Indian Union Budget 2008-2009

Union Finance Minister P Chidambaram presented his fifth Budget in Parliament on Friday.

Changes in I-T slab. Threshold of exemption for all Income Tax assesses raised from from Rs 1,10,000 to Rs 1,50,000.
Every income tax assessees to get relief of minimum of Rs 4,000.
No change in rate of surcharge.
New tax slabs will be: 10 per cent for Rs 150,000 to Rs 300,000, 20 per cent for Rs 300,000 to Rs 500,000 and 30 per cent above Rs 500,000.
For women, the income tax limit goes up from Rs 1.45 lakh to Rs 1.80 lakh. In case of senior women citizens, it increases from Rs 1.95 lakh to Rs 2.25 lakh.
Fresh facilities, encouragement to sports and guest houses exempted from Fringe Benefit Tax.
Five year tax holiday for setting up hospitals in tier II and tier III regions for providing healthcare in rural areas from April 1, 2008.
Five year tax holiday for promoting cultural tourism.
Short-term capital gains increases to 15 per cent.
Commodities Transaction Tax to be introduced on the lines of Securities Transaction Tax.
Banking cash transaction tax withdrawn from April one, 2009.
Direct tax proposals to be revenue neutral. Indirect tax proposals to result in loss of Rs 5,000 crore.
Rs 500 crore for corpus fund to subsidise all women Self Help Groups for LIC [Get Quote] cover for permanent disability.
Agricultural loans given by scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007 and due for December 31 that year will be covered under the waiver scheme to address the problem of indebtedness.
No change in corporate income tax.
To protect tigers, Rs 50 crore for National Tiger Conservation Programme. Bulk of it to be used to raise Tiger Protection Force.
Plan expenditure fixed at Rs 2,43,000 crore and non plan expenditure at 5,74,000 crore.
Fiscal deficit pegged at 3.1 per cent and revenue deficit at 1.4 per cent.
Tax to GDP ratio increased from 9.2 per cent in 2004-05 to 12.5 per cent 2007-08.
No change in peak rate of customs duty for non
Customs duty on specified life saving drugs reduced from ten per cent to five per cent.
Special Countervailing Duty on power imports.
Customs duty on specified sports goods machinery down from 7.5 per cent to five per cent.
Duty withdrawn on naptha for production of polymers.
Duty on crude and unrefined sulphur reduced from five to 2 per cent to help raise domestic fertiliser production.
General Centvat on all goods to be reduced from 16 per cent to 14 per cent. Excise duty reduced from 16 per cent to eight per cent on all pharmaceutical goods manufacture.
Excise duty on small cars reduced to 12 per cent from 16 per cent and hybrid cars to 14 per cent.
Excise duty reduced from 16 to 8 per cent on water purification items.
Duty on non filter cigarettes to be raised.
Asset management service under mutual funds, services by stock exchanges to be brought under Services Tax net.
Threshold for small service providers raised from Rs eight lakh to Rs 10 lakh.
Allocation for defence to be increased by 10 per cent from Rs 96,000 crore to Rs 1,05,600 crore.
75 lakh people to be covered by health insurance scheme.
Allocation for Textile Upgradation Fund to be more than doubled.
Micro, small and medium enterprises to continue to get special attention.
Risk Capital Fund to be set up in SIDBI.
PAN requirement to be extended to all transactions in capital market subject to a threshold.
Rs 750 crore for upgradation of 300 ITIs in 25 districts.
Rs 32,676 crore as subsidy to Public Distribution System.
PDS through smart cards in Haryana and Chandigarh on pilot basis.
Three schemes to be introduced for providing social security to unorganised sector workers.
Sixth central pay commission to submit report by March 31, 2008.
Rs 624 crore allocated for Commonwealth Games

Budget 2008-09 Sops for Industry

Rs 5000 crore fund for enhancing re-finance operations
No change in corporate tax
Excise duty on Pharma products down to 8 per cent from last year's 16 per cent
Excise duty on two and three wheelers down to 12 per cent
Excise duty on Hybrid cars reduced to 14 per cent from 24 per cent
Excises duty on buses and chassis reduced to 12 per cent
Special exemptions and reductions for paper, fertilizers and auto industries
Four new services (Asset management service provided under ULIP, services provided by stock / commodity exchanges and clearing houses, right to use goods in cases where VAT is not payable and customised software) brought under tax net
Custom duty on project import have been reduced from 7.5 per cent to 5 per cent
Public Sector Units to get Rs 16436 crore in 2008-09
Export taxes on key raw material of steel to be increased
Excise duty on packaged software increased from 8 to 12 per cent
Change in Security Transaction Tax (STT)
Short-term capital gains to increase to 15 per cent
Banking Transaction Tax (BTT) withdrawn
Commodity Transaction Tax introduced
No double deduction of Dividend Distribution Tax (DDT)

Narendra Modi fights for common man of India in Budget 2008

The Budget must truly provide succour to the Aam Aadmi and protect him against inflation in terms of daily consumption and necessities , including food grains. The Budget should be growth-oriented and achieve double-digit GDP growth.

It should not be populist, as generally apprehended, keeping in view the General Elections in 2009. The Budget must create an environment for providing more employment for the country’s youth by addressing the hitherto neglected informal sector of the economy.

The Centre should not resort to so-called communal budgeting, since poverty knows no religion. It should not encourage schemes which will divide the nation based on religion, which may even encourage religious conversions . Such discrimination based on religion will adversely affect the entire social fabric of the nation.

Instead of creating more and more centrally-sponsored straitjacket schemes for the entire country, the Centre should transfer funds to the states to undertake such development activities which suit the specific requirements of a particular state. It is time the Union Budget considered policies to plough back resources from the parallel black economy to fund various physical and social infrastructure projects in the country. Needless to say, adequate care should be taken to protect the interests of honest taxpayers while devising such schemes. If India has to grow fast, its Budget must focus on power generation.

Special budgetary allocation for setting up power stations via public-private partnership must be focused on. Ten-year tax breaks for companies investing in power generation and taxfree bonds should be introduced to encourage rapid investment in this area. The central government should encourage /reward state governments for policies that help reduce carbon emissions. State governments’ loss of revenue from various state and local taxes should be made good by the Centre. Also, funds should be provided on a grant basis by the Centre to states to improve capacity for monitoring carbon emissions.

Similarly, there should be a better package to encourage non-conventional energy in the Budget. I also look forward to a special provision for Bio-fuel Mission in this Budget.

In recent years, there has been a tendency of announcing certain schemes in the Union Budget wherein the financial burden is borne by the states. For example, the scheme of 7% interest on agricultural loans, though announced by the Centre, has to be borne financially by the states. Such schemes announced in the Budget should be totally funded by the Centre.

Railway Budget

I would also like to make specific suggestions on the Railway Budget. Traditionally, the Railway Budget in India is by and large dictated by popular pressure.

The Railways also needs to have long-term vision. The Golden Quadrilateral programme of the National Highways Authority of India, initiated during NDA rule, brought about pathbreaking changes in the road sector.

A similar vision targeting year 2020 is also needed for the Railways in India and it should be reflected in this Budget. India, with a population of 100 crore, has tremendous potential for religious tourism, which itself can trigger huge economic activities. Private sector should be brought in for running trains specifically meant for special circuits, based on popular religious tourist destinations.

In the end, I would expect the Budget to promote competitiveness in the economy. It would be in the interest of the nation that the Budget promotes efficient utilisation of resources and incentivise progressive states to do even better. In this context, Gujarat has achieved a revenue surplus of Rs 1,770 crore in 2006-07 after completely wiping out its revenue deficit which stood at Rs 6,730 crore in 2000-01 .

