Zeenews Bureau

New Delhi, Feb 29: Finance Minister P Chidambaram in his fifth consecutive Union Budget for 2008-09 on Friday announced a complete debt-waiver scheme for the small and the marginal farmers. The FM also raised the exemption limit for Income Tax to Rs 1,50,000, Rs 1,80,000 for women and Rs 2,25,000 for senior citizens. He tinkered with the tax slabs for individuals, but left the corporate tax structure untouched.

Beginning his address, the FM said the economy had achieved record growth rates of over 8% for the 12th quarter starting January 2005 till December 2007. The FM said that the growth projected for the current financial is likely to be 8.7%, according to CSO, but he was confident of achieving 8.8%. Manufacturing and services have been driving the economy and had recorded growth rates of 9.4% and 10.7% respectively.

Chidambaram said the Indian growth story has been an absorbing and inspiring one. He added that the Indian economy was on a high growth trajectory but faced major challenges in year 2007-08. Since August 2007, financial markets in the developed world have faced turbulence while crude oil prices have spiralled. The prices of iron ore, copper, lead have escalated while wheat rates have grown by 88% and rice by 15%. He said therefore keeping inflation under control while providing inclusive growth were the corner stones of the UPA government’s policies. The FM kept his promise to the Defence Services and raised allocation by 10% to Rs 105,000 cr.

Taxes	Fundamentals	Agriculture	Industry & Finance
Infrastructure	Education	Health	Social Sector
SC/STs & Minorities	Women/kids/ Senior	Miscellaneous	FM Speak

• Tax collections have increased dramatically
• Some surprised at the tax collection buoyancy, I am not
• Moderate and stable rates bring high collections
• Tax-GDP ratio has improved from 9.2% in 2003 to 12.5% this year
• Tax collection helped by high growth rate, change in attitudes, and by technology the most
• On course to achieve budget estimate of direct taxes
• FBT exemption to creche facility, guest houses
• Central Sales Tax to be 2% from April vs 3% now
• Goods & services tax to come into effect from Apr 1, 2010
• Working population to increase to 95 cr by 2026


Direct Taxes


• Direct tax proposals revenue neutral
• Short-term capital gains tax hiked to 15% from 10%
• Securities Transactions Tax (STT) unchanged
• STT for commodity futures trades
• Deduction of STT paid allowed
• Banking Cash Transaction Tax withdrawn
• Dividend Distribution Tax to be 15%
• Can setoff dividend income from subsidiary vs dividend tax
• Demat corp debt instruments exempt from TDS
• Reverse mortgage income won`t be considered income for tax
• 5 yr tax holiday for hospitals set up to serve rural areas
• 5 yr holiday in income tax from 2-3-4 star hotels in UNSECO specified tourism districts
• 125% weighted deduction for research co on R&D outsourcing


Income Tax


• Threshold exemption limit increased from 1,10,000 to 1,50,000
• Exemption limit for women increased to 1,80,000 from 145,000
• Exemption limit for senior citizens up from 1,95,000 to 2,25,000. Exemption of 2.25%
• All income tax payers get minimum relief of Rs 4,000/yr
• Rs 15,000 more 80D cut on parents` insurance premium
• Senior Citizens Savings Scheme 2004 and the Post Office Time Deposit Account under Section 80C
• Reverse Mortgage not to amount to "transfer", stream of revenue received by senior citizens not to be "income"
• Agriculture income exempt from income tax; seedlings and saplings in nurseries also exempt


New Tax Slabs


• 1.5 lakh to 3 lakh: 10%
• 3 lakh to 5 lakh: 20%
• 5 lakh and above: 30%


Corporate Tax


• No change in corporate taxes
• No change in surcharge


Service Tax


• Stock, commodity bourses and clearing houses under service tax net
• Exemption limit for small service providers Rs 10 lakh/yr vs 8 lakh; 65,000 to benefit
• Services contribute 55% of GDP
• Customised software to be brought on par with packaged software
• Service sector to get amortisation benefit
• Money changers, tour operators to come under svc tax net
• Service tax net to include asset management services of ULIPs

