BUDGET 2010 HIGHLIGHTS

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Vishwakanth

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UNION BUDGET 2010-11

  • Online news agencies to attract service tax
  • Service Tax rates unchanged
  • Account auditing for all income above Rs 15 lacs
  • More services to be brought under tax net
  • Rationalisation of customs duty on gaming software
  • Toys exempted from excise duty, to become cheaper
  • Jewellery to be more expensive
  • Monorail granted project import status
  • CDs to be cheaper
  • Excise duty on CFL halved to 4%
  • Customs duty on Gold and Platinum hiked
  • Refrigerators to be costlier
  • Televisions to be costlier
  • Mobile phones to become cheaper
  • Peak customs duty unchanged at 10%
  • Cement to be costlier
  • Air conditioners to be costlier
  • Oppostion walkout in Lok Sabha
  • Uproar in Parliament over hike in fuel prices
  • Excise on all non smoking tobacco raised
  • 7.5% duty on petrol and diesel restored
  • 5% duty on crude petroleum restored
  • Fuel prices likely to go up
  • Excise duty on petrol and diesel raised to Rs 1/litre
  • Cigarettes to be costlier
  • Excise on large cars,SUVs, MUV raised to 22%
  • Partial rollback in Excise Duty from 10% to 8%
  • Excise on large cars,SUVs, MUV raised to 22%
  • Presumptive tax limit raised to Rs 60 lacs
  • Investment linked deduction benefit for 2 Star hotels
  • Deduction of Rs 20000 on investment in infra bonds
  • Weighted deduction on R&D raised to 200% from 150%
  • No tax on Income up to Rs 1.6 lacs
  • Current surcharge on companies reduced to 7.5%
  • Minimum Alternate tax hiked to 18%
  • 30% tax on income above Rs 8 lacs
  • 20% tax on income between Rs 5 lacs to 8 lacs
  • 10% tax on income between Rs 1.6 lacs to 5 lacs
  • IT tax slabs broadened
  • IT dept to notify Saral 2 form for individual tax payers
  • IT exemption limit enhanced, surcharge withdrawn
  • FY11 net market borrowings pegged at Rs 3.45 lac Crs
  • 20 Kms of highway to be constructed everyday
  • FY10 budget deficit seen at 6.9% of GDP
  • FY12 fiscal deficit target at 4.8%
  • FY13 fiscal deficit target at 4.1%
  • More than 50% increase in funds for minority welfare
  • Fiscal deficit target of 5.5% in FY11
  • 15% rise in planned expenditure
  • Govt to set up National Mission for delivery of justice
  • Gross tax receipts Rs 7.46 lac Crs
  • Defence capex raised to Rs 60000 Crs
  • Allocation to defence raised to Rs 1.47 lac Crs
  • Pvt sector to meet food grain storage deficit
  • Rs 100 Cr woman farmer fund scheme
  • Rs 1900 Crs allocated for UID project
  • Skill development programme for textile sector
  • Home loans up to Rs 20 lacs to get intrest subvention of 1% up to March 11
  • Government to contribute Rs 1000 per month for pension security
  • Rs 5400 Crs allocated for urban development
  • Rs 66100 Crs allocated for rural development
  • Rs 2400 Crs allocated for MSMEs
  • Social Security Fund to have corpus of over Rs 1000 Crs
  • National Social Security fund for unorganised workers
  • Intrest subvention for housing loans up to 1 lacs
  • Rs 10,000 Crs allocated for Indira Awas Yojna
  • Rs 1200 Crs assistance for drought in Bundelkhand
  • Rs 48000 Crs for Bharat Nirman
  • NREGA scheme allocation raised to Rs 41000 Crs
  • Allocation to health Rs 22,300 Crs
  • 25% of plan allocation for rural infrastructure
  • Social sector spending seen at Rs 1.38 lakh Crs
  • Allocation for school education up from Rs 26800 Crs to Rs 31036 Crs
  • Allocation to power sector at Rs 5130 Crs
  • Rs 200 Crs for Tamilnadu textile sector
  • One time grant for Tirupur exports
  • Draft food security Bill ready
  • Clean energy fund to be established
  • Allotment for renewable energy hiked by 61%
  • Coal regulatory authority to be set up
  • Road development hiked to Rs 19894 Crs
  • Rs 1.73 lakh Crs, which is 46% of total plan outlay, reserved for infrastructure development
  • 2% loan subsidy to farmers
  • Farm credit targets to be increased to Rs 3.75 lakh Crs
  • Farm loan payments to be extended for six months
  • Interest subvention of 2% to be extended for handicrafts and SMEs
  • Rs 300 Crs for agricultural impetus
  • Additional Rs 1,65,000 Crs for bank re-capitalisation
  • Intrest subvention for exports to extended for one year
  • RBI may give banking licenses to Pvt cos and NBFCs
  • FDI policy to be made more user-friendly
  • To discuss Kirit Parikh report in due course
  • Fertiliser subsidy to be reduced
  • Divestment target of Rs 25,000 Crs
  • GST to be implemented from 2011
  • Hope to implement Direct Tax Code from April 2011
  • Calibrated exit strategy for fiscal stimulus
  • Need to review stimulus, go back to fiscal prudence
  • Significant private investment inflow expected to boost GDP
  • Economy can achieve GDP growth of 10%
  • India faces a challenge of reverting to double digit growth
  • FY 2009-10 was a challenging year
  • Need to improve food security and healthcare systems
  • Indian economy in far better position than last year, says Pranab
  • Pranab Mukherjee starts Budget speech
  • Pranab Mukherjee arrives in Parliament
  • Parliament to convene at 11 am
  • All eyes on stimulus rollback
  • Pranab Mukherjee reaches North Block
 
