More on Union Budget 2010

February 26, 2010
• Union Cabinet approves Budget for 2010-11.
• Fiscal year 2009-10 was challenging for Indian economy
• First challenge before Government is to quickly revert to high GDP growth path of 9 per cent
• Second challenge is to harness economic growth to make it more inclusive and consolidate gains.
• Impressive recovery in the past few months. Can witness faster recovery in the coming months, says Mukherjee
• We have strengthened food security, says Mukherjee.
• 18.5 per cent manufacturing growth in December was highest in two decade.
• Figures for merchandise exports for January encouraging after turnaround in November and December last.
• Need to review stimulus imparted to economy, says FM.
• Need to ensure that the demand-supply imbalance is managed, says Mukherjee.
• FM appeals to “misguided elements” (left wing extremists) to eschew violence and join the mainstream.
Expenditure/ deficit and revenue

• Total expenditure pegged at Rs 11.8 lakh crore, an increase of 8.6 per cent.
• Non-plan expenditure pegged at Rs 37,392 crore and Plan expenditure at Rs 7,35,657 crore in budget estimates.
• 15 per cent increase in plan expenditure and six per cent in non-plan expenditure.
Fiscal deficit pegged at 5.5% for 2010-11, says FM
• Fiscal deficit seen at 4.8 per cent and 4.1 per cent in 2011-12 and 2012-13 respectively.
• Fiscal deficit pegged at 6.9 per cent in 2009-10 as against 7.8 per cent in the previous fiscal.
• Government’s net borrowing to be Rs 3,45,010 crore for 2010-11.
Taxes, Disinvestments and Exports/Imports

• Gross tax receipts pegged at Rs 7,46,656 crore for 2010-11, non-tax revenues at Rs 1,48,118 crore.
Income Tax department ready with two-page Saral-2 return forms for individual salaried assesses.
• FM prunes tax rates: Income up to Rs 1.6 lakh – nil
• Income above Rs 1.6 lakh and up to Rs 5 lakh – 10 per cent
• Income above Rs 5 lakh and up to Rs 8 lakh – 20 per cent
Income above Rs 8 lakh – 30 per cent.
• Finance Minister says Government hopes to implement direct tax code from April 2011.
• Earnest endeavour to implement General Sales Tax in April 2011.
• Finance Minister to continue giving cash subsidy for fuel and fertiliser instead of previous practice of bonds.
• Status paper on public debt within six months.
• Market capitalisation of five PSUs listed since October increased by 3.5 times.
FDI inflows steady during the year. Government has taken series of steps to simplify FDI regime.
• Government intends to make FDI policy user friendly by complying all guidelines into one document.
• Government to continue interest subvention of 2 per cent for one more year for exports covering handicrafts, carpets, handlooms and small and medium enterprises.
Tackling fuel/food price rise

• Double digit food inflation last year due to bad monsoon and drought-like conditions, says FM
• Erratic monsoon and drought-like conditions forced supply side bottleneck that fuelled inflation, says FM.
• Deficit in foodgrains storage capacity to be met by private sector participation.
• Government conscious of the situation of price rise and taking steps to tackle it, says FM.
• Kirit Parekh report on fuel price deregulation will be taken up by Oil Minister Murli Deora in due course, says FM.
Growth/Development schemes and proposals

• Government has decided to set up apex-level Financial Stability and Development Council.
• RBI considering some additional banking licenses to private companies, NBFC will also be considered if they meet criteria.
• Government committed to ensure continued growth of Special Economic Zones.
• Need to take firm view on opening up of the retail sector, says FM.
• Government proposes to set Coal Development Regulatory Authority.
• Government for competitive bidding for coal blocks for captive power plants.
• Clean Energy Fund to be created for research in new energy sources.
• Alternative port to be developed at Sagar Island in West Bengal.
• Exclusive skill development programme to be launched for textile and garment sector employees.
• Financial Sector Legislative Reforms Committee to be set up.
• Planning Commission to prepare integrated action plan for Naxal-affected areas.
• A unique identity symbol would be provided to the Indian Rupee in line with US Dollar, British Pound Sterling, Euro and Japanese Yen.

