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Budget proposal for 2008-09 on Zee Business

Mr. Speaker, Sir


It is my privilege to present the Budget for 2007-08.

In the year 2007-08, the biggest minus is that the growth rate of GDP has decreased 8.7 %, we are still back 10% with previous year GDP growth 9.6%.

Industry and services are the main driver of growth, and in this sector, too, grew at lower rates of 8.6 per cent and 10.6 per cent, though these were on the high corresponding last year’s levels of 10.6 per cent and 11.2 per cent, respectively.

On the other hand, part of the lower-than-expected growth was on account of agriculture, which expanded by just 2.6 %, as against the 3.8 per cent of 2006-07.

The encouraging indicator in the CSO data is gross fixed capital formation (GFCF). The latter, as a percentage of GDP at constant 1999-2000 prices, is estimated to have touched an all-time-high of 32.6 in 2007-08, compared to 30.6 in 2006-07, 29.2 in 2005-06. Even as a proportion of GDP at current prices, GDFC has gone up from 31 % in 2005-06 to 32.5 % in 2006-07 and 34.6 % in 2007-08.

To help step up growth, I would like to emphasize in this proposal namely, agriculture and rural development, infrastructure, education, and girl childcare.

The health of agriculture is vital for sustaining our economic performance.

I propose to announce a new agricultural programme, costing Rs 40,000 crores in the XI Plan — the “BHARAT KRISHI KISHAN DARSHAN”. This agriculture programme will cover Ground water recharge, latest/advance agriculture technology, special training of farmer labor & farmer for agriculture backward areas.

Farm credit continues to grow at a satisfactory pace. I propose to fix a target of Rs.250,000 crore as farm credit and an addition of 50 lakh new farmers to the banking system.

The 2 % interest subvention scheme for short-term crop loans will continue in 2008-09, and I am making a provision of Rs.2, 000 crore for that purpose

The Agriculture Technology Management Agency (ATMA) that is now in place in 300 districts will be extended to another 500 districts in 2008-09. I propose to enhance the provision for ATMA from Rs.230 crore to Rs.450 crore next year.

National Bank for Agriculture and Rural Development: To augment its resources for refinancing rural credit cooperatives, NABARD to issue Government guaranteed rural bonds to the extent of Rs.5,000 crore with suitable tax exemption.

I propose to raise the corpus of Rural Infrastructure Development Fund (RIDF) in 2008-09 to Rs.16,000 crore. I would urge State Governments to use these funds primarily in the distressed districts of the State. I also propose to continue the separate window under RIDF-XIII in 2007-08 with a corpus of Rs.8,000 crore.

Electricity generation has recorded a growth rate of 7.5 per cent in April-December this year. However, as we complete the Tenth Plan, we would have added only 23,163 MW of additional capacity in the five year period including 16,339 MW added in the three years beginning 2004-05. Hence, it is imperative that we take new initiatives.

I propose to award two Ultra Mega Power Projects (UMPP) in Sasan and Mundra. Seven more UMPPs are under process and we are confident that at least two more will be awarded by July, 2007. Other initiatives taken by the Ministry of Power include facilitating setting up of merchant power plants by private developers and private participation in transmission projects.

I am happy to propose the share of expenditure on education in the central Gross Budgetary Support 22% in the current 11th plan.

To promote the Private/Public participation in elementary and secondary education, I propose to provide interest free loan up to Rs. 10 lacs.

I propose to at least one top class school in each block level. This kind of top class school will have the facility of excellence teacher training support.

To improve the quality of elementary and secondary education, I propose to teacher student ratio system, and in this system 1 teacher will be on each 25 students. To initiate this system, central government will have the provision of Rs. 15,000 crore in the current plan.

On the eve of budget plan; I propose to launch a programme for Girl child — “Girl Child Insurance Plan”. In this plan, the central government will bear 50% of the premium of Rs. 300 per year per girl child and I would urge to State government to come forward to bear the balance 50% on behalf of the Girl child. I propose to plan a sum of Rs. 800 crore in fund that will be managed by LIC. I also propose to formulate the plan in consultation with state government.

