NRI worldwide praised India's budget
Rs 60,000-crore relief package for farmers, including complete waiver of loans
given to small and marginal farmers

NEW DELHI, August 21, 2007
Col. Surdul Singh, New Delhi &
Gary Singh, LA

The government has made a generous gesture in announcing a loan waiver for farmers. Prime Minister Manmohan Singh hailed the Union Budget 2008-09 as pro-agriculture and pro-investment, saying the measures announced would address the problems of the critical farm sector and would lead to overall development of the economy.

Finance Minister P Chidambaram announced a Rs 60,000-crore relief package for farmers, including complete waiver of loans given to small and marginal farmers.

Presenting his fifth Budget and the last one before the general elections, Chidambaram announced waiver of Rs 50,000 crore worth of loans to small and marginal farmers and a settlement scheme for other farmers that would cost the exchequer another Rs 10,000 crore

UK NRI, Lord Swraj Paul of Caparo group praised India's budget as "very good" but said the need to deliver to the farmer was even more important than the promised loan waiver and P. Chidambaram is a very experienced finance minister and he has done a very good job

According to PTI report: NRIs in the UAE today described the Union Budget as “populist” but were disappointed that it did not contain any benefit for the 20 million expatriate community.Analysing the Budget proposals, Mr Suresh Kumar, CEO of Emirates Financial Services and a former IBPC governor, said the Budget lacks boldness. “Though it is goody-goody Budget, it is not good enough”.
Mr Kumar said the finance minister should have given more emphasis to infrastructure and agriculture and try and repeat the urban growth story in rural areas where more than 70 per cent of India lives.
“We should have targeted 10 per cent agricultural growth which would have helped remove poverty in the long-run rather than three per cent at present,” he said.
Mr Paras Shahdatpuri, a leading local businessman, said the Budget ignored the contributions made by the huge NRI community.

The Punjab Chief Minister Mr. Parkash Singh Badal today described the claim of complete loan waiver to farmers owning less than five acres of land as " an inadequate decision taken under farmer's pressure and totally insufficient to meet the burgeoning farm crisis in the country. The decision would not benefit more than twenty seven per cent of the farmers in Punjab and that too lies in the realm of uncertainty." He said that this was a mere an eye-wash by a rally-rattlled Centre.

"This is a classic case of too little, too late and done clearly under pressure of the SAD-BJP Rally. He said that the rally had so rattled the centre that even some Central leaders known to be cool had used rather intemperate language against it. This is proof enough of how the rally has worked in favour of the farmers to the extent that the budget had to be changed at the last minute to include the farm sector and it is loaded against the poor farmers who have to rely on sources other than institutional loans, like the Arhtiyas. The Centre has wasted an opportunity to get a breakthrough in this area.

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In Details:

Chidambaram's Budget gives sops, writes off farm loans

Union Minister for Finance P Chidambaram presented the Union Budget for 2008-09 in the Lok Sabha, announcing a waiver of agricultural loans to the tune of Rs 60,000 crore, raised the income tax exemption threshold to Rs 1,50,000 and slashed customs and excise duties on variety of goods.

Presenting his fifth and last full-fledged budget, Cidambaram also withdrew the controversial banking cash transaction tax but introduced a Commodities Transaction Tax on the lines of Securities Transaction Tax on options and futures.

The Central Sales Tax was reduced from three to two per cent.

Under the income tax proposals that will give a minimum relief of Rs 4,000 to all assessees, incomes between Rs 1,50,001 and Rs 3,00,000 will be 10 per cent, those between Rs 3,00,001 and Rs 5,00,000 will be 20 per cent and above Rs 5,00,001 will be 30 per cent.

Senior citizens will pay no tax up to Rs 2,25,000 and women up to Rs 1,80,000. There will be no change in the corporate income tax or the surcharge rate.

While Chidambaram's direct tax proposals are revenue neutral, those on the indirect taxes side are estimated to result in a loss of Rs 5,900 crore.

Raising the Defence budget by 10 per cent from Rs 95,000 crore to Rs 105,600 crore in the coming year, the estimates of Plan expenditure have been fixed at Rs 2,43,386 crore which will be Rs 32.4 per cent of the total expenditure. Non-Plan expenditure has been estimated at Rs 5,07,498 crore.

The revenue deficit for the current year will be 1.4 per cent against the budget estimates of 1.5 per cent and the fiscal deficit will be 3.1 per cent against an estimate of 3.3 per cent.

DIRECT TAX

In a major bonanza to the income tax payees, the Union Finance Minister P Chidambaram raised the no tax ceiling limit and changed the income tax slabs.

While the thresh-hold exemption limit has been raised from One Lakh ten thousand to one Lakh fifty thousand rupees, giving away every assessee minimum four thousand rupees tax relief.

Further carrying forward the tax slabs rationalization, the Finance Minister proposed ten percent Income Tax between One Lakh Fifty Thousand and Three lakh.

20 % rate will be charged for income between Three Lakh and Five Lakh.

Thirty percent slab will be attracted for income beyond Five Lakh.

In case of women assessee the threshold limit of exemption has been raised from One Lakh Forty Five Thousand to One Lakh Eighty Thousand.

For Senior Citizens the threshold limit stands hiked to Rs Two Lakh Twenty Five Thousand.

Senior Citizen Saving Sheme 2004 and post office time deposit account have been added to Section 80-C.

Additional deduction of Rs fifteen thousand will be allowed under section 80-D to an individual for paying medical insurance premium for parents.

CORPORATE TAX

There has been no change in the corporate income tax rates.

There has also been no change in the rate of surcharge.

