My Ppt For Budget

UNION BUDGET 2009-10

Pranav Mukherj Finance Ministe India

First Budget  On Nov 26,1947 RK Shanmukham

Chetty presented the first budget of Independent India.

Some Interesting Facts  Morarji Desai holds the record for

presenting the maximum number of budgets.  He holds the unique distinction of presenting the budget twice on his birthday(1964 & 1968)-both leap years  Initially,budget papers were printed in Rashtrapati Bhawan.But in 1950,the budget papers were leaked  Now it is printed in the basement of a North Block

Budget at a glance  Total estimated Expenditure is Rs.

10,20,838 crore, 36 % more than prev.  Total estimated Income is Rs.

6,14,497 crore.  Sustain a growth rate of 9% p.a. over

an extended time.

Taxation

 Only two things in life are certain Death

and Taxes, said Benjamin Franklin.  First Income tax in the world was levied in England in 1404 AD. Comparison of Indian Tax system with other countries

Tax Rates for AY – 2009For Men (Below 10 65 yrs)

üThere is a 3% education cess, so 10%become 10.3%, and saving Rs.1000 become Rs.1030

Tax Rates for AY – 2009For Women (Below 10 65 yrs)

üThere is a 3% education cess, so 10%become 10.3%, and saving Rs.1000 become Rs.1030

Tax Rates for AY – 2009For Senior10 Citizens (more than 65 yrs)

üThere is a 3% education cess, so 10%become 10.3%, and saving Rs.1000 become Rs.1030

Other changes in the Tax Liability  Wealth tax now payable on taxable wealth over

Rs. 30 lakh instead of Rs. 15 lakh.

 Interest on loans for studies in any field after

Class-10th now tax deductible.  Advance tax to be paid only if tax liability exceeds

Rs 10,000 against Rs 5,000 earlier.

 Most gifts in kind worth over Rs

50,000 to become taxable post October 1. Non cash gift to be taxed.  MAT (Minimum Alternative Tax) is paid by corporates on the profit declared in their balance sheet.  Rise in MAT by 5%. (10% to 15%)

 Introduction of GST by April1, 2010.  Sec. 80DD deduction limit increased

from Rs.75,000 to Rs.1 lakh.

 Because of Increase in exemption

limit of personal IT, the govt. will lose Rs. 3,500 crore.

 The department is likely to earn Rs

7,804 crore from education cess.  Abolition in fringe benefit tax (FBT) will cost the govt. around Rs 10,500

Budget & Infrastructure

Budget and Infrastructure  China spends 11% of its GDP on infrastructure

development.

 Inadequate Infrastructure is responsible for

pushing back India’s GDP by about 2%.

Budget and Infrastructure Cotd…  9% of the country’s GDP will be spent

on Infrastructure by 2014 from current 5%. One third of this investment would come from private companies.  Investment in Infra

2007 -2012 = $500 bn 2012 -2017 = $1.5 tn

Infrastructure  60% of Public Private Partnership (PPP)

projects by Indian Infrastructure Finance Company Limited (IIFCL); ‘takeout financing’.

Urban & Power  Allocation under Jawaharlal Nehru

National Urban Renewal Mission (JNNURM) up 87% from Rs. 6,891 Rs12,887 crore.  160% hike i.e. Rs. 2080 Crore in

allocation of Accelerated Power Development & Reform Program.

to

Housing  Subsidy of 1% on home loan upto Rs 10 lac.

House should not cost more than Rs. 20 lac.

 Govt has tightened the regulations of section 80 IB

(under this section developers get total tax concessions for residential units of 1,000 sq ft in big cities and 1,500 sq ft in smaller ones.

Transport  23% increase in National Highways

Development Program (NHDP) from Rs 12,966 crore to 15948.18 crore.  Allocation in railways increased from Rs.

10,800 crore to 15,800 crore.

Sports Commonwealth Games 2010  The allocation raised from Rs 2,112 crore to Rs

3,472 crore.

