"Managing a complex economy is a difficult task. More so, when it is a growing economy in a globalised world. And yet, choices have to be madeand they have to be well-timed. The success of the fiscal stimulus in supporting domestic demand could be traced to its composition. Now that the recovery has taken root, there is a need to review public spending."
Key Issues Addressed in the Budget
Summary of Union Budget 2010-11
The Union Budget this year has aimed to focus on inclusive growth and insuring food security. These concerns for aam aadami have gone hand in hand with credible measures for improving investment climate, strengthening infrastructure and fiscal consolidation. As the country looks to 'quickly revert to high GDP growth path' in the wake of 'uncertain times', concerns for inclusive growth targeting the disadvantaged sections form the defining features of the Budget.
Many new initiatives have been introduced for sustained and inclusive growth. These include setting up of Mahila Kisan Sashaktikaran Pariyojana, Financial Stability and Development Council, Gold Regulatory Authority, Technical Advisory Group for Unique Projects, National Mission for Delivery of Justice and Legal Reforms, Independent Evaluation Office and National Clean Energy Fund
Presenting the Union Budget 2010-11 in the Lok Sabha today, the Finance Minister Shri Pranab Mukherjee, said that three challenges would continue to engage the Indian policy planners for next few years. The first challenge is to quickly revert to the high GDP growth path of 9% and then find the means to cross the double digit growth barrier. The second challenge is to consolidate recent gains in making development more inclusive. The third challenge is to remove weaknesses at different levels of governance and to improve public delivery mechanism. The Budget, therefore, focuses on fiscal consolidation, making growth more broad-based and ensuring that supply-demand imbalances are better managed.
The Minister expressed the hope that the economy will reach 10% growth in not too distant a future. The Minister explained that after a fall in GDP growth in 2008-09 to 6.7%, the growth has built up and 7.2% growth is expected in 2009-10. The Minister said that the recovery is very encouraging as it has come about despite negative growth in agriculture sector. The growth rate in manufacturing in December 2009 was 18.5%, the highest in past two decades. Similarly, there are also signs of a turnaround in the merchandise exports with a positive growth in November and December 2009 after a decline in about twelve successive months.
Expressing concern at the emergence of double digit food inflation, the Minister said that the Government has set in motion steps in consultation with the State Chief Ministers to bring down the inflation in the next few months and ensure better management of food security.
FINANCE MINISTER,
Pranab Mukherjee
Pranab Mukherjee
Key Issues Addressed in the Budget
- How quickly we can come back to the path of fiscal consolidation
- Entering a higher growth trajectory
- Addressing the problems of those sections which are vulnerable
Summary of Union Budget 2010-11
The Union Budget this year has aimed to focus on inclusive growth and insuring food security. These concerns for aam aadami have gone hand in hand with credible measures for improving investment climate, strengthening infrastructure and fiscal consolidation. As the country looks to 'quickly revert to high GDP growth path' in the wake of 'uncertain times', concerns for inclusive growth targeting the disadvantaged sections form the defining features of the Budget.
Many new initiatives have been introduced for sustained and inclusive growth. These include setting up of Mahila Kisan Sashaktikaran Pariyojana, Financial Stability and Development Council, Gold Regulatory Authority, Technical Advisory Group for Unique Projects, National Mission for Delivery of Justice and Legal Reforms, Independent Evaluation Office and National Clean Energy Fund
Presenting the Union Budget 2010-
The Minister expressed the hope that the economy will reach 10% growth in not too distant a future. The Minister explained that after a fall in GDP growth in 2008-09 to 6.7%, the growth has built up and 7.2% growth is expected in 2009-10. The Minister said that the recovery is very encouraging as it has come about despite negative growth in agriculture sector. The growth rate in manufacturing in December 2009 was 18.5%, the highest in past two decades. Similarly, there are also signs of a turnaround in the merchandise exports with a positive growth in November and December 2009 after a decline in about twelve successive months.
Expressing concern at the emergence of double digit food inflation, the Minister said that the Government has set in motion steps in consultation with the State Chief Ministers to bring down the inflation in the next few months and ensure better management of food security.
FISCAL CONSOLIDATION
The Minister said that now that the recovery has taken roots, there is a need to review public spending, mobilize resources and gear them towards building the productivity of the economy.
