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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 as 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. He 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. Flagship Programmes 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. 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. INCOME TAX EXEMPTION The income tax exemption limit has been raised 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. The Budget brings 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. INDIRECT TAXES On the indirect taxes front, there is 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 percent. 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. 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. 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. 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. 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. 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. North EAST The North Eastern Region (NER) continued to receive special attention and enhanced allocations. In the General Budget 2008-09 presented in Lok Sabha today by the Finance Minister, Shri Chidambaram an amount of Rs. 1,445 crore has been provided to the Ministry of Development of North Eastern Region(DONER). The total Budget allocation for NER, spared over different ministries/departments, will increase from Rs. 14,365 crore in 2007-08 to Rs. 16,447 crore in 2008-09. The North Eastern Region especially, the border areas face special problems that cannot be tackled in the usual course or through normal schemes. Hence, the Government proposed to identify the urgent needs of these areas and addressed them through a special mechanism. A sum of Rs. 500 crore in a fund dedicated for this purpose has been set aside in the Budget. The government will establish 16 Central Universities in each of the hitherto uncovered States. This was stated by the Finance Minister Shri P. Chidambaram while presenting the General Budget 2008-09 in Lok Sabha today. Shri Chidambaram said the Government also proposed to set up three IITs in Andhra Pradesh, Bihar and Rajasthan; two IISERs at Bhopal and Tiruvananthapuram; and two Schools of Planning and Architecture at Bhopal and Vijaywada. More institutes of higher education, as promised by the Prime Minister, would be established during the Eleventh Plan period. WELFARE SCHEMS FOR MINORITIES Allocation for the welfare schemes meant for the minorities has been substantially stepped up.The allocation for the Ministry of Minority Affairs would be increased from Rs. 500 crore in 2007-08 to Rs. 1,000 crore in 2008-09. Apart from the schemes commenced in 2007-08, the following schemes/measures have been proposed to be implemented in 2008-09:
DECENTRALIZED HEALTH DELIVERY SYSTEM The Government has proposed to increase the allocation for National Rural Health Mission (NRHM) to Rs. 12,050 crore. NRHM is the key instrument of intervention by the Central Government. The goal of the government is to establish a fully functional community owned, decentralized health delivery system. 462,000 Associated Social Health Activists (ASHAs) and link workers have been trained and are in place. 177,924 Village Health and Sanitation Committees are functional. 323 district hospitals have been taken up for upgradation. National Aids Control Programme would be provided Rs. 993 crore. On the other hand an amount of Rs. 1,042 crore will be provided for polio eradication programme in 2008-09. FLAGSHIP PROGRAMMES National Rural Employment Guarantee Scheme (NREGS), Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Rajiv Gandhi Drinking Water Mission (RGDWM) and Total Sanitation Campaign (TSC) got enhanced allocation in the Budget. More money would be provided to meet the legal guarantee of employment under NREGS. NREGS would be rolled out to all 596 rural districts in India. Initially an amount of Rs. 16,000 crore will be provided for this purpose. The allocation for JNNURM will be increased from Rs. 5,482 crore in 2007-08 to Rs. 6,866 crore in 2008-09. The allocation for RGDWM has been enhanced from Rs. 6,500 crore in 2007-08 to Rs. 7,300 crore in 2008-09. An amount of Rs. 1,200 crore has been provided for the TSC in 2008-09. The government has approved the continuation of the Rajiv Gandhi Grameen Vidyutikaran Yojana during the Eleventh Plan period with a capital subsidy of Rs. 28,000 crore. An allocation of Rs. 5,500 crore is proposed for the Yojana (including NER) in 2008-09. An allocation of Rs. 800 crore has been provided for the Accelerated Power Development and Reforms Project. The poor state of transmission and distribution (T&D) so far has been a drag on the sector. Huge investments are required to be made in T&D, but linked to fundamental reforms. Hence, it has been proposed to create a national fund for transmission and distribution reform. The details of the scheme will be worked out and announced very soon. AIBP The
government is investing heavily in the Accelerated Irrigation Benefit
Programme (AIBP) and the Rainfed Area Development Programme and
in the management and augmentation of water resources. Under AIBP,
24 major and medium irrigation projects and 753 minor irrigation
schemes will be completed in this financial year. In 2008-09 the
estimated outlay for the above scheme is Rs. 20,000 crores with
a grant component of Rs. 5,550 crores. Rainfed Area Development
Programme has been finalized with an allocation of Rs. 348 crores.
