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FISCAL POLICY ESTIMATES

•Fiscal policy

•Fiscal policy for the ensuing


financial year
EXPENDITURE POLICY
Budget Estimates
• Expenditure Proposed at Rs 953,231 crore for
2009-10. Of this, Rs. 285,149 crore is under Plan and Rs. 668,082 crore under
the Non-Plan sector.

• The budgetary support to the Plan sector for 2009-10 has been increased for the
Departments of Rural Development, Road Transport & Highways, Railways,
Information Technology and Industrial Policy & Promotion and the Ministry of
Power, with a view to maintain the fiscal tempo to address the economic slow
down and meet the requirements of rural and infrastructure development.

• Rs. 30,100 crore has been allocated to National Rural Employment Guarantee
Scheme (NREGS) in 2009-10. The Scheme has been extended to all the districts
of the country and provided employment of 138.76 crore person days, covering
3.51 crore households during 2008-09.
• For Sarv Shiksha Abhiyan an allocation of Rs.13,100 crore have
been proposed. About 98 per cent of our habitations have been
covered by primary schools and the focus now is on improving the
quality of elementary education.

• An allocation of Rs.6,705 crore have been proposed for the


Integrated Child Development Scheme (ICDS) in the country.
• Bharat Nirman, the time bound plan for building rural infrastructure,
has been allocated Rs.40,900 crore for 2009-10. During 2005-09, the
allocation to this programme has been increased by 261 per cent.
National Rural Health Mission has been allocated Rs.12,070 crore. The
programme aims to bring about uniformity in the quality of preventive
and curative health care in rural areas.
• Rajiv Gandhi Rural Drinking Water Mission is envisaged to supply safe
drinking water. An allocation of Rs.7,400 crore has been made for this
programme for the year 2009-10.
• Rs.1,200 crore have been assigned for Total Rural Sanitation programme.

• A provision of Rs 100 crore in the Annual Plan 2009-10 made for


Unique Identification Authority of India.

• Allocation for Defence increased to Rs 1,41,703 crore which includes


Rs 54,824 for Capital Expenditure.

• Major subsidies including food, fertilizer and petroleum estimated at Rs


95,579 crore.

• There are no valid reasons for either the 'experts' to get disappointed
with the lack of new schemes or for the stock market index to look
downwards.
•The income and expenditure statement has confirmed that there is not
much fiscal space for a stimulus and any additional stimulus would be
the responsibility of the government that will come to power after
elections.
• In India, unlike in the US or Japan the reduction in the rate of interest
would certainly enhance investment demand.

• Lower crude oil prices provide additional space for the existing
programmes as the government may not have to make provision for
oil and fertilizer bonds.
TAXATION POLICY

INDIRECT TAXES DIRECT TAXES


INDIRECT TAXES
• CUSTOM DUTY
• EXCISE DUTY
• SERVICE TAX
DIRECT TAXES
• PERSONAL INCOME TAX
• CORPORATE INCOME TAX
• WEALTH TAX
• GIFT TAX
DIRECT TAXES
Over the last four years, widespread reforms have been
ushered into the direct tax arena. The touchstone of
such reforms have been the following.
• Distortions within the tax structure have been
minimized by expanding the tax base and
maintaining moderate tax rates.
• Tax administration has been geared up to provide tax
payer services and also enhance deterrence levels.
• Business processes have been re-engineered in the
income-tax department through extensive use of
information technology.
The major tax policy proposals in the union budget
2008-09 are as follows;
• Rationalization of the personal income tax (PIT) rate
structure for individuals, HUF’s, etc by enhancing the
threshold limit and revising the income slabs.
• Introducing the commodities transaction tax on the
lines of STT, in respect of commodities traded on
recognized commodity exchanges.
• Allowing STT paid as a deduction from income
• Restricting the scope the term “charitable purpose”
by amending its definition and, thereby, and bringing
many “non charitable” activities into the tax net.
• Enhancing the existing tax rate of 10% to 15% in
respect of short term capital gains arising from the
transfer of short term capital asset
• Exempting interest income on bonds issued by
companies listed on recognized stock
exchanges, from the purview of TDS
provisions so as to facilitate development and
deepening of the bond market.
• Introduction of a scheme for centralized
processing of returns to provide better
taxpayer services, by harnessing India's
inherent advantage in the sphere of
information technology.
CHANGES IN FISCAL
POLICY
1. CHANGES IN TAXATION
SYSTEM

A.DIRECT TAXES
B.INDIRECT TAXES
DIRECT TAXES
• CORPORATE TAX
• DIVIDEND DISTRIBUTION TAX
• FRINGE BENEFIT TAX
• BANKING CASH TRANSACTION TAX
• PERSONAL INCOME TAX
INDIRECT TAX
• SALES TAX
• EXCISE DUTY
• CUSTOM DUTY
• SERVICE TAX
CHANGES IN GOVERNMENT
EXPENDITURE
• UTILIZING MONEY ON TIME
• IMPLEMENTATION OF GENERAL FINANCIAL
RULES
• ENCOURAGEMENT OF MINISTRIES TO
RELEASE A SUMMARY OF THEIR MONTHLY
RECEIPT AND EXPENDITURE TO GENERAL
PUBLIC
• EXPANDING E-LEKHA PROGRAMME
• MORE EMPHASIS ON EXPLICIT
RECOGNITION OF REVENUE CONSTRAINT
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