Besides, the Accelerated Power Development and Reforms Project (APDRP) has reduced significantly Aggregate Technical and Commercial (ATC) losses in 213 towns. APDRP is being restructured to cover all district headquarters and towns with a population of more than 50,000. I propose to increase the budgetary support for APDRP from Rs.650 crore in 2006-07 to Rs.800 crore next year.

Having regard to the pace of implementation under the Rajiv Gandhi Grameen Vidyutikaran Yojana and the annual target, I propose to increase the allocation from Rs.3,983 crore in 2007-08 to Rs.4,750 crore in 2008-09.

Following the credit policy for small and medium enterprises (SME) announced in August 2005, outstanding credit to the SME sector increased from Rs.135,200 crore at end December 2005 to Rs.173,460 crore at end December 2006. While encouraging banks to lend more to the SME sector, I propose to ask banks to have regard to the credit rating acquired by an SME while fixing the interest rate.

I propose to increase the provision for building tourist infrastructure from Rs.520 crore in 2007-08 to Rs. 750 crore in 2008-09.

I propose that:

– The threshold limit of exemption in the case of all assessees be increased from Rs.110,000 to Rs. 150,000, thus giving every assessee a relief of Rs.4,000

– Consequently, in the case of a woman assessee, the threshold limit be increased from Rs.145,000 to Rs.175,000, giving her a relief of Rs.5,500;

– The threshold limit of exemption in the case of a senior citizen be increased from Rs.195,000 to Rs.250,000, giving him or her a relief of Rs.11,000; and

Taxable income slab (Rs.) General Women Senior Citizen
Up to 1,50,000 Nil Nil Nil
1,50,000 – 2,00,000 10% 10%(above 1,75,000) Nil
2,00,001 – 2,50,000 20% 20% Nil
2,50,001 — 10,00,000 30% 30% 30%
10,00,00 upwards 30% 30% 30%**

** Surcharge of 10 % of the total tax liability should be applicable where the total income exceeds Rs 1,000,000.Presently all taxes in India are subject to an education cess, which is 3% of the total tax payable, and propose to increase education cess 3% to 4 %.

Presently all taxes in India are subject to an education cess, which is 3% of the total tax payable, and propose to increase education cess 3% to 4 %.

– The deduction in respect of medical insurance premium under section 80D be increased to a maximum of Rs.25,000 and, in the case of a senior citizen, a maximum of Rs.50,000.

Sir, with these words, I commend the Budget to the House.


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12 Responses

  1. Service_to_all says:

    Hello,

    Lot of time and effort seems to have gone into this activity.

    Some clarification on the Tax calculation

    What would be the taxed amount for a person drawing an annual income of 2,01,000
    Is it straight 20% on 2,01,000

    Regards,
    SERVICE TO ALL

  2. veerugcet says:

    Yes

    Rs. 1.5 Lacs to 2 Lacs 10%
    Rs. 200001 to 2.5 Lacs 20%
    Rs. 250001 to 10 Lacs 30%
    Rs. 10 Lacs onward 30% + Surcharge of 10 % of the total tax liability should be applicable where the total income exceeds Rs 1,000,000/-

    actually I am unable to post it in table format

  3. Service_to_all says:

    Hello,

    Take the cases of a person earning 2,01,000 and another drawing 1,99,000

    In the case of a person earning 1,99,000
    the person will be paying 19,900 as tax, so his net after tax is 1,79,100

    In case of the person earning 2,01,000
    the person will be paying 40,200 as tax so his net after tax is 1,60,800

    Isnt this absurd that for a marginal income difference of Rs 2000 between the 2 cases, a person drawing that marginal excess income will be taking a net income after tax, lesser that the person whose pre tax income is lesser, which is close to Rs 18,000.

    Please clarify.

