Finance minister Pranab Mukherjee.

NEW DELHI: A day after the Budget ignited Opposition protests over fuel price hikes,
Congress allies Trinamool chief Mamata Banerjee and DMK leader M Karunanidhi
demanded the "inflationary" increases be rolled back even as finance minister Pranab
Mukherjee stoutly stood his ground.

The Trinamool took out rallies in Kolkata to protest the price hike while the party chief
wrote to Prime Minister Manmohan Singh and Congress president Sonia Gandhi "to
reconsider the hikes in view of hardships faced by the common man".

Karunanidhi also wrote to the PM and Congress leadership, though he said the
government should "at least roll back" the increase in diesel prices. While both allies
dashed off letters, they did not indicate how far they were prepared to push their
opposition.

Speaking in the Capital, Mukherjee went on the defensive, saying the inflationary impact
of the duty hikes would be minimal, just adding 0.4% to overall inflation. He blamed
supply side constraints and an inefficient public delivery system for shortages and price
rise in food items. "Our PDS is not geared to distribute efficiently...the gap between farm
gate and retail is large," he said.

Karunanidhi, in his letter, argued that the increase in fuel prices would only aggravate
food inflation. "You are fully aware that the Centre and states are grappling with high
food inflation...any increase in diesel prices will have a cascading effect on food prioces
and those of essential commodities as well." He sought the immediate intervention of the
PM, Mukherjee and Sonia to roll back the diesel hike.

With both Trinamool and DMK facing elections in 2011, their protests have not surprised
the Congress. But it is felt that the quantum of hike was not so high as to cause
widespread disaffection. There had been no hikes for a while and as long as prices did not
shoot up steeply, the political fallout could be contained.

The assessment in Congress circles is that the allies, particularly Banerjee, though
worked up over the fuel hikes due to restoration of custom and excise duties, would not
push their point too far. Congress is fairly confident that DMK is not inclined to up the
ante at present and in any case, the finance bill was not up for a vote till April.

Senior Congress sources said the Budget provisions would be voted on only after the
Budget Session break when standing committees study the bill. That would give upset
allies enough time to cool off, and, if current trends in wholesale prices continue, food
inflation would also decline.

Ministers did admit that there was no escaping a generalized inflation but pointed out that
duty restoration had been inevitable in view of the need to curb deficits. Allies would
have to understand the compulsions that the Centre had to work under and the
government could, in the meanwhile, send a stronger signal on anti-inflationary
measures.

Congress leaders are not insensitive to the political overtones of fuel hikes adding to food
costs, all the more so in the wake of already high inflation in this sector. They would
certainly like more initiatives on this front but the decision on fuel prices does not seem
to have come as a surprise for the party leadership. There is an expectation that food
prices will cool as the rabi crop progresses well.

The Opposition is expected to keep up its pressure on prices as it looks to milk an

obvious political issue. While BJP leaders agree that Mukherjee had few options but to
restore excise and customs duties, they felt that the FM had provided them an opening.
The decision on hikes, apart from those due to excise, could have been taken after the
Budget as well.

History of Indian Budget

India's first Finance Minister Sir R.K. Shanmugham Chetty, presented the first Finance Budget of
independent India on November 26, 1947. Since then, 28 different Union Finance Ministers have been
presenting the budget year after year. Initially, major attention was paid towards the agriculture sector but as
the economy evolved, the focus shifted from agriculture to other sectors like industrial, financial etc.

During the early the fifties, Indian budget highlights revolved around the public sector and public finance and
hence, back then - taxation, inflation, public savings etc were much talked about topics. This trend continued
till the finance budget 1985-86.

The change in the approach began with Mr. Manmohan Singh who served as the Union Finance Minister
under the leadership of Mr. P.V. Narsimha Rao. Mr. Singh was instrumental in headstarting the new phase
of economic liberalization. He reduced the control of Government over public sector units through
disinvestment. The liberalization process which he started years back is still followed and is seen in interim
budget and Indian budget announcements every year.

Facts Bite

 First Finance Minister: Shanmugham Chetty

 Number of Finance Minister Since Independence: 28
 Maximum Number of Budgets Presented by: Morarji Desai
 Economic Liberalization Started by: Mr. Manmohan Singh ( Finance Minister 1991)
 Current Finance Minister: Mr. Pranab Mukherjee

Fuel prices likely to go up

The fuel prices are likely to go up very soon. Finance minister Pranab Mukherjee announced in the
parliament today that excise duty on petrol and diesel will be raised to Rs 1/litre.
He also announced to restore 5% duty on crude petroleum and 7.5% duty on petrol and diesel.
With this announcement there was an uproar in the paliament and the oppostion walkout in Lok Sabha

Income Tax Slabs Relaxations and Slab Restructured

The finance minister of India Mr. Pranab Mukherjee announced the restructuring of Income tax slabs while
presenting the budget for 2010-11. The new slabs include 30% tax on income above Rs 8 lacs , 20% tax on
income between Rs5 lacs to 8 lacs and 10% tax on income between Rs1.6 lacs to 5 lacs.
The relaxation limit under section 80C has been inceased to Rs. 2 lakhs. He also announced that the
exemption limit in Income Tax will be enhanced to Rs. 1.6 laks.
Besides this, the surcharge has also been withdrawn. Current surcharge on companies has also been
reduced to 7.5%.
The presumptive tax limit has also been raised to Rs 60 lacs.
He also announced a deduction of Rs 20000 on investment in infra bonds.

Budget Expectations - 2010-11

Economic Survey - Highlights (Continued)

 VAT introduction to boost states' tax revenues

 Favours making available food in open market
 Trade gap narrowed to $76.24 bn in April-December.
 Favours monthly ration coupons usable anywhere for poor
 Exports in April-December 2009 down 20.3 per cent
 Imports in April-December 2009 down 23.6 per cent
 Overall approach is to foster "inclusive and green growth promoting fiscal federalism"
 FRBM Act needs to specify the nature of shocks that would require relaxation of the targets
 Commission proposes new Fiscal Responsibility and Budgetary Management (FRBM) Act
 Commission recommends increase in states' share to 32 per cent of Central tax proceeds from the
current level of 30.5 per cent.
 Finance Commission has asked the government to adopt a "calibrated" strategy for withdrawing
stimulus
 Supply side pressure on inflation will prevail for the near term
 V-shaped recovery seen
  Economic recovery weak, says Survey
 High double-digit food inflation in 2009–10 a great concern
 India's GDP growth at 7.2 % in 2009-10
 Hike in fuel prices will impact inflation
 Review planned schemes for fiscal consolidation
 India's GDP expected to return to 9% growth in 2011-2012
 Necessary to watch recovery in private investment in Q3, Q4
 Industrial sector growth seen at 8.2%
 Service sector growth seen at 8.7 %
 Recovery creates scope for gradual pullback of stimulus
 Credit needed for private investment in agriculture
 Fundamental policy changes needed for trade
 FY 10 trade outlook has brightened
 India can become world's fastest growing economy in 4 yrs
 Current fuel prices not fiscally sustainable
 India not immune to global financial situation
 Medium term prospects of Indian economy really strong
 Investment growth rate still below GDP growth rate
 GDP expected to grow around 8.5%
 Exports may again turn negative

2% point excise hike expected in budget

The Cenvat rate for excise duty is expected to rise by 2 percentage points. Raising the excise duty would be
the first step towards mending the fiscal deficit.

Traders hoping a feed on STT status

The Day traders in export market are looking forward for an update regarding the Securities Transaction Tax
(STT) in the forthcoming Union Budget. As per the government's proposed Direct Tax Code (DTC), STT is
very likely to be abolished.
Tax benefits should not be withdrawn: MF industry
The mutual fund (MF) industry expects the finance ministry to retain the existing tax benefits available to
investors in MF schemes in the forthcoming Union budget.

Assuring millions of Indians that the worst was over and the nation has emerged as a
brave warrior from the mid 08 crisis, Finance Minister of India Pranab Mukherjee
exhibited confidence and optimism in his 5th budget speech presented in the parliament
on February 26, 2010. He quoted that the current scenario is much different from the last
time he presented the Union Budget as the indicators of financial recovery are more
pervasive and unambiguous at present. The speedy recovery according to him was
triggered by three incentive packages that the Government launched one after another in
the previous Budget.

In an endeavor to steadily slide back to the 9% GDP growth path and pave way for GST
without damaging the revival process, he announced few Indirect Tax proposals which
will come into force from the current fiscal year. To improve the standard fee on non-
petroleum commodities, the FM reduced the Central Excise tariff to 10% from the
previous 8% along with an increase in the explicit tariff rates valid to Portland cement
and cement clinker.

On the same note, the ad valorem of excise tariff on big cars, MUVs and SUVs was hiked
to 22% against the previous 20%. In order to strengthen the petroleum rates in the FY
2008, the administration offered full tax exemption from basic customs tariff on
petroleum and removed basic tariff from refined petroleum products but in an attempt to
sustain the economic consolidation route, 5% of basic tariff was hiked in petroleum, 10%
on other refined petroleum and 7.5% on diesel.

Other indirect tax proposals include: hike in the excise tariff of tobacco, service tax
exemption on agricultural seeds, service tax exemption on news agencies, and hike in
customs tariff of platinum and gold, and silver to Rs 300 and Rs 1500 on every kg
respectively.

India Union Budget 2010-2011

Railway budget 2010-2011 | Union Budget 2010-2011 | Budget Highlights
Budget Expectation | Budget Survey | Economic Survey 2010-11 Highlights
Budget Tax Proposal

In an attempt to quickly slip back to the high GDP expansion route of 9% and locate effective measures to
supersede the 'double digit growth barrier', the Finance Minister of India Pranab Mukherjee proposed few
initiative to assist the economic expansion while presenting the India Union Budget 2010-2011 in the
parliament on February 26, 2010.

Summation of India Union Budget 2010-2011

The Finance Minister of India began his speech on an impressive note by highlighting the economic growth
in various sectors and recommendation of new initiatives for future financial years. Below is the list of the
proposals announced by the FM while delivering his budget speech in the parliament -

India Union Budget 2010-2011 General Proposals and Announcements

 Fiscal deficit for the FY 2011 is estimated at 5.5%

 18.9% growth rate registered by manufacturing industry in 2009
 Indian Economy is expected to register a 10% GDP growth in the coming years
 A 7.2% economic growth is estimated to be registered in the current fiscal
 The future years are expected to witness gradual segmentation of incentives
 Direct Tax Code and General Sales Tax to be launched in April 2011
 A supreme level Fiscal Stability and Development Council to be established by the central
government
 Issue of additional banking licenses by the Reserve Bank of India to private players and non-
banking financial organizations
 6 months extension of the refund term for farmer loans up to June 30th 2011
 Undertaking of the introductory development activities for Delhi-Mumbai industrial corridor
 Rs 25000 crores increase by the government via Disinvestment route
 Setting up of Technology advisory group under the governance of Nandan Nilekani
 Allocation of Rs 1900 crore for UID authority

India Union Budget 2010-2011 Direct Tax Proposals

 Implementation of Direct tax code from April 1, 2011

 Introduction of a simplified 2 page Saral 2 form by Indian Income Tax department for FY 2010-11
 Loss of Rs 26,000 cr from the initiation of Direct Tax plans and profits of Rs 45,000 from the
implementation of Indirect Tax proposals
 Corporate Tax to continue at the same rate
 3% increase in Minimum Alternate Tax from the previous 15% to 18% on book gains
 Reduction of 10% additional tax on domestic firms to 7.5%
 Demand for account assessment of professionals with more than Rs 15 lakh of earnings
India Union Budget 2010-2011 Indirect Tax Proposals

 Service Tax rates to remain constant at 10% in an attempt to include more services under the tax
code
 Increase in the tariff on smoking and non-smoking tobacco commodities
 2% increase in Central Excise tariff from the previous 8% to the proposed 10%
 Total excise tax exemption on electric cars
 Central Customs tariff to remain constant at 10%
 Excise tariff of Rs 1 per litre on diesel and petrol
 Service Tax exemption on News agencies
 Limited reduction in the excise tariff on cement
 Service Tax exemption on farming seeds
 Hike in the customs tariff on gold and platinum exports from the previous Rs 200 to the proposed
Rs 300
 Hike in Import tax on silver metal to Rs 1500 on every kg

India Union Budget 2010-2011 Individual Tax Proposals

 Individuals earning upto Rs 1.60 lakh will not be levied under Income Tax laws.
 Individuals earning from Rs 5 lakh to Rs 8 lakhs will be charged at 10%
 Individuals earning above Rs 8 lakh will be taxed at 30%
 Tax exemption limit remains constant for Women and Senior Citizens at Rs. 1, 90,000 and Rs. 2,
40,000 respectively.
 Additional deduction of Rs 20,000 will be accessible for making investment in Infrastructure Bonds

India Company
The scenario of India Company has incalculably improved in the last few decades. The number of Indian
companies has increased at a very striking rate. It has been observed that more and more international
companies are willing to have their place of business in India. It is either individually that these foreign
companies are entering India or through a partnership or with building up a subsidiary of such companies.
With more liberalized norms and rules by the Government, more and more companies saw the business
scenario getting better. These have in a way made a positive impact on the India company scenario and
augmented the credibility of the India corporate sector. The future of India Company really looks very
promising indeed.

Alphabetical list of Companies

 A
 B
 C
 D
 E
 F
 G
 H
 I
 J
 K
 L
 M
 N
 O
  P
 R
 S
 T
 U
 V
 W
 Y

Highlights of the India Company scenario

1. India has 52 billionaires in 2009 as the Forbes report. This is with all courtesy to the improvement
in the India company situation.
2. India has been stated as the world's fastest growing wealth creator, all thanks to a vibrant stock
market and higher earnings from the strata of Indian companies.
3. The number of top companies in India has outshone their performances in terms of net profit in just
six months of the start of the fiscal year. This depicts a fast growth in corporate earnings.

Amongst all the developments in India, the major one has been in the IT sector. The Indian IT company
scenario has witnessed a fast growth pace and it has in its basket a lot of job opportunities. That is why the
IT sector has been considered a prime career option. As a matter of fact, this sector happens to be the
fastest growing sectors in the India Company premise.

List of top Indian companies in Forbes

There are 34 top Indian companies that have been listed in the Forbes Global 2000 ranking for 2008. The
leading Indian companies from different sectors are:
Profits Assets Market
World Revenue
Company   Industry (billion (billion Value
Rank   (billion $)  
$)   $)   (billion $)  
193 Reliance Industries Oil & Gas, Petrochemicals 26.07 2.79 30.67 89.29
Oil and Natural Gas
198 Oil & Gas Operations 18.90 4.11 33.79 54.11
Corporation
219 State Bank of India Banking 15.77 1.47 188.56 33.29
303 Indian Oil Corporation Oil & Gas Operations 42.68 1.82 25.39 16.36
374 ICICI Bank Banking 9.84 0.64 91.07 29.85
411 NTPC Electricity generation 7.84 1.60 20.34 41.57
Steel Authority of India
647 Steel 7.88 1.45   26.37
Limited
738 Tata Steel Steel 5.83 0.97 11.48 14.63
Telecommunications
826 Bharti Airtel 4.26 0.94 6.61 39.16
Services
Telecommunications
846 Reliance Communications 3.13 0.65 13.08 29.63
Services
927 Tata Consultancy Svcs Software & Services 4.32 0.97 3.03 21.38
949 HDFC Banking 1.49 0.40 16.97 19.07
961 Larsen & Toubro Capital Goods 4.68 0.52 5.72 24.94
967 Bharat Petroleum Oil & Gas Operations 22.77 0.50 8.67 4.16
1012 Bharat Heavy Electricals Capital Goods 3.99 0.56 5.17 27.92
1040 Infosys Technologies Software & Services 3.21 0.89 3.08 22.09
1093 HDFC Bank Banking 1.96 0.27 21.09 12.87
1102 Wipro Software & Services 3.47 0.68 3.26 15.87
1111 Tata Motors Capital Goods 7.27 0.50 5.77 6.75
1112 Hindustan Petroleum Oil & Gas Operations 20.48 0.39 7.59 2.54
1134 NMDC Materials 0.97 0.54 1.73 34.83
1159 ITC Limited Food Drink & Tobacco 2.98 0.64 3.57 19.01
1166 Punjab National Bank Banking 3.03 0.38 38.42 4.76
1185 DLF Universal Limited Diversified Financials 0.61 0.45 4.19 33.26
1205 Hindalco Industries Materials 4.41 0.62 6.43 6.22
1249 GAIL Utilities 3.83 0.59 5.03 8.93
1305 Canara Bank Banking 3.03 0.35 38.54 2.85
1361 Axis Bank Banking 1.29 0.15 16.91 9.10
1375 Bank of India Banking 2.48 0.26 32.80 4.72
Power Grid Corporation of
1413 Utilities 0.83 0.25 8.50 11.54
India
1477 Bank of Baroda Banking 2.55 0.26 33.97 3.33
National Aluminium
1478 Materials 1.37 0.55 2.20 7.46
Company
1484 Unitech Group Construction 0.76 0.30 3.03 14.57
1527 Grasim Industries Construction 3.24 0.46 3.70 6.62
1597 Reliance Power Utilities 0.00 0.00 0.05 24.32
1737 Indian Overseas Bank Banking 1.43 0.23 19.03 2.25
1744 IDBI Bank Banking 1.70 0.14 24.51 2.14
Business Services &
1753 Power Finance Corporation 0.89 0.23 10.80 5.36
Supplies
1759 Union Bank of India Banking 1.90 0.20 23.76 2.34
1763 Satyam Computer Services Software & Services 1.50 0.33 1.59 7.26
1803 Central Bank of India Banking 1.58 0.12 21.44 1.05
1833 Syndicate Bank Banking 1.54 0.17 20.66 1.28
1919 Mahindra & Mahindra Consumer Durables 4.07 0.35 4.59 4.12
Business Services &
1919 Reliance Capital 0.37 0.16 1.72 11.16
Supplies
1935 UCO Bank Banking 1.35 0.07 17.32 1.01
1952 Oriental Bank of Commerce Banking 1.32 0.13 17.05 1.57
1954 Suzlon Energy Utilities 1.85 0.20 2.90 10.52
1996 Allahabad Bank Banking 1.22 0.18 15.68 1.23

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.

• The Advance Estimates for Gross Domestic Product (GDP) growth for 2009-10
pegged at 7.2 per cent. The final figure expected to be higher when the third and fourth
quarter GDP estimates for 2009-10 become available.

• The growth rate in manufacturing sector in December 2009 was 18.5 per cent – the
highest in the past two decades.

• A major concern during the second half of 2009-10 has been the emergence of double
digit food inflation. Government has set in motion steps, in consultation with the State
Chief Ministers, which should bring down the inflation in the next few months and
ensure that there is better management of food security in the country.