Rural and social sector development

• Govt to provide Rs 66,100 crore for rural development
• Outlay for social sectors pegged at Rs 1,37,674 crore, accounting for 37 per cent of the total plan allocation.
• Plan allocation for health and family welfare increased to Rs 22,300 crore from Rs 19,534 crore.
• Allocation for NREGA stepped up to Rs 40,100 crore in 2010-11.
Indira Awas Yojana scheme’s unit cost raised to Rs 45,000 in plain area and Rs 48,500 in hilly areas.
• Government will raise Rs 25,000 crore from disinvestment of its stake in state-owned firms.
• Government to provide Rs 16,500 crore to public sector banks to maintain tier-I capital.
• Rs 200 crore provided for climate resilient agriculture initiative.
• 25 per cent of plan outlay earmarked for rural infrastructure development.
• Allocation for urban development increased by 75 per cent to Rs 5,400 crore in 2010-11.
• One per cent interest subvention loan for houses costing up to Rs 20 lakh extended to March 31, 2011; Rs 700 crore provided.
• Rs 1,270 crore provided for slum development programme, marking an increase of 700 per cent.
• Government decides to set up National Social Security Fund with initial allocation of Rs 1000 crore to provide social security to workers in unorganised sector.
• Government to contribute Rs 1,000 per year to each account holder under the new pension scheme.
Finance allocation
• For rural development, Rs 66,100 crore have been allocated.
• Govt to provide Rs 66,100 crore for rural development
• Allocation for development of micro and small scale sector raised from Rs 1,794 crore to Rs 2,400 crore.
• Allocation for women and child development hiked by 80 per cent.
• Rs 1,900 crore allocated for Unique Identification Authority of India.
• Plan outlay for Ministry of Social Justice raised by 80 per cent to Rs 4,500 crore.
• Plan allocation for Ministry of Minority Affairs raised from Rs 1,740 crore to Rs 2,600 crore.
• Defence allocation pegged at Rs 1,47,344 crore in 2010-11 against Rs 1,41,703 crore in the previous year. Of this, capital expenditure would account for Rs 60,000 crore.
Infrastructure and Education

• Rs 1,73,552 crore provided for infrastructure development.
• Road transport allocation raised by 13 per cent to Rs 19,894 crore, says FM.
• Propose to maintain thrust of upgrading infrastructure in rural and urban areas. IIFCL authorised to refinance infrastructure projects.
• Road transport allocation raised by 13 per cent to Rs 19,894 crore.
• Allocation for Railways fixed at Rs 16,752 crore, an increase of Rs 950 crore over last financial year.
• Mega power plant policy modified to lower cost of generation; allocation to power sector more than doubled to Rs 5,130 crore in 2010-11.
• Rs 500 crore allocated for solar and hydro projects for Ladakh region.
• Allocation for new and renewable energy ministry increased by 61 per cent to Rs 1,000 crore.
• One-time grant of Rs 200 crore provided to Tirupur textile cluster in Tamil Nadu.
• Allocation for National Ganga River Basin Authority doubled to Rs 500 crore.
• Plan allocation for school education raised from Rs 26,800 crore to Rs 31,036 crore in 2010-11.
Agriculture

• Nutrient based fertiliser subsidy scheme to come into force from April 1.
• Nutrient based fertiliser subsidy will reduce volatility of subsidy and also reduce it
• Government to provide Rs 300 crore to organise 60,000 pulse and oilseed villages and provide integrated intervention of watershed and related programme.
• Repayment of loan by farmers extended by six months to June 30, 2010 in view of drought and floods in some part of the country, says FM.
• Interest subvention for timely repayment of crop loans raised from one per cent to two per cent, bringing the effective rate of interest to five per cent.
Source: http://www.timesnow.tv/Pranab-presents-budget-prunes-tax-rates/articleshow/4339395.cms

