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Debt
relief package
Rs. 60,000 crore debt
relief package benefiting four crore farmers, increase in spending
on social sector schemes and relief to income-tax payers are some of
the highlights of the Union Budget for 2008-09.
Presenting the budget in the Lok Sabha today, Finance
Minister, Shri P. Chidambaram, announced a new insurance scheme for
workers in the unorganized sector, setting up of institutes of
higher learning and 6000 high-quality model schools, and provision
of Rs. 16,000 crore to cover all rural districts under National
Rural Employment Guarantee Scheme (NREGS).
Under the debt waiver and relief package, small and marginal
farmers (with holdings up to 2 hectare) there will be a complete
waiver of all loans overdue on December 31, 2007 and which remained
unpaid until February 29, 2008. For other farmers, there will be a
one-time settlement (OTS) scheme. Under the OTS, a rebate of 25 per
cent will be given against payment of the balance 75 per cent. Loans
re-scheduled in 2004 and 2006 through special packages and those
re-scheduled in the normal course will also be eligible for a waiver
or an OTS. The debt relief scheme will be implemented by June 30,
2008 and the covered farmers 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 scheme is likely to benefit about
three crore small and marginal farmers and one crore other farmers.
Expressing the hope that the target of agricultural credit
for 2007-08 would be exceeded, the Finance Minister has set the
target of Rs. 280,000 crore farm credit in 2008-09. Short-term crop
loans will continue to be disbursed at interest rate of 7 per cent
per year.
Irrigation sector
More investment is flowing into the
irrigation sector. Under the Accelerated Irrigation Benefit
Programme, 24 major and medium irrigation projects and 753 minor
projects will be completed. The outlay for this programme is being
raised from Rs 11,000 crore last year to Rs. 20,000 in 2008-09. The
Rain-fed Area Development Programme will be implemented, with an
allocation of Rs. 348 crore.
The Government will establish the Irrigation and Water
Resources Finance Corporation with an initial capital of Rs. 100
crore. This Corporation will mobilize resources for major and medium
irrigation projects.
Initiatives for rejuvenating the agricultural sector
include setting up of 500 soil testing laboratories, introduction of
crop insurance scheme for plantation crops and support to
cooperative sector reforms.
PDS: The budget provides Rs. 32,667 crore
for food subsidy under the Public Distribution System (PDS). As a
new initiative for efficient delivery of food grains under the PDS,
smart cards are being introduced in Haryana and Chandigarh, on pilot
basis.
Indira Awas Yojana: Keeping in mind
the higher cost of construction of houses by the poor, the subsidy
per unit for new houses sanctioned under Indira Awas Yojana after
April 01, 2008 is being enhanced from Rs. 25,000 to Rs.35,000 in
plain areas and from Rs.27,500 to Rs.38.500 in hilly/difficult
areas. The subsidy for upgradation of houses goes up from Rs. 12,500
per unit to Rs.15,000. Loans up to Rs.20,000 per unit under the
Indira Awas Yojana will be available at the interest rate of 4 per
cent.
Education and Health sectors
Calling the education and health sectors
‘the twin pillars on which rests the edifice of social sector
reforms’, the Finance Minister announced 20 per cent increase in
budget allocation for education and 15 per cent for the health
sector.
In the area of school education, a model school
programme with the aim of establishing 6,000 high quality model
schools has been announced. Mid-day meal scheme is to be extended to
upper primary classes in Government and Government-aided schools in
all blocks of the country. Nehru Yuva Kendras will be opened in all
the 123 districts which presently do not have an NYK. In higher
education, three IITs are to be set up in Andhra Pradesh, Bihar and
Rajasthan; two IISERs at Bhopal and Thiruvananthapuram; two Schools
of Planning and Architecture at Bhopal and Vijayawada; and one
Central University in each of the hitherto uncovered States. To
encourage children to take up science and R&D, scholarships will
be given to students under a new scheme, Innovation in Science
Pursuit for Inspired Research (INSPIRE).
Highlighting the need for launching a world class skill
development programme in mission mode, the budget seeks to establish
a non-profit corporation. The Government will put Rs. 1,000 crore as
initial equity in the corporation. Continuing the scheme of
upgradation of ITIs, the budget provides Rs.750 crore for upgrading
300 more ITIs in 2008-09. In the Health sector two major
interventions are planned. Under the Rashtriya Swasthya Bima Yojana
every worker in the unorganized sector falling under the BPL
category and his family will get health cover of Rs. 30,000. For the
elderly a National Programme for the Elderly is to be started in
2008-09.
