to allocate Rs500 crore for rehabilitation of internally displaced Tamils in Sri Lanka, says Mukherjee.
• Rs1,000 crore for rebuilding infrastructure damaged by the recent Cyclone Aila in West Bengal.
• Total budget expenditure for 2009-10 will be Rs10,28,032 crore, crossing the Rs10 lakh crore mark for the first time since independence.
• Plan expenditure, for both the Centre and states, to go up by Rs61,000 crore over the interim budget.
• Fiscal deficit in 2009-10 is proposed at 6.8% of GDP.
• Defence gets Rs1,41,703 crore for 2009-10, a 34% hike from the 2008-09 budgetary allocation of Rs1,05,600 crore.
• To further improve the efficiency of tax system, I propose to set up two authorities for advance ruling, says Mukherjee.
• Effort is to improve tax collection by eliminating distortions in tax system and expanding the base.
• No change in corporate tax.
• Personal income tax exemption limit for senior citizens raised by Rs15,000.
• I propose to raise by Rs10,000 the exemption limit for women on income tax. For all others, Rs10,000 up from Rs1,50,000, says Mukherjee.
• Ten per cent surcharge on personal income tax removed.
• Fringe Benefit Tax abolished.
• Proposal to incentivise business. I propose to start investment-linked tax benefits in areas of agriculture and national grid, says Mukherjee.
• Minimum Alternate Tax on book profits increased to 15% from 10%.
• 100% tax deduction for donations to electoral funds to improve transparency in political funding.
• Income tax incentives on educational loans expanded to cover vocational studies after schooling.
• Small businesses up to Rs40 lakh turnover exempted from filing advance tax returns.
• Presumptive Taxation of 8% on businesses of turnover of up to Rs40 lakh.
• Customs duty of 5% being levied on import of set-top boxes used under Conditional Access System (CAS).
• Manufacturing growth, which was negative during last year till March this year, appears to be barely turning the corner, says Mukherjee.
• Customs duty on gold and silver import increased.
• Customs duty to be reduced on drugs for heart treatment.
• Proposal to restore optional 4% CENVAT on cotton textiles beyond fibre stage.
• Excise duty on fibre for cheaper cloth reduced.
• Excise duty on petrol-driven small trucks reduced to 10%
• Full exemption from excise duty on branded jewellery
• Service tax exempted for exporters on select services
• Service Tax to be extended to lawyers on technical advice
Railway minister Mamata Banerjee played to a full gallery on Friday, with her 2009-10 budget scattering largesse all around. While passenger fares and freight rates have been kept unchanged despite fuel price increases, super-low ticket rates have been announced for youth, madrassa students and unorganised labour. New projects and special trains have been unveiled for most states, with West Bengal being the prime recipient of benevolence.
The Santa Claus act was, however, overshadowed by a few lines at the end of her speech which seemed to debunk the performance credentials of her predecessor, Lalu Prasad. Banerjee said Prasad had set "unrealistically high" freight targets for this year. She also promised a "white paper" on the railways' performance over the last five years -- statements that riled Lalu enough to organise a press conference to denounce her statements. "I am not afraid of any white paper. We have been audited by the comptroller and auditor general, and the railways committee of Parliament. IIM, Ahmedabad, and Harvard have studied the (railways) turnaround," he said.
Though both Banerjee and Lalu subsequently denied any political intent behind her statement, the subtle shift in priorities between her and her predecessor was apparent. In contrast to Lalu Prasad's focus on fare stability and improving the efficiency of the railways, Banerjee announced two strategic shifts.
First, she said, the "old mindset of economic viability should be substituted by social viability." This means, future railways projects may be cleared on social grounds Second, there is a shift in emphasis from bottomline performance to serving the customer with improved passenger amenities.
In keeping with this, Banerjee announced a plan to upgrade 50 railway stations to world class (including Mumbai's Chhattrapati Shivaji Terminus), improved facilities for another 375 stations, provision of "Janata khana" keeping local tastes in mind, mobile ticket vending vans, facilities to buy unreserved tickets from 5,000 post offices, improved security in vulnerable stations, air-conditioned double-decker trains for inter-city travel and SMS updates for wait-listed passengers.