Union Budget 2010

February 26, 2010
  • Finance Minister says Government hopes to implement direct tax code from April 2011.
  • Kirit Parekh report on fuel price deregulation will be taken up by Oil Minister Murli Deora in due course.
  • Fiscal Deficit for 2010-11 at 5.5%
  • FY’12 Fiscal Deficit seen at 4.8%
  • Fiscal Deficit for 2010-11 at 5.5%
  • Rs 60000 cr as capex for defence sector
  • Allocation of Rs 1900 cr for UID project
  • UIDA to roll out 1st set of IDs by end of this year
  • National Social Security Fund for unorganised sec
  • Govt to contribute Rs 1000/month for Pension Security
  • Rs 5400 cr allocated for urban development
  • Rs 48000 cr allocated for Bharat Nirman
  • Rs 66100 cr allocated for rural development
  • Allocation to NREGA raised to Rs 41000 cr
  • To allocate Rs 22300 cr to Health Ministry
  • Social sector spending in FY’11 seen at Rs1.38 lakh cr
  • 25% of plan allocation for rural infra
  • Govt ready with Draft Food Security Bill
  • To provide 1 time grant for Tirupur exports
  • To establish National Clean Energy Fund
  • Plan outlay for renewable energy raised to Rs 1000 cr
  • IIFCL disbursements at Rs 9000 cr by March 2010
  • Allocation to road infra raised to Rs 19894 cr
  • Govt to extend interest subvention of 2%
  • RBI considering additional banking license to pvt players
  • NMDC, SVJN stake sale to fetch Rs 25000 cr in FY’10
  • To raise Rs.25,000 cr in FY’10 from PSU disinvestment
  • Hope to rollout GST by April 1, 2011
  • To implement Direct Tax Code from April 1, 2011
  • Hope to reach 10% GDP in near future
  • Review of stimulus for fiscal consolidation
  • Budget has to signal policies for the future
  • Budget not a mere statement of accounts
  • India faces challenges of reviving double digit growth
  • Challenges not any less than 9 months ago
  • Need to provide food security, healthcare for all
  • Economy has weathered the recent economic crisis
  • Indian economy faced grave uncertainty in 2009
  • Need to move to high GDP target of 9%
  • Budget to reflect govt’s vision for development
  • Weakness in govt system still a challenge
  • Need to make development more inclusive
  • Expect roadmap for reduction in subsidy for oil sector
  • Issues of subsidy need to be addressed
  • Expect a partial withdrawal of stimulus in the budget
  • More clarity on growth in H2 CY’10
  • Indian markets to trade sideways to negative
  • Real GDP growth of 8-9% next fiscal
  • Govt needs to address deficit concerns
  • Monetary tightening likely to continue
  • Rising inflation a challenge for budget
  • No hike expected in IT exemption limits
  • Likely roll-back in tax cuts on excise duties
  • Depreciation rate to be aligned for accounting
  • Expect fiscal deficit at 5.3% in FY’11 vs 6.3% of GDP
  • Overall deficit may come down from 10% of GDP to 8.5%
  • Expect govt to begin unwinding of softer fiscal stance
  • Infrastructure push to continue
  • Hike in Excise duty likely
  • Announcement of divestments unlikely
  • Govt must look at reducing corporate tax rates
  • Expect fiscal deficit to be cut to 5.5% of GDP in FY’11
  • Expect budget to withdraw certain stimulus measures
  • Expect budget to start process of fiscal consolidation
  • Need for policy intervention for initiating infra projs
  • Expect to see relief for SPV structure
  • European sales up 2% (YoY) to $80mn
  • Guidance based on product exclusivity in U.S
  • 2010 PAT seen at Rs.460cr vs Rs.310cr (YoY)
  • Expect 2010 sales at Rs.7800cr vs Rs.7340cr (YoY)
  • Inflation remains a concern
  • Outline a stable disinvestment plan for few years
  • Must look for clearer tax reforms in 2011
  • Expect govt to take back some stimulus measures
  • Excise rollback not to affect industrial growth
  • Expect some support for export oriented sector
  • Govt should focus on reviving investment demand
  • Key triggers: Borrowing program and monetary stance
  • South-based players may go slow on price hike
  • May pass on hike in excise duty to customers
  • No impact on Marico since products are tax exempt
  • Marginal impact on Nestle and Britannia
  • Difficult for HUL to pass on hikes due to shrinking share
  • HUL: Major chunk of production attracts excise
  • Competition will make it difficult to hike prices
  • CV makers M&M, Tata Motors less sensitive to hikes
  • Maruti, Hero Honda unlikely to pass on entire excise hike
  • Prices may be increased if excise duty is hiked