The government will follow the recommendations of the Thirteenth Finance Commission by capping the government debt. The Commission has recommended a capping of the combined debt of the Centre and the States at 68% of the GDP to be achieved by 2014-15.
For the first time, the Government would target an explicit reduction in its domestic public debt-GDP ratio. A status paper would be brought out within six months, giving a detailed analysis of the situation and a road map for curtailing the overall public debt. This would be followed by an annual report on the subject.
The Finance Minister expressed the hope that a broad consensus would be achieved on the Direct Tax Code and the Goods and Service Tax (GST) and these would be introduced from April 2011.
The government will follow the recommendations of the Thirteenth Finance Commission by capping the government debt. The Commission has recommended a capping of the combined debt of the Centre and the States at 68% of the GDP to be achieved by 2014-15.
For the first time, the Government would target an explicit reduction in its domestic public debt-GDP ratio. A status paper would be brought out within six months, giving a detailed analysis of the situation and a road map for curtailing the overall public debt. This would be followed by an annual report on the subject.
The Finance Minister expressed the hope that a broad consensus would be achieved on the Direct Tax Code and the Goods and Service Tax (GST) and these would be introduced from April 2011.
IMPROVING INVESTMENT ENVIRONMENT
The Finance Minister said that a number of steps have been taken to simplify the Foreign Direct Investment (FDI) regime. The government also intends to make the FDI policy user-friendly by consolidating all prior regulations and guidelines into one comprehensive document. This would enhance clarity and predictability of our FDI policy to foreign investors, he said.
With a view to strengthen and institutionalize the mechanism for maintaining financial stability, Government has decided to set up an apex-level Financial Stability and Development Council. It would monitor macro prudential supervision of the economy, including the functioning of large financial conglomerates.
Towards strengthening the banking system, the Budget provides Rs.16500 crore as Tier-I capital. It would ensure that the Public Sector Banks are able to attain a minimum 8% Tier-I Capital by March 2011. Further capital would also be infused into the Regional Rural Banks (RRBs). The Minister also informed that the RBI is considering giving some additional banking licenses to private sector players. Non Banking Financial Companies could also be considered, if they meet the RBI's eligibility criteria.
With a view to strengthen and institutionalize the mechanism for maintaining financial stability, Government has decided to set up an apex-level Financial Stability and Development Council. It would monitor macro prudential supervision of the economy, including the functioning of large financial conglomerates.
Towards strengthening the banking system, the Budget provides Rs.16500 crore as Tier-I capital. It would ensure that the Public Sector Banks are able to attain a minimum 8% Tier-I Capital by March 2011. Further capital would also be infused into the Regional Rural Banks (RRBs). The Minister also informed that the RBI is considering giving some additional banking licenses to private sector players. Non Banking Financial Companies could also be considered, if they meet the RBI's eligibility criteria.
AGRICULTURE GROWTH
A four-pronged strategy would be followed to spur growth in agriculture sector. The elements of the strategy are (a) agricultural production; (b) reduction in wastage of produce; (c) credit support to farmers; and (d) a thrust to the food processing sector.
The Budget provides Rs.400 crore for extending the green revolution to the eastern region of the country comprising Bihar, Chattisgarh, Jharkhand, Eastern UP, West Bengal and Orissa, with the active involvement of Gram Sabhas and the farming families.
60,000 'pulses and oil seed villages' will be organized in rainfed areas with an outlay of Rs.300 crore during 2010-11. This will provide water harvesting, watershed management and soil health facilities to enhance to productivity of dryland farming areas. Another Rs.200 crore have been provided in the Budget for conservation farming.
To improve the storage capacity of food grains, Food Corporation ofIndia
The target for farm credit is being raised to Rs.3,75,000 crore in 2010-11 from Rs.3,25,000 crore in the current year.
The period for repayment of loans under the Debt Waiver and Debt Relief Scheme is being extended by six months to June 30,2010.
The interest subvention for timely repayment of crop loans is being raised from 1% to 2%. Thus, the effective rate of interest for crop loans for farmers who repay their crop loan as per schedule will now be 5% per year.
