In an election budget that gives largesse to different sections, Finance Minister P Chidambaram on Friday announced a waiver of agricultural loans to the tune of Rs 60,000 crore.
NEW DELHI: In an election budget that gives largesse to different sections, Finance Minister P Chidambaram on Friday announced 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, he 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 assesses, 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.
Revenue recipts for 2008-09 are projected at Rs 6,02,935 crore and revenue expenditure at Rs 6,58,119 crore.
Consequently, the revenue deficit is estimated at Rs 55,184 crore, which amounts to one per cent of GDP. The fiscal deficit is estimated at Rs 1,33,287 crore which is 2.5 per cent of GDP.
Chidambaram said he would not only achieve the target for fiscal deficit under the Fiscal Responsibility and Budget Management Act but also meet the target of annual reduction of 0.5 per cent in the case of revenue deficit.
"However, because of conscious shift in favour of health, education and the social sector, we may need one more year to eliminate the revenue deficit. In my view, this is an entirely acceptable deferment," he said.
In cheerful news to the Central Government employees, he announced that the Sixth Pay Commission will give its report by March this year.
Faced with problem of farmers' suicides on account of indebtedness, the Finance Minister announced a scheme of debt waiver and relief under which all loans upto March 2007 and overdue upto December last will be covered. Three crore small and marginal farmers will benefit to the tune of Rs 50,000 crore by the waiver while the one-time settlement for other farmers will cost Rs 10,000 crore.
On the indirect tax proposals side, he made no change in the peak rate of customs duties while reduced it on project imports from 7.5 per cent to five per cent. He also proposed to impose a four per cent special countervailing duty on a few specified projects in the power sector.
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