    Regards,
    SERVICE TO ALL

  4. veerugcet says:

    Dear Friend
    Thanks for your quarry
    I am solving your problem here
    Your case:
    Person First Income Rs. 2,01,000 and
    Person second income Rs. 1,99,000/-

    Tax liability as per my proposal
    Person First Rs. 2,01,000 up to Rs. 1,50,000/- Nil
    Tax liability on Rs. 2,01,000 – 1,50,000 = 51,000/-
    Tax 50,000×0.10=5000/- and
    On 1,000×0.20=200
    Total tax = 5200/-
    Person Second Rs. 1,99,000 up to Rs. 1,50,000/- Nil
    Tax liability on Rs. 1,99,000 – 1,50,000 = 49,000/-
    Tax 49,000×0.10=4900/-

    Result first person will pay Rs. 5200 and second person will pay Rs. 4900/- only

    I am sure your above you will find to satisfied you

    I think you have not understand the TAX SLAB SYSTEM

  5. Service_to_all says:

    Hello,

    I know the way tax is computed currently. Just wanted to confirm from you, what you had in mind.

    Regards,
    SERVICE TO ALL

  6. jmalhotra says:

    jmalhotra

    Every budget comes with pros and cons and we experience high and lows in various segments. I would appreciate all such moves that will appreciate growth in agriculture, girl care, rural development and banking system. The proposals sounds fruitful and should certainly be of great significance if and only if they are made in practice.

  7. veerugcet says:

    Dear Malhotra

    I read your appreciation comments and thanks for the same. Let see what will come out today.

    regards

  8. veerugcet says:

    Dear Service_to_all

    I am quite surprise with your comment reply, in one way you want to taste me and in another you want to show your knowledge.

    As I observed in this site you have done a good job specially to promote genuine blogger and due to your this job eblogs site administrator had also appreciated.

    I was also in impression that you have a good knowledge and doing good job in site and also writing your comments on every blogs. I was also quite sure that with your activity we read good contents in this site, but you want to examine to bloggers.

    How surprise with your silly activity.

    Hope, you will avoid such kind of mistake in future.

    Regards

  9. Service_to_all says:

    Hello,

    At the outset let me thank you for your compliments.

    Assumptions can sometimes lead to wrong conclusions sir. It is better to clarify things rather than assume and later repent.

    Revealing ones knowledge is not a crime, in fact it is a service of sharing ones knowledge and not keeping to oneself.

    If you feel that I wanted to test your knowledge, I cannot help.

    Even if it be so, would it be not to your benefit, if by chance there have been wrong asumptions made. After all no one is perfect. And the best way is to seek answers by questioning.

    I hope I have made my point clear.

    Regards,
    SERVICE TO ALL

  10. veerugcet says:

    Dear,
    I am agree with you that “revealing ones knowledge is not a crime, in fact it is a service of sharing ones knowledge and not keeping to oneself. Assumptions can sometimes lead to wrong conclusions sir. It is better to clarify things rather than assume and later repent.”
    I had also replied of your first doubt /comments with example of two person income to help you as well as to share to all. Then why you need to reply me by comment as quoted below;
    Quote
    I know the way tax is computed currently. Just wanted to confirm from you, what you had in mind.
    Unquote
    I also agree with you “after all no one is perfect, and the best way is to seek answers by questioning”.
    And with the same way I was replying your questions, where I was not intending to show my knowledge, but what I know that was sharing with you people, and in the reply, you are writing that you know the way of tax calculation and just want to confirm by me. What is the meaning of that sentence? If you know, then why you need to ask such kind of question, just for your confirmation.

    Regards,

  11. Service_to_all says:

    Hello,

    What I know (which may be right or wrong) may not be what you have in your mind. If I had not asked a clarification, it is assumption that what I know is what you had in mind, which may or may be the case. And That is why I had said I did not want to “assume”.

    Regards,
    SERVICE TO ALL

  12. veerugcet says:

    Dear

    its ok

    but if you look tax slab table where is clear.

    Bi the way good news on this topic in todays budget

    Income Tax: Threshold limit of exemption increased from Rs 1,10,000 to Rs 1,50,000
    -Threshold tax exemption for women increased to Rs 1.8 lakh
    – New tax slabs: 10% for 1,50,000 to 3,00,000; 20% for 3,00,000 to 5,00,000; and 30% above 5,00,000.

    regards

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