Finance Minister Pranab Mukherjee presented Union Budget 2009 in the Parliament. The Minister commenced his speech by stating that the mandate for UPA in the just concluded General Elections is in fact a mandate for inclusive growth and went on to spell out the road ahead for India's growth story.
Highlights of Union Budget 2009:
Impact & outcome
Cheaper: Footwear, LCD TVs, branded jewellery, drugs for heart treatment, bulk drugs, textiles
Dearer: Mobile phones, set-top boxes, gold bars, gold and silver import
Tax slabs raised
- Income tax exemption limit for others raised by Rs 10,000 (Rs 1.5 lakh to Rs 1.6 lakh)
- Income tax exemption limit for women raised by Rs 10,000 (Rs 1.80 lakh to Rs 1.90 lakh)
- Income tax exemption limit for senior citizens raised by Rs 15,000 (Rs 2.25 lakh to Rs 2.40 lakh)
- 10% surcharge in Direct Taxes scrapped
- Individual law consultation not to attract service tax
- I-T Saral II form to be introduced
- No change in corporate taxation
- SEC 80IB benefit extended to natural gas
- Investment-linked tax benefits for gas pipelines, cold chains
- Sunset clause for Software Technology Parks of India (STPIs) extended by 1 year
- Minimum alternate tax increased to 15% from 10% of book profit
- Section 80DD to be hiked to Rs 1 lakh
- Fringe benefit tax scrapped
What is in it for you?
- Govt to spend Rs 120 cr in FY10 on unique ID
- Certain pension-related benefits extended to war-hounded
- National Web Portal for employer and employee to be launched
- Stepped up allocation of funds from Rs 10,800 cr to Rs 15,800 cr for railways
- Aila hurricane relief at Rs 1,000 cr
What Young India gets?
- Employment exchanges to be modernised
- Interest subsidy for educational loans
- Plan to cut female illiteracy by half in three yrs
- To launch national mission on female literacy
What Agriculture sector gets?
- Rashtriya Krishi Vikas Yojna stepped up by 30%
- Agri credit for at Rs 3.25 lakh crore for 09-10
- Budget makes subvention of 1% to benefit farmers
- Proposes to extend deadline to farmers to pay off 75% of loans by six months to December 31, 2009
- Ensure 4% agriculture growth
What Rural India gets?
- To provide Rs 2000 cr for rural housing
- Banking facilities in remote areas in next 3 years
- To add handloom clusters in West Bengal and Tamil Nadu
- Govt aims to have social security for informal sector
- PM's Adarsh Gram Yojana starts with Rs 100 cr funding
- NHB refinance to rural housing sector to be raised
- Indira Awaas Yojana outlay increased by 63%
- Bharat Nirman outlay raised by 59%
- Food security to provide rice, wheat at Rs 3 a kg to poor
- Allocation for Indira Awaas Yojana to be increased by 63%
- Govt. to move food security bill very soon
- NREGA outlay increased by 144%
- NREGA min wages set at Rs 100/day
- Special fund of Rs 4,000 cr from Rural Infra Dev fund to provide cheap loans to MSME
PSUs: Disinvestment on backburner
- PSU companies to remain under government control
- Govt wants public shareholding in PSUs to go up
- PSUs to remain under govt control
- Govt to set-up expert committee to advise on petro pricing products
- PSU Banks, insurance firms outside disinvestment plan
- There are signs of revival in domestic industry
Sops for industry
- Construction: Restore full exemption on goods such as pre-fabricated slabs
- Branded jewellery exempted from excise duty
- Tax holiday on commercial production of mineral oil and natural gas on NELP VIII
- MAT hiked to 15% of book profit from 10%
- To introduce GST by April 1, 2010
- Govt wants public shareholding in PSUs to go up
- PSUs to remain under govt control
- PSU Banks, insurance firms outside disinvestment plan
- Exporters borne the brunt of eco crisis, will provide adj assistance till March 2010
- IIFCL and banks in position to support Rs 1,00,000 cr in infrastructure
- Infra investment to be over 9% of GDP by 2014
- Gross capital flow rose to over 9% over GDP
Financial sector: The road ahead
- Budget estimates: Interest payment expected at Rs 2,25,511 cr
- 8.5% growth in recent past fueled by pvt sector investment
- PSU Banks, insurance firms outside disinvestment plan
- Turbulence in world markets left Indian financial sector unaffected
- Fiscal deficit up to 6.2% from 2.7% fo GDP
- IIFCL and banks in position to support Rs 1,00,000 cr in infrastructure
Advantage Infrastructure
- Rs 1 lakh crore projects for Infrastructure revival
- IIFCL and banks in position to support Rs 1,00,000 cr in infrastructure
- Highway and railways: Allocation hiked by 23%
- Stepped up allocation of funds from Rs 10,800 cr to Rs 15,800 cr for railways
- Govt have some success in attracting investments in certain sectors through PPP
- Allocation for Mumbai flood management hiked
Defence Budgets
- To spend Rs 1.42 lakh cr on defence
- Govt to build 100,000 homes for paramilitary forces
- Paramilitary housing project to cost Rs 1,000 cr
- Certain Pension related benefits extended to war hounded
- Paramilitary housing cost estimated at Rs 1,000 cr
- Govt proposes to launch housing for 1 lakh para military forces
Challenges ahead
- Fiscal deficit grew from 2.7% to 6.8% of GDP
- To lead the economy back to 9% growth
- Growth rate in 2008-09 dipped to 6.7% from average 9 % growth in previous 3 fiscal years
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