Five more Mega Food Parks will be set up in addition to the 10 already being established. External Commercial Borrowings will henceforth be available for cold storage, farm level pre-cooling and preservation and storage of agricultural and allied produce marine products and meat.
The Budget provides Rs.400 crore for extending the green revolution to the eastern region of the country comprising Bihar, Chattisgarh, Jharkhand, Eastern UP, West Bengal and Orissa, with the active involvement of Gram Sabhas and the farming families.
60,000 'pulses and oil seed villages' will be organized in rainfed areas with an outlay of Rs.300 crore during 2010-11. This will provide water harvesting, watershed management and soil health facilities to enhance to productivity of dryland farming areas. Another Rs.200 crore have been provided in the Budget for conservation farming.
To improve the storage capacity of food grains, Food Corporation of
The target for farm credit is being raised to Rs.3,75,000 crore in 2010-11 from Rs.3,25,000 crore in the current year.
The period for repayment of loans under the Debt Waiver and Debt Relief Scheme is being extended by six months to June 30,2010.
The interest subvention for timely repayment of crop loans is being raised from 1% to 2%. Thus, the effective rate of interest for crop loans for farmers who repay their crop loan as per schedule will now be 5% per year.
Five more Mega Food Parks will be set up in addition to the 10 already being established. External Commercial Borrowings will henceforth be available for cold storage, farm level pre-cooling and preservation and storage of agricultural and allied produce marine products and meat.
INFRASTRUCTURE
The Budget provides Rs.1,73,552 crore for infrastructure, accounting for over 46% of the total Plan allocation.
The allocation for road transport is being increased by over 13% from Rs 17,520 crore to Rs.19,894 crore.
Disbursement for infrastructure by India Infrastructure Finance Company Ltd(IIFCL) is expected to reach Rs.20,000 crore in 2010-11 as against Rs.9,000 crore this year. Refinancing of bank landing to infrastructure projects by IIFCL is expected to be more than double in 2010-11.
The allocation for road transport is being increased by over 13% from Rs 17,520 crore to Rs.19,894 crore.
Disbursement for infrastructure by India Infrastructure Finance Company Ltd(IIFCL) is expected to reach Rs.20,000 crore in 2010-11 as against Rs.9,000 crore this year. Refinancing of bank landing to infrastructure projects by IIFCL is expected to be more than double in 2010-11.
ENERGY
The Plan allocation for power sector is being more than doubled from Rs.2,230 crore in 2009-10 to Rs.5,130 crore in 2010-11.
A Coal Regulatory Authority is proposed to be set up for creating level playing field in the coal sector and resolving various issues.
The Plan outlay for New and Renewal Energy Ministry is being increased by 61% from Rs. 620 crore to Rs.1,000 crore, especially to support the ambitious solar energy programme.
A Coal Regulatory Authority is proposed to be set up for creating level playing field in the coal sector and resolving various issues.
The Plan outlay for New and Renewal Energy Ministry is being increased by 61% from Rs. 620 crore to Rs.1,000 crore, especially to support the ambitious solar energy programme.
INCLUSIVE DEVELOPMENT
Stating that inclusive development is an act of faith for the UPA government, the Finance Minister said that after the Right to Information, Right to Work and Right to Education, the government is now ready with the draft Food Security Bill. A sums of Rs.1,37,674 crore, representing 37% of the total outlay, will be spent on social sector programmes.
Plan Allocation for school education is being increased from Rs.26,800 crore to Rs.31,036 crore to support the children's rights to free and compulsory education. In addition, States will have an access to Rs. 3,675 crore for elementary education under the Finance Commission grant for 2010-11.
It has been decided to provide appropriate banking facilities to habitations having population in excess of 2000 by March 2012. It is also proposed to extend insurance and other services to the targeted beneficiaries. These provisions are expected to cover 60,000 habitations.
Rs.66,100 crore have been provided for Rural Development. Mahatma Gandhi National Rural Employment Guarantee Scheme gets Rs.40,100 crore and Bharat Nirman Programme, Rs.48,000 crore.
Indira Awas Yojana gets Rs.10,000 crore. The unit cost under this scheme is being raised to Rs.45,000 in plain areas and Rs.48500 in hilly areas to cover the increase in cost of construction of houses.