CONSOLIDATING GROWTH

ORGANIZATION OF DATA

Fiscal Consolidation

• With recovery taking root, there is a need to review public spending, mobilise resources
and gear them towards building the productivity of the economy.

• Fiscal policy shaped with reference to the recommendations of the Thirteenth Finance
Commission, which has recommended a calibrated exit strategy from the expansionary
fiscal stance of last two years.

• It would be for the first time that the Government would target an explicit reduction in
its domestic public debt-GDP ratio.

Tax reforms

• On the Direct Tax Code (DTC) the wide-ranging discussions with stakeholders have
been concluded – Government will be in a position to implement the DTC from April 1,
2011.
• Centre actively engaged with the Empowered Committee of State Finance Ministers to
finalise the structure of Goods and Services Tax (GST) as well as the modalities of its
expeditious implementation. Endeavour to introduce GST by April, 2011

People’s ownership of PSUs

• Ownership has been broad based in Oil India Limited, NHPC, NTPC and Rural
Electrification Corporation while the process is on for National Mineral Development
Corporation and Satluj Jal Vidyut Nigam. This will raise about Rs 25,000 crore during
the current year.

• Higher amount proposed to be raised during the year 2010-11. Fertiliser subsidy

• A Nutrient Based Subsidy policy for the fertiliser sector has been approved by the
Government and will become effective from April 1, 2010.

• This will lead to an increase in agricultural productivity and better returns for the
farmers, and overtime reduce the volatility in demand for fertiliser subsidy and contain
the subsidy bill.

Petroleum and Diesel pricing policy

• Expert Group to advise the Government on a viable and sustainable system of pricing of
petroleum products has submitted its recommendations.

• Decision on these recommendations will be taken in due course. Improving Investment

Environment

Foreign Direct Investment

• Number of steps taken to simplify the FDI regime.

• Methodology for calculation of indirect foreign investment in Indian companies has

been clearly defined.

• Complete liberalisation of pricing and payment of technology transfer fee and

trademark, brand name and royalty payments.

Financial Stability and Development Council

• An apex level Financial Stability and Development Council to be set up with a view to
strengthen and institutionalise the mechanism for maintaining financial stability.

• This Council would monitor macro-prudential supervision of the economy, including

the functioning of large financial conglomerates, and address inter-regulatory
coordination issues.
Banking Licences

• RBI is considering giving some additional banking licenses to private sector players.
Non Banking Financial Companies could also be considered, if they meet the RBI’s
eligibility criteria.

Public Sector Bank Capitalisation

• Rs. 16,500 crore provided to ensure that the Public Sector Banks are able to attain a
minimum 8 per cent Tier-I capital by March 31, 2011.

Recapitalisation of Regional Rural Banks (RRB)

• Government to provide further capital to strengthen the RRBs so that they have
adequate capital base to support increased lending to the rural economy.

Corporate Governance

• Government has introduced the Companies Bill, 2009 in the Parliament to replace the
existing Companies Act, 1956, which will address issues related to regulation in
corporate sector in the context of the changing business environment.

Exports

• Extension of existing interest subvention of 2 per cent for one more year for exports
covering handicrafts, carpets, handlooms and small and medium enterprises.

Agriculture Growth

• Government will follow a four-pronged strategy, covering

(a) Agricultural production

• Rs. 400 crore provided to extend the green revolution to the eastern region of the
country comprising Bihar, Chattisgarh, Jharkhand, Eastern UP, West Bengal and Orissa.

• Rs. 300 crore provided to organise 60,000 “pulses and oil seed villages” in rain-fed
areas during 2010-11 and provide an integrated intervention for water harvesting,
watershed management and soil health, to enhance the productivity of the dry land
farming areas.

• Rs. 200 crore provided for sustaining the gains already made in the green revolution
areas through conservation farming, which involves concurrent attention to soil health,
water conservation and preservation of biodiversity.

(b) Reduction in wastage of produce

• Government to address the issue of opening up of retail trade. It will help in bringing
down the considerable difference between farm gate, wholesale and retail prices.

• Deficit in the storage capacity met through an ongoing scheme for private sector
participation – FCI to hire godowns from private parties for a guaranteed period of 7
years.

(c) Credit support to farmers

• Banks have been consistently meeting the targets set for agriculture credit flow in the
past few years. For the year 2010-11, the target has been set at Rs.3,75,000 crore.

• In view of the recent drought in some States and the severe floods in some other parts of
the country, the period for repayment of the loan amount by farmers extended by six
months from December 31, 2009 to June 30, 2010 under the Debt Waiver and Debt
Relief Scheme for Farmers.

• Incentive of additional one per cent interest subvention to farmers who repay short-term
crop loans as per schedule, increased to 2% for 2010-11.

(d) Impetus to the food processing sector

• In addition to the ten mega food park projects already being set up, the Government has
decided to set up five more such parks.

• External Commercial Borrowings to be available for cold storage or cold room facility,
including for farm level pre-cooling, for preservation or storage of agricultural and allied
produce, marine products and meat.

Infrastructure

• Rs 1,73,552 crore provided for infrastructure development which accounts for over 46
per cent of the total plan allocation.

• Allocation for road transport increased by over 13 per cent from Rs. 17,520 crore to Rs
19,894 crore.

• Rs 16,752 crore provided for Railways, which is about Rs.950 crore more than last year.

India Infrastructure Finance Company Limited (IIFCL)

• IIFCL’s disbursements are expected to touch Rs 9,000 crore by end March 2010 and
reach around Rs 20,000 crore by March 2011.

• IIFCL has refinanced bank lending to infrastructure projects of Rs. 3,000 crore during
the current year and is expected to more than double that amount in 2010-11.

• The take-out financing scheme announced in the last Budget is expected to initially
provide finance for about Rs. 25,000 crore in the next three years.

Energy

• Plan allocation for power sector excluding RGGVY doubled from Rs.2230 crore in
2009-10 to Rs.5,130 crore in 2010-11.

• Government proposes to introduce a competitive bidding process for allocating coal

blocks for captive mining to ensure greater transparency and increased participation in
production from these blocks.

• A “Coal Regulatory Authority” to create a level playing field in the coal sector
proposed to be set up.

• Plan outlay for the Ministry of New and Renewable Energy increased by 61 per cent
from Rs.620 crore in 2009-10 to Rs.1,000 crore in 2010-11.

• Solar, small hydro and micro power projects at a cost of about Rs.500 crore to be set up
in Ladakh region of Jammu and Kashmir.

Environment and Climate change

• National Clean Energy Fund for funding research and innovative projects in clean
energy technologies to be established.

• One-time grant of Rs.200 crore to the Government of Tamil Nadu towards the cost of
installation of a zero liquid discharge system at Tirupur to sustain knitwear industry.

• Rs.200 crore provided as a Special Golden Jubilee package for Goa to preserve the
natural resources of the State, including sea beaches and forest cover.

• Allocation for National Ganga River Basin Authority (NGRBA) doubled in 2010-11 to
Rs.500 crore.

• Schemes on bank protection works along river Bhagirathi and river Ganga-Padma in
parts of Murshidabad and Nadia district of West Bengal included in the Centrally
Sponsored Flood Management Programme.

• A project at Sagar Island to be developed to provide an alternate port facility in West

Bengal.

INCLUSIVE DEVELOPMENT
• The spending on social sector has been gradually increased to Rs. 1,37,674 crore in
2010-11, which is 37% of the total plan outlay in 2010-11.

• Another 25 per cent of the plan allocations are devoted to the development of rural
infrastructure.

Education

• Plan allocation for school education increased by 16 per cent from Rs.2 6,800 crore in
2009-10 to Rs.3 1,036 crore in 2010-11.

• In addition, States will have access to Rs.3,675 crore for elementary education under the
Thirteenth Finance Commission grants for 2010-11.

Health

• An Annual Health Survey to prepare the District Health Profile of all Districts shall be
conducted in 2010-11.

• Plan allocation to Ministry of Health & Family Welfare increased from Rs 19,534 crore
in 2009-10 to Rs 22,300 crore for 2010-11.

Financial Inclusion

• Appropriate Banking facilities to be provided to habitations having population in excess

of 2000 by March, 2012.

• Insurance and other services to be provided using the Business Correspondent model.
By this arrangement, it is proposed to cover 60,000 habitations.

• Augmentation of Rs. 100 crore each for the Financial Inclusion Fund (FIF) and the
Financial Inclusion Technology Fund, which shall be contributed by Government of
India, RBI and NABARD.

Rural Development

• Rs. 66,100 crore provided for Rural Development.

• Allocation for Mahatma Gandhi National Rural Employment Guarantee Scheme

stepped up to Rs.40,100 crore in 2010-11.

• An amount of Rs.48,000 crore allocated for rural infrastructure programmes under

Bharat Nirman.

• Unit cost under Indira Awas Yojana increased to Rs.45,000 in the plain areas and to
Rs.48,500 in the hilly areas. Allocation for this scheme increased to Rs.10,000 crore.
• Allocation to Backward Region Grant Fund enhanced by 26 per cent from Rs.5,800
crore in 2009-10 to Rs 7,300 crore in 2010-11.

• Additional central assistance of Rs 1,200 crore provided for drought mitigation in the
Bundelkhand region.

Urban Development and Housing

• Allocation for urban development increased by more than 75 per cent from Rs.3,060
crore to Rs.5,400 crore in 2010-11.

• Allocation for Housing and Urban Poverty Alleviation raised from Rs. 850 crore to
Rs.1,000 crore in 2010-11.

• Scheme of one per cent interest subvention on housing loan upto Rs. 10 lakh, where the
cost of the house does not exceed Rs.20 lakh — announced in the last Budget —
extended up to March 31, 2011. Rs.700 crore provided for this scheme for the year 2010-
11.

• Rs. 1,270 crore allocated for Rajiv Awas Yojana as compared to Rs. 150 crore last year.

Micro, Small & Medium Enterprises

• High Level Council on Micro and Small Enterprises to monitor the implementation of
the recommendations of High-Level Task Force constituted by Prime Minister.

• Allocation for this sector to be increased from Rs. 1,794 crore to Rs.2,400 crore for the
year 2010-11.

• The corpus for Micro-Finance Development and Equity Fund doubled to Rs.400 crore
in 2010-11.

Unorganised Sector

National Social Security Fund for unorganised sector workers

• National Social Security Fund for unorganised sector workers to be set up with an initial
allocation of Rs.1000 crore. This fund will support schemes for weavers, toddy tappers,
rickshaw pullers, bidi workers etc.

• Rashtriya Swasthya Bima Yojana benefits extended to all such Mahatma Gandhi
NREGA beneficiaries who have worked for more than 15 days during the preceding
financial year.

• A new initiative, “Swavalamban” will be available for persons who join New Pension
Scheme (NPS), with a minimum contribution of Rs. 1,000 and a maximum contribution
of Rs.12,000 per annum during the financial year 2010-11, wherein Government will
contribute Rs. 1,000 per year to each NPS account opened in the year 2010-11.
Allocation of Rs.100 crore made for this initiative.

Skill development

• National Skill Development Corporation has approved three projects worth about Rs 45
crore to create 10 lakh skilled manpower at the rate of one lakh per annum.

• An extensive skill development programme in the textile and garment sector to be

launched by leveraging the strength of existing institutions and instruments of the Textile
Ministry to train 30 lakh persons over 5 years.

Social Welfare

• Plan outlay for Women and Child Development stepped up by almost 50 per cent.

• The ICDS platform being expanded for effective implementation of the Rajiv Gandhi
Scheme for Adolescent Girls.

• “Saakshar Bharat” to further improve female literacy rate launched with a target of 7
crore non-literate adults which includes 6 crore women.

• Mahila Kisan Sashaktikaran Pariyojana to meet the specific needs of women farmers to
be launched with a provision of Rs 100 crore as a sub-component of the National Rural
Livelihood Mission.

• Plan outlay of the Ministry of Social Justice and Empowerment enhanced by 80 per cent
to Rs.4500 crore. With this enhancement, the Ministry will be able to revise rates of
scholarship under its post-matric scholarship schemes for SCs and OBC students.

• Plan allocation for the Ministry of Minority Affairs increased by 50 per cent from
Rs.1,740 crore to Rs.2,600 crore for the year 2010-11.

STRENGTHENING TRANSPARENCY & PUBLIC ACCOUNTABILTY

• Financial Sector Legislative Reforms Commission to be set up to rewrite and clean up

the financial sector laws to bring them in line with the requirements of the sector.

• Rs 1,900 crore allocated to the Unique Identification Authority of India (UIDAI) for
2010-11. UIDAI will be able to meet its commitments of issuing the first set of UID
numbers in the coming year

• A Technology Advisory Group for Unique Projects (TAGUP) to be set up to look into
various technological and systemic issues for effective tax administration and financial
governance.
• Independent Evaluation Office (IEO) chaired by the Deputy Chairman, Planning
Commission to be set up to evaluate the impact of flagship programmes.

BUDGET ESTIMATES 2010-11

• The Gross Tax Receipts are estimated at Rs. 7,46,651 crore

• The Non Tax Revenue Receipts are estimated at Rs. 1,48,118 crore.

• The net tax revenue to the Centre as well as the expenditure provisions in 2010-11 have
been estimated with reference to the recommendations of the Thirteenth Finance
Commission.

• The total expenditure proposed in the Budget Estimates is Rs. 11,08,749 crore, which is
an increase of 8.6 per cent over last year.

• The Plan and Non Plan expenditures in BE 2010-11 are estimated at Rs. 3,73,092 crore
and Rs. 7,35,657 crore respectively. While there is 15 per cent increase in Plan
expenditure, the increase in Non Plan expenditure is only 6 per cent over the BE of
previous year.

• Fiscal deficit for BE 2010-11 at 5.5 per cent of GDP, which works out to Rs.3,8 1,408
crore.

• Taking into account the various other financing items for fiscal deficit, the actual net
market borrowing of the Government in 2010-11 would be of the order of Rs.3 ,45,0 10
crore. This would leave enough space to meet the credit needs of the private sector.

• The rolling targets for fiscal deficit are pegged at 4.8 per cent and 4.1 per cent for 2011-
12 and 2012-13, respectively.

• Against a fiscal deficit of 7.8 per cent in 2008-09, inclusive of oil and fertilizer bonds,
the comparable fiscal deficit is 6.9 per cent as per the Revised Estimates for 2009-10.

• Conscious effort made to avoid issuing bonds to oil and fertilizer companies.
Government would like to continue with this practice of extending Government subsidy
in cash, thereby bringing all subsidy related liabilities into Government’s fiscal
accounting.

TAX PROPOSALS

• The Centralized Processing Centre at Bengaluru is now fully functional and is

processing around 20,000 returns daily. This initiative will be taken forward by setting up
two more Centres during the year.
• The Income Tax department has introduced “Sevottam”, a pilot project at Pune, Kochi
and Chandigarh through Aayakar Seva Kendras, which provide a single window system
for registration of all applications including those for redressal of grievances as well as
paper returns. The scheme will be extended to four more cities in the year.

• Automation of Central Excise & Service Tax, has already been rolled out throughout
the country this year. Similarly, a Mission Mode Project for computerization of
Commercial Taxes in States has been approved recently. With an outlay of Rs. 1133
crore of which the Centre’s share is Rs. 800 crore, the project will lay the foundation for
the launch of GST.

• The income tax department to notify SARAL-II form for individual salaried taxpayers
for the coming assessment year.

• Scope of cases which may be admitted by the Settlement Commission expanded to

include proceedings related to search and seizure cases pending for assessment. Scope of
Settlement Commission also expanded in respect of Central Excise and Customs to
include certain categories of cases that hitherto fell outside its jurisdiction.

• Bi-lateral discussions commenced to enhance the exchange of bank related and other
information to effectively track tax evasion and identify undisclosed assets of resident
Indians lying abroad.

Direct Taxes

• Income tax slabs for individual taxpayers to be as follows

Income upto Rs 1.6 lakh Nil

Income above Rs 1.6 lakh and upto Rs. 5 lakh 10 per cent

Income above Rs.5 lakh and upto Rs. 8 lakh 20 per cent

Income above Rs. 8 lakh 30 per cent

• Deduction of an additional amount of Rs. 20,000 allowed, over and above the existing
limit of Rs. 1 lakh on tax savings, for investment in long-term infrastructure bonds as
notified by the Central Government

• Besides contributions to health insurance schemes which is currently allowed as a

deduction under the Income-tax Act, contributions to the Central Government Health
Scheme also allowed as a deduction under the same provision.

• Current surcharge of 10 per cent on domestic companies reduced to 7.5 per cent.
• Rate of Minimum Alternate Tax (MAT) increased from the current rate of 15 per cent
to 18 per cent of book profits.

• To further encourage R&D across all sectors of the economy, weighted deduction on
expenditure incurred on in-house R&D enhanced from 150 per cent to 200 per cent.
Weighted deduction on payments made to National Laboratories, research associations,
colleges, universities and other institutions, for scientific research enhanced from 125 per
cent to 175 per cent.

• Payment made to an approved association engaged in research in social sciences or

statistical research to be allowed as a weighted deduction of 125 per cent. The income of
such approved research association shall be exempt from tax.

• Benefit of investment linked deduction under the Act extended to new hotels of two-star
category and above anywhere in India to boost investment in the tourism sector.

• Allow pending projects to be completed within a period of five years instead of four
years for claiming a deduction of their profits, as a one time interim relief to the housing
and real estate sector. Norms for built-up area of shops and other commercial
establishments in housing projects to be relaxed to enable basic facilities for their
residents.

• Limits for turnover over which accounts need to be audited enhanced to Rs. 60 lakh for
businesses and to Rs. 15 lakh for professions.

• Limit of turnover for the purpose of presumptive taxation of small businesses enhanced
to Rs. 60 lakh.

• If tax has been deducted on payment by way of any expense and is paid before the due
date of filing the return, such expenditure to be allowed for deduction. Interest charged on
tax deducted but not deposited by the specified date to be increased from 12 per cent to
18 per cent per annum.

• To facilitate the conversion of small companies into Limited Liability Partnerships,

transfer of assets as a result of such conversion not to be subject to capital gains tax.

• “The advancement of any other object of general public utility” to be considered as

“charitable purpose” even if it involves carrying on of any activity in the nature of trade,
commerce or business provided that the receipts from such activities do not exceed Rs.10
lakh in the year .

• Proposals on direct taxes estimated to result in a revenue loss of Rs. 26,000 crore for the
year.

Indirect Taxes
• Rate reduction in Central Excise duties to be partially rolled back and the standard rate
on all non-petroleum products enhanced from 8 per cent to 10 per cent ad valorem.