Summary of Railway Budget 2010-11

RAILWAY BUDGET 2010-11



There will be no increase in the passenger fares of any class or category of trains. Freight tariffs will also remain the same for 2010-11. Service charges for e-tickets and freight charges for food-grains will be reduced. This was announced by the Minister of Railways, Kumari Mamata Banerjee in Parliament today while presenting Railway Budget for the new financial year.



Kumari Mamata Banerjee has proposed Rs.41,426 crore, the highest ever plan investment to provide efficient, customer focused and modern railway network. Out of this allocation, Rs.4,411 crore have been proposed to achieve the target of 1,000 kms. for new lines and Rs.1,302 crore for passenger amenities. The Plan would be financed through gross budgetary support of Rs.15,875 crore, Diesel Cess of Rs.877 crore, internal resources of Rs,14,523 crore and EBR of Rs.10,151 crore including market borrowing through IRFC of Rs.9,120 crore.



Presenting the Railway Budget for 2010-11 in Parliament today, the Minister said that the Railway is committed to take up socially desirably projects connecting backward areas of the country. Surveys for 114 projects for such areas will be updated and surveys for 55 new lines will be taken up during the year. She said that 800 km. Gauge Conversion and 700 km of doubling the rail line will be achieved during the year besides a number of new projects on cost sharing with state governments or through PPP route. She also proposed 52 new train services to meet increasing demand of passengers, increase in frequency of 12 train services, extension of 21 trains and introduction of some special trains.



Reiterating the Government’s commitment to provide efficient railway network within the reach of common man, Kumari Mamata Banerjee said that the target has been set to add 25,000 km of new lines in next 10 years. A Special Task Force to clear proposals for investments within 100 days will be set up, policy guidelines will be made easy, simple and investment friendly so that business community can join hands to build partnership with the Railways. But the Minister clarified that this does not mean that Railway is going for privatization, it will remain a Government organization, she asserted.



Highlighting the initiatives taken recently, Railway Minister said that within a span of 7 months, significant achievements have been made. She announced that out of 120 new trains, extensions and increase in frequencies announced in last budget, 117 would be flagged off by the end of 2010. Special drive for improving passenger amenities and cleanliness has been taken up. The Catering Policy is under revision to provide better food, six bottling plants to be set up to provide clean drinking water. 94 new stations will be developed as Adarsh Stations and 10 more stations will be upgraded as World Class Stations. She also announced construction of another 93 Multi-functional Complexes and to develop multi-level parking complex through PPP route.



