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BUDGET 2007-08

Introduction
• The Indian Budget is a schematic plan of
India's financial and operational goals. It is an
action plan that facilitates allocation of resources
in India. The Government of India Budget,
also known as the Union Budget, is primarily
made up of the Revenue Budget and Capital
Budget.
• Revenue Budget-Comprises of Government
revenue receipts like tax and expenditure met
from the revenue.
• Capital Budget-Comprises of capital receipts
and payments. The primary components of
capital receipts include loans brought up by
Government of India from public. The primary
components of capital payments include capital
expenditure on acquisition of assets like
equipment, machinery, land and buildings which
also include transactions in the Public Account
and investments in shares.
Finance Minister
• Mr. P. Chidambaram was the Finance Minister
in 2007-08.
• It was the 4th Budget in succession to be
presented by FM P. Chidambaram under the
UPA Government at the centre.
• Presented on 28th Feb.,2007
Achievements Till 2007
• GDP- 7.5% in 2004-05 to 9% in 2006-07.
• Manufacturing-8.7% to 9.1%.
• Services-9.6% to 11.2%.
• Agriculture-operating under ups and downs.
• Inflation has been maintained at moderate
levels.
• Government is working on Bharat Nirman and
other Flagship Programmes.
Budget on View
Focus Areas
• Social Initiatives
• Agriculture
• Infrastructure
• Defence
• Banking
• Custom Duties
Social Initiatives
• Bharat Nirman -Increase of 31.6% from
previous year to Rs.24,603 crore.
• Education & Health Sector – Increase of
34.2% and 21.9%.
• Sarva Shiksha Abhiyaan and Mid day meal-
Increase of 35% to Rs.23,142 crore and Rs.7,324
crore to mid day meal scheme.
• Schemes for secondary education were under
consideration and will be proposed in future.
• Means Cum Merit Scholarships – 100,000
scholarships will be awarded under this. A corpus
fund of Rs750 crore has been created.
• Drinking water & Sanitation-Rajiv Gandhi
Drinking water Mission with allocation of Rs.5,850
crore and for sanitation Rs.954 crore.
• Polio- Rs. 1,299 crore
• HIV/AIDS- Rs.969 crore
• Health-National Rural Health Mission(2nd year)
• Urban Unemployment- Swarna Jayanti Shahari
Rojgar Yojana (SJSRY) from Rs. 250 crore to Rs.344
crore.
Agriculture
• Farm Credit-Rs.225,000 crore.2% subvention
scheme for short term crop loans with Rs.1,677
crore and Rs.153 crore for cattle purposes.
• Plantation-Special Tea Fund launched. Similar
mechanisms to be provided to coffee, rubber ,
spices, cashew. Rs.3580 crore for these
purposes.
• Training- with total estimate of Rs.100 crore in
association with ICAR.
• NABARD- provides refinance to cooperative
institutions .
• Rural Infrastructure Development Fund-
A corpus fund provided with Rs.4,000 crore
which increases to Rs.12,000 crore in total.
• Social Security- scheme for landless
unorganized workers as “aam aadmi bima
yojana” on a 50-50 share of premium between
central and state governments in association
with LIC.
Infrastructure
• Accelerated Power Development and Reforms
Project (APDRP) gets Rs.800 crore as compared
to Rs.650 crore last year.
• Rajiv Gandhi Grameen Vidyutikaran Yojana
gets Rs.3,983 crore , an increase of Rs.983
crore.
• National Highway Development Programme
(NHDP) saw an increase from Rs.9,945 crore in
2006-07 to Rs.10,667 crore this year.
Tax Slabs
• For persons other than women below 65 years of age and
senior citizens