 With more than Rs. 30,000 Crore directed

towards this sector & provisions for Rs. 1 lac Crore of budgetary support,infrastructure development appears to be heart of union budget.

AGRICULTURAL SECTOR

Agriculture has been the mainstay of our economy with 60 per cent of our population deriving their sustenance from it. In the recent past, the sector has recorded a growth of about 4 per cent per annum with substantial increase in plan allocations and capital formation in the sector.

 Our Finance minister Mr. Pranab Mukherjee has

announced different schemes for the development of agricultural sector in the Union Budget 20092010.

 This includes schemes like –  Financial support on interest available for short

term crop loans.

 Increase in allocation for Rastriya Krishi Vikas Yojns

(RKVY).

 Food Security Bill,  Fertilizer Subsidy etc

AGRICULTURE DEVELOPMENT

 Target for agriculture credit flow set at

Rs.3,25,000 crore for the year 2009-10.  In 2008-09 agriculture credit flow was at

Rs.2,87,000 crore.

 Interest subvention scheme for short term crop

loans up to Rs.3 lakh per farmer at the interest rate of 7 per cent per annum to be continued.

 Additional subvention of 1 per cent to be paid

from this year, as incentive to those farmers who repay short term crop loans on schedule.

DEBT RELIEF FOR FARMERS  Under the Agricultural Debt Waiver and Debt

Relief Scheme (2008), farmers having more than two hectares of land were given time upto 30th June, 2009 to pay 75% of their overdues.

 Due to the late arrival of monsoon this period is

extented by six months upto 31st December, 2009 .

 Taskforce to be set up to examine the issue of

debt taken by a large number of farmers in some regions of Maharashtra from private money lenders who were not covered by the loan waiver scheme announced last year.

ACCELERATED IRRIGATION BENEFIT PROGRAMME  Allocation under Accelerated Irrigation Benefit

Programme (AIBP) increased by 75 per cent over B.E. 2008-09 because of an additional Rs.1,000 crore over Interim B.E.  Allocation under Rashtriya Krishi Vikas Yojana

(RKVY) stepped up by 30 percent in B.E. 200910 over B.E. 2008-09.

FOOD SECURITY BILL  The FM announced that the draft Food Security

Bill will soon be put on the net for public debate and consultations.

 The proposed National Food Security act will

ensure that every family living below the poverty line (BPL) in rural or urban areas will be entitled by law to 25 kilos of rice or wheat per month at Rs. 3/kg.

FERTILIZER SUBSIDY  To ensure balanced application of fertilizers for

increasing agricultural productivity,Government intends to move towards a nutrient based subsidy regime so as to cover larger basket of fertilizers with innovative fertilizer products available in the market at reasonable prices.

 It is intended to move to a system of direct

transfer of subsidy to the farmers in due course.

IMPACT  Higher liquidity in the hands of indian farmers

will benefit companies providing direct or indirect inputs to the agriculture industry such as-

 Seeds,  Fertilizer,  Agrochemicals,  Pumps and pipes for irrigation,  Warehousing infrastructure and  Transportation.

 The government has to support the small

farmer. This budget has allocated a lot of money for irrigation, but has not said anything about small irrigation schemes, which benefit small farmers.

 Big and medium irrigation projects, on the

other hand, displace small farmers and should be stopped.

 We need a separate budget for agriculture just

like we have it for railways.

Outmost importance has to be given to agriculture to –  Promote usage high tech technology,  Increase land ownership,  Help conserve water and  Connect indian farmers with national as well as

global markets to know price movements and demand of every agricultural commodities

Banking & Financial Sector



BANKING & FINANCE SECTOR The average public float in Indian listed companies is less than 15 percent.

 Deep non-manipulable markets require larger and

diversified public shareholdings. This requirement should be uniformly applied to the private sector as well as listed public sector companies.

 The threshold for non-promoter public shareholding

for all listed companies to be raised in a phased manner.

 Scheduled commercial banks allowed to set up

off-site ATMs without prior approval subject to reporting.