ON THE JOB

Create jobs for youth by focussing on the informal sector

POWER POINT

Special budgetary allocation for setting up power stations via public-private partnership. Offer 10-year tax breaks to companies and float tax-free bonds

RAIL TRAIL

Rail Budget should come out with a Vision 2020 plan on the lines of NHAI’s Golden Quadrilateral programme

FREE STATE

States should be given funds and freedom to devise development schemes that suit their specific requirements

CARBON COPY

States should be rewarded for policies that help reduce carbon emissions

Promote efficient utilisation of resources and incentivise progressive states to do even better PIOUS PROFIT

Private sector should be roped in to promote religious tourism (The author is chief minister, Gujarat)

Source: http://economictimes.indiatimes.com

Agriculture Budget 2008 - 2009

• Debt waiver scheme and relief to small and marginal farmers
• Agri loans disbursed by rural banks, RRBs and Cooperative banks before March 2007 and overdue on Dec 2007 waived
• Overdue agri loans amount to Rs 50,000 cr under the waiver and 10,000 cr under the OTS
• Implementation of waiver to be completed by June 2008
• Farmers eligible for fresh agri loans post the waiver or one time settlement
• National Agri Insurance scheme get Rs 640 cr
• National Horticulure Mission to get Rs 1,100 cr
• Govt sets up irrigation and water resource finance corp with an initial corpus of Rs 100 cr
• Agriculture share in total investment up from 10.2% in 2003-04 to 16% during the 11th Plan
• Agri credit target to be Rs 2,80,000 cr for 2008-09
• Agri credit doubled in first two years
• Agriculture credit to touch 2,40,000 cr in 2008
• Focus on achievement of self-sufficiency in food grain
• Soyabean output to be 9.45 mn tonnes
• Maize production to be 16.78 mn tonnes
• Rice production to be 94.08 mn tonnes
• Total agri production to be 219.32 mn tonnes at all time high
• Agriculture disappointing at average annual growth of 2.6%

Education Everywhere - "Learn India" - Indian Budget 2008 - 2009

• 3 IITs to be set up in Bihar, AP, Rajasthan
• Jawaharlal Navoday Vidyalaya to be set in 20 new districts for SC/STs
• Bhopal and Tripura to get one IIScR each and 2 colleges of art
• IT industry gets Rs 100 cr for connecting knowledge institutions
• Rs 200 cr for providing portable water system in each school in areas of water scarce regions
• 16 Central universities to be set up
• 6000 model high schools to be started
• Science scholarships for young learners
• Education sector gets a boost

Banking In Indian Union Budget 2008 - 2009

• Schedule Commercial Banks farm credit 75%
• 288 public sector bank branches to be opened in areas with concentration of minorities
• LIC to cover all woman SHGs linked to the bank
• Agri loans disbursed by rural banks, RRBs and Cooperative banks before March 2007 and overdue on Dec 2007 waived

Tea Research association gets Rs 20 cr

India is leading Tea producers and exporters in Asia.

Thanks o FM - see this fact on papers and promoting Tea Sector. Now Tea Research association gets fund of Rs. 20 cr. This would definitely help Tea sector in improving quality of product compare to European countries.

Debt waiver scheme and relief to small and marginal farmers

Farmers must be very happy this time. FM didnt forget that we live on Agriculture Ruled Country and our main economy is of agriculture sector.

Debt waiver scheme and relief to small and marginal farmers and Farmers eligible for fresh agri loans post the waiver or one time settlement are focused benefits for Farmers.

3 IITs to be set up in Bihar, AP, Rajasthan

Education is everywhere now!!
New IIMS, IITs !! That's Great. India needs more quality in education. Thanks to FM for realising it at last.
New 3 IITs would be set up in Bihar, AP, Rajasthan.
Let's have more for Gujarat, Punjab too where engineering eduation is yet missing in terms of IITs.

Government of India Union Budget and Economic Survey

Visit - http://indiabudget.nic.in for more details.

Calculate Your Taxes - Taxation Matrix

Tax Man Woman
Rs. 100000 - 150000 NIL NIL
Rs. 150000 - 180000 10 10
Rs. 300000 - 500000 20 20
Rs. 500000 - 1000000 30 30
Rs. 10, 0000+ 33 33

Gift To Parents - Medical Insurance Premium Paid For Parents Eligible for Sec 80 D Deduction

This Diwali - Insurare Your Family Completely!!

Now - Medical Insurance Premium Paid For Parents is eligible for Sec 80 D Deduction!! The deduction under Section 80-D in respect of medical insurance premium is available to an individual where it is paid to insure the health of such individual, the spouse of such individual, dependent parents or dependent children of such individual.

The word ‘dependent’ is not defined in the Section and it should be understood as a person who is wholly or mainly dependent on the individual and probably should also be understood not to mean mere financial dependence.

FM dangles carrot 'n' stick for investors in the Budget 08-09

Despite waiving of the securities transaction tax (STT) on the strike price of unexercised options, the tax is expected to hurt more. Finance minister P Chidambaram has proposed in the Budget 2008-09 on Friday that the money paid as STT should be treated like any other deductible expenditure against business income. At present, it is given a rebate against tax liability. This will mean that STT will become more expensive as deductions under business income are only given a 30% rebate.

The move is expected to make it more expensive for traders who will now be unable to get a full rebate on STT paid, Bobby Parikh managing partner BMR Advisors & Co pointed out.

The government also hopes to earn more revenue through this and the Budget estimates for 2008-09 reveal that STT collections are expected to rise to a whopping Rs 9,000 crore in 2008-09 as compared to Rs 7,500 crore revised estimate for this fiscal.

However bringing some cheer to domestic investors, Chidambaram while leaving the STT rate unchanged has also proposed that the tax in the case of options, will be levied 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.

The move is expected to cheer up the options market, having daily trading volumes of nearly Rs 8,000 crore.

STT is levied at 0.017% rate on both the strike price as well as the premium paid for buying the option and is borne by the seller at present.

Chidambaram has also proposed increasing the rate of short-term capital gains tax to 15% from the present 10%. Investors selling their securities within one year of buying them will have to shell out 15% of the amount as short-term capital gains.

The minister in his Budget speech also said, "The move will encourage investors to stay invested for a longer time." Parikh agreed and said, "This will now be more expensive for both domestic investors and foreign institutional investors (FIIs)."

In a post Budget press conference, Chidambaram however said the move would not hurt retail investors. FIIs too will continue to have the same exit pattern as price by earnings ratio are high and so a higher tax rate would justify a short-term sale, he added.

The proposal however did not go well with domestic bourses and the Sensex dipped close to 500 points within minutes of the announcement.

Making it costlier for investors, the Budget has also proposed instituting a commodities transaction tax (CTT) on the lines of STT. Taxable commodities transactions would include sale and purchase of options in goods, options in commodity derivatives and any other commodity derivatives in recognised exchanges. The tax rate would vary between 0.017% to 0.125%. With commodity exchanges booming and investments in them at an all time, analysts feel it is the right time to introduce the tax.

The changes in STT and the higher rate of short-term capital games will give Chidambaram extra resources, which will prove useful given that he has increased the income tax threshold and provided tax exemptions to the post office time deposit account scheme and the senior citizen savings scheme. These are expected to cost the exchequer about Rs 4,000 crore in 2008-09. While higher STT collections would bring in around Rs 1,500 crore, the rest would be made up by doubling the rate of short-term capital gains.

But to give some relief to corporates, the finance minister has proposed minor changes to exempt certain activities from the fringe benefit tax net.

Chidambaram has proposed exempting expenses and payments through pre paid meal cards such as Sodexho and FoodPlus Card from hospitality expenditure while calculating the tax. Amitabh Singh tax partner Ernst and Young pointed out that this would give more administrative convenience to companies.

Expenditure on providing crèche facility to children of employees, sponsoring a sportsman who is an employee and organising sports events for employees have also been exempted from the tax.

The Budget has also proposed exempting payments made for maintenance of guest houses while calculating the tax. Chidambaram has also proposed reducing the value of fringe benefits on spending on festival expenditure to 20% from the current 50%.

Providing further clarity on the fringe benefit tax (FBT) on employee stock options (Esops), Chidambaram has also said any amount recovered from expatriate employees for FBT on Esops issued by an Indian company can be offset by the expat while paying FBT on Esops issued to him or her by their parent company abroad.

Singh said, "It is a welcome move and will clear the path for expat employees who are currently paying tax twice because of a lack of clarity on the issue." He however added that it would be up to the foreign country to accept this as an offset.

http://in.news.yahoo.com/financialexpress/20080301/r_t_fe_bs_budget08/tbs-fm-dangles-carrot-n-stick-for-invest-7435665.html

Extension of special revival fund welcomed -Budget 08-09

The Union Budget proposal to revitalise the ageing cardamom, rubber and coffee holdings with a special fund for re-plantation and rejuvenation has been welcomed by the plantation sector. The Budget mentions that the fund will be similar to the Special Purpose Tea Fund (SPTF) formulated to increase the productivity of the tea plantations.

SPTF for re-plantation and rejuvenation of tea estates was launched last year as the biggest-ever productivity intervention programme by the Union Government to lift the tea industry's fortunes, severely dented owing to both senile tea bushes and depressed auction prices. The total corpus under SPTF is Rs 4,760 crore, spread over 15 years with a funding pattern of 25 % subsidy, 25 % promoters' contribution and the balance 50 % by way of loans from the banks.

Senile and less productive plantations are a drag on the economy and reduce the competitiveness, Ullas Menon of the United Planters' Association of Southern India (UPASI) told FE. "Re-plantation and rejuvenation of old bushes and trees help increase productivity and reduce cost. This will increase the profitability of the sector and help in facing challenges," he said. However, Prince George of Association of Planters of Kerala was apprehensive about the eligibility criteria for the fund in rubber.

"While we welcome the move, we would like to see all plantations being included in the programme irrespective of their holding size," he said. The plantation sector shares a fear that the Union Government may restrict the aid in coffee and rubber to holdings of less than 10 hectares, he added.

