During the presentation of Budget in the Lok Sabha today, the decision to provide a debt-relief package initially raised a furore that the Congress-led UPA was indulging in political one-upmanship. However, Chidambaram maintained that for small and marginal farmers with holdings up to two hectares there would be complete waiver of all loans overdue on December 31, 2007. For other farmers, there would be a one-time settlement scheme (OTS) providing a rebate of 25 per cent against payment of the balance 75 per cent. Loans rescheduled in 2004 and 2006 through special packages and those rescheduled in the normal course would also be eligible for a waiver or OTS.
The debt relief and waiver scheme will be implemented by June 30, 2008, and the farmers thus covered will be entitled to fresh farm loans from banks in accordance with normal rules. The total value of overdue loans being waived is estimated at Rs 50,000 crore and the OTS relief at Rs 10,000
crore.
The finance minister has set the target of Rs 280,000 crore as farm credit in 2008-09.
The income tax limit for women assessees has been hiked to Rs 1,80,000 and that for senior citizens to Rs 2,25,000. The tax rate will be 10 per cent for the income slab between Rs 150,001 and Rs 300,000, 20 per cent for income between Rs 300,001 and Rs 500,000 and 30 per cent for income of Rs 500,001 and above.
Chidambaram has not proposed any change in the corporate income tax and the rate of surcharge.
In a major initiative, the minister said a National Programme for the elderly with a Plan outlay of Rs 400 crore would be started in 2008-09. At the same during the 11th Plan period, two National Institutes of Ageing, eight regional centres and a department for geriatric medical care in one medical college/tertiary level hospital in each state would be established.
He announced a 10 per cent hike in the allocation for Defence from Rs 96,000 crore to Rs 105,600 crore. “I have assured the Raksha Mantri that any further amount needed for the Defence forces, especially for capital expenditure will be provided,” Chidambaram said.
He announced a five-year tax holiday for setting up hospitals anywhere in India specially in tier-II and tier-III towns to serve the rural population. Certain specified urban agglomerations will not be
covered. This window will be open for a five-year period from April 1, 2008, to March 31, 2013.
Similarly, a five-year tax holiday is being provided for two, three and four star hotels established in specified districts, which have Unesco declared World Heritage sites. The hotel should be constructed and start functioning between April 1, 2008, and March 31, 2013.
While withdrawing the banking cash transaction tax, Chidambaram provided relief in the fringe benefit tax for certain class of tax payers. He proposed reduction in excise duty on agriculture-related items to reduce the cost of manufacture of cattle and poultry feeds. The duty on vitamin premixes and mineral mixtures has been reduced from 30 per cent to 20 per cent. Duty on phosphoric acid has been reduced from 7.5 per cent to 5 per cent.
Four additional service sectors have been brought under the Service Tax Act. They are asset management service provided under ULIP to bring it on a par with those under mutual funds; services provided by stock/commodities exchanges and clearing houses, customised software to bring it on a par with packaged software and other IT services; and right to use goods in cases where VAT is not payable.
It was clarified that money changers, persons running games of chance and tour operators using contract carriage vehicles are liable to service tax. The threshold limit of exemption for small service providers is proposed to be increased from Rs 8 lakh annually to Rs 10 lakh per annum. The measure is expected to benefit 65,000 small service providers.
Chidambaram announced two major interventions for the vulnerable sections of society under which every worker in the unorganised sector of the country, falling under the BPL category, will be provided health cover of Rs 30,000 under the Rashtriya Swasthya Bima Yojana. He disclosed that most of the states had agreed to join the yojana and it would be launched in Delhi, Haryana and Rajasthan in the next financial year. The Centre would provide Rs 205 crore as its share of the premia in 2008-09.
He proposed reducing general CENVAT rate on all goods from 16 per cent to 14 per cent to give a stimulus to the manufacturing sector.
He announced excise duty reduction in the growth and employment driving sectors. Excise duty on buses and their chassis reduced from 16 to 12 per cent, on small cars from 16 to 12 per cent and hybrid cars from 24 to 14 per cent; on two and three wheelers from 16 to 12 per cent; on all goods produced in the pharmaceutical sector from 16 to 8 per cent and on certain variety of printing and writing paper from 12 to 8 per cent.
The minister noted that the number of 1,411 tigers in the country should ring alarm bells. The tiger was under grave threat and to redouble efforts to protect the animal, he proposed making a one-time grant of Rs 50 crore to the National Tiger Conservation Authority. The bulk of the grant would be used to raise, arm and deploy a special tiger protection force.
To facilitate training of helicopter pilots, Chidambaram proposed to remove the duty on helicopter simulators.
No change has been effected in the peak rate of customs duty.
He said the Sixth Central Pay Commission would submit its report by the end of next month.
He expressed confidence that the report will meet the legitimate expectations of government employees
In the Budget estimates, the total expenditure is estimated at Rs 750,884 crore. Of this, the Plan expenditure is placed at Rs 243,386 crore. Non-Plan expenditure is estimated at Rs 507,498 crore. The revenue deficit for the year will be 1.4 per cent and the fiscal deficit 3.1 per cent.
