India’s Budget to be announced on 6th July, 2009

India’s Budget to be announced on 6th July, 2009

Finance minister Pranab Mukherjee will present the Union Budget for 2009-10 to Parliament in July.

The budget text is not a speech of financial records; it is also a agreement of the government cost-effective policies. There for it is the most expected strategy paper in Indian economic.

This year government is focused on agriculture, rural development, internal security, primary education, industry growth and natural resources.

While making of budget so many surveys and analysis is doing like pre budget survey, Industry key persons meetings, different government departments head & important persons seat together, financial organizations talk, in that way the budget is making. Lots of affords is made a final Budget.

Expectations are high after the formation of the new government at the center. The Finance Minister, Pranab Mukherjee, announced that the government will present the full budget on July 6. The signals are the government will take quick and strong measures to address structural problems and provide a stimulus to enable an 8-9 per cent GDP growth.

Indications from senior government officials confirm that the new government will take the necessary steps to keep the interest rates under control. The government is putting pressure on banks to reduce home loan interest rates for current borrowers, to bring them on par with the new loan accounts.

Economic survey 2009 was tabled in Parliament on Thursday. Economic survey of india is the first step towards presenting the budget which is scheduled on 6th July, 2009.

Economic survey 2009 recommends that government should phase out all cesses and surcharges on taxes and securities transaction tax, fringe benefit tax and introduce a new income tax code.

Economic survey of india also called for reviewing commodities transaction tax proposed in the Budget for 2008-09. Economic survey called for selling loss making PSUs and 10% stake in profile making PSUs.

The railway budget will be presented by Railway Minister Mamata Banerjee and the fiscal budget by Finance Minister Pranab Mukherjee on July 6, 2009.

The parliament session begins on Thursday with the presentation of the Economic Survey. After the survey and the railway and union budgets are presented, there would be a discussion on the demands for grants for select ministries.

The Congress said it had the numbers and was confident of pushing through the “aam aadmi” agenda it raised in the run up to the elections. The Liberhan Commission report on the 1992 demolition of the Babri Masjid by Hindu supporters is likely to create political ripples.

For many years the televised budget speech was one of the few opportunities for Indians to hear the government directly, and some finance ministers have added a measure of showmanship, with P. Chidambaram, for example, quoting Tamil poetry.

Highlights of Economic Survey of India 2009:-

• Unleash reforms – phase out cesses, surcharges and transaction taxes (such as commodities transaction tax, securities transaction tax and Fringe Benefit Tax).

• Introduce new Income Tax Code that results in neutral corporate tax regime.

• 7-7.5% growth possible in 2009-10.

• Allow 49% FDI in defence and insurance; permit FDI in multi-format retail starting with food.

• Proposes another round of fiscal stimulus including tax cuts and increase in expenditure.

• Decontrol petrol and diesel prices; end Govt monopoly in railways, coal and nuclear energy.

• Lift all bans on future contracts to restore price discovery; decontrol sugar and fertiliser.

• Revitalise disinvestment programme to generate Rs 25,000 crore annually, list all PSUs and auction those beyond revival.

• Economic growth decelerated in 2008-09 to 6.7 per cent from 9 per cent in 2007-08.

• Fiscal deficit in 2008-09 shot up to over 6 per cent from 2.7 per cent in 2007-08.

• Survey indicates FRBM-II to get back to path of fiscal consolidation.

• Complete the process of selling 5-10 per cent equity in identified profit-making non-’Navratna’ PSUs.

• List all unlisted PSUs and sell a minimum 10 per cent equity to public.

• Auction all loss-making PSUs that cannot be revived.

• In PSUs with zero net worth, allow negative bidding in the form of debt write-off.

• Auction 3G spectrum.

• The auctioned spectrum must be freely tradable, with capital gains on spectrum to be taxed under the Income Tax Act.

• Rationalise Dividend Distribution Tax to ensure full single taxation of returns to capital in the hands of the receiver.

• Reform petroleum (LPG, Kerosene), fertiliser and food subsidies to reduce leakages and ensure targeting.

• Limit LPG subsidy to a maximum of 6-8 cylinders per annum per household.

• Phase out kerosene supply-subsidy by ensuring that every rural household has a solar cooker and solar lantern.

• Review customs duty exemptions and move to a uniform duty structure to eliminate inverted duties.

• Implement GST from April 1, 2010.

• Rapid operationalisation of UID Authority within 3 months.

• Agriculture growth fell sharply to 1.6 per cent in 2008-09 from 4.9 per cent.

• Exports grew at 3.4 per cent to $168 billion in 2008-09 from $163 billion in previous fiscal.

• Imports grew at 14.3 per cent to $287.75 bn from $251.65 bn Trade balance deteriorated to $119.05 bn from $88.52 bn.

Expectations from Budget:-

“People across the economy are pinning too much expectation on this particular budget, because they expect something dramatic perhaps to happen,” said Shubhada Rao, chief economist at Yes Bank.

The high impact that taxes and subsidies have on the lives of people in a country where poverty remains widespread have long made the annual budget plan especially important for Indians.

Mr. Mukherjee, in his union budget speech announced the allocation of Rs. 1,41,703 for the defence sector. He justified this allocation by saying that increase had to be made considering the present security situation around the country especially in the wake of the Mumbai terror attacks.

The Finance Minister increased Plan expenditure for Defence this year to Rs 86,879 crore. Last years Plan expenditure was only Rs 73,600 crore, which contributed to an increase of Rs 13,279 crore this year.

In his effort towards battling the on-going recession Mr. Mukherjee, allocated Rs. 30,100 crore to the rural development program of the government. He refrained from making any alteration in the tax and duty rates.