Indirect Taxes


• Indirect tax proposals revenue loss Rs 5,900 cr
• Production of seeds added to VAT list
• Chrome ore export duty up at Rs 3,000/tn vs Rs 2,000
• Fully exempt rough cut stones from import duty
• Some cuts in customs to protect industry


Customs Duty


• CD at 10% down from 20%
• No change in peak rates of customs duty
• Bulk drugs down to 5% from 10%
• Vitamin premixes down to 20%
• Life saving drugs down from 10% to 5%
• Bactofuges down to 7%
• Full exemption for specific parts of set-top boxes
• Convergence products down to 5%
• Exemption for raw materials for sports goods
• Naptha for fertiliser manufacturing to continue to be exempted
• Vitamin food, mineral food cut to 20%
• Phosphoric acid 5% vs 7.5%
• On course to exceed budget estimate of indirect taxes
• Some bulk drugs cut to 5% vs 10%
• Project imports cut to 5% vs 7.5%
• Steel scrap cut to 0% vs 5%
• Crude sulphur 2% vs 5%
• Unrefined sulphur cut to 2% vs 5%
• Raw material for sports goods exempt
• Sports goods cut to 5% vs 7.5%
• Exemption for set top boxes in IT hardware
• Specialised machinery cut to 5% vs 7.5%
• Steel melting, aluminium melting scrap exempted
• Some IT, hardware components exempted
• Edible oils left unchanged
• Polished cubic Zirconia, rough coral 5% vs 10%
• Helicopter simulators exempt


Excise Duty


• General CENVAT rate down from 16% to 14%
• Pharma goods down from 16% to 8%
• Small cars down 16% to 12%
• Bus chassis down 16% to 12%
• Hybrid cars cut to 14% vs 25%
• Some paper types cut to 10% vs 12%
• Some writing, printing paper 8% vs 12%
• Anti-AIDS drugs totally exempted
• RO water purifiers down 16% to 8%
• Cigarettes to cost more
• Duty of Rs 4.6/litre on unbranded diesel
• Two-wheelers, 3-wheelers cut to 12% vs 16%
• Pharma goods cut to 8% vs 16%
• Wireless data card exempt
• Polyester filament yarn exempted
• Cement Excise: Higher of 14% advolorem or Rs 400/tn
• Bulk cement Rs 400/m tn
• Abolish advalorem component on unbranded petrol, diesel
• Refrigeration units above 2 tn cut
• Packaged software 12% vs 8%
• Packaged coconut water exempted
• Coffee mixes, puffed rice exempted
• Wireless data cards exempted

• GDP increased by 8.8% during first 3 years of UPA
• Growth to be 8.7% this fiscal, according to CSO
• Confident of 8.8% this fiscal
• FY-08 H1 GDP growth was 9.1%
• Manufacturing growth at 9.4%
• Services growth at 10.7%
• Agriculture grew by 2.6%
• Gross Budgetary Support Rs 243,386 cr vs 228,725 cr
• Central Plan allocation at Rs 179, 954 cr
• Capital inflows in excess of deficits
• Capital inflows need to be managed more actively
• Govt to monitor and moderate foreign capital inflows to ensure stock market stability
• Downside risks have increased worldwide
• Investment rate 35.6% growth in 07-08
• FY-08 fiscal deficit target at 3.1% of GDP vs 3.3%
• FY-09 fiscal deficit target of 2.5% (Rs 1,33,287 crore)
• FY-08 revenue deficit at 1.4% of GDP vs 1.5%
• FY-09 revenue deficit target at Rs 55,184 cr, 1% of GDP
• One more year needed to remove revenue deficit
• FY-09 non-Plan expenditure seen Rs 5,07,498 cr
• FY-09 plan expenditure seen Rs 2,43,000 cr
• FY-09 revenue expenditure projected at Rs 6,58,000 cr
• FY-08 tax to GDP ratio 12.5% vs 9.2% inherited by UPA govt
• Some fiscal steps to be taken to boost industrial growth
• Policy is to list PSUs to unlock their true value
• Manufacturing industries, apparel, paper growing slower
• Manufacturing sector growing more slowly
• 20% growth in capital goods
• IIP for consumer goods, durables down in FY-08
• Double-digit manufacturing growth in coal, power, steel
• Sharp fall in consumer goods growth in Apr-Dec
• Micro, small enterprises to continue to get govt aid
• Additional Rs 10,000 cr plan capital expenditure this yr
• FDI inflow seen at USD 1270 cr in FY-08
• FII inflow seen at USD 1800 cr in FY-08
• FY-08 investment rate estimated 36.3% of GDP
• "Unmistakeable boom of investment" since FY-06
• FY-08 savings rate estimated 35.8% of GDP