Rubber sector is facing problems with growers not keen on replanting due to the prevailing high prices. Besides poor yield, the quality of latex also declines, as the tree gets old. Delay in re-planting could result in lesser supply and increased cost in the future.

Prince feels that the subsidy component for rubber needs to be higher than the 25% allocated for tea, to encourage farmers with smallholdings to participate in the programme. Likewise, cardamom and coffee farmers are also facing increasing pressure to re-plant and at the same time maintain returns from their plantations.

http://in.news.yahoo.com/financialexpress/20080301/r_t_fe_bs_budget08/tbs-extension-of-special-revival-fund-we-7435665.html

Budget for the aam-aadmi, will spur 9% GDP growth

ABudget for the aam-aadmi. An excellent Budget which will go a long way in sustained 9% plus GDP growth. There is a strong emphasis on infrastructure, rural, agriculture, education, health, defence and manufacturing sector.

This will fuel consumerism. Corporate sector stands to gain from this budget, since the overall direction for the economy is growth-oriented and positive.

A conducive tax policy for building people, strengthening rural economy and enhancing competitiveness are the key focus areas, which got priority in this Budget.

A change in I-T slab and exemption for all IT assesses from Rs 1.10 lakh to Rs 1.50 lakh is a welcome step. I was anticipating some exemptions in fringe benefit tax. Guest houses exempted from FBT is a step towards this.

A five-year tax holiday for setting up of hospitals in tier II and tier III regions is essential for the spread of hospitals across the country. There is great relief to farmers on account of waiver of agricultural loans. I was expecting changes in corporate income tax. However, reductions in General Centvat and excise duty will boost economy further. A step towards Sarva Shiksha Abhiyan, midday meal scheme and secondary education scheme are indicative of thrust areas on the government agenda.

The Budget envisages massive outlays in agriculture and allied sectors, education, healthcare and infrastructure.

The FM has expectedly addressed the burning issue of indebtedness of the Indian farmer.

And predictably, with the general elections looming, he has gone beyond the recommendations of the Dr Radhakrishnan Committee by providing debt waiver to small and marginal farmers.

The downside of this complete waiver to the tune of Rs.60,000 crore is that it isn't a 'complete' solution to the problem.

For one, it doesn't address the indebtedness of the majority of farmers as more than half of them do not have access to bank credit. Also, it may discourage fresh lending to the farm sector. Building India means building people.

So, skills, re-training the youth and the workforce have to be the top priority of any government. With India poised to reap the demographic dividend, the FM's proposal to launch knowledge and technology development programmes on a mission mode to cover the whole country is a promising start. This will facilitate the transformation of the Indian economy that's based largely on labour arbitrage to one based on skills and knowledge.

However, given that nearly 1.20 lakh students leave for studies overseas every year, India loses about Rs.50,000 crore p.a. of forex on higher education.

I believe the FM should have gone in for deregulation of higher and technical education.

On the taxes front, the FM's proposals have been fairly forward-looking. Though there has been no change in peak rates in customs duty, the reduction in duties on project imports and convergence products by 2.5% and 5% respectively are all positives from an industry perspective. Likewise, the halving of excise duty on pharmaceutical products to 8%.

http://in.news.yahoo.com/financialexpress/20080301/r_t_fe_bs_budget08/tbs-budget-for-the-aam-aadmi-will-spur-9-7435665.html

Budget proposes tax cuts for individual taxpayers

Income tax payers in India stand to gain at least Rs.4,000 per year with Finance Minister P. Chidambaram proposing to raise the exemption limit from Rs.110,000 to Rs.150,000 as he presented the 2008-09 budget here Friday.

In the case of women, the tax exemption threshold is proposed at Rs.180,000 against Rs.145,000 now, while for senior citizens (above 65), it is to be Rs.225,000 from Rs.195,000 now.

'I believe that boldness pays. I also believe that trust will beget trust, moderation will beget revenues and fairness will beget compliance,' the finance minister said.

Accordingly, he declared that every taxpayer will get relief of a minimum of Rs.4,000 per year, with tax experts saying it could go up to a maximum of Rs.44,000 at the peak rate.

The new slabs propose nil tax up to an annual income of Rs.150,000, 10 percent till Rs.300,000, 20 percent till Rs.500,000 and 30 percent for income above Rs.500,000.

To taxpayers who pay medical insurance premium for their parents, the finance minister allowed an additional deduction of Rs.15,000, and said the post office deposit schemes would also be notified for tax concessions.

http://in.news.yahoo.com/indiaabroad/20080229/r_t_ians_bs_budget08/tbs-budget-proposes-tax-cuts-for-individ-6276fdc.html

Aam admi gives thumbs-up to the Union Budget 08-09

The 'aam admi' (common man) on Friday gave his thumbs-up to the Union Budget 2008-09, in which, apparently with an eye on elections, a large number of sops have been announced for the middle class and the farmers.

"It's a good Budget. Though personally I will not gain much, hopefully we will not get to hear of any more suicides amongst farmers," said Aditya Bandhopadhyay, a financial analyst with a public sector undertaking.

An employee with an international firm in Delhi, Amit Basu, has reasons to smile after having witnessed the Budget presentation by Finance Minister P Chidambaram.

"This Budget is pro-poor and pro-middle class. I am happy as I know that this time I will be able to buy a car," he said, referring to the tax cuts on cars.

Basu also welcomed the increase in the income tax exemption limits.

Housewife Arti Singh said she was happy for her daughter as she would not have to pay income tax now after the increase in the exemption limit for women from Rs 1.4 lakh to Rs 1.8 lakh per year.

"She puts up all alone, toils it out in a completely unknown city and then has to pay a huge chunk of her income as tax. At least she is saved from paying her hard earned money as tax now," she said.

http://in.news.yahoo.com/indianexpress/20080229/r_t_ie_bs_budget08/tbs-aam-admi-gives-thumbs-up-to-the-unio-e2ca1ce.html

India Budget 08-09 overlooked export sector challenges

The national budget for 2008-09 did not address the problems faced by Indian exporters, who have been affected due to the rising rupee against the dollar, exporters said Friday.

'The budget has not addressed the problems faced by the exporters in view of appreciating rupee and stagnating traditional markets,' said Ganesh Kumar Gupta, president, Federation of Indian Export Organisation (FIEO).

'The proposal to provide zero rating of exports through refund of states and local levies, exemption from FBT (fringe benefit tax) on genuine business expenses, exemption from all service taxes on services used during the course of exports to provide a level playing field to Indian exporters have not been considered.'

He was also upset that schemes such as Electronic Hardware Technology Park Scheme, Export-oriented Units and Software Technology Park of India scheme, which offered a slew of benefits and tax sops, have not been extended. These schemes expire March 31, 2009.

While presenting the budget, the finance minister said: 'Merchandise exports have come under some pressure due to the appreciation of the rupee and may fall just short of the target of $160 billion, although the growth rate was strong at 21.8 percent during April-Dec 2007-08.'

'The government is sensitive to the needs of the export sector and will continue to respond sympathetically as the situation demands,' he added

http://in.news.yahoo.com/indiaabroad/20080229/r_t_ians_bs_budget08/tbs-budget-overlooked-export-sector-chal-6276fdc.html

P Chidambaram proposed to levy specific excise duty on un-branded auto fuels

With a view to limit revenue loss on sale of petrol and diesel, Finance Minister P Chidambaram on 29 February proposed to levy specific excise duty on un-branded auto fuels, but this will not translate into a price cut as the rates fixed are at par with current levies. The move to convert ‘ad valorem plus specific rate’ on petrol and diesel sold without a brand name to pure ‘specific rate’ would, however, help retailers limit their revenue losses in future as the cascading effect of duties in the event of price rise has been checked.

Chidambaram presenting the last full-year budget before the general elections, said unbranded petrol that currently attracts 6% ad valorem excise rate plus Rs13 a litre fixed duty, would be charged Rs14.35 a litre specific excise duty.

Similarly, un-branded diesel that attracts 6% ad valorem rate plus Rs3.25 fixed duty would be charged a specific excise levy of Rs4.

60 per litre. However, branded fuels like Indian Oil’s Extra Premium, Bharat Petroleum’s Speed and Hindustan Petroleum’s Power will continue to attract the present ad valorem cum specific rates.

Chidambaram reduced customs duty on project imports from 7.5% to 5%, a move that would help cut project cost at new refineries, pipelines and oil/gas fields developments.

He withdrew 5% customs duty exemption on import of naphtha by manufacturers of polymers, resulting in increase in cost of production of Haldia Petrochemicals. Reliance Industries too would be impacted marginally as it was also importing small quantities of naphtha.

http://in.news.yahoo.com/mint/20080229/r_t_mint_bs_budget08/tbs-fm-levies-specific-excise-duty-on-un-a839eca.html

Banking cash transaction tax for the year 2008-09 - India Budget

Finance Minister P Chidambaram on 29 February proposed to withdraw the Banking Cash Transaction Tax, which provided for a 0.1% levy on certain cash withdrawals from banks.