He said that priority will be given to those areas that have not
been the beneficiaries of watershed development scheme. AGRICULTURE To give a boost to the agricultural sector, the scheme of Debt Waiver and Debt Relief for farmers has been announced. All agricultural loans distributed by scheduled commercial banks, regional rural banks and cooperative credit institutions upto March 31, 2007 and overdue as on December 31, 2007 will be covered under Debt Waiver and Debt Relief scheme. For marginal farmers and small farmers there will be a complete waiver of all loans that were overdue on December 31,2007 and which remained unpaid until February 29,2008. In respect of other farmers, there will be a One Time Settlement (OTS) scheme for all loans that were overdue for the above period. Under the OTS, a rebate of 25 percent will be given against payment of the balance of 75 percent. Agricultural loans which were rescheduled and are restructured during 2004-06 as per the RBI guidelines will also be eligible for a waiver or an OTS on the same pattern. The implementation of the Debt Waiver and Debt Relief scheme will be completed by June 30, 2008. Upon being granted debt waiver or signing an agreement for debt relief under the OTS, the farmer would be entitled to fresh agricultural loans from the banks. Thirty million small and marginal farmers and ten million other farmers will benefit from the scheme. The total value of overdue loans being waived is estimated at Rs.50,000 crores and the OTS relief on the overdue loans is estimated at Rs. 10,000 crores. In order to increase the resource base of NABARD, SIDBI and NHB, the resources of the scheduled commercial banks are being tapped to the extent that they fall short of their obligation to lend the priority sector. Financial Inclusion can be taken forward by expanding the reach of these three banks.To achieve this, he proposed to create the following funds : (i) A fund of Rs. 5,000 crore in NABARD to enhance its refinance operations to short term cooperative credit institutions. (ii)Two funds of Rs. 2,000 crore each in SIDBI – one for risk capital financing and other for enhancing refinance capability to the MSME Sector and;A fund of Rs. 1200 crores in NHB to enhance its refinance operations in the rural housing sector. Each of these funds will be governed by general guidelines that are now applicable to Rural Infrastructure Development Fund (RIDF) with some modifications. The minister however emphasized the need for enhancing eligibility criteria for loans under the Differential Rate of Interest Scheme to the weaker sections, which still stand at levels fixed in 1986. Annual family income of Rs. 18,000/- in rural areas and Rs. 24,000 in urban areas have been fixed as borrowers’ eligibility criteria. Defence The allocation for Defence has been raised by 10 percent from Rs. 96,000 crores to Rs. 105,600 crore. Any further amount needed for Defence forces, especially for capital expenditure will be provided. In anticipation of the Unorganized Sector Workers’ Social Security Bill, 2007 being made into law, the Government has introduced three schemes viz Aam Admi Bima Yojana, Rashtriya Swasthya Bima Yojana and Indira Gandhi National Old Age Pension Scheme with an objective to provide social security to workers in the unorganized sector in a phased manner. The Finance Minister proposed to place an additional sum of Rs. 1000 crore with Life Insurance Corporation (LIC) in the year 2008-09 to cover another one crore poor households under the Aam Admi Bima Yojana in the second year. Expressing the happiness,he announced that in the first year of Yojana, LIC will cover 10 million landless households by 30th September, this year. Rashtriya Swasthya Bima Yojana will be implemented with effect from 1st April, 2008. Regarding the Indira Gandhi National Old Age Pension Scheme, which was in large with effect from November 19, 2007 to include all persons over 65 years falling under Below Poverty Line (BPL) category, the Finance Minister proposed to allocate Rs. 3,443 crore in 2008-09 as against Rs. 2,392 crore in 2007-08 because of expansion of coverage from 87 lakh to 157 lakh beneficiary under the scheme. WORLD CLASS SKILL DEVELOPMENT BANK Emphasising the need to launch a world-class Skill Development Programme in Mission Mode, that will address the challenge of imparting the skills required by a growing economy, the Finance minister proposed to establish a non-profit corporation and entrust the mission to that corporation. He said, “it is my intention to garner about Rs.15,000 crore as capital from Governments, the public and private sectors, and bilaterial and multilateral sources”. To begin with, he proposed to put Rs. 1000 crore as Governments’ equity in the proposed non-profit corporation. He stressed that both the structure and the leadership of the mission must be such that the programme can be scaled up quickly to cover the whole country. In the General Budget 2008-09, a five-year tax holiday has been announced for setting up Hospitals anywhere in India, specially in tier-2 and tier-3 towns in order to serve the rural hinterland. Certain specified urban agglomerations will not be covered. This window will be open for the period April 1,2008 to March 31, 2013, during which the hospital must commence operations. For the purpose a new sub-section 11 C in Section 80-IB will be inserted. A five year holiday from income tax has been announced 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 during April 1,2008 to March 31, 2013. The measure has been taken in view of significant rise in tourist arrivals, especially for cultural tourism. * India’s fiscal year is April-March.
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