Agriculture

• Agriculture grew by 2.6%
• New debt-waiver scheme for farmers
• Agri credit doubled during UPA’s tenure
• Record food grain production at 219 mn tonnes
• Record rice production at 94.08 mn tonnes
• Record maize production at 16.7 mn tones
• Cotton output seen at 23.38 mn bales FY-08
• Soybean output estimated 9.45 mn tn
• Rs 32,667 cr in next 5 yrs for food subsidy
• Rashtriya Krishi Vikas Yojna outlay at Rs 25,000 cr
• National Agri Insurance Plan to get Rs 640 cr
• Food security scheme allocation Rs 4,882 cr
• Deliver subsidies through smart cards; pilot project in Haryana and Chandigarh
• 75-78% total agri credit by PSU banks
• Agri credit seen Rs 2,40,000 cr by March end
• 2008-09 target at Rs 2,80,000 cr for credit to farmers
• 75-79% of agri lending has come from rural, small banks
• 75% of agri credit by scheduled commercial banks
• Retired bank officers to work as credit counsellors
• Encourage total financial inclusion
• Rs 5000 cr fund for NABARD to refinance loans
• Recapitalisation for SMEs
• Additional irrigation potential to be developed for 5 lakh hectares
• Rain-fed area development program to be launched in new areas
• Funds for this scheme at Rs 348 cr
• 14 national projects approved
• New financial institution IWRFC to be launched with an initial allocation of Rs 100 cr to mobilise money to fund agriculture
• 500 soil testing labs to start via PPP
• Rs 75 cr for Agriculture Ministry for mobile soil testing
• To set up mobile soil testing labs in 230 districts
• National agricultural insurance scheme to continue for Kharif, Rabi crops at Rs 644 cr
• Fertiliser subsidy to continue
• Fertilisers: New nutrient based subsidy regime to be launched
• Prof Vaidyanathan Committee recommendations on micro-credit to be implemented at Rs 3,074 cr
• World Bank aiding many states in agriculture
• 900,000 hectares to be developed under World Bank aid
• More pacts with World Bank likely for Orissa, W Bengal
• Gross capital formation in agri 12.5% of GDP FY-07
• Aims to up agri contribution to GDP to 1.6% in 11th Plan
• Rs 1,600 cr interest subvention for short-term crop loan
• Irrigation Resources Finance to have Rs 100 cr capital
• To set up Irrigation, Water Resources Finance Corp
• 548,000 hectare brought under irrigation in last 2 years
• 24 major, 750 minor irrigation projects in FY-09
• Education plan to up retention, upgrade learning quality
• To cover 4,00,000 hectare more in micro, dip irrigation at Rs 500 cr
• Irrigation outlay Rs 20,000 cr vs Rs 11,000 cr yr ago
• IWRFC to be incorporated as company before Mar
• Perpetual fund for Rubber, Cardamom, few others
• Rubber Fund to get Rs 19.41 cr, Cardamom 10.68 cr, Coffee 18 cr
• Coconut, cashew, pepper to get priority for crop revival
• Special Purpose Tea Fund to get Rs 40 cr
• 20 cr for Tea Research Association
• 56,000 old plantations revived under Horticulture Mission
• 2,76,000 hectares brought under horticulture crops
• National Horticulture Mission to get Rs 1,100 cr
• National Plant Protection Training Institute to be upgraded into an autonomous National Institute of Plant Health Management with Rs 29.4 cr
• To incorporate New Water Commission before Mar 31
• Have planned crop insurance scheme for spices next yr
• Rs 18 cr allocation for coffee
• Rs 5 cr one-time fund to Trivandrum Plantation Unit
• Have planned crop insurance scheme for spices next year


