Union Budget 2009-10
- A Favorable Budget for Common Man -
- Part 2 -

G S Oinam *

Infra structure

A . Public Private Partnership (PPP) Project refinance: (60 % refinancing on PPP projects by IIFCI) Finance Minister has insured a sharp increase in institutional funding by asking IIFCL to evolve a takeout financing scheme in consultation with banks to ensure greater funds to the infrastructure sectors. The proposal is to make IIFCL refinance 60% of commercial banks loan for PPP projects in critical infrastructure projects.

B. National Highway Project: .23% increased in National highway programme: NHDP by 23% increased i.e. Rs.13, 646 crores. The implementing agency, national highway authority of India (NHAI) can use the money to provide viability gap funding (VGF) to private developers who develop the projects. NHDP envisages development and up gradation of national highways in seven phase. The 5,846 km Golden Quadrilateral, which is almost complete and 6647 North south East West connectivity corridor form the first two phases of the mega highways construction scheme. In addition to this, government also provided for a grant of Rs.1988 crores to the States. For expansion of expressways, nexal affected areas; government has earmarked a capital outlay of Rs.4, 140.55 crores and Rs. 1319.51 crores for certain strategic roads in border areas.

C. Pradhan Mantri Gram Sadak Yojana (PMGSY): It has been hiked by 59% to Rs. 12,000 crores. The allocation will facilitate rural road building.

D. Jawaharlal Nehru National Urban Renewable Mission (JNNURM) to received 87% more funds in the current fiscal, at Rs.12, 887 crores. With this funds for urban developments will exceed Rs. 1, 00,000 crores though projects sanctioned under the mission are for nearly half the amount. Expect better infrastructure in tier-II and III cities and towns in the coming years.

E. Accelerated Power Development & Reforms Programme: 160% hike in allocation i. e. Rs.2080 crores, should bring cheers to the producers, investors, and financers of infrastructural equipment and services on roads, urban services and power equipment especially distribution and transmission equipment and manufacturers.

F. Indira Awaas Yojana: It is proposed to increase by 63 % to Rs. 8,800 crores. To broaden the pace of rural housing, it is proposed to allocate, from the shortfall in the priority sector lending of commercial bank, a sum of Rs.2, 000 crores for Rural Housing Fund in the National housing bank.

G. Rajiv Gandhi National Drinking water mission: Budget allocation increased to 27%, i.e. Rs.7000 crores over 2008-09(BE)

H. Education: Mission in education through ICT has been substantially increased to Rs. 900 crores, the provision of setting up polytechnics under the skill development Mission has been increased to Rs.495 crores. The Provision of IITs / NITs establishment allocation is Rs 2,113 crores which included new establishment amount of Rs.450 crores. The over all plan budget for higher education is proposed to be increased by Rs. 2000 crores over the interim BE.

I. Rural Employment Schemes: NREGS hike by 144%; National Rural employment guarantee scheme has increase of 144% over 2008-09 Budget estimate i.e. an amount of Rs. 39,100 crores.

J. Rural Health Mission: Increased of Rs. 2057 crores over and above Rs. 12,070 crores provided in the Interim Budget. Rastriya Swasthya Bima Yojana (RSBY) was operationalised last year and more the 46 lacs BPL families in 18 States and UTs have been issued biometric smart card. This scheme empowered poor families by giving them freedom of choice for using health care services from an extensive list of hospital including private hospital. An amount of Rs.350 crores, making 40% increase over the previous allocation is being provided in 2009-20 budgets.

K. Accelerated Irrigation Benefit Programme: An additional Rs.1000 crores over Interim BE for the accelerated Irrigation Benefit Programme (AIBP), marking an increase of 75% over allocation in 2008-09(BE). The allocation for the Rastriya Krishi Vikas Yojna (RKVY) is also being stepped up by the30% over Budget estimates of 2008-09.

L. Sarva Siksha Abhiyan (SSA) and Mid Day Meal Scheme, a key government initiative in education did not find mention in the budget speech 2009-10. One reason could be changing funding pattern of SSA that has now, become 60:40 between centre and State.

