Key Features of Budget 2007-2008
A MID-TERM REPORT CARD ON THE ECONOMY
growth rate in the three years of the UPA Government at 8.6%; growth target
for the Tenth Plan of 8% will be nearly achieved; during three year period,
acceleration in growth rate in manufacturing from 8.7% to 9.1% and further
to 11.3%; and in services sector from 9.6% to 9.8% and further to 11.2%.
on domestic prices by global commodity prices; and supply constraints in
some essential commodities - consequently, average inflation in 2006-07
estimated at between 5.2 and 5.4% vis-a-vis 4.4% last year.
BHARAT NIRMAN AND FLAGSHIP PROGRAMMES
kilometres of rural roads completed and 783,000 rural houses constructed
with 914,000 houses under construction; 19,758 villages covered so far under
the Rajiv Gandhi Grameen Vidyutikaran Yojana; 15,054 villages provided
with telephone against target of 20,000 villages, and balance to be covered
by the end of the year.
ELEVENTH FIVE YEAR PLAN
employment creation, reducing disparities across regions and ensuring access
to basic physical infrastructure and health and education services to all.
Rs.32,352 crore & for health and family welfare by 21.9% to Rs.15,291 crore.
crore, of which Rs.10,671 crore for SSA, provision for strengthening of
teachers training institutions to be increased from Rs.162 crore to Rs.450
crore with 200,000 more teachers to be appointed and 500,000 more class
rooms to be constructed. Mid-day Meal Scheme to be provided Rs.7,324
crore; children in upper primary classes in 3,427 educationally backward
blocks to be also covered; transfer to Prarambhik Shiksha Kosh to increase
from Rs.8,746 crore to Rs.10,393 crore; provision for secondary education
to double from Rs.1,837 crore to Rs.3,794 crore.
test from among students who have passed class VIII; each student to be
given Rs.6,000 per year; 100,000 scholarships to be awarded every year; a
corpus fund of Rs.750 crore to be created this year, and augmented by a like
amount annually over the next three years.
Sanitation Campaign from Rs.720 crore to Rs.954 crore.
to be on mother and child care and on prevention and treatment of
communicable diseases; convergence sought to be achieved among various
programmes such as immunization, ante natal care, nutrition and sanitation
through Monthly Health Days (MHD) organised at Anganwadi centres;
320,000 Associated Social Health Activists (ASHAs) recruited with over
200,000 given orientation training; 90,000 link workers selected by the States;
AYUSH systems being mainstreamed into health delivery system at all levels;
increase in allocation for NRHM from Rs.8,207 crore to Rs.9,947 crore.
blood to be ensured; more hospitals to provide treatment to prevent
transmission of HIV/AIDS from mother to child; provision for AIDS control
programme to be Rs.969 crore.
Pradesh and 10 districts of Bihar; provision of Rs.1,290 crore in 2007-2008.
lactating mothers and all children below the age of six; allocation to be
increased from Rs.4,087 crore to Rs.4,761 crore.
Rs.2,800 crore provided for Sampoorna Gramin Rozgar Yojana in districts
not covered by NREGS; allocation for Swaranjayanti Gram Swarozgar Yojana
to promote self employment among rural poor to increase from Rs.1,200 to
Rs.1,800 crore.
to Rs.4,987 crore.
implemented, will include computerisation of PDS and an integrated
information system in Food Corporation of India.
of schemes with at least 20% of benefits earmarked for SCs and STs; increase
in allocation for Rajiv Gandhi National Fellowship Programme from Rs.35
crore to Rs.88 crore; Post-Matric Scholarships: provision to be increased
from Rs.440 crore to Rs.611 crore; a separate provision of Rs.91 crore
proposed for similar scholarships to students belonging to socially and
educationally backward classes.
development programme in districts with a concentration of minorities;
allocation for Pre-matric scholarships at Rs.72 crore, Post-matric scholarships
at Rs.90 crore and Merit-cum-Means scholarships at graduate and postgraduate
levels at Rs.48.60 crore.
is Rs.22,382 crore.
to be in place before March 31, 2007.
through better tax administration during the course of the year; under Plan
‘C’ resources available outside Budget to be leveraged for investment,
especially in infrastructure.