• The specific rates of duty applicable to portland cement and cement clinker also
adjusted upwards proportionately. Similarly, the ad valorem component of excise duty on
large cars, multi-utility vehicles and sports-utility vehicles increased by 2 percentage
points to 22 per cent.

• Restore the basic duty of 5 per cent on crude petroleum; 7.5 per cent on diesel and
petrol and 10 per cent on other refined products. Central Excise duty on petrol and diesel
enhanced by Re. 1 per litre each.

• Some structural changes in the excise duty on cigarettes, cigars and cigarillos to be
made coupled with some increase in rates. Excise duty on all non-smoking tobacco such
as scented tobacco, snuff, chewing tobacco etc to be enhanced. Compounded levy
scheme for chewing tobacco and branded unmanufactured tobacco based on the capacity
of pouch packing machines to be introduced.

Agriculture & Related Sectors

• Provide project import status with a concessional import duty of 5 per cent for the
setting up of mechanised handling systems and pallet racking systems in ‘mandis’ or
warehouses for food grains and sugar as well as full exemption from service tax for the
installation and commissioning of such equipment.

• Provide project import status at a concessional customs duty of 5 per cent with full
exemption from service tax to the initial setting up and expansion of

¨ Cold storage, cold room including farm pre-coolers for preservation or storage of
agriculture and related sectors produce ; and  Processing units for such produce.

• Provide full exemption from customs duty to refrigeration units required for the
manufacture of refrigerated vans or trucks.

• Provide concessional customs duty of 5 per cent to specified agricultural machinery not
manufactured in India;

• Provide central excise exemption to specified equipment for preservation, storage and
processing of agriculture and related sectors and exemption from service tax to the
storage and warehousing of their produce; and

• Provide full exemption from excise duty to trailers and semi-trailers used in agriculture.

• Concessional import duty to specified machinery for use in the plantation sector to be,
extended up to March 31, 2011 along with a CVD exemption.
• To exempt the testing and certification of agricultural seeds from service tax.

• The transportation by road of cereals, and pulses to be exempted from service tax.
Transportation by rail to remain exempt.

• To ease the cash flow position for small-scale manufacturers, they would be permitted
to take full credit of Central Excise duty paid on capital goods in a single installment in
the year of their receipt. Secondly, they would be permitted to pay Central Excise duty on
a quarterly, rather than monthly, basis.

Environment

• To build the corpus of the National Clean Energy Fund, clean energy cess on coal
produced in India at a nominal rate of Rs.50 per tonne to be levied. This cess will also
apply on imported coal.

• Provide a concessional customs duty of 5 per cent to machinery, instruments, equipment

and appliances etc. required for the initial setting up of photovoltaic and solar thermal
power generating units and also exempt them from Central Excise duty. Ground source
heat pumps used to tap geo-thermal energy to be exempted from basic customs duty and
special additional duty.

• Exempt a few more specified inputs required for the manufacture of rotor blades for
wind energy generators from Central Excise duty.

• Central Excise duty on LED lights reduced from 8 per cent to 4 per cent at par with
Compact Fluorescent Lamps.

• To remedy the difficulty faced by manufacturers of electric cars and vehicles in

neutralising the duty paid on their inputs and components, a nominal duty of 4 per cent
on such vehicles imposed. Some critical parts or sub-assemblies of such vehicles
exempted from basic customs duty and special additional duty subject to actual user
condition. These parts would also enjoy a concessional CVD of 4 per cent.

• A concessional excise duty of 4 per cent provided to “soleckshaw”, a product developed

by CSIR to replace manually-operated rickshaws. Its key parts and components to be
exempted from customs duty.

• Import of compostable polymer exempted from basic customs duty. Infrastructure

• Project import status to ‘Monorail projects for urban transport’ at a concessional basic
duty of 5 per cent granted.

• To allow resale of specified machinery for road construction projects on payment of

import duty at depreciated value.
• To encourage the domestic manufacture of mobile phones accessories, exemptions from
basic, CVD and special additional duties are now being extended to parts of battery
chargers and hands-free headphones. The validity of the exemption from special
additional duty is being extended till March 31, 2011.

Medical Sector

• Uniform, concessional basic duty of 5 per cent, CVD of 4 per cent with full exemption
from special additional duty prescribed on all medical equipments. A concessional basic
duty of 5 per cent is being prescribed on parts and accessories for the manufacture of
such equipment while they would be exempt from CVD and special additional duty.

• Full exemption currently available to medical equipment and devices such as assistive
devices, rehabilitation aids etc. retained. The concession available to Government
hospitals or hospitals set up under a statute also retained.

• Specified inputs for the manufacture of orthopaedic implants exempted from import
duty.

Infotainment

• To address the difficulties experienced by film industry in importing digital masters of

films for duplication or distribution loaded on electronic medium vis-a-vis those imported
on cinematographic film, owing to a differential customs duty structure, customs duty to
be charged only on the value of the carrier medium. The same dispensation would apply
to music and gaming software imported for duplication. In all such cases the value
representing the transfer of intellectual property rights would be subjected to service tax.

• Provide project import status at a concessional customs duty of 5 per cent with full
exemption from special additional duty to the initial setting up “Digital Head End”
equipment by multi-service operators.

Precious Metals

• Rates on precious metals indexed as follows:

¨ On gold and platinum from Rs.200 per 10 grams to Rs.300 per 10 grams

¨ On silver from Rs.1,000 per kg to Rs.1,500 per kg.

• Basic customs on Rhodium – a precious metal used for polishing jewellery reduced to 2
per cent.

• Basic customs duty on gold ore and concentrates reduced from 2 per cent ad valorem to
a specific duty of Rs.140 per 10 grams of gold content with full exemption from special
additional duty. Further, the excise duty on refined gold made from such ore or
concentrate reduced from 8 per cent to a specific duty of Rs.280 per 10 grams.

Other Proposals

• Full exemption from import duty available to specified inputs or raw materials required
for the manufacture of sports goods expanded to cover a few more items.

• Basic customs duty on one of key components in production of micro-wave ovens,

namely magnetrons, reduced from 10 per cent to 5 per cent.

• Value limit of Rs. 1 lakh per annum on duty-free import of commercial samples as
personal baggage enhanced to Rs. 3 lakh per annum.

• Outright exemption from special additional duty provided to goods imported in a pre-
packaged form for retail sale. This would also cover mobile phones, watches and ready-
made garments even when they are not imported in pre-packaged form. The refund-based
exemption is also being retained for cases not covered by the new dispensation.

• Toy balloons fully exempted from Central Excise duty.

• Reduction in basic customs duty on long pepper from 70 per cent to 30 per cent;

• Reduction in basic customs duty on asafoetida from 30 per cent to 20 per cent;

• Reduction in central excise duty on replaceable kits for household type water filters
other than those based on RO technology to 4 per cent;

• Reduction in central excise duty on corrugated boxes and cartons from 8 per cent to 4
per cent;

• Reduction in central excise duty on latex rubber thread from 8 per cent to 4 per cent;
and

• Reduction in excise duty on goods covered under the Medicinal and Toilet Preparations
Act from 16 per cent to 10 per cent.

• Proposals relating to customs and central excise are estimated to result in a net revenue
gain of Rs. 43,500 crore for the year.

Service Tax

• Rate of tax on services retained at 10 per cent to pave the way forward for GST.

• Certain services, hitherto untaxed, to be brought within the purview of the service tax
levy. These to be notified separately.
• Process of refund of accumulated credit to exporters of services, especially in the area
of Information Technology and Business Process Outsourcing, made easy by making
necessary changes in the definition of export of services and procedures.

• Accredited news agencies which provide news feed online that meet certain criteria,
exempted from service tax.

• Proposals relating to service tax are estimated to result in a net revenue gain of Rs 3,000
crore for the year.

• Proposals on direct taxes estimated to result in a revenue loss of Rs. 26,000 crore for the
year. Proposals relating to Indirect Taxes estimated to result in a net revenue gain of
Rs.46,500 crore for the year. Taking into account the concessions being given in the tax
proposals and measures taken to mobilise additional resources, the net revenue gain is
estimated to be Rs. 20,500 crore for the year.

Read more: http://www.taxguru.in/budget-2010/major-highlights-of-union-budget-2010-

11.html#ixzz0idHWof6Y
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.

Union Budget 2010

    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.

    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 fuelled 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,
handlooms 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 foodgrains 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 set

up.

    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.

    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%.

UNION BUDGET 2010-11

 Opposition walkout during budget first in history

 BJP lambasts Govt for fuel price hike
 Net gain from indirect taxes Rs 46500 Crs
 Direct tax relief to result in loss of Rs 26000 Crs
 Net revenue from tax proposals Rs 20500 Crs
 Pranab has exercised modernation, says PM
 Section 80c investment limit hiked by Rs 20000
 Excise duty on solar panels waived
 Accreditted news agencies exempted from service tax
 Sensex shoots up 391 pts after tax slabs announced
 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
 Rs 950 cr more for Railways
 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
 Indian Rupee to get unique identity and symbol
 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

Indian Budget
India's Budget - India's public finance
system follows the British pattern. The
Indian constitution establishes the
supremacy of the bicameral Parliament--
specifically the Lok Sabha (House of the
People)--in financial matters. No central
 government taxes are levied and no
government expenditure from public
funds disbursed without an act of
Parliament, which also scrutinizes and
audits all government accounts to ensure
that expenditures are legally authorized
and properly spent. Proposals for
taxation or expenditures, however, may
be initiated only within the Council of
Ministers--specifically by the minister of
finance. The minister of finance is
required to submit to Parliament, usually
on the last day of February, a financial
statement detailing the estimated
receipts and expenditures of the central
government for the forthcoming fiscal
year and a financial review of the current
fiscal year.

The Lok Sabha has one month to review and modify the government's budget
proposals. If by April 1, the beginning of the fiscal year, the parliamentary
discussion of the budget has not been completed, the budget as proposed by the
minister of finance goes into effect, subject to retroactive modifications after the
parliamentary review. On completion of its budget discussions, the Lok Sabha
passes the annual appropriations act, authorizing the executive to spend money,
and the finance act, authorizing the executive to impose and collect taxes.
Supplemental requests for funds are presented during the course of the fiscal
year to cover emergencies, such as war or other catastrophes. The bills are
forwarded to the Rajya Sabha (Council of States--the upper house of Parliament)
for comment. The Lok Sabha, however, is not bound by the comments, and the
Rajya Sabha cannot delay passage of money bills. When signed by the
president, the bills become law. The Lok Sabha cannot increase the request for
funds submitted by the executive, nor can it authorize new expenditures. Taxes
passed by Parliament may be retroactive.

Each state government in India maintains its own budget, prepared by the state's
minister of finance in consultation with appropriate officials of the central
government. Primary control over state finances rests with the state legislature in
the same manner as at the central government level. State finances are
supervised by the central government, however, through the comptroller and the
auditor general; the latter reviews state government accounts annually and
reports the findings to the appropriate state governor for submission to the state's
legislature. The central and state budgets consist of a budget for current
expenditures, known as the budget on revenue account, and a capital budget for
economic and social development expenditures.
The national railroad (Indian Railways), the largest public-sector enterprise, and
the Department of Posts and Telegraph have their own budgets, funds, and
accounts (see Railroads; Telecommunications, this ch.). The appropriations and
disbursements under their budgets are subject to the same form of parliamentary
and audit control as other government revenues and expenditures. Dividends
accrue to the central government, and deficits are subsidized by it, a pattern that
holds true also, directly or indirectly, for other government enterprises.

During the eighth plan, the states were expected to spend nearly Rs1.9 trillion, or
42.9 percent of the public outlay. Because of its greater revenue sources, the
central government shared with the states its receipts from personal income
taxes and certain excise taxes. It also collected other minor taxes, the total
proceeds of which were transferred to the states. The division of the shared
taxes is determined by financial commissions established by the president,
usually at five-year intervals. In the early 1990s, the states received 75 percent of
the revenue collected from income taxes and around 43 percent of the excise
taxes. The central government also provided the states with grants to meet their
commitments. In FY 1991, these grants and the states' share of taxes collected
by the central government amounted to 40.9 percent of the total revenue of state
governments.

The states' share of total public revenue collected declined from 48 percent in FY
1955 to about 42 percent in the late 1970s, and to about 33 percent in the early
1990s. An important cause of the decline was the diminished importance of the
land revenue tax, which traditionally had been the main direct tax on agriculture.
This tax declined from 8 percent of all state and central tax revenues in FY 1950
to less than 1 percent in the 1980s and early 1990s. The states have jurisdiction
over taxes levied on land and agricultural income, and vested interests exerted
pressure on the states not to raise agricultural taxation. As a result, in the 1980s
and early 1990s agriculture largely escaped significant taxation, although there
has long been nationwide discussion about increasing land taxes or instituting
some sort of tax on incomes of the richer portion of the farm community. The
share of direct taxes in GDP increased from 2.1 percent in FY 1991 to 2.8
percent in FY 1994.

TAXATION

Since independence government has favored more politically palatable indirect

taxes--customs and excise duties--over direct taxes. In the 1980s and early
1990s, indirect taxes accounted for around 75 percent of all tax revenue
collected by the central government. State governments relied heavily on sales
taxes. Overall, indirect taxes accounted for 84.1 percent of all government tax
revenues in FY 1990. Total government tax revenues amounted to 17.1 percent
of GDP in that year, up from 9.0 percent in FY 1960, 11.5 percent in FY 1970,
 and 14.9 percent in FY 1980. In FY 1990, the share of the public sector in GDP
was 26.4 percent. In terms of rupees (in current prices), total government income
rose from Rs259.8 billion in FY 1981 to Rs1.3 trillion in FY 1992 (see table 18,
Appendix).

Comprehensive tax reforms were implemented with the FY 1985 budget.

Corporate tax was cut, income taxes simplified and lowered for high-income
groups, and wealth taxes reduced. Tax receipts in FY 1985 rose by 20 percent
over FY 1984 as a result of tightened enforcement, and taxpayers responded to
lower taxes with greater compliance. In FY 1986, another major change was
made with the launching of a long-term program of tax reform designed to
eliminate annual changes, which had produced uncertainty. However, in FY
1987, when the monsoon failed, the government raised taxes on higher income
groups. The emergency budget of FY 1991, designed to cope with the nation's
1990 balance of payments crisis, increased indirect and corporate taxes, but the
budgets for FY 1992 and FY 1993 reflected the policy of economic liberalization.
They reduced and simplified direct taxes, removed the wealth tax from financial
investments, and indexed the capital gains tax. The highest marginal rate of
personal income tax was 42.5 percent in FY 1992.

Indian Budget 1995 loc data.

Union Budget > Budget Speech

            
  Union Budget 2008-2009  

Budget Speech

Budget  2008-2009

Speech  of

P. Chidambaram
 Minister of Finance

Mr. Speaker, Sir

I rise to present the Budget for 2008-09. This House and the United Progressive Alliance Government have
bestowed upon me the honour of presenting all five Budgets on behalf of a Government - a rare honour
that I have the privilege to share with only one of my distinguished predecessors, Dr. Manmohan Singh.

I. THE ECONOMY: AN OVERVIEW

2. Honourable Members! The India growth story, so far, has been an absorbing and inspiring tale.
Beginning January 1, 2005, the economy has recorded a growth rate of over 8 per cent in 12 successive
quarters up to December 31, 2007. In the first three years of the UPA Government, the Gross Domestic
Product (GDP) increased by 7.5 per cent, 9.4 per cent and 9.6 per cent, resulting in an unprecedented
average growth rate of 8.8 per cent. In the current year too, according to the Advance Estimates by the
Central Statistical Organisation (CSO), the growth rate will be 8.7 per cent - although I am confident that
we will maintain the average of 8.8 per cent. The drivers of growth continue to be "services" and
"manufacturing", which are estimated to grow at 10.7 per cent and 9.4 per cent, respectively.

3. Nevertheless, 2007-08 has been the most challenging of the last four years. At the beginning of the
year, the outlook for the global economy was benign. Our economy, thanks to our own policies as well as
globalisation, was poised to record another year of high growth: in fact, the first half of 2007-08 returned a
growth of 9.1 per cent. However, since August 2007, the financial markets in the developed countries have
witnessed considerable turbulence that has not yet abated. The consequences for developing countries are
also not yet clear.

4. Moreover, agriculture has struck a disappointing note. Despite a fine start in the first half of 2007-08,
the growth rate for the whole year in agriculture is estimated at only 2.6 per cent.

5. There are other downside risks too. World prices of crude oil, commodities and food grains have risen
sharply in the period April 2007 to January 2008. The position of crude oil is well known to this House.
Among commodities, the prices of iron ore, copper, lead, tin, urea etc are elevated. The prices of wheat
and rice have increased in the world market by 88 per cent and 15 per cent, respectively. All these trends
are inflationary, and there is pressure on domestic prices, especially on the prices of food articles.
Consequently, the management of the supply side of food articles will be the most crucial task in the
ensuing year.

6. We have also witnessed capital inflows that are far in excess of the current account deficit. This poses a
challenge to monetary management. The solution lies in increasing the absorptive capacity of the economy
in the medium term. In the short term, it is our responsibility to manage the flows more actively.
Government will, in consultation with the RBI, continue to monitor the situation closely and take such
temporary measures as may be necessary to moderate the capital flows consistent with the objective of
monetary and financial stability.

7. Keeping inflation under check is one of the cornerstones of our policy. Recently, the Prime Minister
declared, "I think no Government in our country can be oblivious to the objective of ensuring reasonable
price stability without hurting the growth process." There can be no clearer enunciation of policy. However,
since the downside risks have increased worldwide, we must be vigilant and prepared to make swift
adjustments in our policies to achieve the goal of growth with price stability.

8. Let me first deal with agriculture, briefly for the present, and at some length later. The Ministry of
Agriculture has estimated that the total output of food grains in 2007-08 will be 219.32 million tonnes and
that will be an all time record. In particular, production of rice is estimated at 94.08 million tonnes; maize
at 16.78 million tonnes; soya bean at 9.45 million tonnes; and cotton at 23.38 million bales (of 170 kg
each) - and each of these will be an all time record. Government is conscious that while a lot has been
done, a lot more needs to be done. Since the last Budget, Government has formulated and announced the
National Policy for Farmers. Besides, Government has launched the Rashtriya Krishi Vikas Yojana with an
outlay of Rs.25,000 crore and the National Food Security Mission with an outlay of Rs.4,882 crore. Both
schemes will be implemented during the Eleventh Five Year Plan period. We are determined to become
self-sufficient in food grains. Presently, I shall place before this House a number of new initiatives in the
agriculture sector.