Up to Rs.1,10,000 Nil

Rs.1,10,001-Rs.1,50,000 10%

Rs.1,50,001-Rs.2,50,000 20%

Rs.2,50,001 and above 30%


• For women below 65 years of age
Up to Rs.1,45,000 Nil

Rs.1,45,001-Rs.1,50,000 10%

Rs.1,50,001-Rs.2,50,000 20%

Rs.2,50,001 and above 30%

• For Senior citizens i.e. person 65 years and above of age

Up to Rs.1,95,000 Nil

Rs.1,95,001-Rs.2,50,000 20%

Rs.2,50,001 and above 30%


• The deduction in respect of medical insurance
premium under section 80D is increased to a
maximum of Rs.15,000 and, in the case of a
senior citizen, to a maximum of Rs.20,000 from
Rs.10,000 and Rs.15,000 respectively.
• Corporate Tax Rate remained unchanged i.e.
30% for domestic and 40% for foreign
Change in Rates
• Customs Duty reduced from 12.5% to 10% except on
agriculture items.
• Excise exemption limit for small scale industries
increased from 10 million to 15 million.
• Introduction of exemption on : food mixes, water
purification devices, water filters, computer flash
memories, DVD writers and DVD drives.
• Withdrawal of exemption on : tobacco products,
recorded video cassettes, brooms, mops etc.
• MRP based assessment scheme extended to PCs,
computer hardware, fax machines, set top boxes.
Service Tax
• Maintained at 12%.
• Education cess increased from 2 to 3 percent.
• Additional services brought within ambit of
service tax namely:
Telecommunication services, renting of
immovable property, content development for
telecom, ad agency and asset management
services.
Services Sector
• Merchandise Exports exceeded the Government
estimates. Thus , Government decided to follow
export friendly policies.
• Building tourist infrastructure gets priority and
saw an increase in allocation from Rs.423 crore
in 2006-07 to Rs.520 crore in 2007-08.
Financial Sector
• Government proposes to acquire RBI's equity
holding in State Bank of India
• Differential Rate of Interest (DRI) scheme
provides finance at a rate of 4% to the weaker
sections of the community engaged in gainful
occupations will get loans up to Rs.15,000 and
the housing loan up to Rs.20,000 per beneficiary
• Health Insurance Scheme for senior citizens
started by National Insurance Co. was likely to
be followed by other cos. in 2007-08
• PAN made the sole identification number for all
participants in the securities market with an
alpha-numeric prefix or suffix to distinguish a
particular kind of account.
• A committee chaired by Shri Deepak Parekh has
made a number of recommendations for
financing infrastructure.
Other Proposals
• Defence Allocation increased to Rs.96,000 crore
• Government has launched an ambitious
programme for e-governance with an allocation of
Rs.719 crore.
• Creation of about 100,000 jobs every year for
physically challenged persons with a salary limit of
Rs.25,000 per month
• Rs.150 crore to the Ministry of Youth Affairs and
Sports and Rs.350 crore to the Delhi Government
for the Common Wealth Games.
Impact On Sectors
• Neutral on auto industry. Education and training
of the workforce and extension of the weighted
deduction on R&D expenditure by five years
• Public sector banks with more rural branches will
be benefited as they will be able increase their
core business
• No direct impact on FMCG sector from budget but
increased outlay on rural infrastructure & also
increased Rs.10,000 in hands of tax-payers, which
will have a positive impact on the sector
• Positive impact on the food processing industry.
Increased emphasis on Agriculture sector will
benefit the food-processing industry.
• Construction companies are directly impacted by
the infrastructure spending of the government.
In this budget, GOI has given stress on two
things
(a) increased allocation towards infrastructure
(b) trying to come up with innovative ways to
fund infrastructure projects
• Overall impact of the budget on Media industry has
been negative. Commercial properties for rent
purposes are now brought under service tax sphere.
• There is no provision for retail industry in this
budget. Demands such as permission of FDI &
incentives are left untouched
• Services sector continues to maintain impressive
growth. Supportive regulations, incremental Capex
spends, higher end product innovations and failing
equipments prices will keep the sector momentum
ahead
• Rental /Lease costs to IT Companies will go up
significantly, due to the proposed imposition of
service tax on rentals related to immovable
property for commercial or industrial purposes.
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