In the budget proposals announced today for the fiscal year 2008-09, he said that no BCTT would be charged in respect of any taxable banking transaction after 31 March 2009. The BCTT was introduced by the Finance Act, 2005 and provided for a 0.

1% levy on “taxable banking transaction”. Such transactions included cash withdrawal of more than Rs50,000 for individuals and HUFs and Rs1,00,000 for others in a single day from non-savings bank account maintained with any scheduled bank.

Besides, the levy was also applicable on single-day cash receipt exceeding Rs50,000 for individuals and HUFs and Rs1,00,000 for others on encashment of one or more term deposists, whether on maturity or otherwise.

http://in.news.yahoo.com/mint/20080229/r_t_mint_bs_budget08/tbs-banking-cash-transaction-tax-to-be-s-a839eca.html

Indian Budget 08-09 gives tax benefit to all

Union Finance Minister P Chidambaram on Friday gave tax benefits to almost all section of society.
Chidambaram has restructured the tax slabs for income tax payment by raising the exemption limit from 110 thousand rupees to 150 thousands rupees for men, for women it has been raised from 145 thousand rupees to 180 thousand rupees and for senior citizens it has been raised from 195 thousand rupees to 225 thousand rupees.

The minimum benefit to a person with an annual income of 150 thousand rupees at the threshold will be around Rs 4,000, Finance Minister P Chidambaram said, while presenting the Budget 2008-09 in Lok Sabha.

According to the proposed slabs, income between 150 thousand and Rs 300 thousand will be taxed at 10 per cent, between Rs 300 thousand and Rs 500 thousand at 20 per cent, while for Rs 500 thousand and above the rate would be 30 per cent in addition to 3 per cent education cess.

Chidambaram also said that there would be no change in the corporate tax rate and banking transaction tax will be waived during next fiscal. (ANI)

http://in.news.yahoo.com/ani/20080229/r_t_ani_bs_budget08/tbs-chidambaram-gives-tax-benefit-to-all-946dd1a.html

India will project its 'soft power' through greater use of Art

New Delhi, Feb 29 (IANS) India will project its 'soft power' through greater use of its films, music, dance, art and cuisine in 2008-09 with an allocation of Rs. 750 million (nearly $10 million) coming from Finance Minister P. Chidambaram's budget.

In presenting the budget for 2008-09 in parliament, the finance minister proposed that the country's art, culture and films be projected in a more 'sophisticated and subtle manner' and announced an allocation of Rs.750 million to the Indian Council for Cultural Relations (ICCR), the government agency charged with promoting Indian culture around the world.

He said: '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.'

The measure was immediately hailed as 'historic' with ICCR Director General Pavan K. Varma telling IANS: 'We are delighted that extra resources will be available for the promotion of Indian culture abroad.'

India's top cultural diplomat said this was the 'need of the hour, especially since India is emerging as a global power; soft power is a very important pillar for diplomacy'.

ICCR has 20 cultural centres with two sub-centres around the world and also sends artistes on concert tours abroad. Besides, it also maintains 24 chairs of Indian Studies abroad.

Rajiv Lochan, director of the National Gallery of Modern Art, said it was 'heartening to hear about the government's initiative to support art and culture.'

'I hope visual arts will have a sizable share of the projected amount, to begin with. It should be enlarged gradually and I hope that entertainment will not take over arts,' Lochan told IANS.

Well-known Bharatnatyam danseuse Geeta Chandran welcomed the increased allocation for ICCR, adding that with a rising budget 'the management of these resources should be improved'.

Having gone on several ICCR-sponsored foreign tours, Chandran said that ICCR should draw up a cultural programme for at least the next one or two years. 'We usually come to know about our programme just 15 days before the trip, or even sometimes just as we are boarding the plane,' she said.

The Delhi-based dancer also noted that another area for revision should be the rates paid to artistes for these. 'We get a pittance compared to our domestic rates, but we go there due to the prestige of being India's cultural ambassador. We will certainly ask for increased remuneration now,' said Chandran.

With Indian films, especially from Bollywood - a big draw across the world and earning millions of dollars abroad - they have now become an effective vehicle to garner a larger share for India on the global mindset.

According to Tips Music's Kumar Torani, they would be looking at the government to improve access of the Indian entertainment industry to foreign markets, which should automatically bring down piracy.

http://in.news.yahoo.com/indiaabroad/20080229/r_t_ians_bs_budget08/tbs-india-to-project-soft-power-with-gre-6276fdc.html

Mobile handsets to become costlier - india budget 08-09

Mobile phone users would now have to shell out more money for buying new handsets, with the government proposing to levy one per cent excise duty on them. In his Budget speech, Finance Minister P Chidambaram said: "Excise duty of one per cent, called National Calamity Contingent Duty, 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." "It will definitely increase the prices of mobile phones," LG Business Group Head (GSM) Anil Arora told PTI when asked about the impact of the proposed move.

The proposal may translate into a corresponding one per cent hike in price of mobile handsets. However, a full impact of this needs to be reviewed, a Nokia spokesperson said.

Echoing similar sentiments, Indian Cellular Association President Pankaj Mohindroo said the proposed move of levying one per cent excise duty would increase the prices of mobile phone sets. When asked how much the prices would go up, he said, "The price rise will not be killing.

It will be minimal." Global cellular handsets majors Nokia, Samsung, Motorola and LG have their mobile manufacturing plants in India.

http://in.news.yahoo.com/mint/20080229/r_t_mint_bs_budget08/tbs-mobile-handsets-to-become-costlier-a839eca.html

Cars to get cheaper, mobile phones dearer

The results of the budget speech are slowly coming to fore with mobile and car companies deciding on thier future moves. Mobile phone users would now have to shell out more money for buying new handsets, with the government proposing to levy one per cent excise duty on them.

In his Budget speech, Finance Minister P Chidambaram said: "Excise duty of one per cent, called National Calamity Contingent Duty, 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."

"It will definitely increase the prices of mobile phones," LG Business Group Head (GSM) Anil Arora said when asked about the impact of the proposed move.

The proposal may translate into a corresponding one per cent hike in price of mobile handsets. However, a full impact of this needs to be reviewed, a Nokia spokesperson said.

Echoing similar sentiments, Indian Cellular Association President Pankaj Mohindroo said the proposed move of levying one per cent excise duty would increase the prices of mobile phone sets.

When asked how much the prices would go up, he said, "The price rise will not be killing... it will be minimal."

Global cellular handsets majors Nokia, Samsung, Motorola and LG have their mobile manufacturing plants in India.

On the other hand, much to the delight of prospective small car buyers, leading manufacturers Hyundai Motor India and General Motors on Friday said they would slash prices by up to Rs 16,000 to pass on benefits from the excise duty cut announced in the Budget.

Finance Minister P Chidambaram, in his Budget speech, has proposed to cut excise duty from 16 per cent to 12 per cent on small cars.

"We have decided to pass on the benefit of the excise duty cut to customers on three models - Santro, i10 and the Getz--effective April 1," a Hyundai official said.

The price cut on Santro could be between Rs 12,000 and Rs 14,000, while that on Getz would be between Rs 14,000 and Rs 16,000.

Price cut on the newly launched i10 could be between Rs 12,000 and Rs 16,000, the official added.

General Motors is also cutting he price of its small cars Spark and Aveo U-VA.

"We will be cutting the prices of our small cars between Rs 7,500 and Rs 14,000," GM India Vice-President P Balendran said.

Meanwhile, rival Maruti officials said the company was studying the impact of the excise cut before taking any steps.

http://in.news.yahoo.com/financialexpress/20080229/r_t_fe_bs_budget08/tbs-cars-to-get-cheaper-mobile-phones-de-7435665.html

Union Budget 2008-09 Live Highlights

Income Tax exemption to Rs 1.5 lakh
Income Tax exemption for women to 1.8 lakh
Income Tax exemption for senior citizens to 2.25 lakh
Revenue deficit at 1.4 pewr cent of GDP
Duty on project import cut to 5 per cent from 7.5 per cent
Excise duty on two and three wheelers down to 12 per cent
Anti-AIDS drugs exempted from excise duty
Reduce general CEVAT to 14 per cent on all goods from 16 per cent
No change in corporate tax
Ad Valorem duty on diesel and petrol removed
Higher tax rates on cigarettes
Five year tax holiday from Income Tax for hospitals across India
Five year tax break for UNESCO heritage two, three and four star hotels
Four new sectors brought under tax net
Excise duty on Pharma products down to 8 per cent from 16 per cent
Haryana & Chandigarh to develop smart card facility for food subsidy distribution

Budget 2008 - 09: Farmers get Rs 60,000 cr package

Finance Minister P Chidambaram announced a Rs 60,000-crore relief package for farmers, including complete waiver of loans given to small and marginal farmers.