  • Auto, FMCG, cement likely to take a hit on margins
  • Hike will impact cement, auto and FMCG
  • Excise duty is expected to increase by 2-4%
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  • Expect to see R&D reforms for education sector
  • Strong case for impetuos measures to be reduced
  • Hope to see partial rollback of the stimulus
  • Nifty March Put-Call ratio at 1.26
  • Lower than average rollover shows nervousness ahead
  • Nifty starts the March series at 2.15 cr shares
  • Nifty rollovers at 68.1% vs 76.5%
  • Feb 23: Rs 634.2 cr Feb 22: – Rs 56.8 cr
  • Feb 25: – Rs 594.78 cr Feb 24: Rs 566.4 cr
  • FIIs Net Buy at Rs.645.02 cr in F&O
  • FIIs Net Buy at Rs 321.48 cr in Stock Futures
  • FIIs Net Sell at Rs.242.72 cr in Index Futures
  • DIIs Net Buy at Rs 325.92 cr
  • Reverting to path of fiscal responsibility
  • FY’10 fiscal deficit is seen at 6.8% of GDP
  • Total deficit, including states’ is 10.2% of GDP
  • Widening of Tax net to include base not taxed earlier
  • To ensure tax evasion gets more difficult & expensive
  • Simplifying tax procedures that lead to tax evasion
  • Need for a simple tax system with reasonable rates
  • Short-term revenue loss must not hold up tax reforms
  • Speedy implementation of GST desirable
  • Disinvestment proceeds of Rs1120cr insufficient
  • Govt should aim at raising Rs4000cr through disinvestment
  • Funds collected can be invested in public sector
  • Funds to be used for financing long term investments
  • Shift from cash account to accrual budgeting beneficial
  • Accrual budgeting will ensure resource utilisation
  • Accountability with delivery time key to efficiency
  • Third party monitoring for each project
  • FIIs Net Sell at Rs 594.78 cr
  • Third party monitoring will ensure resource utilisation
  • Monitoring cell to include Govt, and industry experts
  • Reforms needed in property, tax and import procedures
  • Sustaining domestic level of prices not viable
  • Administrative reforms can help cut transaction costs
  • Govt should provide flexibility in labour laws
  • Labour laws must enable industry to compete with China
  • Risk of food inflation cascading to other sectors
  • Long pending labour reforms have hindered investments
  • A sound regulatory framework needed
  • Sharp increase in food prices cause for concern
  • Transparency in bidding process for PPP projects
  • Issues delaying roll-out of PPP need to be addressed
  • Recommends bringing down deficit to 5.7%
  • Govt intervention needed to expedite PPP process
  • Conducive eco-system for SMEs needed
  • Recommends calibrated exit move from current stand
  • Systems should provide supply of man power, branding
  • Simplify process of land acquisition
  • Tax benefits for companies which source from SMEs
  • SME stock exchange will help raise equity capital easily
  • Continue with concessional excise duty of 8%
  • Reduce excise duty gap between large and small cars
  • Large cars attract 20% + Rs 20,000 excise, small cars 8%
  • Recommends fiscal consolidation by eliminating deficit
  • Reduce excise duty on MUVs from 20% to 8%
  • Remove anomalies in input and output duty structures
  • Tyres can be imported at 10% duty, natural rubber at 20%
  • Reduce excise duty on carbon black from 14% to 8%
  • GDP growth expected to breach 9% in 2011-12
  • Classify ATF as a ‘declared good’ attracting 4% VAT
  • States presently tax ATF at varying rates, going up to 16%
  • Scrap 10% service tax on intl travel in first class
  • Increase the FDI limit in aviation to 49% from 26%
  • Extend repayment period on farm debt waiver
  • Increase FDI cap in insurance from 26% to 49%
  • GDP seen at 8.5% ( +/- 0.25%)
  • Allow power finance companies to float tax free bonds
  • GDP growth expected to be 1% higher in FY’11
  • Recapitalise PSU banks or permit raising stake dilution
  • Increase cap on FII stake in PSU banks from 20%
  • Correct input and output duty anomalies
  • Cement attracts no import duty, but pet coke attracts 5%
  • Simplify MRP based excise duty structure for cement
  • Excise duty is Rs 230/tn for MRP below Rs 190/50kg bag
  • Allow abatement for manufacturing expense for MRP excise
  • Continue with the concessional excise duty of 8% now
  • Increase the income tax slab to drive consumption
  • Increase allocation to NREGS and other welfare schemes
  • Yen declines, export stocks trade positive
  • Japan industrial production rises 2.5% (MoM)