Debt-Waiver



• New scheme of debt-waiver and debt relief for farmers
• All agriculture loans disbursed by PSU banks, cooperatives till March 07 waiting recovery to be covered under scheme
• Complete waiver for marginal farmers holding up to 1 hectare of land
• Complete waiver for small farmers holding 1 to 2 hectares of land
• One-time settlement scheme for “all other” farmers
• Agricultural loans were restructured by banks through special packages. All such loans will also be eligible for waiver under the scheme
• Implementation to be completed by June 30, 2008
• Farmers will be also eligible for fresh loans
• Govt to allocate 60,000 cr for this scheme
• Farmers` debt worth Rs 50,000 cr to be waived off
• Four crore farmers to benefit (3 crore small, 1 crore marginal)
• Waiver amounts to 4% of total bank loans
• Rs 1,100 cr for National Horticulture Mission
• Farm loans by bank, RRBs, co-op banks until March 07 covered
• Waiver also for farm loans recast by banks since 2005, 2006

Industry and Finance

• IT department allocation Rs 1,680 cr vs 1,500 cr
• New coal regulator to be appointed
• Cluster approach for handloom has been a success
• To develop handloom cluster at Varanasi, Shivsagar
• 250 clusters for handloom being developed
• Rs 450 cr rupees allocated for textile parks FY-09
• All 30 integrated textile parks approved
• Integrated textile park scheme to continue in 11th Plan
• Fund for Textile Upgradation Fund up to Rs 1,090 cr vs Rs 911 cr
• SIDBI to reduce guarantee fee from 1.5% to 1%
• Rs 2,000 cr SIDBI fund each for risk capital financing and enhancing refinance capability
• SIDBI cuts SSIs annual services fees to 0.5% from 0.75%
• To launch exchange traded forex, rate derivative market
• To expand market for corporate bonds
• Banks to embrace total financial inclusion concept
• 288 PSU bank branches to be opened in backward areas by March
• Will work with RBI for temporary steps to moderate inflow
• "Measured steps" to continue in financial sector reforms
• There is no seamless national market for securities
• Differences in duties, levies hampering securities market
• PSU banks to give DRI scheme home loans at 4% interest rate
• To ask states to help develop national securities market
• Central Public Sector Enterprises to get Rs 16,436 cr as equity and Rs 3,003 cr as loans
Power
• PAN requirement extended to all financial markets
• PAN sole identification number in securities market
• Rupee up 9.8% from Apr 2007
• Relief to exporters in FY-09 to continue as required
• Apr-Dec merchandise export growth 21.8%
• Merchandise exports to fall short of target
• Rs 340 cr rupees for weavers insurance scheme in FY-09
• 17 lakh weavers to be covered under insurance scheme
• Interest spend on MSS is subsidy to export sector
• Govt sensitive to needs of merchandise export sector
• Banks, RRBs to add 250 accounts/yr per rural branch

Infrastructure

• Power generation on target for 11th Plan; target at 78,577MW
• Rs 5500 cr for Rajiv Electrification Plan
• National fund for power transmission, distribution
• Rs 800 cr for accelerated power reform plan
• Tilaiya ultra mega power project to be awarded shortly
• Rural electrification to get Rs 5000 cr
• Rs 12,966 cr for National Highways vs Rs 10867 cr
• 96.48% of Golden Quadrilateral completed
• 23.36% of East-West, North-South Corridor completed
• Rs 4,000 cr for rural roads through special window
• RIDF corpus up Rs 14,000 cr
• USD 350 cr-USD 800 cr needed for oil exploration blocks
• One lakh broadband centres to be set up in rural areas
• To introduce more reform in coal, electricity sectors
• Coal regulator to be established
• 300 km roads to be completed FY-09 under national plan
• Plans national fund for power transmission, distribution
• Rs 75 cr for common service centres
• 180-km roads completed in FY-08, 300 km target FY-09
• 1.57 mn houses to be built by March
• Rs 1,200 cr for refinancing operations in rural housing sector
• 4.1 mn houses built until Dec under rural housing plan
• Sop for housing for poor Rs 35,000/head from Apr

