Budget passed: Fuel price not cut; drugs, air travel cheaper

Pranab Mukherjee announced a slew of relief measures that the govt would bring in to Budget 2010 as the House finally passed the bill.

Updated: Apr 29, 2010, 19:13 PM IST

Zeebiz Bureau

New Delhi: Refusing to budge on the increase in price of fuel, Union Finance Minister Pranab Mukherjee on Thursday announced a slew of relief measures that the government would bring in to Budget 2010 as the House finally passed the bill with the Opposition staging a walk-out.

He announced special relief packages for coffee growers, and tax concessions for healthcare, auto and realty sectors, but without any change in the levies on petroleum products.

Thanking the Lower House for passage of Finance Bill 2010, Finance Minister Pranab Mukherjhee said that the bill focused on financial correction which would serve the long-term interest of the economy by preventing burgeoning fiscal deficit.

The bill, he said, would save the country “ignominy of pegging” India’s future growth to foreign institutions to borrow money. He said that as the Finance Minister he didn’t want to face the situation of asking his counterparts in other countries for money.

Admitting that the raising of indirect taxes is at the risk of fanning inflation, he said he was left with no other choice and had to take a calculated risk.

Following are a few relief measures announced by the minister:

  • Service tax on domestic air travel to be maximum Rs 100 per ticket; international flight at Rs 500 per ticket.
  • Flights to and from North East to be exempted from service tax.
  • Customs duty relief on 11 drugs, including cancer and AIDS drugs cut to 5%


  • Tax concession on hospital with at least 100 beds.
  • Low cost housing under central plans to be exempted from service tax
  • Excise duty cut on paper made from waste to 4%
  • Debt relief package for coffee growers
  • Excise duty cut on hand-rolled local cigarettes.
  • Vocational training courses to be exempt from service tax
  • Customs relief to tunnel boring machines
  • Export duty on iron ore lumps hiked
  • Basic excise duty on stainless steel cut to 2.5%
  • Excise rebate on auto components for construction machinery extended.
  • Components for manufacture of optical discs exempted from customs duty.
    In the 2010 Union budget the minister had increased indirect taxes, reduced direct taxes (thus putting money into the hands of the middle class) and drastically cut subsidies on fertilizers and fuels raising huge outcry from the Opposition parties.

    During the course of his reply to the debate, Mukherjee justified the hike in excise and customs duties on crude oil and some petroleum products because of the prevailing global situation and said he had taken a "correct" stand by not touching retail prices.

    "Instead of duties, I could have taken the administered price mechanism route. But I did not do so because to me it would not have been correct," the minister said in his final reply to the debate on the Finance Bill for the current fiscal in the Lok Sabha.

    He said it was because of hiking the duties that the state governments would get a 32 percent share of the measure, amounting to Rs.26,000 crore, based on the formulae for sharing of central revenues.

    As the minister took his seat after responding to various demands of MPs, the leader of opposition, BJP leader Sushma Swaraj staged a walk-out, saying the relief had nothing for the common man.