AGRICULTURE
interest subvention for short-term crop loans; a special plan being
implemented over a period of three years in 31 especially distressed districts
in four States involving a total amount of Rs.16,979 crore; of this, about
Rs.12,400 crore to be on water related schemes; special plan includes a scheme
with proposed provision of Rs.153 crore for induction of high yielding milch
animals and related activities.
the production of breeder, foundation and certified seeds; Government to
fund the expansion of Indian Institute of Pulses Research, Kanpur, and offer
other producers a capital grant or concessional financing to double production
of certified seeds within a period of three years.
created; outlay to be increased from Rs.7,121 crore to Rs.11,000 crore
including grant component to State Governments of Rs.3,580 crore, an
increase from Rs.2,350 crore.
bodies having a command area of 400,000 hectares; agreement for Andhra
Pradesh expected to be concluded in March 2007 to cover 3,000 water bodies
with a command area of 250,000 hectares.
Rs.1,800 crore to be transferred to NABARD.
32 selected State Agricultural Universities and ICAR institutes; each
institution to train 100 trainers and 1,000 farmers every year; interest free
loan of Rs.3 crore to be provided to each institution to create a corpus fund.
Agency (ATMA) now in place in 262 districts to be extended to another 300
districts; provision for ATMA to increase from Rs.50 crore to Rs.230 crore.
weather based crop insurance scheme to be started by Agricultural Insurance
Corporation on a pilot basis as an alternative to NAIS; allocation of Rs.100
crore to be made in 2007-08.
Government guaranteed rural bonds to the extent of Rs.5,000 crore with
suitable tax exemption.
continue with a corpus of Rs.4,000 crore.
households which enjoy no cover at all today; head of family or one earning
member in family to be insured; Government to bear 50% of premium of
Rs.200 per year per person; Rs.1,000 crore to be placed in a fund to be
maintained by LIC.
INVESTMENT
and outpaced portfolio investment of US$6.8 billion; Central Public Sector
Enterprises to invest Rs.165,053 crore through internal and extra budgetary
resources in 2007-08; Government to provide equity support of Rs.16,361
crore and loans of Rs.2,970 crore.
INFRASTRUCTURE
up of merchant power plants by private developers and private participation
in transmission projects; Accelerated Power Development and Reforms
Project being restructured to cover all district headquarters and towns with a
population of more than 50,000; budgetary support for APDRP to increase
from Rs.650 crore to Rs.800 crore; Rajiv Gandhi Grameen Vidyutikaran
Yojana: allocation to increase from Rs.3,000 crore to Rs.3,983 crore.
and approved end users; definition of specified end use to be enlarged to
include underground coal gasification and coal liquefaction.
bridge at Bogibeel, Assam, over Brahmaputra, to be taken up as a national
project.
contribute up to 75% of preparatory expenditure in the form of interest free
loan to be recovered from the successful bidder.
INDUSTRY
blocks awarded for exploration.
continue with provision of Rs.911 crore.
include ancillary workers; allocation for the sector to be enhanced from Rs.241
crore to Rs.321 crore.
provision of Rs.22.50 crore.
FINANCIAL SECTOR
occupations, limit of loan to be raised from Rs.6,500 to Rs.15,000 and limit
of housing loan to be raised from Rs.5,000 to Rs.20,000 per beneficiary.
Enforcement of Securitisation of Interest (SARFAESI) Act to be extended to
loans advanced by RRBs; to be permitted to accept NRE/FCNR deposits;
and those which have a negative net worth to be recapitalized.
of income against mortgage of his/her house, while remaining the owner and
occupying the house throughout his/her lifetime, without repayment or
servicing of the loan; regulations to be put in place to allow creation of
mortgage guarantee companies.
to offer a similar product to senior citizens; Micro Financial Sector
(Development and Regulation) Bill and a comprehensive Bill to amend
insurance laws to be introduced in Budget Session.
a Financial Inclusion Technology Fund to be also established to meet costs
of technology adoption; each fund to have an overall corpus of Rs.500 crore,
with initial funding to be contributed by Government, RBI and NABARD.
distinguish a particular kind of account; idea of Self Regulating Organisations
(SRO) to be taken forward for different market participants under regulations
to be made by SEBI; mutual funds to be permitted to launch and operate
dedicated infrastructure funds; individuals to be permitted to invest in overseas
securities through Indian mutual funds; short selling settled by delivery, and
securities lending and borrowing to facilitate delivery, by institutions to be
allowed; enabling mechanism to be put in place to permit Indian companies
to unlock a part of their holdings in group companies for meeting their
financing requirements by issue of Exchangeable Bonds.