The Growth Story: Faster and more inclusive

9. To return to the India growth story, I am of the firm belief that we owe our sustained progress to the
policy of economic reforms first ushered in by a Congress Government and now carried forward by the UPA
Government.

10. If 1984 and 1991 were turning points in the history of India's economy, 2004 was another turning
point. Confident that high growth was sustainable, the UPA Government had declared in the National
Common Minimum Programme its intention to make growth more inclusive. Sir, I ask this House,
respectfully, to judge our record on inclusive growth from the following sample of facts:

• agricultural credit doubled in the first two years of this Government and is poised to reach a level of
Rs.240,000 crore by March 2008.

• the National Rural Employment Guarantee Scheme has proved to be a historic measure of empowerment
of Scheduled Castes and Scheduled Tribes and, especially, of women.

• the Mid Day Meal Scheme is the largest school lunch programme in the world covering 11.4 crore
children.

• the National Rural Health Mission has taken improved health care to rural India by strengthening the
primary health centres of which 8,756 have been made 24 x 7.

• the Kasturba Gandhi Balika Vidyalaya Scheme has enrolled 182,000 girls in residential schools, thus
helping to bridge the gender gap in education.

Bharat Nirman

11. Bharat Nirman has made impressive progress in 2007-08. This ambitious programme is now over
1,000 days old. At the current pace, on each day of the year 290 habitations are provided with drinking
water and 17 habitations are connected through an all weather road. On each day of the year 52 villages
are provided with telephones and 42 villages are electrified. On each day of the year 4,113 rural houses
are completed.

12. Mr. Speaker, just as I sat down to write this speech, I received a slim volume titled "Indira Gandhi -
Selected Sayings". Within minutes, I found this gem and I quote, "The more one does, the more one
attempts, the more one is capable of doing". What I have narrated so far is indeed proof of more inclusive
growth, but if you ask me "can we do better?", my answer would be "we can and we should." Budget
2008-09 is about raising our sights and doing more and doing better.

II. THE ELEVENTH FIVE YEAR PLAN:

THE CRUCIAL SECOND YEAR

13. The Eleventh Plan has started on a note of robust growth. Never before did we start a Plan with a first
year growth rate of 8.7 per cent. Government regards the second year of the Plan as extremely critical to
the success of the Plan. 2008-09 should be a year of consolidation; of securing the ongoing programmes
on firm financial foundations; of close monitoring of implementation and enforcing accountability; and of
measuring the outcomes in terms of the targets achieved as well as their quality. The Plan documents
assumed that the Gross Budgetary Support (GBS) in the second year would be Rs.228,725 crore. In our
view, that will not be enough. Hence, I propose to increase the GBS to Rs.243,386 crore, which will
represent an increase of Rs.38,286 crore over the allocation in 2007-08.

14. Out of the GBS, the allocation for the Central Plan will be Rs.179,954 crore, marking an increase of 16
per cent over 2007-08.

15. Let me assure the House that all ongoing programmes will receive ample funds.

16. For Bharat Nirman, I propose to provide Rs.31,280 crore [including the North Eastern Region (NER)
component] as against Rs.24,603 crore in 2007-08.

Education: Sarva Shiksha Abhiyan

17. Education and health are the twin pillars on which rests the edifice of social sector reforms. The total
allocation for the education sector (including NER) will be increased by 20 per cent from Rs.28,674 crore in
2007-08 to Rs.34,400 crore in 2008-09.

18. Of this, Sarva Shiksha Abhiyan (SSA) will be provided Rs.13,100 crore; the Mid-day Meal Scheme will
be provided Rs.8,000 crore; and secondary education will be provided Rs.4,554 crore.

19. The focus of SSA will shift from access and infrastructure at the primary level to enhancing retention;
improving quality of learning; and ensuring access to upper primary classes.

20. A Model School programme, with the aim of establishing 6,000 high quality model schools, will be
started in 2008-09. I propose to provide Rs.650 crore for the new scheme.

Jawahar Navodaya Vidyalaya

21. Jawahar Navodaya Vidyalayas are quality schools. In order to make such schools more accessible to SC
and ST students, Government plans to establish Navodaya Vidyalayas in 20 districts that have a large
concentration of Scheduled Castes and Scheduled Tribes. I propose to set apart Rs.130 crore in 2008-09
for this purpose.

Kasturba Gandhi Balika Vidyalaya

22. Kasturba Gandhi Balika Vidyalayas were set up to address the issue of equity in the education of girls
belonging to SC, ST, OBC and minority communities. So far, 1,754 vidyalayas have been started, and I
propose to allocate funds (as part of SSA) to set up an additional 410 vidyalayas in educationally backward
blocks. I also propose to provide a sum of Rs.80 crore to set up new or upgrade existing hostels attached
to the Balika Vidyalayas.

National Means-cum-Merit Scholarship

23. Last year, I had announced the National Means-cum-Merit Scholarship Scheme to enable students to
continue their education beyond class VIII and up to class XII. I had provided Rs.750 crore with the
promise to add a like amount every year for three more years. The Scheme will be implemented by award
of 100,000 scholarships beginning 2008-09. I intend to keep my promise and earmark another sum of
Rs.750 crore so that a corpus of Rs.3,000 crore will be built up in four years.

Nehru Yuva Kendra

24. 123 districts do not have a Nehru Yuva Kendra. I propose to allocate Rs.10 crore in 2008-09 to set up
a Kendra in each of these districts and to cover the recurring expenditure in the first year.

Mid-day Meal Scheme

25. The Mid-day Meal Scheme has been extended to upper primary classes in 3,479 educationally
backward blocks. The scheme will now be extended to upper primary classes in Government and
Government-aided schools in all blocks in the country. This will benefit an additional 2.5 crore children,
taking the total number of children covered under the Scheme to 13.9 crore.

 
Institutes of Higher Education

26. Knowledge is power. It is knowledge that will drive success in the 21st century. India has the
opportunity to become a knowledge society. Following the Prime Minister's announcement, an IIM at
Shillong; three IISERs at Mohali, Pune and Kolkata; and an IIIT at Kanchipuram have started functioning.
Government will establish one Central University in each of the hitherto uncovered States. We propose to
make a beginning in 2008-09 by establishing 16 Central Universities. Besides, we propose to set up three
IITs in Andhra Pradesh, Bihar and Rajasthan; two IISERs at Bhopal and Tiruvananthapuram; and two
Schools of Planning and Architecture at Bhopal and Vijayawada. More institutes of higher education, as
promised by the Prime Minister, will be established during the Eleventh Plan period.

27. I also propose to make a grant of Rs.5 crore to the Deccan College Post-Graduate and Research
Institute, Pune which is one of the oldest institutions of modern learning in India.

Science and Technology

28. We must encourage our children to take to careers in science and research and development. Ministry
of Science and Technology will introduce a scheme called Innovation in Science Pursuit for Inspired
Research (INSPIRE) that will include scholarships for young learners (10-17 years), scholarships for
continuing science education (17-22 years) and opportunities for research careers (22-32 years). I propose
to provide Rs.85 crore in 2008-09 for this inspired contribution to building a knowledge society.

29. The recommendations of the National Knowledge Commission, submitted from time to time, are under
active consideration. Some of them have been incorporated in the Eleventh Plan. Government has accepted
an important recommendation to inter-connect all knowledge institutions through an electronic digital
broadband network. This will encourage sharing of resources and collaborative research. I propose to
provide Rs. 100 crore to the Ministry of Information and Technology for establishing the National
Knowledge Network.

Health

30. Turning to the health sector, I propose to allocate Rs.16,534 crore for the sector (including NER). This
will mark an increase of 15 per cent over the allocation in 2007-08.

National Rural Health Mission

31. The National Rural Health Mission (NRHM) is the key instrument of intervention by the Central
Government. The goal is to establish a fully functional, community owned, decentralised health delivery
system. 462,000 Associated Social Health Activists (ASHAs) and link workers have been trained and are in
place. 177,924 Village Health and Sanitation Committees are functional. 323 district hospitals have been
taken up for upgradation. Ambitious goals have been set for 2008-09, and I propose to increase the
allocation for NRHM to Rs.12,050 crore .
 

HIV/AIDS

32. The National Aids Control Programme will be provided Rs.993 crore. Studies have shown that the
prevalence rate of HIV/AIDS has come down from 0.9 per cent to 0.36 per cent, which is a matter of some
satisfaction.

Polio

33. The drive to eradicate polio continues with a revised strategy and a focus on the high risk districts in
Uttar Pradesh and Bihar. I propose to provide Rs.1,042 crore in 2008-09 for this purpose.

Rashtriya Swasthya Bima Yojana

34. Two major interventions are planned to be started in 2008-09. The first is the Rashtriya Swasthya
Bima Yojana that will provide a health cover of Rs.30,000 for every worker in the unorganised sector falling
under the BPL category and his/her family. I am happy to report that most of the States have agreed to
join the Yojana and it will be launched in Delhi and in the States of Haryana and Rajasthan on April 1,
2008. I propose to provide Rs.205 crore as the Centre's share of the premia in 2008-09.

National Programme for the Elderly

35. The other major intervention will be for the elderly. A National Programme for the Elderly with a Plan
outlay of Rs.400 crore will be started in 2008-09. Among other measures, we will establish, during the
Eleventh Plan period, two National Institutes of Ageing, eight regional centres, and a department for
geriatric medical care in one medical college/tertiary level hospital in each State.

Integrated Child Development Services

36. The universalization of the Integrated Child Development Services (ICDS) Scheme is underway. At the
end of December 2007, 5,959 ICDS projects and 932,000 Anganwadi and mini-Anganwadi centres were
functional. The beneficiary count had increased to 629 lakh children and 132 lakh pregnant and lactating
mothers. I propose to enhance the allocation for ICDS from Rs.5,293 crore in 2007-08 to Rs.6,300 crore in
2008-09.

37. I am also happy to announce that the remuneration of Anganwadi workers will be increased from
Rs.1,000 per month to Rs.1,500 per month. Likewise, the remuneration of Anganwadi Helpers will be
increased from Rs.500 per month to Rs.750 per month. Over 18 lakh Anganwadi workers and helpers will
benefit from the increase.
 

Flagship Programmes

38. As Honourable Members are aware, there are eight flagship programmes of the UPA Government. I
have dealt with two in the education sector (SSA & MMS) and two in the health sector (NRHM & ICDS). Let
me now refer to the allocations that I propose to make for the other four flagship programmes:

• The National Rural Employment Guarantee Scheme (NREGS) will be rolled out to all 596 rural districts in
India. Initially, we will provide Rs.16,000 crore. Let there be no apprehension in anyone's mind: as demand
rises, more money will be provided to meet the legal guarantee of employment.

• The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is the main vehicle for improving urban
infrastructure. It has also succeeded in driving reforms in urban governance and urban-related laws. I
propose to increase the allocation from Rs.5,482 crore in 2007-08 to Rs.6,866 crore in 2008-09.

• The goal of the Rajiv Gandhi Drinking Water Mission is to supply safe drinking water to uncovered
habitations and slipped back habitations as well as to address issues of quality. I propose to enhance the
allocation to Rs.7,300 crore in 2008-09 as against Rs.6,500 crore in 2007-08.

The Mission does not yet have a separate component for school children in water-deficient habitations. Our
children should have good, clean drinking water. Hence, I propose to allocate funds to the Mission under a
separate sub-head in order to install a standalone system to provide potable water to each school in water-
deficient habitations. The cost of each system, depending on the technology and design, is estimated to be
between Rs.15,000 to Rs.30,000. While a detailed plan for four years will be drawn up, I propose to make
an initial allocation of Rs.200 crore in 2008-09.

• The Total Sanitation Campaign is all about changing habits and mindsets, and it is a continuous process.
I propose to provide Rs.1,200 crore in 2008-09.

Desalination Plant

39. Honourable Members will recall that I had in July 2004 announced support for a desalination plant to be
installed near Chennai. A proposal has now been received from the Government of Tamil Nadu to establish
a plant under public private partnership. While the proposal will be examined for approval, I propose to
signal the Government's support to the project by setting apart Rs.300 crore in 2008-09.

North Eastern Region

40. The North Eastern Region (NER) will continue to receive special attention and enhanced allocations. I
propose to provide Rs.1,455 crore to the Ministry of Development of North Eastern Region (DONER).
Including that amount, the total Budget allocation for NER, spread over different ministries/departments,
will increase from Rs.14,365 crore in 2007-08 to Rs.16,447 crore in 2008-09.

41. The North Eastern Region and, especially, Arunachal Pradesh and the border areas face special
problems that cannot be tackled in the usual course or through normal schemes. Hence, Government
proposes to identify the urgent needs of these areas and address them through a special mechanism. In
order to jumpstart the process, I propose to set apart a sum of Rs.500 crore in a fund dedicated for the
purpose.

SC, ST, OBC and Minorities

42. Scheduled Castes, Scheduled Tribes, socially and educationally backward classes, and minorities will
continue to receive special attention.

Development and Finance Corporations

43. Development and Finance Corporations have been set up for certain disadvantaged groups. I propose
to contribute additional equity to these corporations in the following manner:

Rs. Crore

1 National Minorities Development and Finance Corporation 75.00

2  Three National Finance and Development Corporations for 106.50
Weaker Sections comprising

(i) Safai Karamcharis

(ii) Scheduled Castes

(iii) Backward Classes

3   National/State Scheduled Tribes Finance and Development 50.00
Corporations
4  National Handicapped Development Corporation  9.00
 Scholarships

44. In previous Budgets, we had announced a slew of pre- and post-matric scholarship programmes for
SC, ST, OBC and minorities. All of them will be continued in 2008-09 with adequate funds as summarised
below:

Scheduled Castes               Rs.804 crore

Scheduled Tribes                Rs.195 crore

Other Backward Classes       Rs.164 crore

Minorities (post-matric)        Rs.100 crore

45. I propose to allocate a sum of Rs.75 crore in 2008-09 to the Rajiv Gandhi National Fellowship
Programme. As Honourable Members are aware, this programme supports SC and ST students pursuing
M.Phil and PhD courses.

Scheduled Castes and Scheduled Tribes

46. Following the practice initiated in 2005-06, I have included in the Budget documents a statement on
the schemes for the welfare of SCs and STs. I have provided Rs.3,966 crore for schemes benefiting SCs
and STs exclusively and Rs.18,983 crore for schemes where at least 20 per cent of the benefits are
earmarked for SCs and STs.

Minorities

47. The allocation to the Ministry of Minority Affairs will be increased from Rs.500 crore in 2007-08 to
Rs.1,000 crore in 2008-09. Government has taken up the report of the Justice Rajindar Sachar Committee
for speedy implementation. Apart from the schemes commenced in 2007-08, it is proposed to implement
the following schemes/measures in 2008-09:

• a multi-sectoral development plan for each of the 90 minority concentration districts will be drawn up at
a cost of Rs.3,780 crore. The allocation in 2008-09 will be Rs.540 crore;

• a pre-matric scholarship scheme with an allocation of Rs.80 crore next year;

• a scheme for modernising Madrassa education for which a provision of Rs.45.45 crore has been made in
2008-09;

• 256 branches of public sector banks have been opened this year until December 2007 in districts with
substantial minority population. 288 more will be opened by March 2008 and many more in
2008-09; and

• continuing the exercise started this year, more candidates belonging to the minority communities will be
recruited to the Central Para-Military Forces.

48. I also propose to provide Rs.60 crore to enhance the corpus fund of the Maulana Azad Education
Foundation.

Women and Children

49. I confess that policy makers often tend to forget that one-half of the population is constituted by
women and they are entitled to an equal share - and an equal say - in all programmes and schemes.
Gender Budgeting has gained wider acceptance and credibility. Four more ministries/departments have set
up gender budgeting cells taking the total number to 54. Honourable Members will find in the Budget
documents a statement embracing 33 demands for grants contributed by 27 ministries/departments and 5
Union Territories. According to the statement, Rs.11,460 crore has been provided for 100 per cent women-
specific schemes and Rs.16,202 crore for schemes where at least 30 per cent is for women-specific
programmes.

50. We will score another 'first' this year. A statement on child related schemes is included in the budget
documents and Honourable Members will be happy to note that the total expenditure on these schemes is
of the order of Rs.33,434 crore.

51. I propose to allocate Rs.7,200 crore in 2008-09 to the Ministry of Women and Child Development. This
represents an increase of 24 per cent over the allocation in 2007-08.

Self Help Groups

52. The Life Insurance Corporation of India (LIC) runs the Janashree Bima Yojana and offers life and
permanent disability cover to people in 44 categories. One of the categories is Self Help Groups, but only
35,000 SHGs have been covered so far. Considering the fact that there are over 30 lakh SHGs credit-linked
to banks, I propose to single out this category for special attention. I propose to ask LIC to rapidly scale up
the scheme and cover all women SHGs that are credit-linked to banks. Since one-half of the premium is
subsidized through the Social Security Fund, I propose to contribute Rs.500 crore to the corpus of the fund
with the assurance that annual contributions will be made as the scheme is scaled up. This scheme,
together with the Rashtriya Swasthya Bima Yojana, will mark the beginning of a new deal for women by
providing them life and health cover.

Supplement to GBS

53. Honourable Members will note that the allocations to various sectors and schemes are generous. I
hasten to add that more can be done and more will be done subject, however, to one condition: the
condition of performance. In the last Budget, I had announced a Plan 'B' and I was able to provide
additional Plan funds of Rs.8,365 crore in cash through two supplementaries - and a third one will follow
shortly. The nub of the problem lies in implementation - and implementation mostly is in the hands of
State Governments. This year too, I intend to mobilise additional resources to the tune of Rs.10,000 crore
to be used for Plan capital expenditure. This money - under Plan 'B' - will be available to
ministries/departments of the Central Government and to State Governments that achieve the physical and
quality targets set under different Plan schemes.

III. AGRICULTURE

54. I shall now return to the subject of agriculture.

55. I have already referred to the Rashtriya Krishi Vikas Yojana and the National Food Security Mission.

Agricultural Credit
56. Notwithstanding some shortcomings, the growth of agricultural credit has been impressive and for this
I have to thank our scheduled commercial banks and Regional Rural Banks. Between them, they account
for about 75-79 per cent of agricultural credit disbursed during any year. We will exceed the target set for
2007-08. For 2008-09, I propose to set a target of Rs.280,000 crore.

57. Short-term crop loans will continue to be disbursed at 7 per cent per annum and I am making an initial
provision of Rs.1,600 crore for interest subvention in 2008-09.

Investment in Agriculture

58. What ails agriculture, among other things, is the fall in investment. However, there seems to be a
turnaround. Gross Capital Formation (GCF) in agriculture as a proportion of GDP in the agriculture sector
has improved from a low of 10.2 per cent in 2003-04 to 12.5 per cent in 2006-07. This, however, needs to
be raised to 16 per cent during the Eleventh Plan to achieve the target growth rate of 4 per cent.