The allocation to Backward Region Grant Fund is being enhanced by 26% from Rs.5,800 crore to Rs.7,300 crore. An additional Central assistance of Rs.1,200 crore is being provided for drought mitigation in the Bundelkhand region.
Swarna Jayanti Shahari Rozgar Yojana gets 75% increase in allocation from Rs.3,060 crore to Rs.5,400 crore. In addition, the allocation for Housing and Urban Poverty Alleviation is also being raised from Rs.850 crore to Rs.1,000 crore in 2010-11.
The 1% interest subvention on housing loans upto Rs.10 lakh (where the cost of the house does not exceed Rs.20 lakh) provided in the Budget for 2009-10 has been extended by another year.
Rajiv Awas Yojana, a scheme for housing to slum dwellers and urban poor, gets a huge jump in allocation from Rs.150 crore last year to Rs.1,270 crore in 2010-11.
It has been decided to set up a National Social Security Fund for unorganized sector workers with an initial allocation of Rs.1,000 crore. This fund will support schemes for weavers, toddy tappers, rickshaw pullers, bidi workers etc.
The Rashtriya Swasthya Bima Joyana is being extended to all Mahatma Gandhi NREGA beneficiaries who have worked for more than 15 days during the preceding financial year.
The Swavalamban initiative started last year, under which the government contributes Rs.1,000 per year to each New Pension Scheme (NPS) account, will now be available for another three years.
Plan outlay for Women and Child Development is being stepped up by 50%. A Mahila Kisan Sashaktikaran Pariyojana is being launched to meet the specific needs of women farmers.
The Plan outlay of Ministry of Social Justice and Empowerment gets a boost of 80% to Rs.4,500 crore. Besides supporting the programmes for the target beneficiaries, the Ministry will be able to raise the rates for scholarship schemes for SC and OBC students. Similarly, the Ministry of Minority Affairs allocation has been raised by 50% to Rs.2,600 crore.
Plan Allocation for school education is being increased from Rs.26,800 crore to Rs.31,036 crore to support the children's rights to free and compulsory education. In addition, States will have an access to Rs. 3,675 crore for elementary education under the Finance Commission grant for 2010-11.
It has been decided to provide appropriate banking facilities to habitations having population in excess of 2000 by March 2012. It is also proposed to extend insurance and other services to the targeted beneficiaries. These provisions are expected to cover 60,000 habitations.
Rs.66,100 crore have been provided for Rural Development. Mahatma Gandhi National Rural Employment Guarantee Scheme gets Rs.40,100 crore and Bharat Nirman Programme, Rs.48,000 crore.
Indira Awas Yojana gets Rs.10,000 crore. The unit cost under this scheme is being raised to Rs.45,000 in plain areas and Rs.48500 in hilly areas to cover the increase in cost of construction of houses.
The allocation to Backward Region Grant Fund is being enhanced by 26% from Rs.5,800 crore to Rs.7,300 crore. An additional Central assistance of Rs.1,200 crore is being provided for drought mitigation in the Bundelkhand region.
Swarna Jayanti Shahari Rozgar Yojana gets 75% increase in allocation from Rs.3,060 crore to Rs.5,400 crore. In addition, the allocation for Housing and Urban Poverty Alleviation is also being raised from Rs.850 crore to Rs.1,000 crore in 2010-11.
The 1% interest subvention on housing loans upto Rs.10 lakh (where the cost of the house does not exceed Rs.20 lakh) provided in the Budget for 2009-10 has been extended by another year.
Rajiv Awas Yojana, a scheme for housing to slum dwellers and urban poor, gets a huge jump in allocation from Rs.150 crore last year to Rs.1,270 crore in 2010-11.
It has been decided to set up a National Social Security Fund for unorganized sector workers with an initial allocation of Rs.1,000 crore. This fund will support schemes for weavers, toddy tappers, rickshaw pullers, bidi workers etc.
The Rashtriya Swasthya Bima Joyana is being extended to all Mahatma Gandhi NREGA beneficiaries who have worked for more than 15 days during the preceding financial year.
The Swavalamban initiative started last year, under which the government contributes Rs.1,000 per year to each New Pension Scheme (NPS) account, will now be available for another three years.