Declaring that passenger amenities is a very high priority of the Government, she said that a number of initiatives are being taken for this purpose. SMS updates of reservation status and movements of wagons to freight customers is being initiated. Double-decker train-sets matching the best in global standards will be introduced in two trains each from Delhi and Kolkata as a pilot project. Modern trolleys at all important stations with uniformed attendants will be introduced to assist senior citizens and women passengers for carrying their luggage. Mobile vans for issuing e-tickets will be extended to government medical college hospitals, High Courts, District Court, University campus, IT hubs, IITs and IIMs. The Railway Minister announced that railway reservation ticket centres will also be opened at district headquarters and village panchayats to give more facility to common man.



In order to bring more transparency in freight business, the Railway Minister announced RFID technology will be introduced for tracking of wagons, allotment of the rakes would be accessible through the web.



Highlighting efforts being made for safety and security of the passenger, Kumari Mamata Banerjee said that the railway is developing crashworthy coaches and locomotives and will provide automatic fire and smoke detection system in 20 pairs of long-distance trains as pilot project. Manning of further 1,000 level crossing will be taken up during the budget year. She announced that in coming five years, all the unmanned level crossing will be manned. 12 companies of women RPF, ‘Mahila Vahini’ will be raised for security of women passengers.



The Railway Minister said that as assured, recruitment policy of Railway Recruitment Boards has been reviewed. Now onwards, question papers will be made available in local state languages also besides Hindi, Urdu and English, examination will be held simultaneously by all RRBs for a particular post. She also announced waiving of examination fee for women candidates and those belonging to minority and economically backward classes.



Reiterating her commitment for the welfare of railway employees, she said that a new scheme “House for All” will provide residence to all railway employees in the next 10 years with the help of Ministry of Urban Development. 522 hospitals and diagnostic centres, 50 Kendriya Vidyalayas, 10 residential schools on the pattern of Navodaya Vidyalaya, model degree colleges and technical and management institutions of national importance will be set up for the benefit of railway employees. She also proposed extension of ‘Rashtriya Swasthya Bima Yojana’ to all licenced porters, vendors and hawkers. She also proposed setting up a Railway Cultural and Heritage Promotion Board and Shambhu Mitra Cultural Complex at Howrah for the employee. Rabindra Museum at Howrah and Gitanjali Museum at Bolpur are also proposed to mark the 150th birth anniversary of Rabindranath Tagore, she said.



In order to upgrade railway infrastructure, the Minister said that a centre for Railway Research will be set up at IIT, Kharagpur for research in key areas of railway technology and a state-of-the art advanced loco pilot training centre at Kharagpur and an advanced railway track training centre at Beleghata. To overcome of the shortage of coaches, new coach factories are being set up at Rae Bareilly, Kancharapara and Palakkad. A wagon repair shop will be set up at Badnera and a new Rail Axle Factory will be set up at New Jalpaiguri through PPP or Joint Venture mode. Besides 5 state-of-the-art wagon factories also through joint venture and PPP mode at Sikandrabad, Barddhaman, Bhubneshwar/Kalahandi, Guwahati and Haldia.



Kumari Mamata Bangerjee also announced ‘Kisan Vision Project’ for manufacturing refrigerated container for carrying agricultural products so that farmers are not forced for distress sale of their produce.



Proposing several new initiatives for freight business, the Minister said that Railways will introduce a modified wagon investment scheme for high capacity general purpose and special purpose wagons for carrying iron ore, coal and cement. A scheme to run special freight train by private operators for commodities such as automobiles, vegetable oil, molasses, chemicals and petrochemicals will be notified. A premium Tatkal Service for parcel and freight movement besides special wagons for iron ore, fly ash, automobiles will also be introduced.



Reiterating Railways’ commitment for time bound completion of dedicated corridors, the Minister said preliminary Engineering-cum-Traffic Surveys for North-South, East-West, East-South and South-South corridors will be taken up this year. She also said that Railways is also working on high speed passenger rail corridors, a National High Speed Rail Authority will be set up for planning, standard setting and implementing these projects.