Limited; suggestions of Deepak Parekh Committee to be examined for
establishment of two wholly-owned overseas subsidiaries of IIFCL with
objectives to (i) borrow funds from RBI and lend to Indian companies
implementing infrastructure projects in India, or to co-finance their ECBs
for such projects, solely for capital expenditure outside India; and (ii) borrow
funds from the RBI, invest such funds in highly rated collateral securities
and provide 'credit wrap' insurance to infrastructure projects in India for raising
resources in international markets.
OTHER PROPOSALS
increase from Rs.300 crore to Rs.500 crore; Rs.33 crore to be provided for a
new scheme of manpower development for software export industry.
on public-private partnership.
provide financial assistance by way of seed money; an interest free loan up
to Rs.2.5 crore to be granted to each ITI for upgradation and revision of
courses; Rs.750 crore set aside for this purpose.
scheme proposed to reimburse employer's contribution to Employees
Provident Fund and Employees State Insurance for first three years; to support
creation of about 100,000 jobs every year for physically challenged persons
with a salary limit of Rs.25,000 per month; Rs.1,800 crore earmarked.
Cooperation Agency (IIDCA) to be set up.
Games 2010 in Delhi and of Rs.50 crore for Commonwealth Youth Games
2008 to be held in Pune.
Institute, Pune; and Rajendra Smriti Sanghrahalaya, Patna; Rs.20 crore to be
provided to reposition Nehru Memorial Museum and Library, Delhi, as a
major centre of intellectual activity; scholars from Indian and foreign
institutions to be engaged to work on specific projects and an initial grant of
Rs.5 crore to be made to encourage this effort.
and Tamil Nadu Agricultural University, Coimbatore.
PUBLIC FINANCE
duties to increase from Rs.120,377 crore to Rs.142,450 crore; grants & loans
to States and UTs to increase from Rs.90,521 crore to Rs.106,987 crore.
effect from April 1, 2007; Rs.5,495 crore provided for compensation for
losses, if any, on account of VAT and also on account of CST; a roadmap for
introducing a national level Goods and Services Tax (GST) with effect from
April 1, 2010 to be prepared.
BUDGET ESTIMATES FOR 2007-08
6.5%; Revenue deficit estimated at Rs.71,478 crore (1.5% of GDP) and
fiscal deficit at Rs.150,948 crore (3.3% of GDP).
TAX PROPOSALS
Indirect Taxes:
Customs duties:
polished diamonds from 5% to 3%; on rough synthetic stones from 12.5%
to 5%; and on unworked corals from 30% to 10%.
food processing machinery from 7.5% to 5%.
oil, both crude and refined, by 15 percentage points.
and development, concessional rate of 5% duty to be extended to all research
institutions registered with the Directorate of Scientific and Industrial
Research; reduction in duty from 7.5% to 5% on 15 specified machinery
for pharmaceutical and biotechnology sector.
additional customs duty.
concentrates.
Excise Duties:
to encourage food processing sector, biscuits whose retail sale price does
not exceed Rs.50 per kilogram and all kinds of food mixes including instant
mixes to be fully exempt; reduction in duty on umbrellas and parts of
footwear from 16% to 8%; on plywood from 16% to 8%; biodiesel to be
fully exempt.
filters not using electricity to be fully exempt; exemption on pipes used for
carrying water from a water supply plant to a storage facility to be extended
to all pipes of diameter exceeding 200 mm used in water supply systems.
of Rs.600 per metric tonne on cement that has a higher MRP.
non-machine made biris and from Rs.17 to Rs.24 per thousand for machine
made biris; duty on pan masala not containing tobacco to be reduced from
66% to 45%; withdrawal of exemption for pan masala containing tobacco
and other tobacco products given to units in the North Eastern States.
Service tax :
(residential properties, vacant land used for agriculture and similar purposes,
and land for sports, entertainment and parking purposes & immovable
property for educational or religious purposes to be excluded); development
and supply of content for use in telecom and advertising purposes; asset
management services provided by individuals; design services; services
involved in execution of a works contract with an optional composition
scheme under which tax will be levied at only 2% of the total value of
works contract.
services provided by technology business incubators, their incubatees whose
annual business turnover does not exceed Rs.50 lakhs to be exempt for
first three years; clinical trial of new drugs to make India a preferred
destination for drug testing.