Water Resources

59. Government is investing heavily in the Accelerated Irrigation Benefit Programme (AIBP) and the
Rainfed Area Development Programme and in the management and augmentation of water resources.
Under AIBP, 24 major and medium irrigation projects and 753 minor irrigation schemes will be completed
in this financial year, creating additional irrigation potential of 500,000 hectare. The outlay for 2007-08
was Rs.11,000 crore with a grant component of Rs.3,580 crore. These are being increased in 2008-09, and
the estimated outlay is Rs.20,000 crore with a grant component of Rs.5,550 crore.

60. The Rainfed Area Development Programme has been finalised and will be implemented in 2008-09 with
an allocation of Rs.348 crore. Priority will be given to those areas that have not been the beneficiaries of
watershed development schemes.

61. The centrally sponsored scheme on micro irrigation launched in January 2006 has brought an area of
548,000 hectare under drip and sprinkler irrigation within two years. I propose to allocate Rs.500 crore for
the scheme in 2008-09 with a target of covering another 400,000 hectare.

62. Agreements have been signed with the World Bank by the Governments of Tamil Nadu, Andhra
Pradesh and Karnataka under the project to repair, renovate and restore water bodies. The three
agreements are for a total sum of US$738 million that will benefit a command area of 900,000 hectare. I
am confident that similar agreements will be signed soon between the World Bank and the Governments of
Orissa, West Bengal and some other States.

Irrigation and Water Resources Finance Corporation

63. While these ongoing programmes will raise the level of investment in agriculture, I think that we need
an ambitious scheme of a much larger proportion. Government is of the view that massive investments are
required to be made in irrigation projects. Recently, Government has approved 14 projects that satisfy
certain criteria as national projects and three of them alone would require Rs.7,000 crore during the
Eleventh Plan period. Having regard to the magnitude of the challenge, I propose to establish the Irrigation
and Water Resources Finance Corporation (IWRFC) with an initial capital of Rs.100 crore contributed by the
Central Government. State Governments and other financial institutions will be invited to contribute to the
equity. It is our intention to mobilise the very large resources that will be required to fund major and
medium irrigation projects. I hope to be able to incorporate IWRFC as a company before March 31, 2008.

National Horticulture Mission

64. The National Horticulture Mission (NHM) now covers 340 districts in 18 States and two Union
Territories. An area of 276,000 hectare has been brought under horticulture crops and an area of 56,000
hectare of old plantations has been rejuvenated. Special thrust is being given to the revival of crops such
as coconut, cashew and pepper. NHM will be provided Rs.1,100 crore in 2008-09.

65. 500 soil testing laboratories will be set up in the public and private sectors during the Eleventh Plan
period with Government assistance of Rs.30 lakh per laboratory. In addition, I propose to make a one-time
allocation of Rs.75 crore to the Ministry of Agriculture in order to provide one fully-fitted mobile soil testing
laboratory each to 250 districts of the country before March 2009.

Plantation Crops

66. The Special Purpose Tea Fund set up last year for re-plantation and rejuvenation will be provided Rs.40
crore in 2008-09. I propose to provide funds for similar support to other plantation crops such as
cardamom (Rs.10.68 crore), rubber (Rs.19.41 crore) and coffee (Rs.18 crore). A crop insurance scheme for
tea, rubber, tobacco, chilli, ginger, turmeric, pepper and cardamom will be introduced next year.

67. In order to promote research on matters concerning the plantation sector, I propose to make a one-
time grant of Rs.5 crore to the Centre for Development Studies, Tiruvananthapuram. The Tocklai
Experimental Station at Jorhat of the Tea Research Association will celebrate its centenary in 2010. It is in
the process of upgrading its facilities and expanding its activities to cover other North Eastern States,
North Bengal and Darjeeling. I propose to make a special centenary grant of Rs.20 crore to the Tea
Research Association.

68. The National Plant Protection Training Institute at Hyderabad will be converted and upgraded into an
autonomous National Institute of Plant Health Management with budgetary support of Rs.29.4 crore.

Crop Insurance

69. Pending a decision on an alternative crop insurance scheme that is acceptable to the farmers as well as
viable to the insurer, the National Agriculture Insurance Scheme (NAIS) will be continued in its present
form for Kharif and Rabi 2008-09. I propose to provide Rs.644 crore for the scheme.

70. In addition, the Weather Based Crop Insurance Scheme that is being implemented as a pilot scheme in
selected areas of five States will be continued. I intend to provide Rs.50 crore for this purpose in 2008-09.
71. Government will continue to provide fertilisers to farmers at subsidized prices. Government is
examining proposals to move to a nutrient based subsidy regime and alternative methods of delivering the
subsidy.

Cooperative Credit Structure

72. The Prof. Vaidyanathan Committee's report on reviving the short-term cooperative credit structure is
under implementation in 17 States. So far, a sum of Rs.1,185 crore has been released by the Central
Government to four States. I am happy to report that the Central Government and the State Governments
have reached an agreement on the content of the package to implement the Prof. Vaidyanathan
Committee's report on reviving the long-term cooperative credit structure. The cost of the package is
estimated at Rs.3,074 crore, of which the Central Government's share will be Rs.2,642 crore or 86 per cent
of the total burden.

Debt Waiver and Debt Relief

73. Sir, while I am confident that the schemes and measures that I have listed above will give a boost to
the agriculture sector, the question that still looms large is what we should do about the indebtedness of
farmers. Honourable members will recall that Government had appointed a Committee under Dr. R.
Radhakrishna to examine all aspects of agricultural indebtedness. The Committee has since submitted its
report and it is in the public domain. The Committee had made a number of recommendations but stopped
short of recommending waiver of agricultural loans. However, Government is conscious of the dimensions
of the problem and is sensitive to the difficulties of the farming community, especially the small and
marginal farmers. Having carefully weighed the pros and cons of debt waiver and having taken into
account the resource position, I place before this House a scheme of debt waiver and debt relief for
farmers:

(i) All agricultural loans disbursed by scheduled commercial banks, regional rural banks and cooperative
credit institutions up to March 31, 2007 and overdue as on December 31, 2007 will be covered under the
scheme.

(ii) For marginal farmers (i.e., holding upto 1 hectare) and small farmers (1-2 hectare), there will be a
complete waiver of all loans that were overdue on December 31, 2007 and which remained unpaid until
February 29, 2008. In respect of other farmers, there will be a one time settlement (OTS) scheme for all
loans that were overdue on December 31, 2007 and which remained unpaid until February 29, 2008. Under
the OTS, a rebate of 25 per cent will be given against payment of the balance of 75 per cent.

(iii) Agricultural loans were restructured and rescheduled by banks in 2004 and 2006 through special
packages. These rescheduled loans, and other loans rescheduled in the normal course as per RBI
guidelines, will also be eligible either for a waiver or an OTS on the same pattern.

(iv) The implementation of the debt waiver and debt relief scheme will be completed by June 30, 2008.
Upon being granted debt waiver or signing an agreement for debt relief under the OTS, the farmer would
be entitled to fresh agricultural loans from the banks in accordance with normal rules.

(v) Government estimates that about three crore small and marginal farmers and about one crore other
farmers will benefit from the scheme. The total value of overdue loans being waived is estimated at
Rs.50,000 crore and the OTS relief on the overdue loans is estimated at Rs.10,000 crore.

I appeal to Honourable Members - as well as to the people of India - to give their unqualified support to the
scheme and help Government implement this momentous decision.

IV. INVESTMENT, INFRASTRUCTURE, INDUSTRY AND TRADE

74. Since 2005-06, there has been an unmistakable boom in investment. Two indicators tell the story. The
saving rate and the investment rate in 2003-04 were 29.8 per cent and 28.2 per cent, respectively.
According to estimates made by the Economic Advisory Council to the Prime Minister, they will be 35.6 per
cent and 36.3 per cent, respectively, by the end of 2007-08. The trend is reflected on the foreign
investment side too. During the period April-December 2007-08, foreign direct investment amounted to
US$12.7 billion and foreign institutional investment to US$18 billion. Our policy is to encourage all sources
of investment, domestic and foreign, private and public.

75. In 2008-09, Government will provide Rs.16,436 crore as equity support and Rs.3,003 crore as loans to
Central Public Sector Enterprises (CPSEs). 44 CPSEs are listed today. It is the policy of the Government to
list more CPSEs in order to unlock their true value and improve corporate governance.

Rural Infrastructure Development Fund

76. The Rural Infrastructure Development Fund (RIDF) is the main instrument to channelize bank funds for
financing rural infrastructure, and it is quite popular among State Governments. Therefore, I propose to
raise the corpus of RIDF-XIV in 2008-09 to Rs.14,000 crore. I also propose to operate a separate window
under RIDF-XIV for rural roads with a corpus of Rs.4,000 crore.

Manufacturing Sector

77. There has been some moderation in the index of production of the six core infrastructure industries as
well as in the overall index of industrial production for the period April-December 2007-08. The decline has
been somewhat sharp in the case of consumer goods, especially consumer durables. The silver lining is
that the growth in capital goods is still very high at 20.2 per cent, indicating that industry continues to
make huge capital investments and has a positive outlook about the future. Manufacturing industries that
have grown more slowly than the average include food products, cotton textiles, textile products including
apparel, paper and transport equipment. Among the reasons for the moderation are a rise in interest rates
and the appreciation of the Rupee. There are limits to monetary policy accommodation, especially when the
need is to maintain price stability. However, some steps can be taken on the fiscal side and I shall,
presently, place before the House some proposals in order to stimulate industrial growth. Our goal is to
take the manufacturing growth rate to a double digit. This will also call for more reforms in the coal and
electricity sectors as well as confronting oligopolistic tendencies in the cement and steel sectors.

 
Power

78. The Eleventh Plan target for additional power generation capacity is 78,577 MW which is more than the
total capacity added in the previous three Plans. By end March 2008, we will achieve Commercial Operation
Date (COD) on about 10,000 MW, marking the best first year in any Plan period. Government will redouble
its efforts to ensure that the ambitious target for the Eleventh Plan is achieved.

79. The fourth Ultra Mega Power Project (UMPP) at Tilaiya will be awarded shortly. It is possible to bring
five more UMPPs in Chhattisgarh, Karnataka, Maharashtra, Orissa and Tamilnadu to the bidding stage
provided the States extend the required support. I urge them to do so.

80. Government has approved the continuation of the Rajiv Gandhi Grameen Vidyutikaran Yojana during
the Eleventh Plan period with a capital subsidy of Rs.28,000 crore. I propose to allocate Rs.5,500 crore in
2008-09 for the Yojana (including NER).

81. I propose to provide Rs.800 crore in 2008-09 for the Accelerated Power Development and Reforms
Project. However, it is the poor state of transmission and distribution (T&D) that is a drag on the sector.
Huge investments are required to be made in T&D, but linked to fundamental reforms. Hence, I propose to
create a national fund for transmission and distribution reform. The details of the scheme will be worked
out and announced very soon.

Roads

82. All phases of the National Highway Development Programme continue to make progress. The
completion ratio in the Golden Quadrilateral is 96.48 per cent and in the North South, East West Corridor
project is 23.36 per cent. Special attention is being paid to SARDP-NE, a programme devised for the North
Eastern region. 180 kms of roads were completed in 2007-08 and the target for 2008-09 is 300 kms. I
propose to enhance the allocation for the NHDP from Rs.10,867 crore in 2007-08 to Rs.12,966 crore next
year.

Oil and Gas

83. The 7th round of bidding under the New Exploration Licensing Policy (NELP) was launched in December
2007 and bids have been invited for 57 exploration blocks. It is estimated that the round will attract
investment of the order of US$3.5 billion to US$8 billion for exploration and discovery.

Coal

84. 53 coal blocks with reserves of 13,842 million tonnes have been allotted during April-January 2007-08
to Government and private sector companies. A new Coal Distribution Policy was notified in October 2007.
A coal regulator will be appointed.
 

Information Technology

85. Government's forward looking policy is driving the growth of Information Technology and Information
Technology Enabled Services. I propose to enhance the allocation to the Department of Information
Technology from Rs.1,500 crore in 2007-08 to Rs.1,680 crore in 2008-09. A scheme for establishing
100,000 broadband internet-enabled Common Service Centres in rural areas and a scheme for establishing
State Wide Area Networks (SWAN) with Central assistance are under implementation. A new scheme for
State Data Centres has also been approved. I propose to provide Rs.75 crore for the common service
centres, Rs.450 crore for SWAN and Rs.275 crore for the State Data Centres.

Textiles

86. The two principal schemes of the Ministry of Textiles - the Scheme for Integrated Textile Parks (SITP)
and the Technology Upgradation Fund (TUF) - will be continued in the Eleventh Plan period. All 30
integrated textile parks have been approved and 20 units in four parks have commenced production. I
propose to maintain the provision for SITP at Rs.450 crore in 2008-09. The provision for TUF will be
increased from Rs.911 crore in the current year to Rs.1,090 crore in 2008-09.

87. The cluster approach to the development of the handloom sector has made rapid progress. 250
clusters are being developed. 443 yarn banks have been established. By March 2008, over 17 lakh families
of weavers will be covered under the health insurance scheme. I propose to increase the allocation to
Rs.340 crore in 2008-09.

88. In order to scale up both infrastructure and production, it is proposed to take up six centres for
development as mega-clusters. Varanasi and Sibsagar will be taken up for handlooms, Bhiwandi and Erode
for powerlooms, and Narsapur and Moradabad for handicrafts. Each mega-cluster will require about Rs.70
crore. I propose to start the process with an initial provision of Rs.100 crore in 2008-09.

Micro, Small and Medium Enterprises

89. Micro, small and medium enterprises will continue to receive support from the Government. I wish to
remove certain wrong perceptions about the sector. In the four years ending 2006-07, for which figures
are available, there has been a secular rise in the number of registered units, the number of unregistered
units, production, employment and exports. In order to give a fillip to the sector, I propose to create a risk
capital fund in the Small Industries and Development Bank of India (SIDBI). As on January 31, 2008, the
Credit Guarantee Trust with SIDBI had extended guarantees to 89,129 units for an amount of Rs.2,479
crore. SIDBI will reduce the guarantee fee from 1.5 per cent to 1 per cent and the annual service fee from
0.75 per cent to 0.5 per cent for loans up to Rs.5 lakh.

Foreign Trade

90. Merchandise exports have come under some pressure due to the appreciation of the Rupee and may
fall just short of the target of US$ 160 billion, although the growth rate was strong at 21.8 per cent during
April-December 2007-08. Relief was given to exporters in three tranches amounting to over Rs.8,000
crore. I may note that the interest cost of sterilization through market stabilization bonds (MSS), estimated
at Rs.8,351 crore for the whole year is, in a sense, subsidy to the export sector. Government is sensitive to
the needs of the export sector and will continue to respond sympathetically as the situation demands.

V. FINANCIAL SECTOR

91. Government's policy of a careful and calibrated opening of the financial sector has proved successful.
We shall continue to take measured steps.

92. The final report of the Committee on Financial Inclusion has been received. To begin with, I propose to
accept two recommendations:

• to advise commercial banks, including RRBs, to add at least 250 rural household accounts every year at
each of their rural and semi-urban branches; and

• to allow individuals such as retired bank officers, ex-servicemen etc to be appointed as business
facilitator or business correspondent or credit counsellor.

93. Banks will be encouraged to embrace the concept of Total Financial Inclusion. Government will request
all scheduled commercial banks to follow the example set by some public sector banks and meet the entire
credit requirements of SHG members, namely, (a) income generation activities, (b) social needs like
housing, education, marriage etc and (c) debt swapping.

NABARD, SIDBI and NHB

94. Financial inclusion can be taken forward by expanding the reach of NABARD, SIDBI and NHB. Hence, in
order to increase the resource base of these three banks, I propose to tap into the resources of scheduled
commercial banks to the extent that they fall short of their obligation to lend to the priority sector.
Accordingly, it is proposed to create the following funds:

(i) a fund of Rs.5,000 crore in NABARD to enhance its refinance operations to short term cooperative credit
institutions;

(ii) two funds of Rs.2,000 crore each in SIDBI - one for risk capital financing and the other for enhancing
refinance capability to the MSME sector; and

(iii) a fund of Rs.1,200 crore in NHB to enhance its refinance operations in the rural housing sector.

Each of these funds will be governed by the general guidelines that are now applicable to RIDF with some
modifications.

95. Last year, I enhanced the limit of the loan that could be extended under the Differential Rate of
Interest (DRI) scheme to the weaker sections of the community engaged in gainful occupations. However,
I did not enhance the eligibility criteria which still stand at levels fixed in 1986. This needs to be corrected.
Hence, I propose to fix the borrower's eligibility criteria as annual family income of Rs.18,000 in rural areas
and Rs.24,000 in urban areas.

Capital Markets

96. In my Budget Speech of 2006, I had informed the House that, on the basis of the R.H. Patil Committee
Report, we shall take steps to create an exchange-traded market for corporate bonds. Both Bombay Stock
Exchange and National Stock Exchange have created platforms for trading in corporate bonds.

97. I intend to move forward by taking some more measures to expand the market for corporate bonds.
Hence, I propose to:

• take measures to develop the bond, currency and derivatives markets that will include launching
exchange-traded currency and interest rate futures and developing a transparent credit derivatives market
with appropriate safeguards;

• enhance the tradability of domestic convertible bonds by putting in place a mechanism that will enable
investors to separate the embedded equity option from the convertible bond and trade it separately; and

• encourage the development of a market-based system for classifying financial instruments based on their
complexity and implicit risks.

98. The fear of the Permanent Account Number (PAN) has virtually disappeared. PAN is now the sole
identification number for all participants in the securities market. I propose to extend the requirement of
PAN to all transactions in the financial market subject, however, to suitable threshold exemption limits.

99. Our stock exchanges provide national electronic trading platforms for securities transactions. Yet, we
do not have a seamless national market for securities because of differences among States on the scope
and applicability of rates of stamp duty. Hence, I propose to request the Empowered Committee of State
Finance Ministers to work with the Central Government to create a truly pan Indian market for securities
that will expand the market base and enhance the revenues of the State Governments.

VI. OTHER PROPOSALS

100. India is poised to reap a 'demographic dividend' because the size of its working age population will
increase from about 77.5 crore in 2008 to a likely peak of 95 crore in 2026. The 'dividend' can prove
illusory if the workforce does not acquire the skills to support a knowledge and technology driven economy.