In order to promote industrial activity, Kumari Mamata Banerjee said that Railways would welcome investment through PPP mode for providing rail connectivity to important ports. Additional 2,000 kms. routes will be electrified within two years. Work on adding another 12,000 kms. in existing Optical Fibre Cable network of the Railways is in progress. The balance 15,000 kms. is proposed to be taken through PPP mode, thus covering entire railway network.



Announcing upgradation and modernization of Kolkata Metro, the only Metro with Indian Railways, the Minister said that Metro Station at Park Circus, Maidan, M.G. Road, Chandni Chowk and Rash Behari will be remodeled and network will be extended at four sections. The Railway Minister also announced augmentation of sub-urban train services in Mumbai, Chennai and Kolkata.



Kumari Mamata Banerjee proposed special trains – Sanskriti Express, across the country, to mark 150th birth anniversary of Rabindranath Tagore, Matribhoomi Express trains for ladies in Kolkata, Chennai, New Delhi and Mumbai and Karmabhoomi trains, unreserved trains for common people between Darbhanga-Mumbai, Guwahati-Mumbai and New Jalpaiguri-Amritsar. Similarly, Janmabhoomi Trains specially for uniformed persons, between Ahmedabad and Udhampur, Bharat Tirth Trains for tourists connecting popular sites in different parts of the country will be introduced during the year.



The Railway Minister also proposed four new Durontos trains between Chandigarh and Amritsar, between Chennai and Coimbatore, between Puri and Howrah and between Howrah and Digha.



To reiterate her commitment for the common man, Kumari Mamata Banerjee announced that there will be no increase in passenger fares of any class and in freight tariffs. In spite of tight resource position, the Railways has also proposed to reduce an amount of Rs.100 per wagon in freight charges for food-grains and domestic use of kerosene as a gesture to common man.



The Minister also announced reduction of service charges maximum to Rs.10 for Sleeper Class and Rs.20 for AC Class. She also announced 100 per cent concession for cancer patients going for treatment together with an escort in AC 3 class. Technicians of regional film industry when traveling for film production related work will also be eligible for 75% concession in second sleeper and 50% concession on other classes in all trains. The Minister also announced that concession under Izzat scheme, for press correspondents and students of madrasas will continue.
 
From the perspective of financial planning, a larger disposable income is channelised to long-term asset creation and meeting a family's financial goals. The Budget proposes to leave more funds with the family for effective financial planning. A household with a net taxable income of Rs 5 lakh can save an additional Rs 20,600 in income tax in the new fiscal. This increases to Rs 51,500 if the taxable income rises to Rs 8 lakh.

The recent downturn drove families to manage their finances prudently, keeping in check their discretionary spends. The additional disposable income should be deployed towards achieving long-term financial goals, taking a cue from the government's resolve to implement the Direct Taxes Code (DTC) with effect from April 1, 2011.

The impending Exempt-Exempt-Tax scenario should propel families to invest savings and liquidity not solely to save income tax. The implementation of the DTC could redefine the taxation structure in savings instruments and rationalise tax sops for home loans.

Goals such as retirement should be given a holistic view of long-term asset creation by employing a strategic asset allocation and risk management regime. The additional tax savings to the extent of Rs 20,000 in infrastructure bonds to be notified by the government should be seen in this perspective where the lock-in period and impact of tax on redemption need careful study..

The Budget further consolidates on the roadmap charted for a sustained high GDP growth of 9 per cent, with an emphasis on harnessing the economic growth to make development more inclusive and restructuring the government's delivery mechanism.

The government's determination to have greater financial inclusion, financial literacy and inter-regulatory cohesion would aid the process of a sustainable investment scenario, which will equally benefit the investing public and industry.

We expect the roadmap to the 2010-20 decade to open up more avenues for holistic financial panning by the Indian household.
 
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Expert Talk: Budget was boring, but not harmful

The Budget was boring, which is a good thing as far as Budgets go. It is easy for finance ministers to do the bold thing just to catch the headlines and then regret two years, if not two days, later as to the real effects of what they have done.