 A sub-committee of State Level Bankers

Committee (SLBC) to identify and formulate an action plan for providing banking facilities in under-banked/unbanked areas in the next three years.

 Rs.100 crore set aside as one-time grant in-aid

to ensure provision of at least one centre/Point

 Government has established Competition

Commission of India, an autonomous regulatory body to promote and sustain competition in markets, protect interests of consumers and to prevent practices having adverse effect on competition .

 An Appellate body headed by a retired judge of

Supreme Court also constituted.

IMPACT  The overall impact of the budget on the

banking and finance sector was positive, though not up to the expectations of the industry.

 The budget specified that public sector banks

would remain in the public sector.

 The government reiterated its commitment

towards providing capital support to banks to retain growth and competitiveness.

 Observing that the industry has made

significant strides towards financial inclusion in the past few years, the budget made ambitious plans with respect to financial inclusion in the

 Emphasis has been laid on priority sector lending.

Refinance schemes of Rs 40 billion and Rs 20 billion will enhance credit flow to micro and small enterprises and rural housing, respectively.

 For 2009-10, banks have been directed to lend Rs 3,250

billion to the farm sector - a 13 per cent increase over the previous year.  The reduction in targeted growth rate, over the previous

year, will give banks a breather to consolidate their origination systems for farm credit

 The addition to the Debt Waiver and Debt Relief

Scheme continued, with the increase in the time allowance to repay 75% of the debt.

 The scheme also influenced the introduction of

an interest subvention of 1 percent for farmers repaying loans on time. It might impact the banks’ profitability.

 Most of the announcements made in the

budget were aimed at increasing the credit flow to needy sectors, and not at directly facilitating

Rural Development

National Rural Health Mission  Increase of Rs.2,057 cr  Rs.12,070 cr was provided in Interim

budget

Weaker Sections  Plan outlay of ministry of minority

affairs has been increased from Rs.1000 cr in 2008-09 to Rs.1740 cr in 2009-10.  Provide full interest subsidy on

education loan during the period of moratorium.

YOJNAS  Pradhan Mantri Adarsh gram yojna

has been initiated for integrated development of 1000 villages. Allocation-Rs.100 cr.  Allocation under Rajiv gandhi Gram

Vidyutikaran yojna is up by 27% to Rs.7000 cr.

YOJNAS Contd….  Allocations under Pradhan Mantri

Gram Sadak Yojna increased by 59% to Rs.12,000 cr.  Expenditure on Indira Awas Yojna by

63% to Rs.8,800 cr.

National Rural Employment Guarantee Act  It was started by former P.M Mr. Atal

Bihari Vajpayee in Feb 2006.  Opportunities for more than 4.47 cr.

Households during 2008-09  Real wage of Rs.100 a day as an

entitlement under the NREGA

NREGA Contd… Contd  32% or 24.3 mn household fall in BPL.  NREGA to benefit by Rs.4450 to each

household family get work for for 44.5 men days  Allocation increased by 144% to

Rs.13,100 cr

EDUCATION SECTOR

 Overall Plan expenditure for Education sector in

Budget 2009-10 is 3.25 lakh crore.

 This is 34% up from the previous year.

 Higher education  Over all plan allocations have increased by RS.2000 crore(26%) previous Year’s Budget amount of Rs.7600 crore.  Among initiatives in Higher education, proposed RS.2,113 crore for IITs,and NITS, which includes a provision of 450 crore for the new IITS and NITS.

Central Plan Outlay by ministries/departments

 Allocations in primary and secondary

education, government has increased allocation in higher education by 26%.

Central Plan Outlay by ministries/departments

CENTRAL UNIVERSITY  The Government plan to establish one

central university in each Uncovered State and proposed for this plan is Rs. 827 crore.

EDUCATION LOAN FOR THE POOR Finance minister has announced a full interest subsidy for poor students for higher education.

National mission for female literacy

 Focus on minorities, SC,ST,and other

marginalised groups.  Main Aim of this mission is, in next 3 years

reducing by half the current of female Illiteracy that stands about 50%.