Skill Development Mission

101. Today, skill development programmes are diffused and administered by a number of
ministries/departments. I have no intention of interfering with these sector-specific programmes. However,
there is a compelling need to launch a world-class skill development programme, in mission mode, that will
address the challenge of imparting the skills required by a growing economy. Both the structure and the
leadership of the mission must be such that the programme can be scaled up quickly to cover the whole
country. Hence, I propose to establish a non-profit corporation and entrust the mission to that corporation.
It is my intention to garner about Rs.15,000 crore as capital from Governments, the public and private
sector, and bilateral and multilateral sources. I shall begin by putting Rs.1,000 crore as Government's
equity in the proposed non-profit corporation.

Industrial Training Institutes

102. The upgradation of ITIs is proceeding apace. Under the World Bank assisted scheme, 238 ITIs are
undergoing upgradation. Under the PPP scheme, 309 ITIs in 29 States have been identified with
corresponding industry partners and agreements have been signed in 244 cases. In anticipation of
upgrading 300 more ITIs in 2008-09, I have set apart Rs.750 crore.

Sainik Schools

103. I am concerned by the rate of attrition in the defence forces, especially at the officer level. Sainik
Schools have played a unique role as recruiting and training ground of future leaders of the defence forces.
I propose to make an allocation of Rs.44 crore at the rate of Rs.2 crore each to the 22 Sainik Schools for
immediate improvement of infrastructure including classrooms, laboratories, libraries and facilities for
physical education.

Public Distribution System

104. A sum of Rs.32,667 crore is being provided next year for food subsidy under the Public Distribution
System (PDS) and other welfare programmes. Strengthening the PDS would mean adequate supplies,
reasonable subsidies and efficient delivery of the subsidized food. An idea that has been growing is to
deliver subsidies to the target group through smart cards. Finally, I have found two willing partners - the
State of Haryana and the Union Territory of Chandigarh. They will introduce, on a pilot basis, a smart card
based delivery system to deliver food grains under the PDS in Haryana and Chandigarh, respectively. I
thank the Chief Minister of Haryana and the Administrator of Chandigarh and promise them full support
and cooperation in making a success of the pilot scheme.

Unorganised Sector Workers

105. The Unorganised Sector Workers' Social Security Bill, 2007 is before Parliament. In anticipation of the
Bill being made into law, Government has introduced three schemes that are designed to provide social
security to workers in the unorganised sector in a phased manner. These are:

• the Aam Admi Bima Yojana that will provide insurance cover to poor households. I am happy to
announce that, in the first year of the Yojana, LIC will cover one crore landless households by September
30, 2008. I have already placed Rs.1,500 crore with LIC. In order to cover another one crore poor
households in the second year, I propose to place an additional sum of Rs.1,000 crore with LIC in 2008-09;

• the Rashtriya Swasthya Bima Yojana that will be implemented with effect from April 1, 2008; and

• the Indira Gandhi National Old Age Pension Scheme that was enlarged with effect from November 19,
2007 to include all persons over 65 years falling under the BPL category. Consequently, the coverage has
expanded from 87 lakh to 157 lakh beneficiaries. I propose to allocate Rs.3,443 crore in 2008-09 as
against Rs.2,392 crore in 2007-08.

Housing for the Poor

106. Housing for the poor is one of the six elements of Bharat Nirman and is implemented through the
Indira Awas Yojana (IAY). Against a target of 60 lakh houses, 41.13 lakh houses have been constructed up
to December 2007 and the cumulative number will be 51.77 lakh houses by end March 2008. Reflecting
the higher cost of construction, I propose to enhance the subsidy per unit in respect of new houses
sanctioned after April 1, 2008 from Rs.25,000 to Rs.35,000 in plain areas and from Rs.27,500 to Rs.38,500
in hill/difficult areas. The subsidy for upgradation of houses will be increased from Rs.12,500 per unit to
Rs.15,000. A beneficiary will still need own funds to complete the house. Public sector banks will be
advised to include IAY houses under the differential rate of interest (DRI) scheme and lend up to Rs.20,000
per unit at an interest rate of 4 per cent.

Defence

107. I propose to increase the allocation for Defence by 10 per cent from Rs.96,000 crore to Rs.105,600
crore. I have assured the Raksha Mantri that any further amount needed for the Defence Forces, especially
for capital expenditure, will be provided.

Backward Regions Grant Fund

108. The Backward Regions Grant Fund was given Rs.5,800 crore in the current year. Having regard to the
pace of expenditure, I propose to keep the allocation for the next year at the same level. I may add that
nearly 45 per cent of the amount is likely to be allocated to the States of Bihar, Orissa and Uttar Pradesh.

Climate Change

109. In the Budget Speech last year I had announced the decision of the Government to appoint an expert
committee to study the impact of climate change on India and identify the measures that we may have to
take in the future. Work is in progress. Even while adhering to the principle of "common but differentiated
responsibility" we can - and we must - do a number of things in our self-interest. We can promote clean
technology products; we can review fuel emission and efficiency regulations; we can replace wood by solar
as the fuel of common use; we can encourage the use of gas which is the most benign hydrocarbon; we
can set up a trading platform for carbon emissions; we can build sustainable greenfield cities; and we can
do more. In order to explore and implement these and other ideas, Government proposes to establish a
permanent institutional mechanism that will play a development and coordination role. Details of the
institutional mechanism will be announced shortly.

Sixth Central Pay Commission

110. I have been informed that the Sixth Central Pay Commission will submit its report by March 31, 2008.
I am confident that the report will meet the legitimate expectations of Government employees.

Commonwealth Games

111. The Commonwealth Games are only 947 days away. As promised, we shall provide Rs.624 crore in
2008-09. I would urge the authorities concerned to adhere to the strict timelines and the quality standards.

Institutions of Excellence

112. For the fourth year in succession, I propose to make a special grant of Rs.100 crore each to three
institutions of excellence. The awards for 2008-09 go to: (i) Mahatma Phule Krishi Vidyapeeth, Rahuri,
Maharashtra; (ii) University of Mysore, Mysore; and (iii) Delhi University, Delhi.

India's Soft Power

113. India's music, literature, dance, art, cuisine and especially films are attracting huge interest around
the world. This is the 'soft power' of India, and it must be projected in a sophisticated and subtle manner. I
propose to provide Rs.75 crore to the Indian Council of Cultural Relations to design and implement a
programme to achieve this objective.

Tiger Protection

114. The number 1,411 should ring the alarm bells. That is the number of tigers in India. The tiger is under
grave threat. In order to redouble our effort to protect the tiger, I propose to make a one time grant of
Rs.50 crore to the National Tiger Conservation Authority. The bulk of the grant will be used to raise, arm
and deploy a special Tiger Protection Force.

Monitoring and Evaluation

115. Robust economic growth has thrown up many new challenges, among them the need to put in place
effective monitoring, evaluation and accounting systems for the large sums of money that are disbursed by
the Central Government to State Governments, district level agencies and other implementing agencies. I
think we do not pay enough attention to outcomes as we do to outlays; or to physical targets as we do to
financial targets; or to quality as we do to quantity. Government therefore proposes to put in place a
Central Plan Schemes Monitoring System (CPSMS) that will be implemented as a Plan scheme of the
Planning Commission. A comprehensive Decision Support System and Management Information System
will also be established. The intended outcome is to generate and monitor scheme-wise and State-wise
releases for about 1,000 Central Plan and centrally sponsored schemes in 2008-09.

116. Government also intends to strengthen evaluation. Some ministries have started concurrent
evaluation. This needs to be supplemented by independent evaluations conducted by research institutions.
The Planning Commission will authorise such evaluations of the major schemes and complete the task by
the time of the mid-term review of the Eleventh Plan.

VII. BUDGET ESTIMATES

117. I shall now turn to the Budget Estimates for 2008-09.

118. The estimate of Plan Expenditure is placed at Rs.243,386 crore. As a proportion of total expenditure,
it will be 32.4 per cent.

119. Non-Plan Expenditure is estimated at Rs.507,498 crore.

Revenue Deficit and Fiscal Deficit

120. It is widely acknowledged that the fiscal position of the country has improved tremendously. I am
happy to report that the revenue deficit for the current year will be 1.4 per cent (against a BE of 1.5 per
cent) and the fiscal deficit will be 3.1 per cent (against a BE of 3.3 per cent).

121. Further progress will be made in 2008-09. The revenue receipts of the Central Government for 2008-
09 are projected at Rs.602,935 crore and the revenue expenditure at Rs.658,119 crore. Consequently, the
revenue deficit is estimated at Rs.55,184 crore, which amounts to 1.0 per cent of GDP. The fiscal deficit is
estimated at Rs.133,287 crore which is 2.5 per cent of GDP. Honourable Members will note that not only
will I achieve the target for fiscal deficit under the FRBM Act, I have also left for myself some headroom. In
the case of revenue deficit, I will meet the target of annual reduction of 0.5 per cent. However, because of
the conscious shift in expenditure in favour of health, education and the social sector, we may need one
more year to eliminate the revenue deficit. In my view, this is an entirely acceptable deferment.

Revisiting the Roadmap for Fiscal Adjustment

122. I acknowledge that significant liabilities of the Government on account of oil, food and fertilizer bonds
are currently below the line. This accounting arrangement is consistent with past practice. Nevertheless,
our fiscal and revenue deficits are understated to that extent. There is a need to bring these liabilities into
our fiscal accounting. As a first step, I have shown these liabilities clearly in 'Budget at a Glance'. After the
obligations on account of the Sixth Central Pay Commission become clear, I intend to request the
Thirteenth Finance Commission to revisit the roadmap for fiscal adjustment and suggest a suitably revised
roadmap.

PART - B

VIII. TAX PROPOSALS

123. Mr. Speaker, I shall now present my tax proposals.

124. Many people are surprised by the buoyancy in tax revenues, especially in direct taxes. I am not. I
have always maintained that moderate and stable tax rates coupled with a tax administration that shows
no fear or favour will bring high revenues to the exchequer.

125. The UPA Government inherited a tax to GDP ratio of 9.2 per cent in 2003-04. At the end of 2007-08,
that ratio would have risen to 12.5 per cent.

126. High growth rates have helped. Changes in attitude have also helped. Above all, information systems
and technology have helped most. And, if I may add in a lighter vein, having a lucky Finance Minister may
have also helped! We are on course to achieve the Budget Estimates of indirect taxes and exceed the
Budget Estimates of direct taxes. I take this opportunity to thank all tax payers and I promise them an
efficient and tax payer-friendly administration.

Indirect Taxes

127. I shall begin with customs duties.

128. The peak rate for non-agricultural products was 20 per cent in January 2004 and now stands at 10
per cent. The collection rate is the closest approximation to the level of protection to domestic industry,
and that rate for all imports stood at 10 per cent in 2006-07. Since April 2007, the Rupee has appreciated
against the Dollar by 9.8 per cent. Consequently, the case for reducing the peak rate at this stage is very
weak. Hence, I propose to make no change in the peak rate of customs duty.

129. However, I find that in some cases it is necessary to reduce the customs duty in order to provide a
fillip to that industry or to promote value addition or to remove inversion or any other anomaly. I shall
refer to a few such cases.

130. I propose to reduce the customs duty on Project Imports from 7.5 per cent to 5 per cent. However, I
also propose to impose the 4 per cent special CVD on a few specified projects in the power sector.

131. In order to improve the supply of raw material, I propose to reduce the duty on steel melting scrap
and aluminium scrap from 5 per cent to nil.

132. On certain specified life saving drugs and on the bulk drugs used for the manufacture of such drugs, I
propose to reduce the customs duty from 10 per cent to 5 per cent as well as to totally exempt them from
excise duty or countervailing duty.

133. In order to reduce the cost of manufacture of cattle and poultry feeds, I propose to reduce the duty
on vitamin premixes and mineral mixtures from 30 per cent to 20 per cent and on phosphoric acid from 7.5
per cent to 5 per cent.

134. The duty on bactofuges will be reduced from 7.5 per cent to nil. This will increase the shelf life of milk
and benefit the dairy industry.

135. I propose to fully exempt from duty specified parts of set top boxes and specified raw materials for
use in the IT/electronic hardware industry.

136. To establish parity between devices used in the information/ communication sector and the
entertainment sector, I propose to reduce the duty on convergence products from 10 per cent to 5 per
cent.

137. To provide a fillip to the manufacture of sports goods, I propose to reduce the duty on specified
machinery from 7.5 per cent to 5 per cent. I also propose to exempt from duty specified raw materials for
sports goods.

138. The gem and jewellery industry has responded well to the duty reductions made last year. In order to
encourage value addition and exports, I propose to exempt from duty rough cubic zirconia and to reduce
the duty on polished cubic zirconia from 10 per cent to 5 per cent. Similarly, the duty on rough coral will be
reduced from 10 per cent to 5 per cent.

139. To facilitate training of helicopter pilots, I propose to remove the duty on helicopter simulators.

140. In order to support domestic fertiliser production, I propose to reduce the customs duty on crude and
unrefined sulphur from 5 per cent to 2 per cent.

141. Thanks to a complex regime of export benefits and duty exemptions, naphtha is exported from
refineries and naphtha is imported by manufacturers of polymers, leading to price distortions and revenue
losses. I propose to correct the situation by withdrawing the duty exemption on naphtha for use in the
manufacture of polymers and subject it to the normal rate of 5 per cent. However, naphtha imported for
the production of fertilisers will continue to be exempt from import duty.

142. Finally, in order to conserve chrome ore and make it available for value added manufacture in India, I
propose to increase the export duty from Rs.2,000 per metric tonne to Rs.3,000 per metric tonne.

143. I shall now deal with excise duties.

144. The manufacturing sector is the backbone of any economy. It is consumption that drives production
and it is production that drives investment. Having carefully studied current trends of production and
consumption, I believe there is a need to give a stimulus to the manufacturing sector. Hence, I propose to
reduce the general CENVAT rate on all goods from 16 per cent to 14 per cent.
145. I have looked at specific sectors where growth is flagging. These sectors are important because they
are growth and employment drivers. Some of them also have large externalities. Therefore, I propose to:

• reduce the excise duty on all goods produced in the pharmaceutical sector from 16 per cent to 8 per
cent;

• reduce the excise duty on buses and their chassis from 16 per cent to 12 per cent;

• reduce the excise duty on small cars from 16 per cent to 12 per cent and on hybrid cars from 24 per cent
to the general revised rate of 14 per cent;

• reduce the excise duty on two wheelers and three wheelers from 16 per cent to 12 per cent; and

• reduce the excise duty on paper, paper board and articles made therefrom manufactured out of non-
conventional raw materials by units not having an attached bamboo/wood pulp making plant from 12 per
cent to 8 per cent with a further reduction on clearances up to 3,500 MT from 8 per cent to nil.
Furthermore, excise duty on certain varieties of writing, printing and packing paper will be reduced from 12
per cent to 8 per cent.

146. There are a number of products which are goods of mass consumption. There is also the need to have
tax parity on similar goods. Taking into account requests from a number of industries, I propose to reduce
the excise duty from 16 per cent to nil on a few items including composting machines, wireless data cards,
packaged coconut water, tea and coffee mixes, and puffed rice.

147. Further, I propose to reduce the excise duty from 16 per cent to 8 per cent on a few items including
water purification devices, veneers and flush doors, sterile dressing pads, specified packaging material, and
breakfast cereals.

148. I propose to totally exempt from excise duty the anti AIDS drug, Atazanavir, as well as bulk drugs for
its manufacture.

149. To further encourage cold chain facilities, I propose to exempt from excise duty, on end-use basis,
refrigeration equipment (consisting of compressor, condenser units, evaporator etc) above 2 TR (tonne
refrigeration) utilising power of 50 KW and above.

150. I propose to bring parity in the excise duty rates on bulk cement and packaged cement. Accordingly,
bulk cement will now attract excise duty of Rs.400 per Metric Tonne or 14 per cent ad valorem, whichever
is higher. Cement clinkers will be liable to excise duty of Rs.450 per Metric Tonne.

151. Similarly, I propose to increase the excise duty on packaged software from 8 per cent to 12 per cent
to bring it on par with customised software which will attract a service tax of 12 per cent.

152. Non-filter cigarettes are more toxic than filter cigarettes, yet they enjoy a favourable tax regime,
which is iniquitous. I propose to tax both filter and non-filter cigarettes on par by applying - as Honourable
Members may have guessed - the higher rates.

153. In order to remove a source of misinformation, I propose to abolish the ad valorem part of the excise
duty on unbranded petrol and unbranded diesel and replace the same by an equivalent specific duty of
Rs.1.35 per litre. Henceforth, there will be only a specific duty of Rs.14.35 per litre on unbranded petrol
and Rs.4.60 per litre on unbranded diesel. There will be no impact on retail prices.

154. An excise duty of 1 per cent called NCCD is now imposed on polyester filament yarn, which is the only
yarn suffering this excise duty. I propose to remove that duty and shift the levy to cellular mobile phones.

155. Finally, I turn to my proposals on service tax.

156. 55 per cent of the GDP is contributed by the services sector, which is a growing sector that must
contribute its legitimate share to the exchequer. I propose to bring under the service tax net four services.
They are:-

(i) asset management service provided under ULIP, to bring it on par with asset management service
provided under mutual funds;

(ii) services provided by stock/commodity exchanges and clearing houses;

(iii) right to use goods, in cases where VAT is not payable; and

(iv) customised software, to bring it on par with packaged software and other IT services

157. I also propose to remove unwarranted doubts raised in respect of certain services and clarify that
they are liable to service tax. These include money changers, persons running games of chance, and tour
operators using contract carriage vehicles.

158. There are some miscellaneous changes but I do not wish to burden the House with the same.

159. Finally, I am happy to announce that the threshold limit of exemption for small service providers will
be increased from Rs.8 lakhs per year to Rs.10 lakh per year. As a result, about 65,000 small service
providers will go out of the tax net.

Direct Taxes

160. I shall now deal with direct taxes.

161. I recall the Budget Speech of 1997. I believe that boldness pays. I also believe that trust will beget
trust, moderation will beget revenues and fairness will beget compliance. Income tax payers have made
out a persuasive case for some relief. Accordingly, I propose to make some changes in the slabs for
personal income tax. I propose to increase the threshold limit of exemption:

• in the case of all assesses, from Rs.110,000 to Rs.150,000, thus giving every assessee a relief at a
minimum of Rs.4,000. Consequently, the four slabs and rates will be as follows:

Up to Rs.150,000 NIL

Rs.150,001 to Rs.300,000 10 per cent

Rs.300,001 to Rs.500,000 20 per cent

Rs.500,001 and above 30 per cent

• in the case of a woman assessee, from Rs.145,000 to Rs.180,000;

• in the case of a senior citizen, from Rs.195,000 to Rs.225,000.