Nigel Lawson, when he was the British chancellor of the exchequer, was very likely to fall into this trap. He is a brilliant man and was rated very successful, until two years after his resignation, his policies led to a recession and the resurgence of inflation.

Gordon Brown had ten years as the chancellor of the exchequer-the first half brilliant and the second just so-so. He is blamed today for the weakness of the UK in the recession.

No such danger with Pranab Mukherjee. He is not only cautious but also politically astute. He did many things right but at no point did he overdo them.

At the same time, he avoided the pitfalls of populist measures, but not so strictly that he would be unpopular. Thus, he kept to the road map of fiscal consolidation, but did not promise a faster cut in deficit as I certainly would have wanted.

He decided to add no more to the stimulus since the economy is getting back to a high growth path on its own strength. Yet he put in enough extra money in rural areas, eased the income tax burden by moving the bands around and cheered up the people on pensions.

For me the big move was the one which was delivered in his best deadpan voice by Pranab Mukherjee. This was his commitment that in the future he would put the subsidies transparently in the cash budget and not just issue extra bonds. His reversal of the import duty cut on petrol and the almost sure promise that the government will implement the Parikh report were evidence that the UPA may actually mean business.
 
It was here that the Opposition showed how little it knows how to use its limited strength. It could have stayed and criticised the Budget if it really cared about the consequent price rise.

But it had already wasted two days-Monday and Wednesday-on procedural wrangles and then produced a mouse which could not even move Sharad Pawar from his vulnerable perch. Pranab Mukherjee had an easy ride. It may be that he probably counted on the Opposition making a lot of noise but no one could have expected walkout. The UPA is lucky in its opposition.

The very simple fact that Pranab Mukherjee did what was expected of him, performed his dharma as the finance minister and showed that India has now reached a stage where continuity and stability in the Budgets matters more than fancy footwork. Properly run economies attempt to lay down a medium framework and keep to it unless blown off the course by a big shock like the one which happened in 2008.

The Budget is not the place for doing radical reform whatever hyper-excited media people may say. In any case, the Parikh report implementation was not to be in the Budget. Nor can the finance minister unilaterally announce labour reform or reform of land legislation. The UPA runs a Cabinet government and most of these decisions have to be taken at the Cabinet level. As they should be, of course, to ensure that they are consensual.

My own guess is that the economy will perform much better than the projected numbers on the deficit. I expect a growth rate nearer 9% to 9.5% than the 8.5% implicit in the Budget.

Factor in the bonus due to Kirit Parikh report implementation and divestment proceeds plus spectrum sales and you can expect Pranab Mukherjee next year getting plaudits for doing better than the Budget estimate. It is a deliberate understatement of the expected performance so that he can safely do better than the other way around and have to apologise for having missed the targets.

There is another major policy innovation that has happened without attracting the full attention. This is the aggressive thrust of money into the rural economy.

Starting with NREGA and then the farmers debt forgiveness before the election, the UPA has made the rural stimulus a constant part of the Budget. To begin with, many, including myself, saw this as a massive waste of money most likely to be siphoned off by corrupt intermediaries. But if development is going to be really inclusive the rural areas have to receive as much, if not more, attention than the urban areas with their noisy demands get.

The point of such a strategy is that it not only caters to the majority of the population but it hastens the 'trickle down'. In any case, even if it may not do much good, it certainly cannot do any harm. That is the Hippocratic oath which finance ministers should take-above all, do no harm.
:SugarwareZ-296:
 
Key Features of Budget 2010-2011
:SugarwareZ-064:

CHALLENGES
! To quickly revert to the high GDP growth path of 9 per cent and then find the
means to cross the ‘double digit growth barrier’.
! To harness economic growth to consolidate the recent gains in making development
more inclusive.
! To address the weaknesses in government systems, structures and institutions at
different levels of governance.
OVERVIEW OF THE ECONOMY
! India among the first few countries in the world to implement a broad-based
counter-cyclic policy package to respond to the negative fallout of the global
slowdown.
 

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