Budget & Oil & Gas

Oil & Gas (Budget measure)  Tax holiday u/s 80-IB (9) OF THE IT Act

on the profits from the production or refining of mineral oil, has been extended to natural gas.  Tax incentives will be provided on capital expenditure on the laying and operating of cross country natural gas, crude or oil pipeline networks for Excise duty on naphtha reduced to 14%

Oil & Gas (cont.)  Scope of Service Tax has been widened to

include all offshore activities within 200 nautical miles from India baseline which will increase the impact of service tax cost on the upstream players.  Diesel blended with up to 20% bio-diesel

fully exempted from excise duty.

Budget & POWER SECTOR

Announcements  There were no major announcements

with respect to the power sector.  Allocation under Accelerated Power Development and Reform Programme (APDRP) increased by 160 per cent to Rs.2,080 crore in B.E. 2009-10 over B.E. 2008-09.  IIFCL has been given greater flexibility to re-finance infrastructure projects.

Impact on renewal energy front  Customs duty on permanent

magnets for PM synchronous generator above 500 KW used in wind operated electricity generators to be reduced from 7.5% to 5%.  Customs duty on bio-diesel has been reduced from 7.5% to 2.5%.

Finance Minister’s speech on Power Sector  The Accelerated Power Development

and Reform Programme (APDRP) is an important scheme for reducing the gap between power demand and supply. I propose to increase the allocation for this scheme to Rs.2,080 crore, a steep increase of 160 per cent above the allocation in the BE of 2008-09.

OTHER INDUSTRIES

CEMENT INDUSTRY  The Union Budget 2009-10 is not

expected to have any major impact on the cement sector. Cement prices are not expected to be affected as excise and customs duties for cement and clinker have remained unchanged.  Similarly, duties on key inputs such as coal, limestone and gypsum have not been changed.  Measures to spur infrastructure investments will have a marginally

HOUSEHOLD APPLIANCES  The reduction in customs duty on LCD

panels from 10 per cent to 5 per cent is likely to have a marginally positive impact on the industry.  This cut in duty would also boost domestic assembling of LCD TVs.  The marginal rise in disposable income due to the increase in personal tax exemption limit by Rs

MEDIA AND ENTERTAINMENT  It will have neutral impact. The hike in

customs duty on set top boxes - from nil to 5 per cent - is expected to incentivize its domestic production. However, the move will also increase the subsidies borne by digital pay-tv operators, and hence, will marginally impact their margins.  A 15 per cent waiver of agency commission and 10 per cent increase in the rates of DAVP advertisements in print media, and exemption of customs

STEEL  No change in the customs or Central

Value Added Tax duty related to steel products, the prices are not to be impacted.  However, with the provision of higher investment in infrastructure segments such as roads, railways and urban infrastructure under Jawaharlal Nehru National Urban Renewal Mission (JNNURM), the demand for steel is likely to improve marginally.

FMCG Sector

Budget & FMCG Sector  Rural focus, employment generation

and infrastructure spending will improve rural income.  Exemption on the personal income tax would increase the income in the hands of the consumers.  FMCG sector will benefit with the removal of the FBT as it adds to the costs unnecessarily.

For Customers

(Good News)

 Cuts in customs duties for some life-saving

drugs & medical equipment.  LCD TV’s may be cheaper due to reduction in custom duty by 5% on LCD panels.  Branded jewellary exempted from excise.

(Bad News)  Excise on several household items to rise from

4 % to 8%. These include contact lenses, tooth brushes and man-made fabrics.  Customs duty doubled on import of gold $ silver bars, 5% duty on se-top boxes.

Overview of the economy  Growth rate of GDP dipped from an

avg of over 9% in the prev. year to 6.7% during 2008-09  Whole sale price index rose to nearly 13% in August, 2008 and had an equally sharp fall to 0% in Mar. 2009.  The structure of India’s economy changed over the last ten years with contribution of the service sector to GDP at well over 50%.