India Union Budget 08: Mixed reaction:An Election budget

Political wizards give strong indications that the next general elections will be held ahead of schedule given the populist tone of Friday morning's annual budget of the union government. The proposal to recruit members of minority communities in the Central Paramilitary Forces and also opening of New Branches of Banks in the areas of their density,pre matric scholarship in educating the minority students are welcome step in the budget.Female of Minority community has not received an attention from this budget.
Disappointed with the budge is the Commerce and Industry Minister Kamal Nath who is to meet PM soon to discuss its shortcoming and seek fiscal relief to exporters adversely affected by dollar depreciated."None of the recommendations of both the Rangarajan and the Krishnamurthy Committee have been considered in the Budget. We are very disappointed and the Commerce Minister will meet the PM in the next few days," a senior official said.

However, when asked whether he was happy with the Budget proposals, Nath said, "I am happy with the non-commerce ministry part of it (the budget)".
As to how he would provide relief to the exporters, Nath said the "process will go on".
He said the annual review of the Foreign Trade Policy, due by the month end, would try and address many of the concerns of the exporters.

The two expert committees appointed by the Prime Minister are believed to have recommended several fiscal and other measures to mitigate the trouble of exporters especially in the labour oriented sectors of textile, handicraft, leather and marine products.
Analysts said the budget had failed to cheer the oil sector, which had been seeking a reduction in state levies and investor-friendly steps to encourage more investment.“The government has done nothing for the oil sector especially when we are in deficit and are heavily defendant on imports.The head of research at Anagram Stock Broking Ltd.“We are disappointed that some breathing space has not been offered,especially to small software firms that are facing the macroeconomic challenge of what is happening in the US,” said V Balakrishnan, chief financial officer at Infosys Technologies, India’s second-largest software maker.Lalith Sheth, chairman and managing director of Raj Travel and World,said: “The budget was disappointing. We had asked for exemption from service tax and tax for tour operators. But it remains unchanged.”
“The budget failed to grant infrastructure status to the hospitality business which we were hoping since long. Even the pending issue of depreciation on hotel buildings has remained unchanged,” said S.P.Jain, managing director of Pride Group of Hotels.“Tax holiday for hospitals outside major cities is a revolutionary step towards making healthcare accessible to the common man,”said Prathap C. Reddy, chairman of Apollo Group of Hospitals and chairman of Confederation of Indian Industry’s National Committee on health.By providing tax holiday for semi-urban and rural hospitals and with the active promotion of health insurance, the finance minister has ensured increased availability and financial access to quality healthcare for the common man, Reddy said.He added that increased allocation for health, specifically to the National Rural Health Mission, would have a positive impact on all the health indices of the nation.Reduction in customs duty on project imports and life-saving drugs and excise duty concessions for the pharma sector are a welcome relief forthe sick, he said.”It does not have anything for the IT industry. It
is disappointing for the small and medium enterprises, which had some expectation from Finance Minister P. Chidambaram,” said Shakti Sagar,convenor, IT panel at Confederation of Indian Industry (CII), Andhra
Pradesh.The small and medium enterprises (SMEs) were expecting that the STPIscheme, which has been offering them various exemptions, including 10-year income tax exemption for exports, would be extended beyond 2009,he said.“Excise duty on packaged software being increased to 12 percent from 8percent is bad news for SMEs. There is no mention of STPI in thebudget, which is must for software SME export,” said Debasis Chatterji, director, Netxcell.
Fertilizer industry, one of the links in the agriculture chain, has remained unimpressed over budget proposals.The finance minister had been expected to lower fees, taxes and duties on the telecom sector, said market-research firm Frost and Sullivan.