162. I do not propose to make any change in the corporate income tax rates.

163. No change is proposed in the rate of surcharge.

164. I propose to add the Senior Citizens Savings Scheme 2004 and the Post Office Time Deposit Account
to the basket of saving instruments under Section 80C of the Income Tax Act.

165. I propose to allow an additional deduction of Rs.15,000 under Section 80D to an individual who pays
medical insurance premium for his/her parent or parents.

166. The Reverse Mortgage Scheme was notified by the National Housing Bank in the current financial
year. In order to clarify the tax issues arising out of the scheme, I propose to amend the Income Tax Act
to provide that:

(i) reverse mortgage would not amount to "transfer"; and

(ii) the stream of revenue received by the senior citizen would not be "income";

167. Agricultural income is exempt from income tax. However, courts have ruled that growing saplings or
seedlings on land is agriculture but growing them in pots is not agriculture. This does not seem fair. Hence,
I propose to exempt from tax income arising from saplings or seedlings grown in a nursery.

168. Companies engaged in certain businesses are allowed a weighted deduction of 150 per cent on any
expenditure on in-house scientific research. I propose to add the business of production of seeds and
manufacture of agricultural implements to this list.

169. In order to promote outsourcing of research, I propose to allow a weighted deduction of 125 per cent
on any payment made to companies engaged in research and development.

170. I propose to extend the benefit of amortisation of certain preliminary expenses under Section 35D to
assesses in the services sector.

171. To supplement measures that I announced earlier in respect of the corporate debt market, I propose
to exempt from TDS corporate debt instruments issued in demat form and listed on recognised stock
exchanges.

172. I propose to make some changes in the provisions of law pertaining to Fringe Benefit Tax (FBT) that
will give some relief to corporates and firms. Crèche facilities, sponsorship of an employee-sportsperson,
organising sports events for employees, and guest houses will be excluded from the purview of FBT.

173. At present, a domestic company is liable to pay Dividend Distribution Tax (DDT). As a result, the
distributed dividend is sometimes taxed twice in the hands of a subsidiary company and its parent
company, causing hardship. In order to remove the hardship, I propose to allow a parent company to set
off the dividend received from its subsidiary company against dividend distributed by the parent company,
provided that the dividend received has suffered DDT and the parent company is not a subsidiary of
another company.

174. I propose to insert a new sub-section (11C) in Section 80-IB to grant a five year tax holiday to
encourage hospitals to be set up anywhere in India, except certain specified urban agglomerations, and
especially in tier-2 and tier-3 towns in order to serve the rural hinterland. This window will be open for the
period April 1, 2008 to March 31, 2013, during which the hospital must commence operations.

175. Having regard to the significant rise in tourist arrivals, especially for cultural tourism, I propose to
grant a five year holiday from income tax to two, three or four star hotels that are established in specified
districts which have UNESCO-declared 'World Heritage Sites'. The hotel should be constructed and start
functioning during the period April 1, 2008 to March 31, 2013.

176. I am happy to announce that the Coir Board will be included in Section 10(29A) and exempt from
income tax.

177. Dividends that are distributed attract a tax of 15 per cent. Short term capital gains attract a tax of 10
per cent under Section 111A. There is merit in equating the rates and hence I propose to increase the rate
of tax on short term capital gains under Section 111A and Section 115AD to 15 per cent. This will also
encourage investors to stay invested for a longer term.

178. At present, Securities Transaction Tax (STT) paid is allowed as a rebate against tax liability. Further,
STT on options is levied on the aggregate of the strike price and the option premium and is borne by the
seller. I propose to make some changes. Henceforth, STT paid will be treated like any other deductible
expenditure against business income. Further, the levy of STT, in the case of options, will be only on the
option premium where the option is not exercised, and the liability will be on the seller. In a case where
the option is exercised, the levy will be on the settlement price and the liability will be on the buyer. There
will be no change in the present rates.

179. Transactions in commodity futures have come of age. Hence, I propose to introduce the Commodities
Transaction Tax (CTT) on the same lines as STT on options and futures.

180. "Charitable purpose" includes relief of the poor, education, medical relief and any other object of
general public utility. These activities are tax exempt, as they should be. However, some entities carrying
on regular trade, commerce or business or providing services in relation to any trade, commerce or
business and earning incomes have sought to claim that their purposes would also fall under "charitable
purpose". Obviously, this was not the intention of Parliament and, hence, I propose to amend the law to
exclude the aforesaid cases. Genuine charitable organisations will not in any way be affected.

181. The Banking Cash Transaction Tax (BCTT) has served a very useful purpose in enlarging the
information system of the Income Tax Department. Since the information is also being gathered through
other instruments introduced in the last few years, I propose to withdraw this tax with effect from April 1,
2009.

182. My tax proposals on direct taxes are revenue neutral. On the indirect taxes side, the proposals are
estimated to result in a loss of Rs.5,900 crore.
 

CST and a Roadmap towards GST

183. Following an agreement between the Central Government and the State Governments, the rate of
Central Sales Tax was reduced from 4 per cent to 3 per cent in this financial year. It is now proposed to
reduce the rate to 2 per cent from April 1, 2008. Consultations are underway on the compensation for
losses, if any, and once agreement is reached the new rate will be notified. I am also happy to report that
there is considerable progress in preparing a roadmap for introducing the Goods and Services Tax with
effect from April 1, 2010.

IX. CONCLUSION

184. Mr. Speaker, Sir, once upon a time India, together with China, accounted for 50 per cent of the
world's output. We must regain our position and it is within our capacity to do so.

185. Our work in Government is, every day and every hour, a discovery of the path to reach our goals: full
employment, abolition of poverty and elimination of inequality. "These goals can only be achieved by a
considerable increase in national income and our economic policy must, therefore, aim at plenty and
equitable distribution. We must produce wealth, and then divide it equitably. How can we have a welfare
state without wealth?" Those are not my words; they were uttered in 1955 by Pandit Jawaharlal Nehru.
Although Jawaharlal Nehru did not use the phrase inclusive growth, he actually spelt out the conditions for
inclusive growth.

186. Those words will guide the UPA Government. As always, I turned to my muse, Saint Tiruvalluvar, for
guidance and reassurance. 2,000 years ago he set the benchmark for good governance in the following
immortal words:

"Kodai Ali Sengol Kudi Ombal Nangum

Udaiyanam Vendharkku Oli"

[Generous grants, compassion, righteous rule

and succour to the downtrodden

Are the hallmarks of good governance]

We have tried to remain true to this philosophy. The four years to 2007-08 have been the best years so far
but, may I say with humility, that the best is yet to come.

187. Sir, with these words I commend the Budget to the House.

 
 

Disclaimer: Information is being made available at this site purely as a measure of public facilitation. While every effort has been made to
ensure that the information hosted on this website is accurate, Ministry of Finance and NIC do not hold themselves liable for any
consequences, legal or otherwise, arising out of use of any such information.

Designed, Developed and Hosted by National Informatics Centre

Information is provided by Ministry of Finance

Union budget of India

From Wikipedia, the free encyclopedia
Jump to: navigation, search

The Union Budget of India, referred to as the Annual Financial Statement[1] in Article
112 of the Constitution of India, is the annual budget of the Republic of India, presented
each year on the last working day of February by the Finance Minister of India in
Parliament. The budget has to be passed by the House before it can come into effect on
April 1, the start of India's financial year. Former Finance Minister Morarji Desai
presented the budget eight times, the most by any.[2]
Contents
[hide]

 1 Chronology
o 1.1 Pre-liberalisation
o 1.2 Post-liberalisation
 2 Time of Budget Announcement
 3 See also
 4 References
 5 External links

[edit] Chronology
[edit] Pre-liberalisation

Dr. Manmohan Singh, the current Prime Minister of India, was instrumental in
liberalising the Indian economy.

The first Union budget of independent India was presented by R. K. Shanmukham Chetty
on November 26, 1947.[2]

The Union budgets for the fiscal years 1959-60 to 1963-64, inclusive of the interim
budget for 1962-63, were presented by Morarji Desai.[2] On February 29 in 1964 and
1968, he became the only finance minister to present the Union budget on his birthday.[3]
Desai presented budgets that included five annual budgets, an interim budget during his
first stint and one interim budget and three final budgets in his second tenure when he
was both the Finance Minister and Deputy Prime Minister of India.[2]

After Desai's resignation, Indira Gandhi, the then Prime Minister of India, took over the
Ministry of Finance to become the only woman to hold the post of the finance minister.[2]

Pranab Mukherjee, the first Rajya Sabha member to hold the Finance portfolio, presented
the annual budgets for 1982-83, 1983-84 and 1984-85.[2]

Rajiv Gandhi presented the budget for 1987-88 after V P Singh quit his government, and
in the process became only the third Prime Minister to present a budget after his mother
and grandfather.[2]

N. D. Tiwary presented the budget for 1988-89, S B Chavan for 1989-90, while Madhu
Dandawate presented the Union budget for 1990-91.[2]

Yashwant Sinha became the Finance Minister but presented the interim budget for 1991-
92 as elections were forced.[2]

Due to political developments, early elections were held in May 1991 following which
the Indian National Congress returned to political power and Manmohan Singh, the
Finance Minister, presented the budget for 1991-92[2]

History of Indian Budget

India's first Finance Minister Sir R.K. Shanmugham Chetty, presented the first Finance Budget of
independent India on November 26, 1947. Since then, 28 different Union Finance Ministers have been
presenting the budget year after year. Initially, major attention was paid towards the agriculture sector but as
the economy evolved, the focus shifted from agriculture to other sectors like industrial, financial etc.

During the early the fifties, Indian budget highlights revolved around the public sector and public finance and
hence, back then - taxation, inflation, public savings etc were much talked about topics. This trend continued
till the finance budget 1985-86.

The change in the approach began with Mr. Manmohan Singh who served as the Union Finance Minister
under the leadership of Mr. P.V. Narsimha Rao. Mr. Singh was instrumental in headstarting the new phase
of economic liberalization. He reduced the control of Government over public sector units through
disinvestment. The liberalization process which he started years back is still followed and is seen in interim
budget and Indian budget announcements every year
[edit] Post-liberalisation

Manmohan Singh, in his next annual budgets from 1992-93, opened the economy[4],
encouraged foreign investments and reduced peak import duty from 300 plus percent to
50 percent.[2]

After elections in 1996, a non-Congress ministry assumed office. Hence the final budget
for 1996-97 was presented by P. Chidambaram, who then belonged to Tamil Maanila
Congress.[2]

Following a constitutional crisis when the I. K. Gujral Ministry was on its way out, a
special session of Parliament was convened just to pass Chidambaram's 1997-98 budget.
This budget was passed without a debate.[2]

After the general elections in March 1998 that led to the Bharatiya Janata Party forming
the Central Government, Yashwant Sinha, the then Finance Minister in this government,
presented the interim and final budgets for 1998-99.[2]

After general elections in 1999, Sinha again became the finance minister and presented
four annual budgets from 1999-2000 to 2002-2003.[2] Due to elections in May 2004, an
interim budget was presented by Jaswant Singh.[2]

[edit] Time of Budget Announcement

Until the year 2000, the Union Budget was announced at 5 pm on the last working day of
the month of February. This practice was inherited from the Colonial Era, when the
British Parliament would pass the budget in the noon followed by India in the evening of
the day.

It was Mr.Yashwant Sinha, the then Finance Minister of India in the government of Atal
Bihari Vajpayee, who changed the ritual by announcing the 2001 Union Budget at 11 am.
[5]
Union Budget 2010 Highlights
Posted by arun in Friday, February 26th 2010   
Topics: News India
Tags: budget 2010, budget 2010 income tax, budget 2010 india, ndtv, ndtv live, union budget 10
11 highlights, union budget 2010, union budget 2010 date, union budget 2010 live, union budget
highlights, union budget highlights 10 11
1 Comment

The Association and the Finance Minister Pranab Mukherjee, the Union Budget 2010 ‘in the Lok
Sabha today, and announced a package of measures that focus onagriculture growth and
infrastructure. And banking services for companies, and agriculture got a big boost to the EU budget
in 2010.

There [Pranab Mukherjee's budget in 2010] was a sensation in the parliament due to a rise in the
CET on petroleum products. Opposition staged withdrawal from the Lok Sabha in protest against the
rise. Also rose, Minister of Foreign Affairs and excise duty from 8% to 10%, while the IRS has been
retained by 12%.

Sensex to mad cow disease has been rising, and the Foreign Minister presented the budget today.
The corporate sector and industry have given excellent Pranab Mukherjee in the budget for 2010.
Sensex BSE witnessed a rise of 372 points at 12.50 pm.

Taxpayers got a huge relief, as the Minister of Finance changed the boards of income tax, making it
broader and more simply. There was a partial restoration of excise duties on cement and large
vehicles, which means that the prices of these materials, will rise. The duty on cigarettes has gone
up.

“Our economy is a much better position today. The first challenge is to quickly return to the high
GDP growth of 9%, while the second challenge would be to make development more exclusive,”
said Minister of Finance.

Talking about food security and inflation, and said that India need to enhance food security. “Short-
term outlook looks bleak world during the financial year 2010-11. Undermine the southwest
monsoon crops fall, and we need to work hard in order to contain inflation,” he said.

Mr. Mukherjee said the growth of manufacturing industry in 20009-10 was the highest in the past
two decades. He also said that the trend in spending in ruralinfrastructure a must. “We need to
review the tax incentives and public spending.”

Here are excerpts from the EU budget in 2010:

Vision and Objective:

* GDP growth to be targeted 9%
* Goal of 25,000 rupees car divestment of this year
* Will direct the tax law and tax goods and services will be implemented with effect from April 1,
2011
* Support for the fertilizer to fall
* Gross domestic product of up to 10% in the near future
* Consideration of the Parekh report on fuel prices
* FDI regime to be simplified
* That the rate of inflation fell in 2 months
* 2% for the benefit of export subsidies extended for one year
* Committed to the Special Economic Growth

Banking services:

* More private banks to be encouraged

* Additional to conduct private banking players
* FY10 capital for banks Prince Sultan stand at Rs 16,500 crore
* Rs 1,200 billion rupees to be allocated to the banks of Prince Sultan University
* Rural Banks to be supported
* Banks to get Rs 6,000 billion rupees to improve infrastructure
* Banks to all villages with a population of 2,000

Agriculture:

* Four-pronged agricultural strategy to be adopted

* Further assistance to the food processing sector
* Rs 400 crore to be allocated to a green revolution in eastern India
* Rs 300 billion rupees for the Rashtriya Krishi Vikash Yojna
* Expand the repayment of loans to farmers hit drohught
* Farmers, who repay the loan on time, you will get a waiver from 2%
* Farmers to obtain loans by 5%
* Extend the payment of agricultural loans by 6 months
* Agriculture loans to farmers to increase Rs 3,75,000 crore
* New Food Policy from April 1, 2010
* Rs 300 crore to be allocated to the production of pulse

Infrastructure:

* Rs. Lakah 1.37 billion rupees for the development of infrastructure

* Railways, which will be allocated Rs 16,772 crore
* Develop ways to increase the allocation of Rs 19.894 billion
* 20 km on national highways to be built every day
* Proposal to increase the allocation for renewable energy projects by 61%
* To create a fund for clean energy
* More than twice for the allocation of the energy sector to 5,130 billion rupees
* Coal regulatory authority that will arise
* Grant a one-time Rs 200 billion rupees for the role of the Tamil Nadu textile industry
* NREGA allocation of Rs 40,100 crore in
* 1200 crore rupees package for drought-hit Bundelkhand
* Ganages – 500 crore rupees
* Bharat Nirman Yojna – 48,000 crore rupees
* Solar energy – Rs 1,000 crore
* Tirupur spinning and weaving industry – 500 crore rupees
* Goa – Rs 200 crore special package
* For the preparation of 20,000 MW of generating solar power by 2022
* Delhi and Mumbai industrial corridor will be established

Education:

* Customize the school has risen from Rs 26,800 crore to Rs 31,036 crore
* The provision of health in the 22,300 crore
* Sarva Sikha Abhiyaan – 36,000 crore rupees

Urban Development and Housing:

* Rs 5,400 billion rupees for urban development – an increase of 75%

* Rs 61,000 crore for rural development
* Indira Awas Yojna for the Rs 10,000 crore
* Home loans up to Rs 10 Lakah – 1% subsidy extended for one year
* Focus on the development of slums

The social sector:

* National Fund of Social Security for unskilled workers to be set up with Rs 1,000 crore
* National Pension Scheme – new accounts for 1,000 rupees annually by the government
* National Health Insurance Scheme for the trade unions NREGA, who worked for a period of 15
days in the month of
* Farmers Fund for Women – 100 crore rupees
* Dalits and the poor to get more focus

Technology:

* A unique identifier to be given in a timely manner

* Allocation of 19000 crore rupees for the project a unique identifier
* Rupee to be the new code. There is a fresh look at the rupee to hit soon.
* Technical Advisory Group to create a framework Nandan Nilekani

Plan and expenditure:

* Gross receipts taxes – Rs 7.46 crore Lakah
* 15% increase in the spending plan,
* The fiscal deficit for fiscal year 2010 rate to 6.9% of GDP
* The fiscal deficit – 5.5% in fiscal 2011
* The fiscal deficit – 4.8% for the fiscal year 2012
* Defense allocation – Rs 147,344 crore

Taxes:

* Income tax form Saral – 2 to be re-introduced from next year

* No increase in the exemption limit for taxpayers
* Taxes and sheets changed
* Income up to Rs. 1.6 Lakah – zero
* Income from Rs. 1.6 Lakah – Rs Lakah 5 – 10% of taxes
* Income from Rs Lakah 5 – 8 lah – 20% of taxes
* Income over Rs Lakah 8 – 30% of taxes
* 60% of the taxpayers to be benefited
* Rs. 20,000 tax exemption for investment in bonds in the infrastructure.
* Exemption from tax under 80C will be Rs 1.2 Lakah instead of Rs 1 Lakah
* Reduced fees to the companies from 10% to 7.5%
* MAT (minimum alternative tax) for up to 18% from 15%
* Excise duty rose from 8% to 10%
* Is still in the Tax Department, 12% of goods
* There are no taxes on the Department of news agencies
* Research and development deduction increased
* CET (Central Excise Customs) on petroleum products by Rs 1
* Petrol and diesel prices to go up
* Partial restoration of excise duty on cement, and large vehicles
* Cement and large cars to be more expensive
* Cheaper products – compressed natural gas, mobile, and provision of medicines and medical
equipment, agricultural equipment, mobile phones, Mobile trucks, watches, garments, microwave
ovens, toys and foreign agricultural equipment, set top boxes, water purification, LED Lights
* Cost of products – gasoline, diesel and coal, cigarettes, cement, cars, big cars, flowers, gold,
silver, that the masala

Government of India
From Wikipedia, the free encyclopedia
Jump to: navigation, search
India
 This article is part of the series:
Politics and government of
India
Union Government[show]
Constitution of India
Fundamental Rights

Executive
President Prime Minister
Vice President The Cabinet

Parliament
Rajya Sabha Lok Sabha
The Chairman   The Speaker

Judiciary
Supreme Court of India
Chief Justice of India
High Courts
District Courts
Elections[show]
Election Commission
Chief Election Commissioner
Political Parties[show]
National Parties
State Parties

National Coalitions
Left Front
National Democratic Alliance
United Progressive Alliance
Local & State Govt.[show]
Governor
State Legislature
Vidhan Sabha
 Vidhan Parishad
Panchayat
Gram panchayat
Panchayat samiti
Zilla Parishad

Other countries ·  Politics Portal

Government of India Portal
 view • talk • edit 

The Government of India, officially known as the Union Government and also known
as the Central Government, was established by the Constitution of India, and is the
governing authority of a union of 28 states and seven union territories, collectively called
the Republic of India. It is seated in New Delhi, the capital of India.