Plan outlay for Women and Child Development is being stepped up by 50%. A Mahila Kisan Sashaktikaran Pariyojana is being launched to meet the specific needs of women farmers.
The Plan outlay of Ministry of Social Justice and Empowerment gets a boost of 80% to Rs.4,500 crore. Besides supporting the programmes for the target beneficiaries, the Ministry will be able to raise the rates for scholarship schemes for SC and OBC students. Similarly, the Ministry of Minority Affairs allocation has been raised by 50% to Rs.2,600 crore.
STRENGTHENING TRANSPARENCY AND PUBLIC ACCOUNTABILITY
The government proposes to set up a Financial Sector Legislative Reforms Commission to rewrite and clean up the financial sector laws to bring them in line with the requirements of the sector.
Rs.1,900 crore has been allocated for the Unique Identification Authority of India.
A Technology Advisory Group for Unique Projects (TAGUP) is proposed to be set up under the Chairmanship of Shri Nandan Nilekani for creation of reliable and secure IT projects.
Defence gets an allocation of Rs.1,47,344 crore. As a one time confidence building measure inJammu and Kashmir
An Independent Evaluation Office is to be set up to undertake impartial and objective assessment of various public programmes and improve the effectiveness of public interventions in Planning Commission.
A National Mission for Delivery of Justice and Legal Reforms is also to be set up.
Rs.1,900 crore has been allocated for the Unique Identification Authority of India.
A Technology Advisory Group for Unique Projects (TAGUP) is proposed to be set up under the Chairmanship of Shri Nandan Nilekani for creation of reliable and secure IT projects.
Defence gets an allocation of Rs.1,47,344 crore. As a one time confidence building measure in
An Independent Evaluation Office is to be set up to undertake impartial and objective assessment of various public programmes and improve the effectiveness of public interventions in Planning Commission.
A National Mission for Delivery of Justice and Legal Reforms is also to be set up.
TAX PROPOSALS
The Finance Minister emphasized the need for continued Tax Reforms. The Tax Returns form are being simplified and the Income Tax Department is now ready to notify Saral-2 forms for individual salary tax payers. The Sevottam project started in four cities to provide a single window system for registration and grievance redressal will be extended to four more cities. Two more centres will be opened for bulk processing of Tax Returns. The Indirect Tax Administrations are being revamped to achieve the roll out of Goods and Services Tax (GST). Rs.1133 crore have been budgeted for a mission mode project to achieve this.
Major relief has been provided to individual tax payers by enhancing exemption limit and reducing tax in different slabs of personal income.. Deduction of an additional amount of Rs.20000 for investment in long term infrastructure bonds will be available in addition to the existing limit of Rs.1 lakh available for specified savings.
The surcharge on domestic companies is being reduced from 10% to 7.5%. However, the minimum alternate tax (MAT) is being increased from 15% to 18%.
Exemptions and deductions have been provided to increase spending on research.
The investment linked deduction to new hotels of two star category and above is being extended to give boost to investment in Tourism sector.
A one time interim relief is being provided to the housing and real estate sector by allowing pending projects to be completed within a period of five years instead of four years for claiming a deduction on their profits.
The Finance Minister has proposed to partially roll back the rate deduction in Central Excise duties and enhance the standard rate on all non-petroleum products from 8% to 10% ad valorem. The specific rates of duty applicable to Portland cement and cement clinker are also being adjusted upwards proportionately. Similarly, the ad valorem component of excise duty on large cars, multi-utility vehicles and sports utility vehicles which was reduced as part of the first stimulus package, is being increased by 2 percentage points to 22%.
The basic duty of 5% on crude petroleum; 7.5% on diesel and petrol and 10% on other refined products is being enhanced. The Central Excise Duty on petrol and diesel is being enhanced by Rs.1 per litre.
Excise duty on non-smoking tobacco is being enhanced. In addition a compounded levy scheme is being introduced by chewing tobacco and branded unmanufactured tobacco based on the capacity of pouch making machines.
