Union Budget 2010-11

World Of Finance by Vijaya Sai.M

 Finance minister Pranab Mukherjee began presenting the Union budget for 2010-11 in the Lok Sabha today after the Cabinet approved the document. Here are some of the highlights of his budget speech.

• The Indian economy was facing grave uncertainty. Growth had started decelerating when the interim and full budget for 2009-10 were presented.
• At home there was added uncertainty because of subnormal southwest monsoon.Yet, the economy now in a far better position than it was eight years ago.
• India weathered the economic crisis well and emerged from the global slowdown faster than any other country.
• First challenge before the government is to quickly revert to high GDP growth path of 9%.Expects 10% economic growth in the near future.
• Second challenge is to harness economic growth to make it more inclusive and consolidate gains.
• Third challenge is to overcome weakness in government's public delivery mechanism; a long way to go in this.
• Impressive recovery in the past few months. Can witness faster recovery in the coming months.
• Food security has been strengthened.
• But bottleneck of the public delivery mechanism can hold us back.Fiscal year 2009-10 was challenging for the economy.
• Focus shifted to non-governmental actors and an enabling government. Government now concentrates on supporting and delivering services to the poorer sections.
• Economy stabilised in the first quarter of 2009 itself.
• 18.5% manufacturing growth in December was the highest in two decades.
• Figures for merchandise exports for January encouraging after turnaround in November and December last year.
• Double digit food inflation last year due to bad monsoon and drought-like conditions.
• Government conscious of the price rise and taking steps to tackle it.
• Erratic monsoon and drought-like conditions forced supply-side bottleneck that fueled inflation.
• Need to review stimulus imparted to economy last year to overcome the recession.
• Need to ensure that the demand-supply imbalance is managed.
• Need to make growth more broad-based.
• Need to review public spending and mobilise resources.
• Status paper on public debt within six months.
• Government hopes to implement direct tax code from April 2011.
• Earnest endeavour to implement general sales tax in April 2011.
• Government will raise Rs25,000 crore from divestment of its stake in state-owned firms.
• Kirit Parekh report on fuel price deregulation will be taken up by petroleum minister Murli Deora in due course.
• Nutrient-based fertiliser subsidy scheme to come into force from April 1 this year.
• Nutrient-based fertiliser subsidy will reduce volatility of subsidy and also reduce it.
• Market capitalisation of five public-sector undertakings listed since October increased by 3.5 times.
• FDI inflows steady during the year. Government has taken
• series of steps to simplify FDI regime. Intends to make FDI policy user friendly by compling all guidelines into one document.
• Government has decided to set up apex-level Financial Stability and Development Council.
• RBI considering issuing banking licences to private companies. Non-banking finance companies will also be considered if they meet the criteria.
• Government to provide Rs16,500 crore to public-sector banks to maintain tier-I capital.
• Government to continue interest subvention of 2% for one more year for exports covering handicrafts, carpets,hand looms and small and medium enterprises.
• Government to provide Rs300 crore to organise 60,000 pulse and oilseed villages and provide integrated intervention of watershed and related programmes.
• Rs200 crore provided for climate-resilient agriculture initiative.
• Government committed to ensuring continued growth of special economic zones.
• Need to take firm view on opening up of the retail sector.
• Deficit in food grains storage capacity to be met with private-sector participation.
• Period for repayment of loans by farmers extended by six months to June 30, 2010, in view of the drought and floods in some parts of the country.
• Interest subvention for timely repayment of crop loans raised from 1% to 2%, bringing the effective rate of interest to 5%.
• Road transport allocation raised by 13% to Rs19,894 crore.
• Proposal to maintain thrust of upgrading infrastructure in rural and urban areas. IIFCL authorised to refinance infrastructure projects.
• Rs1,73,552 crore provided for infrastructure development.
• Allocation for railways fixed at Rs16,752 crore, an increase of Rs950 crore over the last financial year.
• Government proposes to set up Coal Development Regulatory Authority.
• Mega power plant policy modified to lower cost of generation; allocation to power sector more than doubled to Rs5,130 crore in 2010-11.
• Government favours competitive bidding for coal blocks for captive power plants.
• Rs500 crore allocated for solar and hydro projects for the Ladakh region in Jammu & Kashmir.
• Clean Energy Fund to be created for research in new energy sources.