Banerjee, who was presenting her third railway budget - the other two happened when she was minister in the NDA government - went one up on Lalu Prasad's muted populism. If Lalu was known for introducing a Garib Rath, AC trains with fares at a 25% discount, Banerjee made her mark by announcing non-stop trains on 12 routes (Duronto), a revision in Tatkal (quick booking) norms, special low-cost trains for youth (Yuva, with tickets priced between Rs 299-399), and `only ladies' suburban trains in Delhi, Chennai and Kolkata (Mumbai already has them).
A new concession scheme called Izzat has been announced for people with monthly incomes up to Rs 1,500 in the unorganised sector. For daily travel up to 100 km, they will have to shell out only Rs 25 a month. "I wish to present the gift of travel with dignity to even the poorest of the poor," the minister pointed out.The rail budget made no mention of Lalu's trademark Garib Rath.
According to Railway Board chairman SS Khurana, the ministry is aiming to improve the level of punctuality of trains as well. From the current 75-80% punctuality, this year the goal is raise it to 85%.
Also significant was the announcement of posting a doctor on long-distance trains. "We are exploring the possibility...", Mamata said in her budget speech. Besides, there will be ambulance services for passengers in Chennai, Mumbai, Delhi, Bangalore, Hyderabad, Kolkata and Bhubaneshwar to start with.
Field trials are being conducted for introducing environment-friendly green toilets and vacuum toilets like those used in aircraft. On safety, there are plans for timely track renewals, modernisation of signals, and use of digital ultrasonic flaw detecting machines. Plus, anti-collision devices are being installed in more trains across the country.
The Indian Railways has also chalked out a plan to launch super fast parcel express trains on the Delhi-Mumbai, Delhi-Chennai and Delhi-Howrah (Kolkata) routes. To prevent wastage of fruit and vegetables, there would be special trains to carry perishable products. Banerjee called the initiative `the second green revolution'.
The dedicated freight corridors on the western and eastern routes have been christened "Diamond Rail Corridors". Pre-feasibility studies on other routes are on. "I visualise an Eastern Industrial Corridor developing alongside the Eastern Dedicated Freight Corridor, similar to the Delhi-Mumbai Industrial Corridor," Banerjee said.
The minister also sought to take advantage of the railways' vast property holdings. She said land along the new freight corridor would be put to productive use. To raise funds, the railways will resume the issuance of tax-free bonds.
Highlight of 2009-10 Railway Budget
Railway Minister Mamata Banerjee on Friday presented the 15th railway budget in the Parliament. The highlights of the Railway budget 2008-09 are as follows:
• 50 Railway stations, including CST Mumbai, Nagpur, Pune, Howrah, Sealdah, Varanasi, New Delhi, Lucknow, Jaipur, Kanpur, Chennai Central, Thiruvananthapuram Central, Secunderabad, Bangalore, Byappanahalli, Ahmedabad, Bhopal, Habibganj, Agra Central, Chandigarh, Kolkata, New Jalpaiguri, Puri and Kochi, will be developed to have world-class facilities.
• Railways to develop multi-functional complexes with shopping malls, food stalls, medicines and variety stores in different parts of the country.
• Railways to introduce 67 new trains across the nation.
• Infotainment services to be provided in major long-distance trains.
• One doctor to be posted on long distance trains.
• 309 stations out of 375 across the nation have been identified for development and special facilities will be provided.
• Unreserved ticketing terminals to be expanded from 5000 to 8000. Automatic ticket vending machines to be increased. Arrangement with Department of Posts for issuance of tickets.
• SMS updates will be made available for passengers to check train status and reservation status.
• Auto-vending machines to be installed in large and medium stations.
• E-ticket cancellation system to be simplified.
• High-capacity air-conditioned double-decker trains to be introduced on select inter-city routes.
• An Integrated Security System is being developed for 130 vulnerable stations to provide security to passengers.
• Seven nursing colleges to be set up on railway land in places including Delhi, Kolkata and Mumbai.
• Railway medical colleges to be developed along with rail hospitals on public-private partnership.
• ATMs on 200 mid and small sized stations
• New factory in West Bengal for making 500 state-of-the-art coaches annually
• Railways to develop cold storages for farmers to store vegetables and fruits.
• Scheme named Izzat for low-income monthly travel till 100 kilometres.
• Superfast parcel express trains to be started on a pilot basis between Delhi and Chennai and Delhi and Mumbai.
• Priority areas to be railway catering, punctuality, food and sanity of rail bogeys.
• Railways to extend helping hand to physically challenged and elderly people by providing ramps, specially designed bogeys.
• Committed for the downtrodden and development of the country Infotainment services to be provided in major long-distance trains.