Presenting his fifth Budget and the last one before the General Elections, Chidambaram announced waiver of Rs 50,000 crore worth of loans to small and marginal farmers and a settlement scheme for other farmers that would cost the exchequer another Rs 10,000 crore.

Chidambaram said that according to estimates, three crore marginal and small farmers would benefit from the government's amnesty.

Under the one-time settlement scheme that will benefit another one crore farmers, the Government will give a rebate of 25 per cent on payment of outstanding loans.

The agricultural credit of scheduled banks is estimated at Rs 2,40,000 crore in the current fiscal and it would go up to Rs 2,80,000 crore in 2008-09.

http://in.news.yahoo.com/financialexpress/20080229/r_t_fe_bs_budget08/tbs-budget-farmers-get-rs-60-000-cr-pack-7435665.html

India Union Budget 2008-09 Highlights

6000 high quality school to be built by-2009
National program me for elderly at 400 corers
Rs. 3966 corers for SC, ST and OBC Schemes
33,434 for child related schemes
All loans to farmers up to March 2007 under the scheme
Marginal and small farmers to get complete loan waiver
One-time settlement for all farmers
Min of Woman and Child welfare to 7,200 corers
Aam Admi Bima Yojna get 1000 corer
50 corers for weather-based crop insurance
4 cr Farmers to benefit from the waiver scheme
Total relief for farmers 60,000 corers
16000 corers on employment generation
Sarva Shikshya Abhiyan 13100 corers
16447 for North East Region
Rural infrastructure Dev. Fund 14000 corers
Allocation for IT Ministry 1680 corers
Rs. 50 corers to National Tiger Authority
Rs 12,970 crore allocated to Natonal Highway
No customs duty on Internet, broadband data cards

Indian Union Budget 2008-2009 Live Highlights

FM presents Seventh Budget
Average economic Growth rate 8.8 %
Agriculture sector was disappointing grew at 2.6%
Confident of maintaining 8% growth
Total output of food grains 219.3 million tones.
8% GDP Growth in 12 successive years.
2008-2009 will be year of consolidation
Midday meal scheme to cover 13.9 cr. Students
Allocation for education increased by 20%
Education spend by 20% to 34400 corer
To setup 3 IITs AP, Rajasthan and Bihar
16 central Universities to be setup
Allocation for AIDS Program me at 990 corers
Health allocation hiked by 15% to 16534 corers

Web Exclusive Politics of the Indian Budget

On 1March, business sections of leading dailies will in all likelihood read, “Finance Minister has extended benefit of MODVAT to capital goods. There is a move to impose countervailing duty on import of capital goods equivalent to excise duty on domestic capital goods.

This means that full credit of excise duty paid on domestic capital goods or countervailing duty paid on imported goods will be available at one time”. Exhausted, confused or both! Read on: intelligent common man, or `aam admi’ will have to hold forth on the known and unknown dimensions of Budget 2008-09 at dinner parties, business lunches or while chatting up co-passengers in local trains and chartered buses.

Every year, to the day, this bewildering document is awaited with expectations. It unfailingly postpones miracles, which promise to answer dreams of riches and wealth, so familiar to the common man.

Forecasts, economic outlooks and the country’s future are much debated, analyzed and pronounced from anything that swing between the two extremes of ‘grim’ and ‘hopeful’. From P3Ps to serious citizens, all voice an opinion on what they want the budget to do for them.

The wishlist captures demands and expectations that swing gleefully, from abolition of all taxes to a lowering of them, at different levels. Yet, when the FM unlocks the Pandora’s box, there are surprises.

http://in.news.yahoo.com/mint/20080227/r_t_mint_bs_budget08/tbs-web-exclusive-politics-of-the-indian-a839eca.html

India Rail Budget 2008-2009

Lalu presents Railway Budget for 2008-09
E-ticket will also be available in wait list
Janasadharan TIcket booking seva extended all zones
Exploring options of reserved and unreserved ticketing through mobiles
Ticket reservation possible from anywhere
Online info boards in overnight trains to display news
Railways to introduce multi-purpose smart Mumbai card
Touchscreen, colour display boards at stations
Rajdhani, Shatabdi maintenance by private agencies
Display boards at railway stations
3000 new bogies to freight trains
High-level, low-level platforms to be increased
Multi-level parking at 36 railway stations
Modular toilets to be installed in trains
New call centres to be added
“Go Mumbai” Smart Card for Mumbai suburban trains, to start from next month

India Rail Budget 2008-2009 - LIVE Major highlights Railway Budget 2008-09

New Delhi: Union Railway Minister Lalu Prasad is presenting his fifth railway budget in Lok Sabha. Headlines India is bringing you the major highlights of the Railway Budget 2008-09.

Railways registered a profit of Rs 25,000 crore in 2007-08 fiscal
Railways earned a surplus of Rs 68,778 crore in last 4 years
Railways earned Rs 2,000 crore from 3,000 additional bogies
Lalu claims that productivity assets has increased
Till December 2007, 8.2 per cent growth in freight loading
Railways registered an Operating Ratio of 76.3 per cent in 2007-08 Fiscal
All trains to have modular toilets
Go-Mumbai Card, a multi purpose card for Mumbai trains
Passengers can get E-Tickets on the Internet
Plan to do away with long queues on Reservation counters in 2 years
Number of trains increased in peak seasons
Display facility on all express trains
Maintenance of trains to be transferred to private agencies
Rs 500 crore to be spent on maintenance of platforms
30 big stations to have multi-level parking
High level platforms to be introduced on major stations
50 more stations to have escalators and elevators facility

http://www.headlinesindia.com/archive_html/26February2008_71348.html

Power and oil sectors await incentives in the upcoming Budget

The power sector, geared up to attain a capacity addition of 78,577 mw during the 11th Plan period, is eagerly awaiting a cut in excise duty on power equipment and other inputs from 16% now to 8% in the upcoming Budget.

The other incentives that might give the sector a high voltage boost are an extension of the deadline for a tax holiday for companies setting up ultra mega power projects (UMPPs) by seven years to 2017 from 2010 and exemption of power distribution franchisees from service tax.

On the other hand, the oil and gas sector is expecting withdrawal of 12% service tax imposed on exploration and production (E&P) work, cut in customs duty on crude and products to 2.5% from 5% and removal of ad valorem excise duties and reduction in specific excise duty rates.

According to the sources, Chidambaram, who did not provide any major sops in the last year's Budget, may provide incentives to boost the government's ambitious capacity addition programme. The sector hopes that the government may restore the pass-through status for venture capital funds operating in the sector.

"The restoration of pass-through status would make power sector VC funds eligible for exemption in income tax by way of dividend and capital gains accruing to the fund company. This could result in the presence of more international VCs in the sector," said Kushal Sampat, COO, Dun & Bradstreet. As far as the oil and gas sector is concerned, the industry is of the view that the removal of 12% service tax imposed on exploration and production (E&P) work could result in a better response to the NELP-VII especially as oil exploration is a risky business and E&P companies do not want to pay tax on something that could possibly turn out to be un-remunerative.

The industry has sought the option of claiming a 10-year tax holiday, starting from the year they begin earning profits. Alternatively, they have sought for an amendment in provisions such that the companies can choose any seven consecutive year in which deduction can be claimed out of the first 15 years beginning from the year of production.

The industry also expects the finance ministry to reduce customs duty on naphtha and liquefied natural gas, bio fuels and bio diesel and also a cut in import duty on all kinds of fuels from 10% to 1%.

"Oil companies are suffering revenue losses due to increasing international crude prices. While the last year's Budget was largely positive for the sector, it introduced a service tax on oil exploration and production, which is having a negative impact on the much-needed foreign investment in this area," Sampat said.

http://in.news.yahoo.com/financialexpress/20080226/r_t_fe_bs_budget08/tbs-power-and-oil-sectors-await-incentiv-7435665.html

Spectrum charges could go up steeply-Budget 2008

Mobile operators may get a hard knock from the Budget. Officials say the finance ministry has proposed a steep hike in the annual spectrum charges the operators pay. They say the current spectrum usage charges, varying from 2-6% of the adjusted gross revenue (AGR) for spectrum held between 4.4 Mhz and 15 Mhz, will be replaced by circle-based charges. This will have three slabs: 8% for metro and category A circles; 6% for category B circles; and 4% for category C circles.

The new charges, if slapped, will double the average payout of the industry to 5% of AGR from 2.6% now. Operators now pay around Rs 2,800 crore a year towards spectrum charges. This figure could go up to around Rs 6,000 crore under new slabs.