The budget provides for Rs. 1,000 crore for the Aam Admi Bima
Yojana that provides insurance cover to poor households. This will
cover one crore poor households in addition to the one crore likely
to be covered by September 30 this year. Funds have also been
enhanced for the Indira Gandhi National Old Age Pension Scheme. This
Scheme has been expanded from November 19 last year to include all
persons over 65 years falling under the BPL category.
National Rural Employment Guarantee Scheme
Allocations for the Flagship Programmes have
been enhanced. Provision has been made to expand the National Rural
Employment Guarantee Scheme to cover all 596 rural districts. For
providing potable water to schools in water deficient habitations,
provision for installing stand-alone systems is being made under the
Rajiv Gandhi Drinking Water Mission.
Schemes benefiting SCs and STs exclusively have been
provided Rs. 3,966 crore and for schemes where at least 20 per cent
of the benefits are earmarked for SCs and STs, the budget provides
Rs. 18,983 crore.
The schemes announced for the welfare of the minorities
include a multi sectoral development plan to be drawn for each of
the minority concentration district and a scheme for modernizing
Madrassa education. The allocation to the Ministry of Minority
Affairs has been doubled to Rs. 1,000 crore.
Women and Child Development
The budget has a number of initiatives for women
and children. The allocation to the Ministry of Women and Child
Development has been enhanced by 24 per cent to Rs. 7,200 crore. For
the first time, a statement on child related schemes has been
introduced in the budget. The total expenditure on schemes for child
welfare would be of the order of Rs. 33,434 crore. Rs.11,460 crore
has been provided for 100 per cent women specific schemes and Rs.
16,202 crore for schemes where at least 30 per cent is earmarked for
women-specific programmes. LIC is being asked to extend the
Janashree Bima Yojana to cover all women Self Help Groups that are
credit-linked to the banks.
North-Eastern region
The North-Eastern region continues to
receive special attention in this year’s budget also. The total
budget allocation for this region has been raised by over Rs. 2,000
crore to Rs. 16,447 crore. The government proposes to identify the
urgent need of border areas in the north-east and address them
through a special mechanism, and for this a Rs. 500 crore fund is
being established.
Income Tax
The Finance Minister has raised the income
tax exemption limit from Rs. 1,10,000 to Rs. 1,50,000, thus giving
every assessee a relief at minimum of Rs. 4,000. The tax rate will
be 10 per cent for the income slab between Rs. 1,50,001 and Rs.
3,00,000 and 20 per cent between Rs. 3,00,001 and Rs. 5,00,000. For
income of Rs. 5,00,001 and above the income tax rate will be 30 per
cent. The exemption limit for women assessees has been increased to
Rs. 1,80,000 and in case of senior citizens to Rs. 2,25,000. The
Finance Minister has not proposed any change in corporate income tax
and in the rate of surcharge. A person paying medical insurance
premium for his parents will be allowed an additional deduction of
Rs. 15,000 under Section 80D. Justifying the changes in the slabs
for personal income tax Shri Chidambaram said that moderation will
beget revenues and fairness will beget compliance.
Service Tax
The Finance Minister has brought four more
services under the service tax net. They include asset management
service provided under ULIP, services provided by stock /commodity
exchanges and clearing houses, right to use goods in cases where VAT
is not payable, and customized software. He also clarified that
money changers, persons running games of chance and tour operators
using contract carriage vehicles are liable to service tax. He,
however, increased the threshold limit of exemption for small
service providers from Rs. 8,00,000 per year to Rs. 10,00,000. He
said 65,000 small service providers will go out of the tax net.
DUTY
On the indirect taxes front, the Finance
Minister has made no change in the peak rates of customs duty. The
customs duty on project imports has been reduced from 7.5 per cent
to 5 per cent. He has proposed to impose a 4 per cent special
countervailing duty on a few specified projects in the power sector.
Duty on steel melting scrap and aluminum scrap has been reduced from
5 per cent to nil. Customs duty on certain life saving drugs and on
the bulk drugs used in the manufacture of such drugs has been
reduced from 10 per cent to 5 per cent and also to totally exempt
them from excise duty or countervailing duty. Specific parts of set
top boxes and specified raw materials for use in IT and electronic
hardware industry have been fully exempted from customs duty.
