Budget 2009-10: Mukherjee Announces IT-Sops; Backs Infrastructure, Farmers

Keeping his promise of “inclusive growth”, Finance Minister Pranab Mukherjee has presented which has measures that could be called popular with exemption limit for income tax being raised, FBT abolished and cheaper loans to farmers announced.

In tune with poll promises made by the Congress party, Mukherjee, in budget for 2009-10 fiscal, announced an additional Rs 10,000 personal income tax exemption and scrapping of 10 per cent surcharge, cheaper loans to farmers and incentives for export and infrastructure to attain nine per cent growth.

Giving incentives for individual tax payers, Mukherjee announced an additional exemption of Rs 15, 000 for senior citizens and Rs 10, 000 for women and others. The exemption limit will now be Rs 240,000 for senior citizens, Rs.190,000 for women and Rs 160,000 for others.

Giving incentives for individual tax payers, Mukherjee announced an additional exemption of Rs 15, 000 for senior citizens and Rs 10, 000 for women and others. The exemption limit will now be Rs 240,000 for senior citizens, Rs.190,000 for women and Rs 160,000 for others.

Also, Mukherjee eliminated Fringe Benefit Tax to alleviate pressure on employers as far as giving benefits to workers is concerned. However, there is no change in corporate tax and in the rates for customs, excise and service tax.

As for A’aam admi’, the minister proposed to enact a Food Security Act for providing Rs 25 kg of rice or wheat a month to the poor at Rs 3 kg.

Mukherjee also urged a return to fiscal responsibility targets as soon as possible.

“The first challenge is to return the GDP growth rate of 9 per cent per annum at the earliest,” Mukherjee said. “The second challenge is to deepen and broaden the agenda for inclusive development.”

According to reports, Mukherjee called on states to remove bottlenecks for infrastructure projects, and outlined plans for more flexible financing for infrastructure and development of long-distance gas pipelines.

Attaching the highest priority for infrastructure, where government institutions and banks could finance Rs one lakh crore for projects in addition with private flow, Mukherjee said that the present conditions and uncertainty about global recovery would make it difficult for him to focus on fiscal deficit which would shoot to 6.8 per cent from 2.7 per cent last year.

Mukherjee revived the government’s divestment programme, promising equity of state-run enterprises in the hands of general public.

He also said that in areas like banking and insurance, specifically, the majority control in state-run companies would remain in the hands of the government with fresh infusion of equity to help them remain globally competitive.

The minister said that the government would work for simplification of the tax structure in four years to come. The IT department has been instructed to introduce the simplified version of the tax filing form Saral, called Saral 2.

Mukherjee began his speech by highlighting the economy’s 6.7 per cent growth in 2008-9, reduction of inflation rate from 13 per cent to near zero per cent in a short period of time, improvement in industrial growth and stepping up of foreign investment.

Unconstrained by its previous alliance with leftist parties, the UPA Government has a freer hand to implement economic liberalisation measures to drive expansion but has also promised “inclusive growth” to support social programmes and rural development.

India’s economy, Asia’s third-largest, grew at 6.7 per cent in the most recent fiscal year, held back by the global downturn, after expanding at least 9 per cent for three straight years.

Budget Highlight

Pranab Mukherjee ends Budget speech by quoting the Mahatma
Excise duty on fibre for cheaper cloth reduced
Service tax to be levied on law firms
Excise duty on petrol-driven small trucks reduced to 10%
Exemption of duty on goods made at construction sites restored
Drugs for heart diseases to become cheaper
Customs duty on gold and silver import increased
Mobile phone accessories to become cheaper
Pranab’s Budget brings little cheer for the markets
Branded jewellery for women to become cheaper