Chidambaram's poll budget - a truly populist measure
Unveiling his seventh, yet fifth budget in a row, Finance Minister P Chidambaram on February 29, opened his magic box to offer bouquet of gifts to each and every section of the society. Estimating the coming election (in case of pre-demolition of government) Chidambaram has tried to delight everyone by offering more or less gifts.
Presenting his budget before the ‘Lok Sabha’-the Lower House of the Parliament, Finance Minister has shown the average Gross Domestic Product rate over 8 percent in the last 12 successive quarters till December 31, 2007 that indicates, “India is growing rapidly.”
India has gained the GDP rate by achieving 7.5 percent, 9.4 percent and 9.6 percent in the year of 2005, 2006 and 2007 respectively. However in the last quarter in 2007, India could not succeed the average GDP rate over 9 percent and slipped to 8.7 percent, yet Finance Minister optimists to maintain the 8.8% of growth rate in the forth-coming year as against, the Economical Survey of India’s point of view which estimates the growth rate would be at 8.7 % while RBI’s estimates slips to 8.5%.
But, Finance Minister, who also belongs to the rural area of Bangalore, has felt the pain of the farmers who were committing suicide due to heavy loss occurring in cultivation and thus offered massive worth of Rs. 60,000 crores to benefiting 40-million small and middle farmers.
This offer will be given in terms of completely loan waiving and partial reduction in debts to some selective farmers, who had been depended upon the rain-based cultivation. Banks, which had offered the loan, would not ask the farmers to repay the debts.
FM has also announced to open 500 soil-testing centres across the country to check the status of soil that will help the farmers to apply the right fertilizers in their farming. To support fertilizer production, Chidambaram has reduced the excise duty from 5% to 2%. By providing these offers FM has tried to woo the biggest sector of vote bank and thus replied pertinently to the oppositions, who were demanding the government to support the farmers.
For the service sector and small business class, FM has provided the opportunity to celebrate this budget by offering them tax rebate in Income Tax and Excise Duty. For service sector, FM has offered the new slab of taxes and extended the Standard Deduction margin from Rs. 1,10,000 to Rs. 1,50,000 for the male, while for women it has increased to Rs. 1,80,000 in stead of Rs.1,45,000.
Senior citizens will have to pay no money up to Rs.2,25,000 as against current Rs.1,95,000.
Besides this, Chidambaram has also revised the new tax slab, it will be now levied at the rate of 10% for the range of Rs.1,50,001 to Rs, 3,00,000; 20% for the range of Rs.3,00,001 to Rs,5,00,000 and 30% for above Rs, 5,00,000 of total annual income.
For small sectors business, FM has surged the upper tax limit from current Rs. 8,00,000 to Rs.10,00,000 for the next fiscal that will give huge relief to small business class society and as much as 65 thousand small service providers will go out from the tax range.
Chidambaram has also deducted the excise duty in some selective goods by slashing 1% from currently 3% to now 2% to reduce the cost of some necessary goods and daily used products.
Service class and small business class society is the second largest vote banks after farmers.
For the India Inc, FM has made no changes in the corporate taxes while India Inc. had been expecting to get some relief in the corporate changes. The entrepreneurs have given the mixed response over this budget. However, FM has reduced the excise duty on a wide range of products that would help the corporates to reduce the price of many products.
Things, which would be cheaper now, are two and three wheelers vehicles (bikes, small and hybrid cars), Buses, Laptops, Refrigerators, Air Conditioners, Tyres, Life saving medicines including ‘Atazanavir’ (Anti-AIDS drugs), Home theatres, Camcorders, Vacuum cleaners, Diamonds, Designer Products, Designer wears, Perfumes, Gaming Consoles, Food Products, Pet Accessories, Pet care products and Pet foods.
On the other hand, things for which people have to pay more now are Mobile Phones, Imported Small Phones, Non-filter Cigarettes, Customise Softwares, Asset Management Services and trading in stock Market covering all fields Cash, Commodities and Future & Options.
To woo the general public, Finance Minister has also performed his social amenities duty and has begun various new projects. Some running projects have got vital life by receiving more grants. For improving the poor condition of education system, FM has proposed to open, three IITs, two planning and architecture schools, three IISc, 16 new universities, 6,000 more model high schools, 410 model primary schools in villages and a world class skill development programme.
For promoting education, Finance Minister has also introduced the Mid-day meal plans to upper classes. Now, Anganwadi workers will get Rs.1,500 from current Rs. 1,000 while Anganwadi helpers will now get Rs. 750 from current Rs. 500. As much as 1.8 million Anganwadi activists will get benefit from it.
In these efforts of social reforming, FM has also announced to enhance government allocation in various social schemes covering National Rural Health Scheme, launching the health insurance scheme to unorganised labours and opening the 288 PSU banks in minor districts.
Though Finance Minister have hurt to some extent the stock traders by enhancing the Security Transaction Tax, imposing new Commodities Transaction Tax and service tax and tax on short-term trading.
The Banking Cash Transaction Tax (BCTT) will be withdrawn from April 01, 2009, while in this coming fiscal year it may go downwards.
Over all announcing the ‘pro-election and pro-public’ budget, Finance Minister has tried to grant all the aspects of the society. Lets see! Would this budget be able to sustain him and his government’s position in the next election? The time would say that the budget worked for the government or went against it.
See, the highlights of the budget; here:
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