Education

• Education outlay increased by 20% at Rs 34,400 cr vs 28,674 cr
• Out of this, Sarva Shiksha Abhiyan to get 13,100 cr
• Mid-day meal is the largest such scheme in world; 11.4 cr children covered
• Mid-day meal plan to get Rs 8,000 cr, extension to help 2.5 cr children
• Mid-day meal scheme to be extended to all blocks in country
• Mid-day meal scheme to start in all govt, govt-aided schools across India
• Noon meal scheme to be extended to upper primary schools
• Plan to give potable water to schools in scarcity areas
• Rs 200 cr for new potable water plan for schools
• Potable water in schools cost Rs 15,000-30,000/system
• New 1 lakh new scholarships to be given
• New Nehru Yuva Kendras to be set up in all districts; to get Rs 10 cr
• One central university in all states
• 16 central universities to be set up in FY-09
• 3 new IITs in AP, Bihar, Rajasthan
• 2 Schools of Architecture in Bhopal and Vijaywada
• Ministry of S&T will start a new scholarship scheme
• 100 cr to connect all knowledge centres via broadband to build national knowledge network
• Special award of Rs 100 cr each for Mahatma Phule Vidyapeth, Maharashtra, Mysore University, Delhi University
• Special grant of Rs 75 cr for ICCR
• Non-profit cooperation fund for national skill development
• Need to set up world class skill development programme
• FY-09 allocation for secondary education Rs 4,554 cr
• Deccan College in Pune to get Rs 5 cr grant
• Rs 85 cr to new scholarship for scientific research
• Rs 60 cr to up corpus of Maulana Azad Foundation
• Rs 750 cr for upgrade of ITIs in FY-09
• Rs 44 cr for Sainik School infrastructure

Health

• Health outlay increased by 15% at Rs 16,534 cr
• 4,62,000 Asha workers trained under National Rural Health Plan
• ICDS allocation increased to Rs 6,300 cr
• Anganwadi workers remuneration increased to Rs 1500
• 323 district hospitals to be upgraded
• Rural Health Plan budget aid upped to Rs 12,050 cr
• 8,756 rural primary health centres made 24X7
• Rs 993 cr for combating AIDS
• Rashtriya Health Bima Yojna to be launched in Delhi, Haryana, Rajasthan on April 1; Centre’s share at Rs 205 cr
• Rashtriya Health Bima Yojna to provide health cover of Rs 30,000 for every worker in unorganised sector falling under BPL
• FY-09 polio eradication drive allocation Rs 1,042 cr

Social Sector and Development

• Bharat Nirman program at Rs 31,280 cr vs 24,603 cr
• Nehru Urban Renewal Mission outlay up at Rs 6,866 cr
• Rs 6,866 cr for Jawaharlal Urban Plan vs 5,482 cr
• Rs 16,000 cr for NREGA
• NREGA to be extended to all 596 rural districts
• 41.13 lakh houses for the poor have been constructed, 51 lakh by end 08
• PSU banks to lend Rs 20,000 per unit at interest rate of 4%
• Rs 3,443 cr for social security scheme FY-09
• Rs 7,300 cr for Rajiv Drinking Water Plan vs Rs 6,500 cr
• Rs 300 cr for desalination plant in Chennai
• Rs 200 cr initial outlay for drinking water in schools
• 290 habitations getting drinking water every day
• 52 villages per day get phone connections under Bharat Nirman
• 4,113 rural villages computerised every day
• 42 villages/day get power connections under Bharat Nirman
• Cleanliness drive allocation upped to Rs 1,200 cr
• 3 social security schemes for unorganised workers
• National Handicapped Development Corporation to get Rs 9 cr
• To give Rs 1000 cr to LIC for Aam Admi Bima Yojana
• Aam Aadmi Bima Yojna to cover 10 mn households by Sep 30
• Govt to ask banks to meet credit needs of self-help groups
• Home loans for poor brought under banks` DRI scheme
• LIC to cover 10mln landless farmer in social security plan