The department of economic affairs (DEA) has asked the department of telecommunications (DoT) to work out the detailed revenue implications of the proposal and submit a report.

The proposed spectrum charges are more in line with what operators pay as annual licence fee, which is 10% of AGR for metros and category A circles, 8% for category B circles and 6% for category C circles.

By the current spectrum usage charges, operators in a metro circle like Delhi and Mumbai pay 2% of their AGR for spectrum up to 4.4 Mhz, 3% for 6.2 Mhz, 4% for 8-10 Mhz, 5% for 12.5 and 6% for 15 Mhz. If the new proposal is accepted, operators would have to pay, for circles like Delhi and Mumbai, spectrum usage charge at 8% of their AGR irrespective of the level of spectrum they hold.

For instance, in Delhi and Mumbai, Bharti Airtel, which has 10 Mhz spectrum for each city, would end up paying 8% of its AGR as spectrum usage charge, while Reliance Communications, which has been allotted 4.4 Mhz, would pay at the same rate.

http://in.news.yahoo.com/financialexpress/20080226/r_t_fe_bs_budget08/tbs-spectrum-charges-could-go-up-steeply-7435665.html

Joining the club of heavy-haul rail carriers

Necessity is the mother of invention, and this could well apply to the Indian Railways. With its existing tracks having become choked with hundreds of new passenger trains introduced by successive ministers over the last couple of decades, it has now been forced to opt for a set of corridors totally dedicated to carry the burgeoning freight traffic. In the process, it would also enter the exclusive club of heavy-haul rail carriers.

The Dedicated Freight Corridor Corporation (DFCC) created a year ago for fashioning this dream into reality has at last got its act together. Based on the Japanese International Cooperation Agency's final report submitted to the railway ministry in October 2007, and the earlier Rail India Techno-Economic Services (Rites) reports, tenders have been invited from reputed consultants to prepare a business plan for the proposed 1,230-km Ludhiana-Son Nagar eastern corridor, and 1,470-km route from Jawaharlal Nehru Port Trust near Mumbai to Dadri.

After bid evaluation by Crisil, DFCC is set to appoint a consultant by the first week of April, and hopefully get a clear idea of the shape of things to come, including the vital task of financing the Rs 60,000-crore project.

Planned on a format of double-line alignments, freight corridor's eastern leg is expected to be electrified, while the western section would be run by diesel traction to enable it to carry double and even triple stack ISO containers, unhindered by the overhead constraints imposed by electric wires. A number of feeder routes, about 11 for the western section totaling 2,092 km and 15 for the eastern corridor along a route of 2,587 km, will ensure extensive coverage of the hinterland, reducing road haulage to a bare minimum.

With the substructure, bridges and track capable of carrying 32.5-tonne axle loads, and a 12-tonne per metre trailing load of 15,000-tonne trains, DFCC would enter the big league of heavy haul routes, presently dominated by the US, Canada, Australia and China. Bigger wagons and consignments would be enabled, giving India's rail freight capacity a quantum boost. Technically speaking, a "ruling gradient" of 1-in-200, with curvatures limited to 2.5 degrees (700 metre radius), would enable speeds of 100 kmph, heralding 21st century operations.

Given the dedication to freight traffic, the stations enroute will be located at distances of over 50 km, with junctions every 300-400 km. Industrial dispersion will now be much easier to attain. The western corridor already has the Delhi-Mumbai Industrial Corridor coming up, a 300-km wide swathe all along DFCC's Delhi-Mumbai route.

Understandably, there would be major differences in approach for the provision of rolling stock, locomotives and so on. For, while the eastern sector is meant to carry predominantly coal from the collieries in Bihar, West Bengal and Jharkhand to a string of power plants in Punjab and Haryana, the western sector will enable speedy and economical transport of containers from Punjab, Haryana and a slew of new facilities slated to come up in the proposed Delhi-Mumbai industrial expanse.

While the western route starts from Dadri and reaches Mumbai's JNPT via Pirthala, Rewari, Phulera, Ajmer, Marwar, Palanpur, Mehsana, Sabarmati, Makarpura, Gothegaon and Vasai Road, the shorter eastern route from Dhandarikalan, in Punjab, will reach Sone Nagar via Sirhind, Rajpura, Kalanaur, Dadri, Khurja, Daudkhan, Tundla, Khaupur, Prempur, Chheoki, Jeonathpur, Mughalsarai, and Ganjkhwaja.

Thanks to the far-sighted policies of those responsible for India's vast railway network built more than a century ago, there is enough land in most places all along the present alignment to lay another set of double-line tracks. However, given the problems of procuring land for junction yards in the rapidly developing urban and even some rural areas, DFCC still has several hurdles in its path.

http://in.news.yahoo.com/financialexpress/20080225/r_t_fe_bs_budget08/tbs-joining-the-heavy-haul-club-7435665.html

An open letter to the finance minister - Indian Union Budget 08-09

Dear Mr Chidambaram, The Indian banking community has never let you down. After the United Progressive Alliance (UPA)-led government came to power, you had exhorted the public sector banks to double their exposure to agriculture loans in three years.

They have obliged you. You had also directed them to offer small farm loans at a concessional rate of 7%.

The bankers never said no to it. The CEOs of public sector banks that account for close to 70% of the industry have a special affinity for you as very few Indian finance ministers in the past have understood the sector the way you do.

You played a major role in opening up the health insurance business ahead of life and general insurance sectors. You were also instrumental in setting up the Infrastructure Development Finance Corp.

and local area banks. Every time the CEOs meet you, they find in you an ally, a great believer in financial sector reforms and consolidation in the banking landscape.

Despite your best efforts you have not been able to do much on this front but they don�t blame you for this as they are aware of the opposition from the Left, without whose support the UPA government cannot survive. Successive budgets have turned into empty promises as far as the Indian banking sector is concerned.

For instance, in 2000, your predecessor Yashwant Sinha made a big-bang announcement of bringing down the government holding in public sector banks to 33%. But nothing has happened on this front yet.

Another long-pending issue is the removal of cap on voting rights for private banks. Both Sinha and Jaswant Singh, former finance minister, announced the removal of 10% cap on voting rights in private sector banks.

You too promised this in the 2005 budget but the necessary amendment to the Banking Regulation Act, 1949, is still awaited. Another contentious issue is foreign investments in Indian banks.

While private banks can offer up to 74% stake to foreign investors, public sector banks cannot offer them more than 20%. Naturally, both sets of banks are bound of have different valuations on bourses.

No finance minister has dared to discuss this in Parliament as this is again a politically sensitive issue. But there are other issues that need your attention.

They will not raise the red flag for the Left but if you address them, they will create a level playing field for the public sector banks. One such issue is the different tax structure for different savings instruments.

For instance, one does not need to pay tax when one earns dividend from investments in mutual funds. Also, there is no capital gains tax if one stays invested in stock market for a year.

http://in.news.yahoo.com/mint/20080225/r_t_mint_bs_budget08/tbs-an-open-letter-to-the-finance-minist-a839eca.html

What the FM should do - Union Budget 08-09

Congress party leaders have let the cat out of the bag and publicly deflated finance minister (FM) P. Chidambaram in a most embarrassing way.

According to a well-placed media leak, a conclave of 38 party leaders told the FM that this year they would like to have a Budget “that caters to the aam aadmi”. Thus, they told him, inflation and farmers’ woes must be combated head-on and relief given concretely.

No more esoteric dream budget rhetoric, they told him. The implication of this directive is that the last four budgets Chidambaram presented did not cater to the aam aadmi, and that today inflation is rampant and farmers are in distress.

Thus the globetrotting FM was rudely brought down on desi soil and given a reality check by the party itself. Despite high GDP growth, the internal organs of the Indian economy are not healthy today.

This is alarming. Any fast growing economy can collapse suddenly, as the 1997 experience of the East Asian economies showed.

These are the principal ills in the economy right now. 1.

Jobless, low-productivity growth. High growth rates are not generating enough jobs, which have been growing at 2.

25% a year since 1999-2000. However, to progressively reduce the unemployment backlog, absorb excess farm labour into industry and provide for the new entrants in the labour market, jobs must grow at about 3.

5% a year. At the same time, the economy must raise productivity of labour and capital through induced innovations and new management practices, so that higher and higher investment rates would not be needed to sustain growth.

Hence, in the Budget there must be adequate provision for encouragement of labour-using instead of labour-substituting technology. There should also be provisions to promote innovation through radical tax breaks.

This means the education sector has to be nurtured in the Budget. 2.

Lack of agricultural reforms. The growth rate in agriculture should be at least 4% annually to ensure that 8-10% GDP growth is sustainable.

But since 1997, agriculture has shown a trend rate of 2.5%, with wide fluctuations year to year, due to lack of reforms, declining public investment, and poor, even pre-modern, infrastructure.

