OVERVIEW ON ECONOMY
To sustain a growth rate of of 9% per annum at the earliest.
Ensure that Indian agriculture continues to grow at an annual rate of 4%.
BUDGET ESTIMATES
Budget Estimates provide for a total expenditure of Rs.10,20,838 crore
consisting of Rs.6,95,689 crore under Non-plan and Rs.3,25,149 crore under
Plan registering an increase of 37%in Non-plan expenditure and 34% in Plan
expenditure over Budget Estimates (B.E) 2008-09.
Gross Budgetary Support for Annual Plan 2009-10 enhanced by Rs.40, 000
crore over Interim B.E. 2009-10.
Outlay for Defence up from Rs.1, 05,600 crore in B.E. 2008-09 to Rs.1,
41,703 crore in B.E. 2009-10.
Fiscal deficit as a percentage of GDP is projected at 6.8 % for FY10
compared to 2.5 % in B.E. 2008-09 and 6.2 % as per provisional accounts
2008-09.
BUDGET HIGHLIGHTS
INFRASTRUCTURE
India Infrastructure Finance Corpn Ltd (IIFCL) to evolve a takeout financing
scheme in consultation with banks to facilitate incremental lending to
infrastructure sector.
IIFCL to refinance 60 % of commercial bank loans for Public Pvt Parternship
projects in critical sectors over the next 15 to 18 months.
IIFCL and banks in position to support Rs 1,00,000 cr in infrastructure.
NATIONAL HIGH WAYS
Allocation to National Highways Authority of India (NHAI) for the National
Highway Development Programme (NHDP) increased by 23% over B.E.
2008-09.
POWER
Duty on Wind power equipment down to 5% from 7.5%.
Allocation under Accelerated Power Development and Reform Programme
increased by 160 %to Rs.2, 080 crore in B.E. 2009-10 over B.E. 2008-09.
DISINVESTMENT
To retain at least 51 % Government equity in PSUs.
PSU enterprises such as banks and insurance companies will remain in the
public sector.
Estimated disinvestments proceeds of Rs.1120 cr in FY10 which includes
disinvestments in RITES, Cochin Ship Yard, Telecommunications
Consultants India, Manganese Core India, Rashtriya Ispat Nigam and Satluj
Jal Vidyut Nigam.
AGRICULTURE
Target for agriculture credit flow set at Rs.3,25,000 crore for the year 2009-10
vs. Rs.2,87,000 crore In 2008-09 .
To provide additional 1000 crore rupees over interim budget for irrigation
Extended agriculture debt waiver by 6 months.
Interest subvention scheme for short term crop loans up to Rs.3 lakh per
farmer at the interest rate of 7% per annum to be continued.
Additional subvention of 1% to be paid from this year, as incentive to those
farmers who repay short term loans on schedule
EXPORT
Adjustment assistance scheme to provide enhanced Export Credit and
Guarantee Corporation (ECGC) cover at 95%to badly hit sectors extended
upto March 2010.
Interest subvention of 2 % on pre-shipment credit for seven employment
oriented export sectors to March 31, 2010.
PETROLEUM AND DIESEL
To set up an expert group to advise on a viable and sustainable system of
pricing petroleum products.
MEDIA
Customs duty of 5% to be imposed on Set Top Box.
TEXTILE
Excise duty on manmade fibre and yarn to be increased from 4% to 8%.
JEWELLERY
Excise duty on branded articles of jewellery to be reduced from 2% to Nil.
Customs duty on serially numbered gold bars (other than tola bars) and gold
coins to be increased from Rs.100 per 10 gram to Rs.200 per 10 gram.
Customs duty on other forms of gold to be increased from Rs.250 per 10
gram to Rs.500 per 10 gram.
Custom duty on silver, excluding jewellery, hiked by Rs 500/ kg to Rs 1,000/
kg.
FERTILISER
Government intends to move towards a nutrient based subsidy regime so as
to cover larger basket of fertilizers with innovative fertilizer products available
in the market at reasonable prices.
It is intended to move to a system of direct transfer of subsidy to the farmers
in due course.
Excise duty on naphtha to be reduced to 14%.
HEALTH CARE
Allocation under National Rural Health Mission (NRHM) increased by
Rs.2,057 crore.
Customs duty on 10 specified life saving drugs/vaccine and their bulk drugs to
be reduced from 10% to 5% with Nil CVD.
Customs duty on specified heart devices, namely artificial heart and
PDA/ASD occlusion device, to be reduced from 7.5% to 5% with Nil CVD (by
way of excise duty exemption).
ALLOCATION UNDER COMMONWEALTH GAMES
Outlay to be stepped up from Rs.2, 112 crore in Interim Budget to Rs.3,472
crore in regular Budget 2009-10.
GAS
Government will develop long distance gas pipelines to develop national grid.
LNG infrastructure in the country to be expanded.
Tax holiday on commercial production of mineral oil and natural gas on NELP
VIII
AUTO
Specific component of excise duty applicable to large cars/utility vehicles of
engine capacity 2000 cc and above to be reduced from Rs. 20,000/- per
vehicle to Rs.15,000 per vehicle.
Excise duty on petrol driven trucks/lorries to be reduced from 20% to 8%.
Excise duty on chassis of such trucks/lorries to be reduced from ‘20% +
Rs.10000’ to ‘8% + Rs.10000’.
SOFTWARE
Sunset clause for Software Technology Parks of India (STPIs) extended by 1
year.
INDIRECT TAXES
Goods & services tax to come into effect from April 2010
Customs duty on LCD Panels for manufacture of LCD televisions to be
reduced from 10% to 5%.
Customs duty on bio-diesel to be reduced from 7.5% to 2.5%.
DIRECT TAXES
Income tax slabs changed.
Standard deduction increased
For women – Rs. 190,000 Vs. Rs. 180,000
For senior citizen – Rs. 240,000 Vs. 225,000
For other assesses– to Rs. 160,000 from Rs. 150,000
Income Tax rate
160001 - 300000 10%
300001 - 500000 20%
Above 500000 30%
No change in corporate income tax rate.
Surcharge on personal Income Tax removed
Fringe Benefit Tax on the value of certain fringe benefits provided by
employers to their employees to be abolished.
Minimum Alternate Tax (MAT) to be increased to 15 per cent of book
profits from 10 per cent.
Commodity Transaction Tax (CTT) to be abolished.
CONCLUSION: Overall the FY 10 budget seems to be a populist budget favouring
the rural population and the individual taxpayers. However, the capital market
did not welcome the budget as widely expected measures such as removal of
security transaction tax (STT), deregulation of oil sector, FDI in insurance,
reduction in surcharge on corporate tax were not touched upon. Further hike in
Minimum Alternative Tax (MAT) rate from 15% to10% also disappointed the
markets. Though measures like introduction of GST and abolition of fringe
benefit tax were positive steps, but was not enough to cheer the markets.