A number of duty concessions are being proposed to support agriculture and allied sector. Mechanised handling systems in warehouses will get project import status with a concessional import duty of 5%. Installation and commissioning of such equipment will be fully exempt from service tax. Concessional duty will also be applicable for cold storages, food processing units, specified equipment for food preservation etc. The concessional import duty to specified machinery for use in the plantation sector is being further extended upto March 2011. Testing and certification of agricultural seed is being exempt from service tax.
Tax exemptions have been announced for equipment used in solar systems and wind energy system, LED lights, electric cars, cycle rickshaw, mobile phone components and certain medical equipment.
The rate of tax on services has been retained at 10%.
Major relief has been provided to individual tax payers by enhancing exemption limit and reducing tax in different slabs of personal income.. Deduction of an additional amount of Rs.20000 for investment in long term infrastructure bonds will be available in addition to the existing limit of Rs.1 lakh available for specified savings.
The surcharge on domestic companies is being reduced from 10% to 7.5%. However, the minimum alternate tax (MAT) is being increased from 15% to 18%.
Exemptions and deductions have been provided to increase spending on research.
The investment linked deduction to new hotels of two star category and above is being extended to give boost to investment in Tourism sector.
A one time interim relief is being provided to the housing and real estate sector by allowing pending projects to be completed within a period of five years instead of four years for claiming a deduction on their profits.
The Finance Minister has proposed to partially roll back the rate deduction in Central Excise duties and enhance the standard rate on all non-petroleum products from 8% to 10% ad valorem. The specific rates of duty applicable to Portland cement and cement clinker are also being adjusted upwards proportionately. Similarly, the ad valorem component of excise duty on large cars, multi-utility vehicles and sports utility vehicles which was reduced as part of the first stimulus package, is being increased by 2 percentage points to 22%.
The basic duty of 5% on crude petroleum; 7.5% on diesel and petrol and 10% on other refined products is being enhanced. The Central Excise Duty on petrol and diesel is being enhanced by Rs.1 per litre.
Excise duty on non-smoking tobacco is being enhanced. In addition a compounded levy scheme is being introduced by chewing tobacco and branded unmanufactured tobacco based on the capacity of pouch making machines.
A number of duty concessions are being proposed to support agriculture and allied sector. Mechanised handling systems in warehouses will get project import status with a concessional import duty of 5%. Installation and commissioning of such equipment will be fully exempt from service tax. Concessional duty will also be applicable for cold storages, food processing units, specified equipment for food preservation etc. The concessional import duty to specified machinery for use in the plantation sector is being further extended upto March 2011. Testing and certification of agricultural seed is being exempt from service tax.
Tax exemptions have been announced for equipment used in solar systems and wind energy system, LED lights, electric cars, cycle rickshaw, mobile phone components and certain medical equipment.
The rate of tax on services has been retained at 10%.
BUDGET ESTIMATES
The Budget Estimates 2010-11 provides for a total expenditure of Rs. 11,08,749 crore. Out of this, Rs 3,73,092 crore is plan expenditure and Rs.7,35,657 crore is non-plan expenditure. The plan expenditure has increased by 15% while there is only 6% in increase in non-plan expenditure.
The total receipt are estimate Rs.7,46,651 crore.
The Fiscal deficit is pegged at 5.5%. In the Medium Term Fiscal Policy Statement being presented along with other Budget documents in the House today, the rolling targets for fiscal deficit are pegged at 4.8% and 4.1% for 2011-12 and 2012-13, respectively. These projections improve upon the recommendations of the Thirteenth Finance Commission.
Economic Impact of Union Budget 2010-11
Key Industrialists' Quote on Budget
"The FM has managed to do an excellent balancing act with this year's Budget. His Budget is growth oriented and yet manages to address the issue of fiscal deficit in an effective manner."
The total receipt are estimate Rs.7,46,651 crore.
The Fiscal deficit is pegged at 5.5%. In the Medium Term Fiscal Policy Statement being presented along with other Budget documents in the House today, the rolling targets for fiscal deficit are pegged at 4.8% and 4.1% for 2011-12 and 2012-13, respectively. These projections improve upon the recommendations of the Thirteenth Finance Commission.