Physical progress against key inputs of SSA;

1. Fiscal deficit to be 6.8% of GDP compared with 2.5 % last fiscal
2. total expenditure goes up 36% to Rs. 10,20,838 crores, non-plan spend by 37%
3. Interest payments, at Rs.2.25 lakh crores, make up 36 % of non-plan spend.
4. Defence outlay hiked to Rs. 1, 41,703 crores from Rs. 1, 05,600 crores last fiscal.

1. Assam: capital subsidy of Rs.2, 138 crores will be provided of Rs. 5,461 crores Assam gas cracker project.
2. West Bengal: Rs 1000 crores scheme for cyclone Aila relief fund, Handloom mega cluster.
3. Maharashtra: Rs. 500 crores Brihan Mumbai storm Water drainage Project to solve the problem of flooding, Farmers loan waiver scheme,
4. Tamil Nadu: handloom mega cluster.
5. Rajasthan: Power loom mega cluster.
6. Utter Pradesh: Carpet mega cluster (Mirzapur).
7. Jammu and Kashmir: Carpet mega cluster (Srinagar).

1. FBT abolished: Fringes benefit tax paid by employers on employee benefits that don't form part of the salary. It is taxed a prescribed portion of the expenditure on 'fringe benefits' such as entertainment, festival celebration, gifts, used of club facilities and running of aircraft and as much as 17 categories were cover under is tax. Most benefits after tax abolition are celebrities, corporate executives etc.
2. MAT increased to15 %: Minimum Alternate Tax is the tax that a corporate compulsorily pays in case its corporate tax outgo- after accounting for all exemptions is below a threshold limit. It is the tax that corporate pays on its 'book profit', which is different from its profit in the 'profit & loss account'. In India, a number of IT and infrastructural companies paying MAT. An increase of MAT from 10% to 15 % is company's disappointment. However, MAT credit to be extended to 10 years from 7 years.
3. GST announcement; Introduction of indirect tax structure known as Goods and Service Tax (GST ), across the country from April 10,2010 after consultation with state will be a benefit to the government. GST is expected to replace excise duty and service tax at central and VAT at state level. At present, state levy 12% VAT on most of the items. Therefore most of the items taxable are 20% including 8% central excise. As a stimulus measure government has cut service tax by 2%. It was expected to raise service tax to 125 in this budget and 16% at the time of implementation of GTS. Country will have dual GDS i. e centre GDS and State GDS.
4. Tax cut for 9 live saving Drugs :Custom duties has been exempted for 9 live saving drugs for the patients of breast cancer, cardiac, Hepatitis-B, Rheumatic arthritis as well as influenza vaccine.
5. Extension of sunset clause for unit operating in free trade zones, export oriented units and set up for reconstruction or revival of a power generating units to assessment year 2011-12.
6. 100% deduction in respect of capital expenditure excluding land, goodwill and financing expenditure for the business of setting up and operating cold chain facility for specified products, warehousing facility for storage of agricultural produce, lying and operating a cross country natural gas, crude or petroleum oil pipeline network for distribution.
7. Definition of farm under Section 2 (23) has been amended to include limited liability partnership (LLP). However, in India, LLP will be taxed as a corporate entity and will not be a pass through. It will be treated on a par with the partnership tax mechanism.
8. Weight deduction of 150% for in house research expenditure (except land and building) incurred under section 35 (2AB) for selected industries extended to almost all sectors of the economy to promote research and development in all sectors of industry.
9. Rules for safe Harbour and alternative Dispute Resolution mechanism to be provided by the CBDT. These measures are intended to showcase India as an investment friendly country and provide clarity up front to tax payers and reduce litigation.
10. Chapter Vi-A, deductions to be allowed only if claimed in the return of income for profits and gains of a company falling or 10BB (free trade zones, special economic zones, export oriented undertakings)
11. The rate of TDS in respect of rentals have undergone a welcome revision from the existing 19% (on plant and machinery) and 15 5, 20% (land, building and furniture) to 2% and 10% respectively. This would help optimize cash flow in the hands of the recipient.
12. Donation made to electoral trust eligible for 100% deductions provided by the trust is approved by the prescribed authorities. This would help streamline the flow of donations to political parties and thereby result in clear visibility and transparency.
13. Government plans to raise Rs. 1,120 crores only this fiscal from sale of equity in PSUs such as RITES, Cochin shipyard, Manganese Ore India, Rastriya Ispat Nigam, MMTC, NMDC, NTPC, SAIL, Hind Copper etc. etc.