  • Japanese stocks trade marginally higher
  • Mixed trade across Asian markets
  • Bernanke: Fed to investigate trader betting against Greece
  • Orders for durable goods rose 0.6% in January
  • Increase depreciation rate for hotels to 20%
  • Jobless claims hit 22,000 for the latest week
  • Increase tax holiday period from 5 years to 10 years
  • Early sell off triggers by concerns on Greece, eco data
  • Make LTC tax free every year vs for 2 years in block
  • Make VAT rate for hotels uniform across the country
  • Exempt cakes made in hotels from 8% excise
  • Bring STPIs on par with SEZs on tax benefits
  • Increase outlay for higher education
  • Allocate 2-3% of GDP for e-governance projects
  • GDP growth expected to be 1% higher in FY’11
  • Formulate the PPP process for roads and infra projects
  • Exempt infra cos from 15% dividend distribution tax
  • Exempt all infra cos from payment of MAT @ 15%
  • Govt should ensure free flow of credit to infra sector
  • De-regulate oil sector,adopt Parikh Committee’s suggestion
  • Increase subsidies from Rs 0.83/lt for kerosene
  • Provide infrastructure status to E&P and refining
  • Extend 80 IB benefit to pre-NELP & NELP I-VII gas blocks
  • Give a tax holiday to city gas distribution networks
  • Exempt power companies from 15% distribution tax
  • Exempt power companies from MAT @ 15%
  • Allow power companies to isssue tax-free bonds
  • Increase subsidy for solar energy to Rs 16/unit
  • Exempt carbon credit income earned from renewable energy
  • Increase deduction on housing loan interest to Rs 2.5 lk
  • Extend tax benefits for affordable housing beyond Mar ’12
  • Allow fund raising via ECBs through the automatic route
  • Allow separate deduction for housing loan repayment
  • Cut long term capital gains period to 1 year for realty
  • Increase duty on iron ore exports to 20% from 15%
  • Continue with excise duty rate of 8%
  • Accord infrastructure status to the steel sector
  • Extend the 10 (B) benefit to export from SEZs from Mar ’10
  • Extend 2% interest rate subvention to March 2011
  • Biggest challenge in removing impediments
  • Targets in infrastructure sector achievable
  • Capacity addition in power and roads behind target
  • Inflation primarily driven by food products
  • Slowdown in agriculture affecting some segments
  • Industrial outlook bright in the medium term
  • Growth in credit to industry fell from 37% to 14.2%
  • Automobiles, rubber manufacturing recover strong
  • Inflows were down 2% at $19.38 bn (YoY)
  • Recovery in industrial sector is evident
  • Inflows at Rs 93,354 cr, a growth of 9% (YoY)
  • Growth in consumer durables drove industry revival
  • Reversal in downward trend in IIP growth
  • Food coupons must replace existing PDS system
  • Capital inflow creating a supply demand imbalance
  • Portfolio investment rush fuel rise in markets
  • Portfolio investment not backed by strong fundamentals
  • Capital inflows into economy to have negative impact
  • Oil, food bonds need inclusion in fiscal accounting
  • Consumption more impacted by slowdown
  • Tax receipts down due to excise rate cut
  • Expenditure restraint to keep deficit at 6.8%
  • Receipts down due to indirect tax shortfall
  • Likely shortfall in revenue receipts
  • Cut Cap goods tariffs to 3%, abolish EPCG scheme
  • Lower peak duties from 10% to 7.5% merchandise sector
  • Large inflows crucial for countries with deficit
  • Policy changes needed to promote exports
  • Legislation enabling states to levy service tax proposed
  • Centre to reduce share in gross tax revenue
  • Centre to review levy of cess and surcharge
  • Fiscal consolidation by reducing revenue deficit
  • Rs 30000 cr compensation if GST introduced in 2014
  • Rs 40000 cr compensation if GST introduced in 2013
  • Rs 50000 cr compensation for states’ revenue loss
  • Binding agreement of GST rates between Center-States
  • GST to contribute significantly to tax revenues
  • Proposes to reduce debt, GDP ratio to 68%
  • GST seen as a game changer in tax reform process
  • Increasing fuel prices may increase inflation
  • Sustaining domestic fuel prices not viable
  • Food inflation entails risk of transmitted
  • Sharp increase in food price cause for worry
  • Fundamentals of economy improving
  • GDP growth expected to breach 9% in 2011-12
  • GDP seen at 8.5% (+/-0.25%)
  • GDP growth expected higher by 1% over 2009-10

Source: http://www.ndtv.com/budget/data.php?page=Simplified