“But this was not even touched upon by the minister in his budget,” it said, adding that for the information-technnology and telecoms industries “it was a lacklustre budget.”Finance Minister P Chidambaram raised the no tax ceiling limit and changed the income tax slabs.Minister has not submitted any bonds for black money to be taped in revenue collection which contributes major Chunk in Indian economy. While the thresh-hold exemption limit has been raised from One Lakh ten thousand to one Lakh fifty thousand rupees, giving away every assessee minimum four thousand rupees tax relief.Further carrying forward the tax slabs rationalization, the Finance
Minister proposed ten percent Income Tax between One Lakh Fifty
Thousand and Three lakh. Twenty percent rate will be charged for income between Three Lakh and Five Lakh.
Thirty percent slab will be attracted for income beyond Five Lakh.
In case of women assessee the threshold limit of exemption has been
raised from One Lakh Forty Five Thousand to One Lakh Eighty Thousand.
Senior Citizens the threshold limit stands hiked to Rs Two Lakh Twenty Five Thousand.Senior Citizen Saving Sheme 2004 and post office time deposit account have been added to Section 80-C.Additional deduction of Rs fifteen thousand will be allowed under section 80-D to an individual for paying medical insurance premium for parents.
CORPORATE TAX
There has been no change in the corporate income tax rates.There has also been no change in the rate of surcharge.
Creche facilities, sponsorship for employee-sportsmen, organizing
sports events for employees and Guest Houses have excluded from the
purview of FBT.capital gains tax has been increased to fifteen percent Securities Transaction Tax paid will be treated like any other deductible expenditure against business income.Commodities Transaction Tax CTT will be introduced on the lines of STT on options and futures.Banking Cash Transaction Tax to be withdrawn from April 1, 2009.CST Central Sales Tax will be reduced from three to two percent from April 1, 2008.Roadmap for Goods and Services Tax is being prepared for introduction of combined GST from April 1, 2010.
SERVICES TAX
A relief to about sixty five thousand small service providers
will go out of service tax net as the threshold limit of exemption has
been increased from eight to ten lakh per year.
The Finance Minister brought four new services in tax net including asset management service provided under ULIP.
The salient features of the Budget are:
Sarva Shiksha Abhiyan will be provided Rs 13,100 crore,
Mid Day Meal scheme Rs 8,000 crore, Secondary education Scheme Rs 4,554
crore.
* 410 additional Kasturba Gandhi Vidyalaya to be set up in backward blocks.
* Navodaya Vidyalayas to be opened in 20 districts with special focus on regions having SC/ST concentration.
* Allocation of Rs 130 crore for this purpose. Rs.750 crore more to be
given for merit scholarship to students up to 10th and 12th class.
* Mid day Meal scheme extended to upper primary level in 3479 schools. 16 central universities to be opened in 2008-09.
* Three IITs to be set up in Andhra Pradesh, Bihar and Rajasthan.
* Schools of architecture and planning in Bhopal and Vijaywada. More institutes of higher education to be opened.
* Rs 100 crore to be given to Information Technology Ministry to set up national knowledge centres.
* Allocation for NRHM increased to Rs 12,050 crore
* Rs 992 crore for national AIDS programme.
* A national programme for the elderly to be started at a cost of Rs. 400 crore.
* Rashtra Swasthya Beema Yojana to start from April one in Delhi and
Haryana. Rs 30,000 for each family belonging to unorganised sector.
* Allocation for ICDS increased to Rs 6300 crore.
* Rs 85 crore sanctioned for scholarships to students pursuing science education.Institutes of Science Education and Research to be set up at Bhopal and Thiruvananthapuram.
* Agriculture credit doubled in the first two years of the government to reach Rs.2.40 lakh crore by March 2008.
* Eleventh Plan started on a robust growth.
* Gross budgetary support to be raised to Rs 2,43,386 crore, an
increase of more than Rs 38,000 crore from the current level.
* Allocation for Bharat Nirman to be raised to Rs 31,280 crore.
* Twenty per cent hike in education budget this year from Rs 28,674 crore to Rs 34,400 crore.
* GDP growth slows down to 8.4 per cent during quarter ended December 31, 2007 as compared to 9.1 per cent a year ago.
* Economy grew over eight per cent over 12 successive quarters since 2005, says Finance Minister P Chidambaram.
* Growth rate of agricultre extimated at 2.6 per cent during the current year.
* Services and manufacturing sectors expected to grow by 10.7 per cent and 9.4 per cent, says Chidambaram.
* Keeping inflation under check is one of the cornerstones of the Government’s policy.
* Rice production estimiated at 94.08 million tonnes, maize 16.78 mt, soyabean 9.45 mt and cotton 23.38 million bales.