Economic Impact of Union Budget 2010-11
The backdrop against which FM Mr. Pranab Mukherjee presented the first budget of UPA II government has dramatically changed. In Budget 2010-11, although sustenance of growth continues to be an important agenda, unabated rise in food prices coupled with high fiscal deficit has emerged as a major challenge for the government. The Finance Minister in his budget speech did try to touch upon both the challenges. While he has laid out a road map to bring down the fiscal deficit to 4.1 per by 2012-13, he did not spell out any such target to bring down the prices. This is understandable; as the economic survey presented in parliament on 25th February 2010 has also pointed out that there is no easy way out of the current bout of inflation. Thus FM appears to have chosen to focus on the root cause of the price rise and highlighted the importance of the agricultural sector in providing food security. To spur growth in this sector he proposed a four-pronged strategy covering (a) agricultural production; (b) reduction in wastage of produce (c) credit support to farmers; and (d) a thrust to the food processing sector.
In terms of new fiscal initiatives, the Finance Minister has done very little in this budget and it is not difficult to understand why as the government’s endeavour is to introduce new direct tax code and GST by 1 April 2011. Nevertheless, the FM did tinker with direct taxes, offering some concessions to personal income tax payers and increasing the rate of minimum alternate tax for the corporate sector, which together with other manoeuvres will result in a revenue loss of Rs. 26, 000 crore. In the case of indirect taxes, the excise duty reductions resorted to in the previous budget for stimulating demand has been partially rolled back. Similarly, excise and customs duties have been increased on petroleum products. Thus the revenue gain on this count is estimated at Rs. 43,500 crore. Another Rs. 3000 crore increase in revenue is expected on account of services tax. Overall, these measures are projected to yield additional revenues to the tune of Rs. 20,500 crore in 2010-11.
Another focus area of this year’s budget is the infrastructure sector. According to the Planning Commission, the country would need investments worth Rs 20,561.5 billion (at 2006-07 prices) during the Eleventh 5-year Plan to overcome the deficit in areas such as road, port, airport, power, telecom etc. Thus a sum of Rs 1,73,552 crore has been provided in the budget for 2010-11 for infrastructure development, which accounts for over 46 per cent of the total plan allocation.
Macroeconomic View
| | Parameter | Forecast 2010-11 |
| Growth (%) | Agriculture | 5.5 |
| Industry | 8.6 | |
| Services | 8.4 | |
| Total GDP | 8.0 | |
| Inflation | WPI Average | 6.5-7.0 |
| Interest Rate | 10-year G-sec | 8.3-8.5 |
| (Year-end) | ||
| Exchange Rate | Re/US$ | 43.5-44.0 |
| (Year-end) | ||
| Fiscal deficit | Fiscal Deficit | 5.6 |
| (as a % of GDP) |
| |
|
|
|
Key Industrialists' Quote on Budget
"The FM has managed to do an excellent balancing act with this year's Budget. His Budget is growth oriented and yet manages to address the issue of fiscal deficit in an effective manner."
Sunil Bharti Mittal
Chairman & Group CEO
Bharti Enterprises
Chairman & Group CEO
Bharti Enterprises
"The Union Budget of 2010-11 is quite a terrific Budget. Its focus areas are quickly reverting to high GDP growth, making the development process as inclusive as possible and tackling inflation in the economy."
Kumar Mangalam Birla
Chairman
Aditya Birla Group
Chairman
Aditya Birla Group
"The most important feature, I think, was that it was growth oriented."
Adi Godrej
Chairman
Godrej Group
Chairman
Godrej Group
"With its strong emphasis on the rural sector, enhanced investments in infrastructure, and the revised tax slabs, this Budget will certainly increase disposable income in the hands of consumers. together, these will partially offset the impact on demand caused by the upward revision of the excise tax."
Pawan Munjal
MD & CEO
Hero Honda
"This is indeed a budget for the aam aadmi. The FM has set his expectations and directions clearly and it is now up to all of us to rise to the occassions to deliver double-digit inclusive growth on a sustainable basis."
MD & CEO
Hero Honda
"This is indeed a budget for the aam aadmi. The FM has set his expectations and directions clearly and it is now up to all of us to rise to the occassions to deliver double-digit inclusive growth on a sustainable basis."
Mukesh Ambani
Chairman & MD
Reliance Industries Limited
Chairman & MD
Reliance Industries Limited