Direct Taxes
woman assessee, threshold limit to be increased from Rs.135,000 to
Rs.145,000 and in case of a senior citizen from Rs.185,000 to Rs.195,000
giving him or her a relief of Rs.2,000; deduction in respect of medical
insurance premium under section 80D to be increased to a maximum of
Rs.15,000 and, in case of a senior citizen, a maximum of Rs.20,000.
under section 36(1)(viia); amalgamation and de-merger of banking
companies is tax neutral - benefit to be extended to cooperative banks.
and storage facilities integrated to the network; and to navigation channel
in the sea.
local bodies to be allowed.
at 8% or more of turnover.
should be completed and begin operations in National Capital Territory of
Delhi or in the adjacent districts of Faridabad, Gurgaon, Ghaziabad or
Gautam Budh Nagar during April 1, 2007 to March 31, 2010.
section 36(1)(viii) to be restricted to 20% of profits each year.
website : http//indiabudget.nic.in
- Improvement in GDP growth rate from 7.5% in 2004-05 to 9% (Quick
growth rate in the three years of the UPA Government at 8.6%; growth target
for the Tenth Plan of 8% will be nearly achieved; during three year period,
acceleration in growth rate in manufacturing from 8.7% to 9.1% and further
to 11.3%; and in services sector from 9.6% to 9.8% and further to 11.2%.
- Average growth in agriculture during Tenth Plan estimated at 2.3%.
- Income and Savings: Per capita income in 2005-06, in real terms, increased
- Inflation: Growth in bank credit, year on year, by 29.6%; expansion in money
on domestic prices by global commodity prices; and supply constraints in
some essential commodities - consequently, average inflation in 2006-07
estimated at between 5.2 and 5.4% vis-a-vis 4.4% last year.
BHARAT NIRMAN AND FLAGSHIP PROGRAMMES
- In 2006-07, additional irrigation potential of 2,400,000 hectares to be created;
kilometres of rural roads completed and 783,000 rural houses constructed
with 914,000 houses under construction; 19,758 villages covered so far under
the Rajiv Gandhi Grameen Vidyutikaran Yojana; 15,054 villages provided
with telephone against target of 20,000 villages, and balance to be covered
by the end of the year.
ELEVENTH FIVE YEAR PLAN
- Objectives: "Faster and More Inclusive Growth"; growth rate of approximately
employment creation, reducing disparities across regions and ensuring access
to basic physical infrastructure and health and education services to all.
- Allocations for Major Sectors: Increase in provision for Bharat Nirman by
Rs.32,352 crore & for health and family welfare by 21.9% to Rs.15,291 crore.
- Sarva Shiksha Abhiyan (SSA) and Mid-day Meal Scheme: Increase in
crore, of which Rs.10,671 crore for SSA, provision for strengthening of
teachers training institutions to be increased from Rs.162 crore to Rs.450
crore with 200,000 more teachers to be appointed and 500,000 more class
rooms to be constructed. Mid-day Meal Scheme to be provided Rs.7,324
crore; children in upper primary classes in 3,427 educationally backward
blocks to be also covered; transfer to Prarambhik Shiksha Kosh to increase
from Rs.8,746 crore to Rs.10,393 crore; provision for secondary education
to double from Rs.1,837 crore to Rs.3,794 crore.
- Means-Cum-Merit Scholarships: National Means-cum-Merit Scholarship
test from among students who have passed class VIII; each student to be
given Rs.6,000 per year; 100,000 scholarships to be awarded every year; a
corpus fund of Rs.750 crore to be created this year, and augmented by a like
amount annually over the next three years.
- Drinking Water and Sanitation: Allocation for Rajiv Gandhi Drinking Water
Sanitation Campaign from Rs.720 crore to Rs.954 crore.
- Health Sector; National Rural Health Mission: All districts to complete
to be on mother and child care and on prevention and treatment of
communicable diseases; convergence sought to be achieved among various
programmes such as immunization, ante natal care, nutrition and sanitation
through Monthly Health Days (MHD) organised at Anganwadi centres;
320,000 Associated Social Health Activists (ASHAs) recruited with over
200,000 given orientation training; 90,000 link workers selected by the States;
AYUSH systems being mainstreamed into health delivery system at all levels;
increase in allocation for NRHM from Rs.8,207 crore to Rs.9,947 crore.
- HIV/AIDS: NACP-III, starting in 2007-08, to target high risk groups; access
blood to be ensured; more hospitals to provide treatment to prevent
transmission of HIV/AIDS from mother to child; provision for AIDS control
programme to be Rs.969 crore.
- Polio: Number of polio rounds to be increased, monovalent vaccine to be
Pradesh and 10 districts of Bihar; provision of Rs.1,290 crore in 2007-2008.
- Integrated Child Development Services: To cover all habitations and
lactating mothers and all children below the age of six; allocation to be
increased from Rs.4,087 crore to Rs.4,761 crore.