The government comprises three interdependent branches: the executive, the legislative
and the judiciary. The executive branch headed by the President, who is the Head of State
and exercises his or her power directly or through officers subordinate to him[1]. The
Legislative branch or the Parliament consists of the lower house, the Lok Sabha, and the
upper house, the Rajya Sabha, as well as the president. The Judicial branch has the
Supreme Court at its apex, 21 High Courts, and numerous civil, criminal and family
courts at the district level.

The basic civil and criminal laws governing the citizens of India are set down in major
parliamentary legislation, such as the Civil Procedure Code, the Indian Penal Code, and
the Criminal Procedure Code. The union and individual state governments consist of
executive, legislative and judicial branches. The legal system as applicable to the federal
and individual state governments is based on the English Common and Statutory Law.
India accepts International Court of Justice jurisdiction with several reservations. By the
73rd and 74th amendments to the constitution, the Panchayat Raj system has been
institutionalised for local governance.
Contents
[hide]

 1 Type of government
o 1.1 Sovereign
o 1.2 Socialist
o 1.3 Secular
o 1.4 Democratic
o 1.5 Republic
 2 Parliamentary government
o 2.1 Individual responsibility
o 2.2 Collective responsibility
 3 Judicial branch
o 3.1 National judiciary
 4 Reform
o 4.1 Corruption
o 4.2 Inefficiency
o 4.3 Spending priorities
o 4.4 Deficits
 5 Finance
o 5.1 Taxation
o 5.2 General budget
 6 References
 7 External links
 8 Further reading

[edit] Type of government

The Preamble lays down the type of government that India has adopted - Sovereign,
Socialist, Secular, Democratic, Republic.

[edit] Sovereign

The word sovereign means supreme or independent nation. India is internally and
externally sovereign - externally free from the control of any foreign power and
internally, it has a free government which is directly elected by the people and makes
laws that govern the people.

[edit] Socialist

The word socialist was added to the Preamble by the 42nd Amendment Act of 1976. It
implies social and economic equality for all its citizens. There will be no discrimination
on the basis of caste, colour, creed, sex, religion or language. Everybody will be given
equal status and opportunities. The government will make efforts to reduce the
concentration of wealth in a few hands, and provide a decent standard of living to all.

India has adopted a mixed economic model, and the government has framed many laws
to achieve the goal of socialism, such as Abolition of Untouchability and Zamindari Act,
Equal Wages Act and Child Labour Prohibition Act.

[edit] Secular

The word secular was inserted into the Preamble by the 42nd Amendment Act of 1976. It
implies equality of all religions and religious tolerance. India does not have any official
state religion. Every person has the right to preach, practice and propagate any religion of
their own choice. The government does not favour or discriminate any religion. It treats
all religions with equal respect. All citizens, irrespective of their religious beliefs are
equal in the eyes of law. No religious instruction is imparted in government or
government - aided schools.

[edit] Democratic

The government of India is elected democratically. Eligible voters may vote at the polling
station in his/her constituency at which he /she is registered on presentation of the voter's
identity card or other suitable identification.Use of electronic voting machines has
simplified the process of voting and counting.[citation needed] 84 out of 543 seats in parliament
are reserved to various social groups and tribes,while the large majority are open and
unrestricted. .[clarification needed] In local elections, 33% of the seats are reserved for women.
There is also a proposal to give out 33% seats in all elections to woman candidates, The
ruling UPA and main opposition parties BJP and Left parties came to an agreement and
the bill is scheduled to be tabled in the Rajya Sabha in March 2010.

The Election Commission of India is responsible for ensuring free and fair elections.

[edit] Republic

The President of India is elected head of the republic by an electoral college for a term of
five years.

[edit] Parliamentary government

Sansad Bhavan

India has a parliamentary system of government based largely on that of the United
Kingdom (Westminster system). However, eminent scholars including the first President
Dr Rajendra Prasad have raised the question "how far we are entitled to invoke and
incorporate into our written Constitution by interpretation the conventions of the British
Constitution".[2]

The legislature is the Parliament. It is bicameral, consisting of two houses: the directly-
elected 545-member Lok Sabha ("House of the People"), the lower house, and the 250-
member indirectly-elected and appointed Rajya Sabha ("Council of States"), the upper
house. The parliament enjoys parliamentary supremacy.

The executive power is vested on mainly the President of India by Article 53(1) of the
constitution. The President enjoys all constitutional powers and exercises them directly or
through officers subordinate to him as per the aforesaid Article 53(1).The President is to
act in accordance with aid and advise tendered by the head of government (Prime
Minister of India) and his or her Council of Ministers (the cabinet) as described in Article
74 (Constitution of India).

All the members of the Council of Ministers as well as the Prime Minister are members
of Parliament. If they are not, they must be elected within a period of six months from the
time they assume their respective office. The Prime Minister and the Council of Ministers
are responsible to the Lok Sabha, individually as well as collectively.

[edit] Individual responsibility

Every individual minister is in charge of a specific ministry or ministries (or specific

other portfolio). He is responsible for any act of failure in all the policies relating to his
department. In case of any lapse, he himself is individually responsible to the Parliament.
If a vote of no confidence is passed against the individual minister, he has to resign.
Individual responsibility can amount to collective responsibility. Therefore, the Prime
Minister, in order to save his government, can ask for the resignation of such a minister
and the people have a say.

[edit] Collective responsibility

The Prime Minister and the Council of Ministers are jointly accountable to the Lok
Sabha. If there is a policy failure or lapse on the part of the government, all the members
of the council are jointly responsible. If a vote of no confidence is passed against the
government, then all the ministers headed by the Prime Minister have to resign.
[edit] Judicial branch

Bombay High Court.

India's independent judicial system began under the British, and its concepts and
procedures resemble those of Anglo-Saxon countries. The Supreme Court of India
consists of a Chief Justice and 25 associate justices, all appointed by the President on the
advice of the Chief Justice of India. In the 1960s, India moved away from using juries for
most trials, finding them to be corrupt and ineffective, instead almost all trials are
conducted by judges.

Unlike its US counterpart, the Indian justice system consists of a unitary system at both
state and federal level. The judiciary consists of the Supreme Court of India, High
Courts at the state level, and District and Session Courts at the district level.

[edit] National judiciary

Main article: Supreme Court of India

The Supreme Court of India has original, appellate and advisory jurisdiction. Its
exclusive original jurisdiction extends to any dispute between the Government of India
and one or more states, or between the Government of India and any state or states on one
side and one or more states on the other, or between two or more states, if and insofar as
the dispute involves any question (whether of law or of fact) on which the existence or
extent of a legal right depends.

In addition, Article 32 of the Indian Constitution gives an extensive original jurisdiction

to the Supreme Court in regard to enforcement of Fundamental Rights. It is empowered
to issue directions, orders or writs, including writs in the nature of habeas corpus,
mandamus, prohibition, quo warranto and certiorari to enforce them. The Supreme
Court has been conferred with power to direct transfer of any civil or criminal case from
one State High Court to another State High Court, or from a court subordinate to another
State High Court.

Public Interest Litigation(PIL) : Although the proceedings in the Supreme Court arise
out of the judgments or orders made by the Subordinate Courts, of late the Supreme
Court has started entertaining matters in which interest of the public at large is involved,
and the Court may be moved by any individual or group of persons either by filing a Writ
Petition at the Filing Counter of the Court, or by addressing a letter to Hon'ble The Chief
Justice of India highlighting the question of public importance for invoking this
jurisdiction.
Such a concept is known as Public Interest Litigation, or PIL and several matters of
public importance have become landmark cases. This concept is unique to the Supreme
Court of India, and perhaps no other Court in the world has been exercising this
extraordinary jurisdiction.

[edit] Reform
This article has been nominated to be checked for its neutrality. Discussion of
this nomination can be found on the talk page. (May 2009)

[edit] Corruption

Overview of the index of perception of corruption, 2007

Main article: Corruption in India
This article may be inaccurate in or unbalanced towards certain viewpoints.
Please improve the article by adding information on neglected viewpoints, or
discuss the issue on the talk page. (May 2009)

The combination of corruption and politics plays a key role in governance.

The concept of tipping and working on commission is new to India. The country has
experienced free markets since 1948, less than the average life span. Concepts like
"premium" processing is new and is being slowly adopted to diminish corruption. At
micro levels, these are called as "Tatkaal" schemes being introduced in government
offices, meaning immediate processing, which directly deals with the common man. At
macro levels these are called betterment charges that are levied on corporations that wish
to invest in large projects. Starting in the early 1990s, privatization helped government to
raise more taxes.[citation needed]

Occupations such as facilitator, negotiator, or agent, were never part of the Indian
society. In business there was a seller and a buyer; and negotiation was considered the
skill of the seller to influence the buyer.[citation needed]

Because it has freedom, the media has played an important role in unmasking corruption.
[citation needed]

In 2009, nearly a quarter of the 543 elected members of parliament had been charged
with crimes, including rape or murder.[3]
[edit] Inefficiency

Indian government is among the most bureaucratic in the world. The current government
has concluded that most spending fails to reach its intended recipients.[4] Lant Pritchett
calls India's public sector "one of the world's top ten biggest problems - of the order of
AIDS and climate change".[4] The Economist article about Indian civil service (2008) said
that Indian central government employs around 3 million people and states another 7
million, including "vast armies of paper-shuffling peons"[4]. The Economist states that
"India has some of the hardest-working bureaucrats in the world, but its administration
has an abysmal record of serving the public".[5]

Unannounced visits by government inspectors showed that 25% of public sector teachers
and 40% of public sector medical workers could not be found at the workplace. Teacher
absence rates ranged from 15% in Maharashtra to 71% in Bihar. Despite worse absence
rates, public sector teachers enjoy salaries at least five times higher than private sector
teachers. India's absence rates are among the worst in the world.[6][7][8][9]

Many experiments with computerization have failed due to corruption and other factors.
[10][11]
In 2008, Tanmoy Chakrabarty noted that "There are vested interests everywhere,
politicians fear that they will lose control with e-government, and this is coming in the
way of successful implementation of e-government projects in India. [...] Out of the 27
projects under the NEGP, only one (the MCA21 program) has been completed. There is
tremendous gap between conceptualization and implementation".[11]

[edit] Spending priorities

See also: Subsidies in India

The government subsidizes everything from gasoline to food.[12] Loss-making state-

owned enterprises are supported by the government. Water is free and paid by the state.
[12]
Farmers are given electricity for free.[12] Overall, a 2005 article by International Herald
Tribune stated that subsidies amounted to 14% of GDP.[12] As much as 39 percent of
subsidized kerosene is stolen.[12] Moreover, these subsidies cause economic distortions.[12]

On the other hand, India spends relatively little on education, health, or infrastructure.
Urgently needed infrastructure investment has been much lower than in China. According
to the UNESCO, India has the lowest public expenditure on higher education per student
in the world.[13]

[edit] Deficits

As per the CIA World Factbook, India ranks 23rd in the world with respect to the Public
Debt with a total of 61.30% of GDP just before United states which ranks 24th (2008
estimated).[14]
[edit] Finance
[edit] Taxation
Main article: Taxation in India

Regional office of the State Bank of India (SBI), India's largest bank, in Mumbai. The
government of India is the largest shareholder in SBI.

India has a three-tier tax structure, wherein the constitution empowers the union
government to levy income tax, tax on capital transactions (wealth tax, inheritance tax),
sales tax, service tax, customs and excise duties and the state governments to levy sales
tax on intrastate sale of goods, tax on entertainment and professions, excise duties on
manufacture of alcohol, stamp duties on transfer of property and collect land revenue
(levy on land owned). The local governments are empowered by the state government to
levy property tax and charge users for public utilities like water supply, sewage etc.[15][16]
More than half of the revenues of the union and state governments come from taxes, of
which half come from Indirect taxes. More than a quarter of the union government's tax
revenues is shared with the state governments.[17]

TAXATION

The tax reforms, initiated in 1991, have sought to rationalise the tax structure and
increase compliance by taking steps in the following directions:

 Reducing the rates of individual and corporate income taxes, excises, customs and
making it more progressive
 Reducing exemptions and concessions
 Simplification of laws and procedures
 Introduction of permanent account number (PAN) to track monetary transactions
 21 of the 29 states introduced value added tax (VAT) on April 1, 2005 to replace
the complex and multiple sales tax system[16][18]

The non-tax revenues of the central government come from fiscal services, interest
receipts, public sector dividends, etc., while the non-tax revenues of the States are grants
from the central government, interest receipts, dividends and income from general,
economic and social services.[19]
Inter-State share in the federal tax pool is decided by the recommendations of the Finance
Commission to the President.

Total tax receipts of Centre & State amount to approximately 18% of national GDP. This
compares to a figure of 37-45% in the OECD .

[edit] General budget

The Finance minister of India presents the annual union budget in the Parliament on the
last working day of February. The budget has to be passed by the Lok Sabha before it can
come into effect on April 1, the start of India's fiscal year. The Union budget is preceded
by an economic survey which outlines the broad direction of the budget and the economic
performance of the country for the outgoing financial year. This economic survey
involves all the various NGOs, women organizations, business people, old people
associations etc.
The 2009 Union budget of India had a total estimated expenditure for 2009-10 was
Rs.10,20,838 crore, of which Rs.6,95,689 crore was towards Non Plan and Rs.3,25,149
crore towards Plan expenditure. Total estimated revenue was Rs 6,19,842 crore,
including revenue receipts of Rs 6,14,497 and capital receipts of Rs 5345 crores,
excluding borrowings. The resulting fiscal deficit was Rs 4,00,996 crore while revenue
deficit was Rs 2,82,735 crore.The gross tax receipts were budgeted at Rs.6,41,079 crore
and non tax revenue receipts at Rs.1,40,279

India's non-development revenue expenditure has increased nearly fivefold in 2003–04

since 1990–91 and more than tenfold since 1985–1986. Interest payments are the single
largest item of expenditure and accounted for more than 40% of the total non
development expenditure in the 2003–04 budget. Defence expenditure increased fourfold
during the same period and has been increasing due to India's desire to project its military
prowess beyond South Asia. In 2007, India's defence spending stood at US$26.5 billion.
[20]

[edit] References
India portal

1. ^ Ministry of Law and Justice, Govt of India: Constitution of India, updated upto 94th
Amendment Act, page 26,http://lawmin.nic.in/coi/coiason29july08.pdf
2. ^ Why we need an executive president : Rajinder Puri, Outlook India, para 11,
http://www.outlookindia.com/article.aspx?235067
3. ^ Washington Post:When the Little Ones Run the Show (quote from the New Delhi
based Association for Democratic Reform) retrieved 14 May 2009
4. ^ a b c India's civil service: Battling the babu raj Mar 6th 2008 The Economist
5. ^ "India's civil service: Battling the babu raj". The Economist. March 6th 2008.
http://www.economist.com/world/asia/displaystory.cfm?story_id=10804248.
6. ^ Teachers and Medical Worker Incentives in India by Karthik Muralidharan
7. ^ Combating India's truant teachers. BBC
8. ^ Private Schools in Rural India: Some Facts (presentation) / Public and Private Schools
in Rural India (a paper). Karthik Muralidharan, Michael Kremer.
9. ^ Teacher absence in India: A snapshot
10. ^ Subhash Bhatnagar (Indian Institute of Management). "Transparency and Corruption:
Does E-Government Help?".
http://www.iimahd.ernet.in/~subhash/pdfs/CHRIDraftPaper2003.pdf.
11. ^ a b Swati Prasad (2008). "'Corruption' slowing India's e-govt growth". ZDNet Asia.
http://www.zdnetasia.com/news/business/0,39044229,62044787,00.htm.
12. ^ a b c d e f "India should redirect subsidies to those who need them". The International
Herald Tribute. 2005. http://www.iht.com/articles/2005/10/25/bloomberg/sxmuk.php.
13. ^ "Higher education spending: India at the bottom of BRIC". Rediff. 2005.
http://www.rediff.com/money/2007/feb/05edu.htm.
14. ^ CIA World Factbook
15. ^ Service tax and expenditure tax are not levied in Jammu and Kashmir; Intra-state sale
happens when goods or the title of goods move from one state to another.
16. ^ a b Bernardi, Luigi and Fraschini, Angela (2005). Tax System And Tax Reforms In India.
Working paper n. 51. http://ideas.repec.org/p/uca/ucapdv/45.html.
17. ^ Tax revenue was 88% of total union government revenue in 1950–51 and has come
down to 73% in 2003–04, as a result of increase in non-tax revenue. Tax revenues were
70% of total state government revenues in 2002 to 2003. Indirect taxes were 84% of the
union governments total tax revenue and have come down to 62% in 2003–04, mostly
due to cuts in import duties and rationalisation. The states share in union government's
tax revenue is 28.0% for the period 2000 to 2005 as per the recommendations of the
eleventh finance commission. In addition, states that do not levy sales tax on sugar,
textiles and tobacco, are entitled to 1.5% of the proceeds.Datt, Ruddar & Sundharam,
K.P.M. (2005). Indian Economy. S.Chand. pp. 938, 942, 946. ISBN 81-219-0298-3.
18. ^ "Indif_real_GDP_per_capitaa says 21 of 29 states to launch new tax". Daily Times.
March 25, 2005. http://www.dailytimes.com.pk/default.asp?page=story_25-3-
2005_pg5_13.
19. ^ Datt, Ruddar & Sundharam, K.P.M.. "55". Indian Economy. pp. 943–945.
20. ^ "India's budget may backfire | The Australian". Theaustralian.news.com.au. April 3,
2008. http://www.theaustralian.news.com.au/story/0,25197,23474033-23850,00.html.
Retrieved 2008-11-03.