Specific machinery for manufacturer of sports goods, vitamin
pre-mixes, mineral mixtures and phosphoric acid used for manufacture
of cattle and poultry fields have been given duty concession.
In order to support domestic fertilizer production,
customs duty on crude and unrefined sulphur has been reduced from 5
to 2 per cent. Export duty on chrome ore has been increased from Rs.
2000 to Rs.3000 per metric tonne to conserve chrome ore. The Finance
Minister has proposed to reduce the general CENVAT on all goods from
16 per cent to 14 per cent. Excise duty on all goods produced in the
pharmaceutical sector has been reduced from 16 per cent 8 per cent.
Excise duty on buses and their chassis, small cars, two
and three wheelers has been reduced from 16 per cent to 12 per cent.
Water purification devices, flush doors, specified packaging
material and breakfast cereals will attract excise duty at 8 per
cent. Anti AIDS drug, Atazanavir has been totally exempted from
excise duty. To encourage cold chain facilities, the Finance
Minister has proposed to exempt excise duty on refrigeration
equipment above two tonne refrigeration utilizing power of 50KW and
above. Bulk cement will now attract excise duty of Rs. 400 per
metric tonne or 14 per cent ad valorem, whichever is higher. Cement
clinkers will be liable to excise duty of Rs. 450 per metric tonne.
Excise duty of packaged software has been increased from 8 to 12 per
cent. An excise duty of one per cent on polyester filament yarn,
called NCCD, has been removed and imposed on cellular mobile phones.
Investment
Emphasizing that there has been an
unmistakable boom in investment, the Finance Minister said the
Government will provide Rs. 16,436 crore as equity support and Rs.
3,003 crore has loans to Central Public Sector Enterprises.
The corpus of the Rural Infrastructure Development Fund is
proposed to be raised to Rs. 15,000 crore during the coming year.
Shri Chidambaram said that there has been some moderation in the
index of production of the six core infrastructure industries as
well as in the overall index of industrial production from April to
December, 2007. He said the decline has been somewhat sharp in the
case of consumer goods.
Power
The Finance Minister
has provided Rs. 5,500 crore for the Rajiv Gandhi Grameen
Vidyutikaran Yojana, Rs. 800 crore for the Accelerated Power
Development and Reforms Project and increased the outlay on National
Highway Development Programme from Rs. 10,867 crore to Rs. 12,966
crore.
Technology Upgradation
The outlay on Technology Upgradation Fund
run by the Ministry of Textiles has been increased from Rs. 911
crore in the current year to Rs. 1090 crore. Rs. 340 crore has been
allocated for the cluster approach to development of the handloom
sector. In order to scale up both infrastructure and production, the
Finance Minister proposes to take up six centres for development as
mega clusters. They include Varanasi and Sibsagar for handlooms,
Bhiwandi and Erode for powerlooms and Narsaspur and Moradabad for
handicrafts. An initial provision of Rs. 100 crore has been made for
the mega clusters.
Relief to Exporters
Recognizing that exports have come under some
pressure due to appreciation of the Rupee, the Finance Minister said
the Government has given relief to exporters in three tranches of
over Rs. 8000 crore and Rs. 8351 crore in the form of interest cost
of market stabilization bonds. He said the Government is sensitive
the needs of the exports sector and will continue to respond
sympathetically as the situation demands.
Capital Market
On the capital market front, he
announced some measures to expand the market for corporate bonds. He
said, the requirement of PAN will be extended to all transactions in
the financial market subject to suitable threshold exemption limit.
Games and Arts
The Finance Minister has provided Rs. 624 crore
for the commonwealth games, Rs. 75 crore to ICCR to promote
India’s music literature, dance, art and films, Rs. 50 crore to
the National Tiger Conservation Authority to raise and deploy a
special protection force.
Defence: The allocation for the
defence has been raised by 10 per cent from Rs. 96,000 crore to Rs.
105,600 crore.
The total plan expenditure will be Rs. 243, 386 crore
and the non-plan expenditure is estimated at Rs. 507,498 crore. The
fiscal deficit for 2008-09 has been estimated at Rs. 133,287 crore
which is 2.5 per cent of GDP. He said, significant liabilities of
the Government on account of oil, food and fertiliser bonds are
currently below the line. He said, after the obligations on account
of the Sixth Central Pay Commission become clear he would request
the Thirteenth Finance Commission to revisit the roadmap for fiscal
adjustment. |
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