Rather than resorting to the silly ad hoc measures to uplift rural people that we have seen in past budgets, we must empower farmers to export through imaginative schemes rather than provide more subsidies and higher purchase prices. 3.

Fiscal deficit. Governments are impounding public sector bank funds (nearly 48%) to finance the budget deficit, thereby starving the public sector (especially manufacturing) of resources.

Chidambaram has a propensity to play to the gallery of unions of organized labour by wrecking fiscal balances through the appointment of pay commissions (for example, in 1997 and 2006) and then creating a huge capital account budget surplus to finance the huge revenue account budget deficit. This is anti-development.

No wonder inflation is rampant today, fuelled by rising money ­supply from revenue ­expenditure. 4.

Debt trap. The debt accumulated by the Centre and states is so large (86% of GDP) that the annual servicing outlay now exceeds the fresh loans taken.

This is unsustainable and can explode into a crisis. Moreover, if we correct Chidambaram’s budgets to date for the Enron-type classification of contingent liabilities, then, as the International Monetary Fund (IMF) recently found, the fiscal deficit as a ratio of GDP has actually been rising, and not falling as the FM claims.

http://in.news.yahoo.com/mint/20080225/r_t_mint_bs_budget08/tbs-what-the-fm-should-do-a839eca.html

Everyone is hoping Union Budget will bring in some positive sentiments

After a lull last week, the stock markets are bracing themselves for the biggest event of the year—the Union Budget. For the past several weeks, the markets have been very volatile and have displayed a negative bias tracking global cues.

This was primarily due to the fact there were no positive triggers in the domestic economy. Weekly inflation numbers, monthly industrial output statistics and projected annual Gross domestic product (GDP) figures lacked surprises and were more or less on expected lines.

Negative sentiments on bourses, largely driven by a fear of heights (the recent highs of Sensex) also seem to be overdone, though TV experts on stock markets will not really agree with me. Now, everyone is hoping that the Budget will bring in some positive sentiments.

What the Budget will actually deliver is anybody’s guess. But one thing that looks certain is that it will have no negative surprises, and that will be good news for the markets.

The main difference between this Budget and previous ones is on the expectations front. Unlike previous budgets, there are no major expectations on the part of the markets and investors from this one.

Issues such as taxation, rationalization of duties, etc., are most likely to be liberalized, so the markets do not have too many apprehensions.

From a macro-economic point of view, the markets have adopted a “wait-and-watch” attitude that will continue in the initial part of this week. Till the time the Budget unfolds and the markets look to domestic factors for triggers, global cues, mainly from the US, will continue to drive global markets.

Looking forward, Friday’s spurt on the US bourses in the last half an hour of trading could bring in some cheer on bourses on Monday. US stocks bounced back sharply on news that banks were near an agreement to bail out bond insurer Ambac Financial, a deal that could prevent further damage to the banking industry and credit markets of the US.

I have been maintaining for some weeks that market- moving news from the US markets will actually come from bond insurers. If Friday’s market talk turns into reality, then there could be a turnaround on bourses globally despite looming fears of a recession in the US.

It is expected that the bail-out plan for Ambac Financial will take some shape by Monday or latest by Tuesday. I think this will pep up the mood on bourses in Asia, when they resume trading on Monday.

http://in.news.yahoo.com/mint/20080225/r_t_mint_bs_budget08/tbs-everyone-is-hoping-budget-will-bring-a839eca.html

Higher fuel bills? Don’t worry about it now, your kids will pay

The ruling United Progressive Alliance (UPA) government’s increasingly common practice of moving big-ticket items of expenditure off its balance sheet is threatening to undermine the objectives of a five-year-old legislation, supported by all political parties, to cap fiscal profligacy. Ironically, when the Fiscal Responsibility and Budget Management Act, or FRBM, was legislated in 2003, it was aimed, among other things, at making government accounting more transparent and getting the current generation to pay its bills.

The legislation was prompted by the thinking that its failure to live within its means would force the government to borrow larger sums of money. And to service interest payments on these, the government would have no choice but to dip into future revenues— money that could have otherwise been used to fund development programmes.

Ironically, despite the legislation, that is just what has happened. In the last four years, the unprecedented spurt in tax revenues has not been able to match the spike in government expenditure—especially on account of the UPA’s decision to absorb the impact of the nearly fourfold increase in international oil prices and not pass it on to the consumer.

To work around the provisions of FRBM, the government has increasingly employed a practice, used by previous regimes, too—though in smaller measure—of moving the accumulating expenditure off-balance-sheet—by consolidating them and issuing bonds that will be redeemable 15-20 years later. However, the problem does not end with issuing bonds.

The manner in which its impact has been neutralized in the government’s account books is turning out be very controversial. “This is where fraud in fisc (fiscal deficit) is taking place (and) decidedly, the burden will fall on future generations,” said Yashwant Sinha, who was the finance minister in the previous National Democratic Alliance government, who successfully piloted the FRBM legislation through Parliament.

Sinha is not the only one to question the consequences of the government’s methods to get around paying for its bills by issuing bonds. The comptroller and auditor general of India, or CAG, an independent watchdog of the government’s accounts, claims the deficit (difference between income and expenditure offset by borrowing) is being understated.

In December, CAG brought out its annual report on the Union government’s finances (for 2006-07), where it showed the deficit to be higher than that projected by the government in its documents such as Budget at a Glance. Both CAG and government documents use the same accounting data to calculate deficits.

The issue is critical because FRBM mandates the government to cap its deficits and CAG’s report, tabled in Parliament on 7 December, said the government had overshot it in 2006-07. Interestingly, on the same day, the last day of the winter session, finance minister P.

http://in.news.yahoo.com/mint/20080224/r_t_mint_bs_budget08/tbs-higher-fuel-bills-don-t-worry-about-a839eca.html

Will farm loan waiver lift UPA’s fortunes? Union Budget

The United Progressive Alliance’s (UPA) proposed mega relief package to the agricultural sector, including a waiver in farm loans that will likely be announced in the coming Union Budget, should be seen in the context of the general election that is just a year away. As per current estimates, the agricultural sector is projected to register a mere 2.

6% growth in the year 2007-08, against the overall GDP growth rate of 8.7%.

People in the government point out that the loan waiver is being offered in the wake of a sharp dip in the growth forecast for agriculture, which would seriously jeopardise the overall projected dream GDP growth rates of 9%. In reality, the proposed write-off has less to do with the dip in the growth of the agricultural sector and more to do with the declining electoral fortunes of the ruling coalition and the Congress party’s growing concerns about its winning prospects in the next year’s general election.

With 57% of the country’s population dependent on agriculture as the principal source of livelihood, the falling contribution of agriculture to the GDP to well below 20% has exacerbated the urban-rural disparities and is stoking a lot of dissatisfaction among the rural populace. The loan waiver is intended as a major sop to appease farmers who are unhappy with the UPA government for importing wheat at exorbitant prices, denying similar prices to domestic growers; offering lower minimum support price for paddy in comparison with wheat; increasing diesel prices; and promoting special economic zones, acquiring their lands at cheap rates.

I have repeatedly argued in this column that the agricultural sector is passing through an existential crisis and urgent and timely interventions are needed. In this regard, I welcome any initiatives intended to benefit farmers and the agricultural sector.

The moot questions are whether a blanket loan waiver is what is needed to help farmers in distress and boost agricultural growth and whether the initiative will help the electoral fortunes of the ruling UPA. Most small and marginal farmers do not have access to institutional credit.

http://in.news.yahoo.com/mint/20080218/r_t_mint_bs_budget08/tbs-will-farm-loan-waiver-lift-upa-s-for-a839eca.html

Education, agri sectors to get priority in coming Union Budget

Education and agriculture sectors would get top priority in the coming Union Budget, Finance Minister P Chidambaram has said. Education sector is being given importance as literacy alone could make India a super power, Chidambaram told a public meeting after distributing Congress membership cards to 2,000 people in his Lok Sabha constituency last night.
Assuring that the government would "take care of the farm sector," he asked farmers to "take care of the education" of their children. Pointing to the February 29 Union Budget, he said education and farm sectors are his top priorities.

The UPA Government in the last three years had allocated Rs 28,600 crore for the education sector lending, of which Rs 17,636 crore had already been distributed, he said. The amount was four times more than what was allocated during the BJP-led NDA regime, the Finance Minister said.

http://www.headlinesindia.com/budget-india-2008/index1.jsp?news_code=70650

Finance Minister Shri P. Chidambaram. invites Members suggestions for Union Budget 2008-09

This year’s first Meeting of the Parliamentary Consultative Committee attached to Finance Ministry was held under the Chairmanship of the Finance Minister, Shri P. Chidambaram.

