Key Features of India Budget 2009-10

Key Features of India Budget 2009-10:

• The government to abolish to the controversial Commodity Transaction Tax (CTT) in line with recommendation of Economic Advisory Council of Prime Minister.

• Branded jewellery exempt from excise duty. Duty on gold re-imposed. Customs duty hike on gold and silver. Tax exemption holiday for gems, jewellery and textiles.

• Target for agriculture credit raised to Rs 3,25,000 crore (Rs 3250 billion) in 2009-10 from Rs 2,87,000 crore. Incentives in interest rates to farmers to pay back agriculture loans in time. Additional allocation of Rs 1,000 crore for accelerated irrigation project.

• Allocations for highways being stepped up by 23 per cent. Indian Infrastructure Financial Corporation Limited to evolve financing mechanism for giving increased support to infrastructure projects.

• Indian Infrastructure Finance Company Limited will re-finance commercial bank loans upto 60 per cent in critical projects through public private partnership to the tune of Rs 1,00,000 crore (Rs 1,000 billion) to raise investment in the sector.

• Allocation for urban poor for provision for housing and basic amenities to be raised to Rs 3,973 crore (Rs 39.73 billion) in the current year. Allocation for Jawaharlal Nehru Urban Renewal Mission increased by 87 per cent to Rs 12,887 crore (128.87 billion).

• Central assistance for storm-water drainage project increased to Rs 500 crore (Rs 5 billion) from Rs 200 crore (Rs 2 billion) in the Interim Budget.

• Income Tax returns to be made simpler.

• Banks and insurance firms to remain in public sector. Rs 100 crore (Rs 1 billion) to be given as one time grant in aid to expand banks in unbanking areas.

• Export Credit Guarantee scheme extended till March 2010.

• Growth rate in 2008-09 dipped to 6.7 per cent from average 9 per cent growth in previous three fiscal years. Pranab said he intends to make pre-budget consultations with state finance ministers an annual affair.

• Fiscal deficit grew from 2.7 per cent to 6.8 per cent of GDP. Total fiscal stimulus during 2008-09 amounts to Rs 1,86,000 crore (Rs 1,860 billion).

• India infrastructure finance company IIFCL is given greater flexibility; used to take care of asset liability mismatch and free up capital for financing new projects; can facilitate incremental lending to infra sector

• IIFCL will finance 50% of projects; involving total investment of Rs1 trillion, public investment in infra to get a big boost. Asked my colleagues in the state governments to remove policy bottlenecks

• Budgetary allocation to highways and railways being stepped up by 23%; railways Rs15,000 crore. JNUURM allocation up by 87%.

• Scheme for urban poor housing to Rs3,973 crore; Rajiv Gandhi Awas Yojana; slum free India. Mumbai drainage allocation up

• Accelerated power development and reform progamme: Rs2,080 crore / 160% increase in allocation

• Natural gas: long distance highway to facilitate a national gas grid

• Agriculture: Rs2.87 trilliion to Rs3.25 trillion; interest subvention scheme for farmer; govt shall pay an additional 1% subvention to those who paid their loans on time — Rs411 crore over the interim budget

• Farm loan waiver covered 40 million farmers; six months extension on account of delayed monsoon. Maharashtra loan waiver coverage review; a task force. Accelerated irrigation development programme:75% increase in allocation

• Kautilya advice: return to frbm targets at the earliest after the negative effects of the global economy are overcome. Medium term perspective await the 13th FC.

• To bring fiscal deficit under control need institutional controls; will cover subsidy, expenditure and disinvestments

• Fertilizer subsidy: a nutrient based subsidy scheme as opposed to product based scheme; unshackling of fertilizer manufacturers will ; direct transfer of subsidy to the farmer

• Oil and petroleum subsidy: Three-fourths of our oil consumption is met through imports. Task force

• Direct tax reforms: asked the department to work on saral-2 form. We need a tax system that generates revenue on a sustained basis. More reforms spread over 5 years.

• Disinvestment: people participation; banks/insurance to remain in public sector; recall of nationalization/socialist credentials; 40 years ago on this day.