SC/ST/OBCs and Minorities

• Ministry of Minority allocation at Rs 1000 cr vs 500 cr
• Scheduled Tribe Fin Corp gets Rs 50 cr
• NMDFC allocation at 75 cr
• NFDC for Weaker Sections at Rs 106.50 cr
• National/State STFDC to get Rs 50 cr
• Allocation for SCs at 804 cr; 195 cr for STs
• Allocation for OBCs at Rs 164 cr, minorities at Rs 100 cr
• Rajiv Gandhi National Fellowship Scheme for scholarships to SC/STs at Rs 75 cr
• Welfare scheme for SC/ST exclusively at Rs 3,966 cr
• Rs 18,983 cr for welfare schemes where SC/ST will get at least 20% benefit
• Sachar Committee recommendations to be implemented
• Pre-metric scholarship scheme for SC/ST/OBCs and minorities
• Rs 45.45 cr for Madrasa education
• 256 bank branches in minority areas
• Rs 3780 cr for 90 districts with minorities; allocation for FY-09 at Rs 540 cr
• More minorities in Central paramilitary forces
• Navodaya Vidyalayas in 20 districts dominated by SC/STs at Rs 130 cr
• Student reservation to continue for SC, ST, minorities
• Kasturba Gandhi Balika Vidayalaya has enrolled 1,82,000 girls
• 410 new Kasturba Gandhi Balika Vidyalaya to be set up for SC/ST/OBCs
• Rs 80 cr for Balika Vidyalaya hostels upgrade
• New Navodaya Vidyalaya to be set up in 20 backward districts
• New model school program to be started; to get Rs 650 cr

Women, Children and Senior Citizens

• Rs 7,200 cr for Ministry for Woman, Child Development
• Rs 16,202 cr allotted for 30% women-specific plans
• Rs 11,460 cr for 100% women-specific programmes
• Rashtriya Janashree Yojana of LIC to cover all women self-help groups; Rs 500 cr corpus
• Rs 6,300 cr for Integrated Child Development Plan
• Spend on children`s schemes FY-09 over Rs 33,434 cr
• Two national institutes of ageing
• New national program for the elderly at Rs 400 cr
• To extend senior citizens pension plan to all above 65 yrs in BPL households at Rs 3,443 cr

Miscellaneous

• FY-09 Defence allocation up 10% at 105,000 cr vs 96,000 cr
• Rs 500 cr for Arunachal, border development plan
• Rs 16,447 cr for Northeast vs 14,365 cr
• DONER to get Rs 1,455 cr
• 45% of backward regions` grant to UP, Bihar, Orissa
• Sixth Pay Commission to submit report by Mar 31
• Pay Commission to meet legitimate claims of govt employees
• Tiger conservation: 1,411 Tigers left in India
• One-time grant of Rs 50 cr for National Tiger Conservation Authority
• To raise dedicated Tiger protection force
• Permanent institutional mechanism to study climate change
• Fund worth Rs 624 in FY-09 for Commonwealth Games

FM Speak

• The Indian growth story has been an absorbing and inspiring tale
• FY-08 most challenging of last 4 years
• FY-09 year of consolidation, implementation, monitoring
• Must be vigilant, swift for growth with price stability
• Determined to become self sufficient in agriculture
• UPA wants to make growth inclusive
• We can do better and we should; Budget 08-09 is about doing more
• Govt sensitive to farmers’ needs
• Irrigation program is UPA’s priority
• Fiscal deficit not only achieved but also some headroom
• On course to achieve budget estimate of direct taxes
• Food grain adequacy will be a challenge in FY-09
• Determined to be self-sufficient in foodgrain output
• Govt to list more subsidiaries to unlock value
• Aiming to take manufacturing growth rate to double digits
• Micro, small, medium companies continue to be priority
• Policy is to encourage all investment - local, foreign
• India has opportunity to become "knowledge society"
• Concerned about rate of attrition in Defence services
• All figures proof of inclusive growth