Creche facilities, sponsorship for employee-sportsmen, organizing sports events for employees and Guest Houses have excluded from the purview of FBT.

Rate of short term capital gains tax has been increased to fifteen percent Securities Transaction Tax paid will be treated like any other deductible expenditure against business income.

Commodities Transaction Tax CTT will be introduced on the lines of STT on options and futures.Banking Cash Transaction Tax to be withdrawn from April 1, 2009.

CST Central Sales Tax will be reduced from three to two percent from April 1, 2008.

Roadmap for Goods and Services Tax is being prepared for introduction of combined GST from April 1, 2010.

SERVICES TAX

In a relief to about sixty five thousand small service providers will go out of service tax net as the threshold limit of exemption has been increased from eight to ten lakh per year.

The Finance Minister brought four new services in tax net including asset management service provided under ULIP.

Industry gives thumbs up to Budget

The Indian industry and investment bankers on Friday gave a thumbs up to the Union Budget, saying Finance Minister P Chidambaram has done a "fantastic" job.

"Budget is on the expected lines and the industry has not been penalised although we are disappointed that the corporate tax has not been changed," apex industry body CII's President Sunil Mittal said.

"Corporate tax are at fair levels. An increase of five per cent on short-term capital gains will make people hold for medium term," Kotak Mahidra Bank Managing Director Uday Kotak said.

Industrialist Sajjan Jindal, Vice-Chairman and MD of JSW Steel said: "This is a mixed budget and the FM has not touched upon the corporate tax, which we were anticipating. The focus is on agriculture and education sector."

Although there is a little disappointment on not meeting the concerns on iron ore conservation and the taxes imposed on chrome ore export are also a long-pending demand of ours, which is a welcome step, he added.

"It (hike in customs duty on chrome ore exports by Rs 1,000 crore) is definitely a welcome move. We hope that this increase in duty should dissuade the exports from shipping the mineral overseas. Besides abolishing duty on scrap melting steel will also help us considerably," Indian Stainless Steel Development Association (ISSDA) President N C Mathur said.

Ranbaxy Laboratories Chairman and Managing Director Malvinder Mohan Singh said: "It is an extremely positive Budget and we are delighted at the excise duty cut."

The proposals in the Budget are helpful in setting up health infrastructure, he added.

Hero Honda Motors Managing Director Pawan Munjal said the excise cut on two and three-wheelers to 12 per cent from 16 per cent was a welcome move.

"This is only half of what we have asked. Nevertheless, we are happy with that. We will study the impact of this cut to pass on the benefit to the customers," he said.

Hyundai Motor India Ltd Senior Vice-President Sales and Marketing Arvind Saxena told PTI: "We are happy with the proposal, but he (FM) could have taken a few more steps for the bigger cars and exports."

He said the company would, however, pass on the excise duty cut benefit to the customers.

"Currently, we are in the process of calculation and latest by tomorrow, we will be announcing price cuts," he added.

Honda Siel Car India Senior General Manager Jnaneswar Sen said while the step was a welcome one, it would create a further gap between the small cars and the big cars segment.

The salient features of the Budget are:

Sarva Shiksha Abhiyan will be provided Rs 13,100 crore, Mid Day Meal scheme Rs 8,000 crore, Secondary education Scheme Rs 4,554 crore.
410 additional Kasturba Gandhi Vidyalaya to be set up in backward blocks.
Navodaya Vidyalayas to be opened in 20 districts with special focus on regions having SC/ST concentration.
Allocation of Rs 130 crore for this purpose. Rs.750 crore more to be given for merit scholarship to students up to 10th and 12th class.
Mid day Meal scheme extended to upper primary level in 3479 schools. 16 central universities to be opened in 2008-09.
Three IITs to be set up in Andhra Pradesh, Bihar and Rajasthan.
Schools of architecture and planning in Bhopal and Vijaywada. More institutes of higher education to be opened.
Rs 100 crore to be given to Information Technology Ministry to set up national knowledge centres.
Allocation for NRHM increased to Rs 12,050 crore
Rs 992 crore for national AIDS programme.
A national programme for the elderly to be started at a cost of Rs. 400 crore.
Rashtra Swasthya Beema Yojana to start from April one in Delhi and Haryana. Rs 30,000 for each family belonging to unorganised sector.
Allocation for ICDS increased to Rs 6300 crore.
Rs 85 crore sanctioned for scholarships to students pursuing science education.
Indian Institutes of Science Education and Research to be set up at Bhopal and Thiruvananthapuram.
Agriculture credit doubled in the first two years of the government to reach Rs.2.40 lakh crore by March 2008.
Eleventh Plan started on a robust growth.
Gross budgetary support to be raised to Rs 2,43,386 crore, an increase of more than Rs 38,000 crore from the current level.
Allocation for Bharat Nirman to be raised to Rs 31,280 crore.
Twenty per cent hike in education budget this year from Rs 28,674 crore to Rs 34,400 crore.
GDP growth slows down to 8.4 per cent during quarter ended December 31, 2007 as compared to 9.1 per cent a year ago.
Economy grew over eight per cent over 12 successive quarters since 2005, says Finance Minister P Chidambaram.
Growth rate of agricultre extimated at 2.6 per cent during the current year.
Services and manufacturing sectors expected to grow by 10.7 per cent and 9.4 per cent, says Chidambaram.
Keeping inflation under check is one of the cornerstones of the Government's policy.
Rice production estimiated at 94.08 million tonnes, maize 16.78 mt, soyabean 9.45 mt and cotton 23.38 million bales.

Union Minister for Finance- P Chidambaram is a very experienced finance minister