The Finance Minister said that overall macroeconomic fundamentals continue to be strong. With tax collections increasing at a healthy pace reflecting the growth potential that could be further harnessed and expenditure trends in the FY 2007-08 encouragingly pointing towards to the achievement of the fiscal targets envisaged under the FRBM mandated roadmap, further reforms in critical sectors and better implementation to ensure more efficient delivery of public services across all sections of society will see the India growth story sustained and consolidated over the Eleventh five year Plan period.

Shri Chidambaram said that buoyant economic growth along with efforts to improve the tax administration system has yielded rich dividends. As a result, Central tax to GDP ratio is estimated to have increased from 8.2 per cent in 2001-02 to 11.8 per cent in BE 2007-08.

http://www.fibre2fashion.com/news/association-news/ministry-finance/newsdetails.aspx?news_id=49417

Budget 2008-09 may benefit common man

India Inc is not expecting any major announcement for itself in Budget 2008-09 as Finance Minister P Chidambaram is likely to focus on higher budgetary allocations to ensure growth of sensitive sectors like agriculture, education, health, defence and manufacturing, an Assocham survey said.

The Budget is likely to be "traditional" for India Inc since the key challenge for the government is to sustain the growth momentum, the survey said.

"The government should ensure that the manufacturing sector grows at 15 per cent and inflation remains below the five-per cent mark for the next 10-15 years. Thrust should be given to development of agriculture and industry," it said.

About 85 per cent of the 300 CEOs polled said the forthcoming Assembly elections notwithstanding, the Finance Minister may not dole out fiscal concessions for India Inc.

The common man, and not India Inc, is likely to gain more from the Budget as "the government would like to maintain growth inertia and honour its commitments to improve infrastructure and agriculture."

"There may be no significant tax cuts since Chidambaram's top priority will be to hike his revenue collections for higher budgetary allocations to agriculture, education, health, defence and manufacturing," an Assocham release said.

About 255 CEOs said subsidies for sectors such as food, fertiliser and petroleum may also be hiked by 10 per cent, while 90 per cent of them said the Finance Minister may strike a balance and present a Budget that appeases Indian industry.

Whereas about 260 CEOs felt that personal income tax ceiling would be raised by nearly Rs 30,000. 15 per cent of them maintained their demand for a reduced taxation structure would not be ignored and there could be some legitimate cuts in the duty structure in the Budget.

http://in.news.yahoo.com/financialexpress/20080214/r_t_fe_bs_india/tbs-budget-2008-09-may-benefit-common-ma-e247859.html

Budget 2008 - 09 Expectations

Budget Expectations : The economic growth of India have been improving significantly over the last few years. Therefore, in this situation, lot of budget expectations will arise on the eve of the 2008 budget announcement.

The Reserve Bank of India and the government have been able to keep the inflation rate in control for the last few years by balancing the money supply and demand for goods. So it can be expected that the collaboration of bank and government will be able to maintain the inflation rate under 5%.

The 2008-09 budget will ensure a sustained economic growth through various schemes launched under the regulations of the Bharat Nirman project. It is important now for the government to implement the allotted resources within the given time and, the maintenance of the projects that are already launched.

http://www.economywatch.com/budget/india-budget-2008/expectctations.html

Indian pharmaceuticals industry hopes for R&D tax sop-Budget 2008

The Indian pharmaceuticals industry is keenly watching the Budget for 2007-08 with the hope for more tax deductions for the R&D sector. The major demand for the industry remains the 10-year extension of tax benefits granted for pharmaceuticals R&D, that came to an end last year.

The industry is demanding that the expenditure on R&D works, such as clinical trials, which is incurred outside the facility, should also be considered for the weighted deduction that is allowed only for in-house R&D at present. Says DG Shah of Indian Pharmaceuticals Alliance (IPA), "Its scope should be widened, so as to also encompass within its fold all expenditure incidental to basic research carried on at any outside R&D facility, as also clinical trials, bio-equivalence studies, etc."

In the last budget, the pharmaceutical industry did not receive the perfect antidote it was expecting from the finance minister, but was happy that the sector was accorded some thrust as a growth segment. The industry welcomed the move to exempt clinical trials, a high growth segment, from the burden of service taxes, and saw the increased focus on healthcare and eradication of diseases like TB, malaria and polio as a positive step. But for some, the only positive measure for the industry in the last budget was the extension of the weighted average deduction on in-house R&D by five more years. This year, they would like to see the FM take these steps to the next level.

http://in.news.yahoo.com/financialexpress/20080215/r_t_fe_bs_budget08/tbs-pharma-industry-hopes-for-r-d-tax-so-7435665.html

High Lights of Indian Budget 2007-08

Manufacturing growth rate estimated at 11.3 per cent.

GDP growth rate estimated at 9.2 per cent in 2006-07. Average growth for last three years is 8.6 per cent.

Saving rate of 32.4 per cent, investment rate of 33.8 per cent will continue.

A number of proposals to perk up agriculture to be announced.

Bank credit rate grew by 29 per cent during first ten months of 2006-07.

Inflation during 2006-07 estimated at between 5.2 and 5.4 per cent against 4.4 per cent during the previous year. Government concerned over inflation and would take all steps for moderating it.Already a number of steps on fiscal, monetary and supply management side have been taken.

No new forward contract to be launched on wheat and rice from today.

Abhijit Sen report on forward trading to be submitted in two months' time.

Additional irrigation potential of 24 lakh hectares to be implemented, including nine lakh hectares under Accelerated Irrigation Benefit Programme.

Economy in a stronger position than ever before.

15,054 villages have been covered under rural telephony and efforts to be made to complete the target of covering 20,000 villages by 2006-07.

Allocation on Healthcare to increase by 21.9 per cent.

Allocattion for education to be enhanced by 34.2 per cent.

Two lakh more teachers to be employed and five lakh more classrooms to be constructed.

Secondary education allowance to be increased from Rs.1,837 crore to Rs.3,794 crore.

Government committed to fiscal reforms.

Foreign exchange reserves stand at 180 billion dollars.

Allocation under Rajiv Gandhi Drinking Mission stepped up from Rs 4680 crore to Rs 5850 crore.

Annual target of 15 lakh houses under Bharat Nirmal Programme to be exceeded.

Allocation for National Rural Health Mission stepped up from Rs 8207 crore to Rs 9947 crore.

Gross budgetary support in 2007-08 raised to Rs 2,05,100 crore from 1,72,728 crore in 2006-07. Of this, budgetary support to the Central plan will go up to 1,54,939 crore against 1,72,728 crore.

School dropout rates high. To prevent dropout, a National Means-cum-Merit scholarship to be implemented, with an allocation of Rs 6,000 per child.

Rs 1290 crore to be provided for elimination of polio. Intensive coverage will be undertaken in 20 districts in UP and 10 districts in Bihar. This will be integrated into NRHM.

National AIDS Control Programme to achieve zero level disease. Allocation for AIDS control programme to be raised to Rs 969 crore.

Allocation for ICDS programme to be increased from Rs 4087 crore to Rs 4761 crore.

130 more districts under NREGA. Additional allocation of Rs.12,000 crore for it.

Rs 800 crore for Sampoorna Gram Rozgar Yojana in districts not covered by NREGA. Swarna Jayanti Swarozgar Yojana allocation increased from Rs 250 crore to Rs 344 crore.

Computerisation of PDS and integrated computerisation programme for FCI.

Allocation for schemes only for SCs and STs to be increased to Rs 3271 crore.

Rs 63 crore for share capital for National Minorities Development Finance Corporation following Sachar Committee recommendations.

Allocation for SC/ST scholarships enhanced from Rs.440 crore to Rs.611 crore.

Scholarships programme for minorities students to be of the order of Rs 72 crore for pre-metric, Rs 48 crore for graduate and postgraduate.

Total Budget for the Northeastern region raised from Rs 12,041 crore to Rs 14,365 crore.

New Industrial Policy for the northeastern region to be in place before March 31.

Women's development allocation will be Rs.22,282 crore.

Rs 7,000 crore allocation for better tax administration to be used for social schemes.

Rs 2,25,000 crore farm credit proposed in the new budget. A target of additional 50 lakh farmers to be brought under farm credit.

Farmers' credit likely to reach Rs.1,90,000 crore as against the targeted Rs.1,75,000 crore during 2006-07.

Special Purpose Tea Fund to rejuvenate tea production.

Rs. 100 crore allocated for National Rainfed Area Authority.

One hundred per cent subsidy for small farmers and 50 per cent for other farmers for water recharging scheme.

World Bank signed agreement for revival of 5,763 waterbodies in Tamil Nadu. Loan component Rs 2,182 crore. To have a command area of four lakh hectares. Similar agreement with Andhra Pradesh in March for recharge of 2,000 bodies. Command area 2.5 lakh hectares.

National Agricultural Insurance Scheme to be continued for Kharif and Rabi this year.

Bonds worth Rs 5,000 crore to augment NABARD to be issued.

Source:http://www.banknetindia.com/banking/bhigh.htm