Highlights of Budget 2008: Farmers' debt to be waived!

Presenting his fifth and last budget of this UPA government, Finance Minister P Chidambaram today offered various attractive packages to several categories of society including farmers. Tabling his final budget Chidambaram today opened government’s locker for the farmers to give them hefty packages of Rs.60,000 crores for selective small farmers who are committing suicide due to heavy losses. The Salaried employee will also get some relief as now the standard deduction has raised Rs.1,50,000 from current Rs.1,10,000. Here is the summery of the presented budget:

Tax Relief for the Salaried Employee

• Tax exemption (Standard Deduction) hiked from Rs. 1,10,000 to Rs. 1,50,000 • Senior citizens' SD hiked from Rs. 1,95,000 to 2,25,000 • Women exemption surged from Rs. 1,45,000 to 1,80,000 • New tax slabs are: 10 per cent for 1,50,000 to 3,00,000, 20 per cent for 3,00,000 to 5,00,000 and 30 per cent above 5,00,000

Corporate Income Tax

• There is no change in Corporate Income Tax Slab

New Revised Tax Rate

The products on which tax reduced are:

• Two and three wheelers reduced from 16 to 12 % • Water purification items waived off 8% • Anti-AIDS drugs • Life Saving drugs • Pharma goods slashed to 14% • Vitamin pre-mixes to lower from 30% to 20% • Buses’ chassis • Paper and paper products • Small cars; now new tax rate is 14% • Hybrid cars cut from 24 pct to 14 pct • General CENVAT rate on all goods from 16% to 14% • Few bulk drugs slashed to 5% • Customs duties on crude Sulphur reduced to 2% • Convergence products slashed to 5% • Steel melting scrap, aluminum scrap • Refigeration components • Packaged software to be lower from 8% to 12%

The products that become duty free are naptha, Coral, Set Top Box while non-filter cigarettes will be expensive up to 50%

New laws for Stocks and Securities

• PAN card is now essential for all securities transactions • Plan to begin Forex Derivatives market • Derivative market will be more transparent now • Levy on STT only on option premiums • Commodities transaction tax introduced like STT • Short term capital gains to be taxed at 15% • Risk Capital Fund to be set up in SIDBI

New Proposed Plans

• To begin Smart-card based PDS system in Harayana, Chandigarh • To be set up 3 IITs in AP, Bihar and Rajasthan • To be set up 2 schools of Planning and Architecture • To be set up 3 Indian Institutes of Science in Bhopal and Trivandrum • To be set up16 central universities • To be set up Navodiya Vidyalayas in 6,0-00 districts • To be set up 6,000 model high schools across the country • To be set up 410 Vidyalayas (Model Schools) in villages • To set up 288 PSU bank branches in minority districts • Launch a world-class skilled development programme • To set up Ultra mega power project at Tilana shortly • Rs 300 cr for desalination plant near Chennai • 500 soil testing labs to be set up in the country • 53 minor irrigation programmes to be implemented • Rajiv Gandhi Drinking Water mission allocation hiked • NREG scheme to be rolled out in 596 districts • To sep up a National Programme for the Elders • To establish 1 lakh broadband-enabled common service centres in villages • All knowledge bodies to be connected via broadband

New Grants

• National Highway Development programme will get Rs 12,966 crore • Accelerated power development programmes will get Rs 8,000 crore • National Human Development Programme to get Rs. 12,956 crore • Rs 800 crore for power reforms • Rs. 275 crore for newly recommended State data centres • Rs.12,050 crore for National Rural Health Mission • Rs 75 cr for Rajiv Gandhi National Fellowship Programme • National Horticulture Mission gets Rs 1,100 crore • Weather-based crop insurance scheme to get Rs 50 crore • Special grant of Rs 20 crore to Tea Research Association • Jawaharlal Nehru Urban Renewal Mission to get Rs 6,865cr • More funds for cardamom, coffee growing • National Minorities Development Corporation to get Rs. 75 crore • Rs 85 crore to building a knowledge society • Scholarships for science and research • Education and Health allocation up 20% • Secondary education Scheme Rs 4,554 crore • Rs 10 crore for Nehru Kendras in 110 districts

Projected Targets & New Plans

• GDP Growth rate will be at 8.8% • 2008-09 will be a year of consolidation • Budget 08-09 about raising our sights, doing better • Govt, RBI to jointly work to check capital inflow • Banks to be encouraged to embrace total financial inclusion • Foreign investment up to $8 billion expected for oil block exploration • Manufacturing growth rate to be taken to double digit • RIDF corpus to be hiked to Rs.14,000 crore • Target of Rs 2.80 lakh crore for agri-credit in 2008-09 • Rs. 500 crore for development of border areas • LIC to cover all women Self-help Groups linked to banks • More minority recruitments in central para-military forces • Rs 20,000 crore for irrigation projects under AIPB • Rs 500 crore to be allocated for micro irrigation schemes • Allocation for NE schemes up from 14,365 crore to 16,400 crore • Service Sector to grow at 10.7% • Budgetary allocation for mid-day meal scheme Rs 8,000

Social Amenities

• 17 lakh families of weavers under Health Insurance • Rs 30,000 health cover for every worker in unorganised sector • Duty reduced on life saving drugs • Mid-day meal scheme extended to upper primary classes • Selective small farmers to get full waiver on all loans • Scheme of debt waiver and debt relief for farmers • Rs. 12,050 crore for strengthening rural health services • Rs 1,042 crore for anti-Polio drive • National Rural Health Mission allocation hiked by 15% • 24% increase in allocation for child development • Rs 200 crore for potable water in schools • Sanitation programmes to get Rs 1200 crore • National Handicap Development Corp to get Rs 9 crore • Remuneration of Anganwadi workers hiked to Rs 1,500

Distribution

• Ministry of Woman and Child Dev gets Rs 7,200 crore • Rashtriya Krishi Vikas Yojana to get Rs 2,80,000 crore • Minority Affairs Ministry fund doubled to Rs 1,000 crore • Allocation for ICDS increased to Rs 6,300 crore • Rs 100 crore to Ministry of Science and tech for National Knowledge Network • Rs. 34,400 crore budgetary allocation for education • Sarva Shiksha Abhiyaan gets Rs 13,100 crore • Bharat Nirman Programme gets allocation of Rs 31,280 crore • Bharat Nirman Programme gets allocation of Rs 31,280 crore • Rs 750 crore for upgradation of 300 ITIs in 25 districts

Review of current plans

• Agriculture was disappointing; growth rate was 2.6% • Growth of agri-credit impressive • Capital inflows in excess of economic deficit • Agri credit doubled in first 2 years of UPA rule • All time record for food grain output in 2007 • Since Aug 2007 financial economies witnessed turmoil • Total output of food grains 219.32 million tonnes