UNION BUDGET (2009-10)

Economic Survey (2008-09), Railway Budget (2009-10) and Central Government Budget (2009-10) determine Central Government policies on raising income and expenditure for the Financial Year 2009-10. The current Budget estimates are for the period 1st August, 2009 to 31st March 2010 as Vote On Account has taken care of the earlier period beginning from 1st April, 2009 to 31st July, 2009. The word meaning of “Budget” is derived by a French word “bougette” which means a “leather bag”. Therefore, Finance Ministers always carry Budget documents in leather bag. But, this time an exception was made by Railway Minister, Madam Mamata Banerjee by bring Railway Budget documents in a side bag made of cloth.
Economic Survey (2008-09) states that Gross Domestic Product (GDP) growth was approximately at 7%. Important aspects dealt with are, decontrol, disinvestment, changes in taxation policies, market regulation, change in labour policy and few other issues.
Central Government proposes to decontrol and disinvestment by way of sale of loss making Public Sector Undertakings (PSUs) and selling at least 10% of equity of other PSUs. There is a proposal to separate telecom licenses and spectrum and selling the same to raise funds, at least Rs.25000 crores per annum. Liberalisation in several areas by allowing public including FDIs in the fields of Insurance, Banking, Nuclear Power Generation, certain kind of retail businesses are proposed. Sale of coal mines to power generating entities, decontrol of sugar, kerosene and cooking gas subsidies were also planned. There is a proposal to convert commercial departments of PSUs and Port Trusts into companies by issuing 49% equities to general public.
Fringe Benefit Tax (FBT), Commodity Transaction Tax (CTT), and Securities Transactions Tax (STT) were proposed to be considered for abolition. However, in the Central Budget presented later, only FBT and CTT were abolished and STT continued to be levied. Dividend Tax certain reliefs were to be considered. Indirect tax on busses would be abolished. Simplification of Bankruptcy laws for speedy conclusion of proceedings and release of impounded assets are on the card. Conversion of rural land into urban land for industrial use will be attempted.
Reconsideration of Future Contracts and drug policy were announced. Environment Regulator to look into environment matters and SEBI to supervise all financial markets were proposed. Retrenchment of labour with enhanced compensation and allowing contract labour in non-core industries as well as Police force reforms were also indicated.
Now, Railway Budget (2009-10). Fresh figures presented show increase in operating expenses going upto 92.5% as gross receipts were estimated at Rs.88,419 crores and total expenditure were placed at Rs.81,665 crores. This is highest till date. No increase in passenger fare and freight charges .But few concessions to poor people by allowing them to purchase ticket of Rs.25 for a small distance of 100 km were granted.
Sixty nine new trains including twelve Non-Stop trains were introduced and several existing trains are extended as well as frequencies increased. It was proposed to upgrade 50 railway stations as ”World Class Stations” with private participation providing modern commercial facilities, such as, shopping area and converting 375 railway station as “ Adarsha Stations” with modern facilities for passengers. Special and dedicated Fright Corridor connecting all parts of the country will be taken up for implementation.
Public Private Participation (PPP) projects to put to use of railway land to create warehouses and cold storages for the benefit of agricultural products, such as, perishable vegetables, fruits, fish, fouls, meat etc. and laying of optic fibre cables along side of railway tracks to facilitate connectivity through- out the country. If these two projects and Fright Corridors are sincerely implemented, they would create best infrastructure facilities for the development of whole of India.
Central Budget estimated the GDP growth at 10.5% for F.Y.2009-10 and GDP in Rupees term is Rs.58,56,569 crores. Instead of narrating the budget estimates, the following figures are given which are self explanatory.



In this Budget rural poor and agricultural sector has received major benefits. For example, Rs.3.25 Lakh crores agricultural credit @ 7% p.a. is proposed and those farmers who repay the loan and interest will be given 1% reduction in interest payment which means the effective rate of interest is 6% on agricultural loan. Further, under National Rural Employment Guarantee Scheme (NREGS) at least 100 days work is assured for rural people with minimum wage of Rs.100 per day and allocation of Rs.39,000 crores is made for this purpose. For the people “Below Poverty Line” (BPL) family 25 kg rice @ Rs.3 per kg is provided for. However, this is less than the promises made by some States Governments @ 35 kg rice @ Rs.2 per kg .Food Security Act incorporating several beneficial provisions for poor is planned. There is a need to in synchronise all these schemes so that BPL families get their dues.
Several pro-rural programmes, such as, Pradhan Mantri Gram Sadak Yojana (12,000 crores), and increase in allocations for Rajiv Gandhi Vidyutkarana Yojana, Rural Housing program Pradhana Mantri Adharsha Grama Yojana to uplift 1000 villages where scheduled caste population is more than 50% were included. Finance Minister assumed that these measures will boost rural consumption and consequently revive the economic recovery.
National High Way construction of around 33,000 km. was planned earlier out of which approximately 11,000km was completed. Budget not only provides additional funds but also plans to bring in private participation as well as innovative funding scheme under Indian Infrastructure Finance Company Ltd (IIFCL).
It was proposed to introduce a comprehensive Central and State Goods and Service Act and a new code for levy of Income Tax. Provisions were made for Police Reform and ‘One Rank One Pension’ for armed forces.
Under the Income Tax Act following changes were made:
1) Limited Liability Partnership (LLP) will be taxed on the same way the other partnership firms are taxed;
2) Minimum Alternative Tax (MAT) on companies was raised to 15% against the earlier rate of 10%;
3) Fringe Benefit Tax (FBT) on companies etc. abolished;
4) Commodity Transaction Tax (CTT) abolished; but certain perquisites which are now taxable under FBT will be taxed in the hands of employees;
5) Surcharge @ 10% on Income-tax payable by the Individual assesses abolished;
6) Wealth-tax basic exemption limit is raised to Rs.30 lakh from Rs.15 lakh.
7) Contributions to Electoral Trusts are exempt;
8) Provisions relating to taxing of Total Income on the basis of turnover of Rs.40 lakh @ 8% are extended to all type of businesses;
9) Quoting Permanent Account Number (PAN) is made compulsory and the assess whose income tax is to be deducted at source (TDS) should make available his PAN failing which no credit will be given for the TDS.
10) The benefit of deduction of interest paid on Education Loan is extended to students who are studying after their Senior Secondary Examination, including vocational courses;
11) Basic exemptions in computing Income- tax is increased by Rs.10,000 for general category and female assesses and Rs.15,000 increase is given to Senior Citizens. Therefore, basic exemption for general category of assesses is Rs.160,000 for female assesses is Rs.190,000 and for senior citizen is Rs.240,000. A comparable chart giving details of cumulative Income-Tax payable are given below:

Under Service-tax, additional services, such as, legal consultancy, transport of goods in sea going vessels, railways, inland water ways etc. were included. Changes made in other enactments are not given for want of space.
There is no mention of “Black Money”(in lakhs of crores) kept in Tax Heavens which all the political parties owed to bring them into India either not mentioned in Budget or by any political party or by the experts commentators on the budget.
Former Prime Minister, late Shri Rajeev Gandhi, had said that only 15% (15 paise) in a Rupee spent by the government for the benefit of people reaches them. Legendary Narayana Murthy of Infosys has expressed his desire to have an authority consisting of eminent persons to oversee the effectiveness of benefit allocated by the government reaches to the intended population,which has not been accepted. Let us hope and pray for the time being the benefits intended for poor and needy reaches more than 15% to the target groups till such an “Authority” is constituted.