• Allocation for new and renewable energy ministry increased by 61% to Rs1,000 crore.
• One-time grant of Rs200 crore provided to Tirupur textile cluster in Tamil Nadu.
• Allocation for National Ganga River Basin Authority doubled to Rs500 crore.
• Alternative port to be developed at Sagar Island in West Bengal.
• Draft of Food Security Bill ready, to be placed in the public domain soon.
• Outlay for social sectors pegged at Rs1,37,674 crore, accounting for 37% of the total plan allocation.
• Plan allocation for school education raised from Rs26,800 crore to Rs31,036 crore in 2010-11.
• 25% of plan outlay earmarked for rural infrastructure development.
• Plan allocation for health and family welfare increased to Rs22,300 crore from Rs19,534 crore.
• For rural development, Rs66,100 crore have been allocated.
• Allocation for National Rural Employment Guarantee Authority stepped up to Rs40,100 crore in 2010-11.
• Indira Awas Yojana's unit cost raised to Rs45,000 in the plains and Rs48,500 in hilly areas.
• Allocation for urban development increased by 75% to Rs5,400 crore in 2010-11.
• 1% interest subvention loan for houses costing up to Rs20 lakh extended to March 31, 2011; Rs700 crore provided.
• Allocation for development of micro and small-scale sector raised from Rs1,794 crore to Rs2,400 crore.
• Rs1,270 crore provided for slum development programme, marking an increase of 700%.
• Government to set up National Social Security Fund with initial allocation of Rs1,000 crore to provide social security to workers in the unorganised sector.
• Government to contribute Rs1,000 per annum to each
• account holder under the new pension scheme.
• Exclusive skill development programme to be launched for textile and garment-sector employees.
• Allocation for woman and child development increased by 80%
• Plan outlay for the social justice ministry raised by 80% to Rs4,500 crore.
• Plan allocation for minority affairs ministry raised from Rs1,740 crore to Rs2,600 crore.
• Financial-Sector Legislative Reforms Committee to be setup.
• Rs1,900 crore allocated for Unique Identification Authority of India.
• A unique identity symbol will be provided to the rupee in line with the US dollar, British pound sterling, euro and Japanese yen.
• Defence allocation pegged at Rs1,47,344 crore in 2010-11 against Rs1,41,703 crore in the previous year. Of this, capital expenditure would account for Rs60,000 crore.
• Planning Commission to prepare integrated action plan for Naxal-affected areas to encourage "misguided elements" to eschew violence and join the mainstream.
• Gross tax receipts pegged at Rs7,46,656 crore for 2010-11, non-tax revenues at Rs1,48,118 crore.
• Total expenditure pegged at Rs11.8 lakh crore, an increase of 8.6%.
• Fiscal deficit at 5.5%.
• Fiscal deficit seen at 4.8% and 4.1% in 2011-12 and 2012-13, respectively.
• Non-plan expenditure pegged at Rs37,392 crore and plan expenditure at Rs7,35,657 crore in budget estimates. Proposed increase of 15% in plan expenditure and 6% in non-plan expenditure.
• Cash subsidy for fuel and fertiliser instead of previous practice of bonds to continue.
• Fiscal deficit pegged at 6.9% in 2009-10 as against 7.8% in the previous fiscal.
• Government's net borrowing to be Rs3,45,010 crore for 2010-11.
• Income-tax department ready with two-page Saral-2 returns
• form for individual salaried assesses.
• Personal income-ax rates pruned:
• Income up to Rs1.6 lakh — nil
• Income above Rs1.6 lakh and up to Rs5 lakh — 10%
• Income above Rs5 lakh and up to Rs8 lakh — 20%
• Income above Rs8 lakh — 30%
• Additional deduction of Rs20,000 allowed on long-term
• infrastructure bonds for income-tax payers; this is above Rs1 lakh on savings instruments allowed already.
• Investment-linked tax deductions to be allowed to two-star hotels anywhere in the country.
• Weighted deduction of 125% for payments to approved associations doing social and statistical research.
• One-time interim relief to housing and real-estate sector.
• Businesses with a turnover of up to Rs60 lakh and professionals earning up to Rs15 lakh to be exempted from the obligation to audit their accounts.
• Housing projects allowed to be completed in five years instead of four to avail of tax breaks.
• Revenue loss of Rs26,000 crore on direct tax proposals.
• Central excise duty on all non-petroleum products raised to 10% from 8%.
• FM increases customs duty on crude oil to 5%, on diesel and petrol to 7.5%, and on other petroleum products to 10%.
• Structural changes in excise duties on cigarettes, cigars, and cigarillos.
• Clean energy cess of Rs50 per ton to be levied on coal produced in India.
• Concessional excise duty of 4% on solar cycle-rickshaws.
• Balloons exempted from central excise duty.
• Customs and central excise proposals to result in a net revenue gain of Rs43,500 crore.
• More services to be brought under the service tax net.
• Certain accredited news agencies exempted from payment of service tax.
• Net revenue gain from tax proposals pegged at Rs20,500 crore.