M A I N   N E W S

FM skirts populist steps
* Relief to I-T payers
* Cars, ACs, TVs, jewellery, computers costlier
 * Mere 4% rise in defence outlay
 * Govt starts stimulus rollback
Anita Katyal
Tribune News Service

New Delhi, February 26
Despite signs of an economic revival, Finance Minister Pranab Mukherjee today resisted the temptation to announce big ticket populist schemes in the 2010 Budget today. He did provide some cheer for the middle class in the form of major personal tax sops. However, this was offset by a two per cent across the board hike in excise duties and an increase in the duty on petrol and diesel, raising fears of a further rise in prices.

As indicated in the Economic Survey yesterday, the Finance Minister resorted to a partial withdrawal of the stimulus packages given to industry nearly two years ago to cushion the adverse impact of the global economic meltdown. Presenting the budget for 2010-11, Mukherjee signalled the UPA government’s intention to work towards fiscal consolidation and to “quickly revert to high GDP growth path”. In this direction, he announced measures for improving investment climate and strengthening research sector by reducing dependence on borrowing and containing deficit.

As against a fiscal deficit of 7.8 per cent in 2008-2009, the Finance Minister has now pegged it at 5.5 per cent. Mukherjee’s proposal to raise Rs.25,000 crore through disinvestment in public sector undertakings signals that reforms are are back on the government’s agenda.

Mukherjee was, however, particularly severe on petroleum products as he raised the central excise duty on petrol and diesel by Rs 1 per litre and slapped customs duty of five per cent on crude, tripling it to 7.5 per cent on petrol and diesel and doubling it on some other oil products.This announcement had an immediate affect as prices of petrol and diesel were raised by Rs.2.67 and Rs.2.58 per litre, respectively, in Delhi tonight, while items like air conditioners, cars, cement cigarettes and television sets will also become costlier. Car manufacturers were quick off the mark who announced that they would be increasing prices.

On the positive side, Mukherjee provided relief to individual taxpayers by broadening tax slabs. As a result, income between Rs 1.6 lakh to Rs 5 lakh would attract a 10 per cent tax, income between Rs.5 and Rs 8 lakh would be levied 20 per cent and income beyond Rs 8 lakh 30 per cent. These proposals can save the taxpayer up to Rs. 50,000. He offered a deduction on investment up to Rs 20,000 in long-term infrastructure bonds over the prevailing Rs one lakh deduction on savings.

But Mukherjee’s decision to hike petrol and diesel prices was met with strong protests from the opposition and parties like the SP, RJD and the BSP who all staged an unprecedented walkout even as Mukherjee was still reading his budget proposals. The BJP is planning to oppose the Budget and move cut motions. If today’s walkout is any indication, the government will find itself on a sticky wicket when it comes to passage of the crucial finance and appropriation bills. As it is, the numbers are not in its favour in the Rajya Sabha. It is comfortably placed in the Lok Sabha as it enjoys the outside support of the SP, the BSP and the RJD. However, if these parties with crucial 46 members decide to throw their lot with the opposition, the government’s majority is reduced to a mere two in the lower house.

While the political class is drumming up opposition to the Budget, dubbing it as “highly inflationary”, the ruling combine is hoping to draw public support for the measures it has taken for the salaried class as well as the farmer and industry. Wih the real estate and banking sectors set to get a big push, the markets have already responded positively while the general consensus from the corporate sector is that it is a “balanced and responsible budget.”

Keeping the focus on inclusive growth, Mukherjee announced a concessional interest of five per cent for farmers on timely payment by doubling subvention to two per cent while improving availability of credit and giving greater impetus to the food processing sector. The allocations for social sectors have been hiked to Rs 1,37,674 crore, which constitutes 37 per cent of the total plan outlay.

Instant Impact: Petrol, diesel dearer

NEW DELHI: Within minutes of the Budget being announced, government officials said petrol and diesel would cost Rs 2.67 and Rs 2.58 more per litre, respectively, from midnight Friday. Prices would slightly vary in other places depending on sales tax in states. The prices have gone up as a result of the restoration of the 5 per cent import on crude and a Re 1 hike in the central excise duty. — TNS

WHAT’S AHEAD

• Taxes on big cars and SUVs increased 2% to 22%
• Basic duty of 5% on crude oil restored
• Tax on cigarettes, cigars and chewing tobacco up
• Rs 26,000 crore revenue loss due to cut in direct taxes
• Partial roll back of reduction in central excise duty
• IT returns forms for individual tax payers to be further simplified
• Expenditure in 2010-11 estimated at 11,l8,749 crore
• Fiscal deficit estimated at 5.5 % in 2010-11; 1% improvement over 2009-10
• 46% of plan allocations in 2010-11 will be for infra
• Implementation of direct tax code from April 2011
• FDI flows in April-Dec 2009 $20.9 billion
• National Social Security Fund created for workers in unorganised sector
• National Clean Energy Fund to be established
• Exclusive skill development programme for textile sector
• Banking facilities to be provided to all habitations with a population of 2,000 and more
• New fertiliser policy from April 2010
• Toy balloons, water filters, refrigerators, mobile equipment, set top boxes, CDs cheaper

Sectorwise allocation

Boost to welfare plans

Social sector walked away with the second highest plan allocation in the Union Budget With 37 per cent of the total plan outlay for 2010-2011 reserved for social welfare schemes, the sector stands next only to infrastructure in terms of priority.

Budget for the Social Justice Ministry saw the highest raise at 80 per cent —from Rs 2,500 crore last year to Rs 4,500 crore in the coming fiscal.

It directly means more funds and new welfare schemes.

Health sees slight rise

Allocation for the health sector has witnessed a marginal increase from Rs 19,534 crore in the last fiscal to Rs 22,300 crore this time, a raise of 14.15 per cent. Also, excise duty rebate has been granted to medical equipment, hence making it cheaper.

Cigarettes, cigars and cigarillos, however, would cost more as the excise duty on them has been raised.

The National Rural Health Mission has managed Rs 13,910 crore, up from Rs 12,529 crore last time.

Cheap loan for farmers

In a major benefit to farmers, a subsidised five per cent interest rate on crop loans has been announced.

The FM also declared a four-pronged strategy to boost the agriculture sector, covering production, reduction in wastage of produce, credit support to farmers and thrust to food processing sector.

The Budget also proposed a 15 pc hike in credit for farm sector and extension of Green Revolution to Bihar, Chattisgarh, Jharkhand, Eastern UP, WB, Orissa.

More roads on the anvil

Infrastructure development has received major attention from the Finance Minister, with a lion's share of Rs 1.73 lakh crore allocated to the sector from the total plan allocations.

"I propose to maintain the thrust for upgrading infrastructure in both rural and urban areas," Mukherjee said in his Budget speech.