- National Rural Employment Guarantee Scheme: Allocation of Rs.12,000
Rs.2,800 crore provided for Sampoorna Gramin Rozgar Yojana in districts
not covered by NREGS; allocation for Swaranjayanti Gram Swarozgar Yojana
to promote self employment among rural poor to increase from Rs.1,200 to
Rs.1,800 crore.
- Urban Unemployment: Increase in allocation for Swarna Jayanti Shahari
- Jawaharlal Nehru National Urban Renewal Mission: 538 projects with a
to Rs.4,987 crore.
- Targeted PDS and Antyodaya Anna Yojana: Scheme for evaluation,
implemented, will include computerisation of PDS and an integrated
information system in Food Corporation of India.
- Scheduled Castes and Scheduled Tribes: Allocation of Rs.3,271 crore in
of schemes with at least 20% of benefits earmarked for SCs and STs; increase
in allocation for Rajiv Gandhi National Fellowship Programme from Rs.35
crore to Rs.88 crore; Post-Matric Scholarships: provision to be increased
from Rs.440 crore to Rs.611 crore; a separate provision of Rs.91 crore
proposed for similar scholarships to students belonging to socially and
educationally backward classes.
- Minorities: Increase in share capital of National Minorities Development
development programme in districts with a concentration of minorities;
allocation for Pre-matric scholarships at Rs.72 crore, Post-matric scholarships
at Rs.90 crore and Merit-cum-Means scholarships at graduate and postgraduate
levels at Rs.48.60 crore.
- Women: Outlay for 100% women specific programmes is Rs.8,795 crore and
is Rs.22,382 crore.
- North Eastern Region (NER): Allocation increased from Rs.12,041 crore to
to be in place before March 31, 2007.
- Supplement to GBS: Allocations under Plan ‘A’ at Rs.205,100 crore; under
through better tax administration during the course of the year; under Plan
‘C’ resources available outside Budget to be leveraged for investment,
especially in infrastructure.
AGRICULTURE
- Farm credit: Target of Rs.225,000 crore for 2007-08 with an addition of 50
interest subvention for short-term crop loans; a special plan being
implemented over a period of three years in 31 especially distressed districts
in four States involving a total amount of Rs.16,979 crore; of this, about
Rs.12,400 crore to be on water related schemes; special plan includes a scheme
with proposed provision of Rs.153 crore for induction of high yielding milch
animals and related activities.
- Mission for Pulses: Integrated Oilseeds, Oilpalm, Pulses and Maize
the production of breeder, foundation and certified seeds; Government to
fund the expansion of Indian Institute of Pulses Research, Kanpur, and offer
other producers a capital grant or concessional financing to double production
of certified seeds within a period of three years.
- Plantation Sector: financial mechanisms for re-plantation and rejuvenation
- Accelerated Irrigation Benefit Programme: 35 projects likely to be completed
created; outlay to be increased from Rs.7,121 crore to Rs.11,000 crore
including grant component to State Governments of Rs.3,580 crore, an
increase from Rs.2,350 crore.
- Rainfed Area Development Programme: Proposed allocation of Rs.100 crore
- Water Resources Management: Restoring Water Bodies: World Bank loan
bodies having a command area of 400,000 hectares; agreement for Andhra
Pradesh expected to be concluded in March 2007 to cover 3,000 water bodies
with a command area of 250,000 hectares.
- Ground Water Recharge: 100% subsidy to small and marginal farmers and
Rs.1,800 crore to be transferred to NABARD.
- Training of Farmers: Indian Council of Agricultural Research (ICAR) to set
32 selected State Agricultural Universities and ICAR institutes; each
institution to train 100 trainers and 1,000 farmers every year; interest free
loan of Rs.3 crore to be provided to each institution to create a corpus fund.
- Extension System: New programme to be drawn up that will replicate earlier
Agency (ATMA) now in place in 262 districts to be extended to another 300
districts; provision for ATMA to increase from Rs.50 crore to Rs.230 crore.
- Fertiliser Subsidies: Based on study to be conducted, a pilot programme to
- Agricultural Insurance: National Agricultural Insurance Scheme to be
weather based crop insurance scheme to be started by Agricultural Insurance
Corporation on a pilot basis as an alternative to NAIS; allocation of Rs.100
crore to be made in 2007-08.
- National Bank for Agriculture and Rural Development: To augment its
Government guaranteed rural bonds to the extent of Rs.5,000 crore with
suitable tax exemption.
- Rural Infrastructure Development Fund: Corpus of RIDF-XIII to be raised
continue with a corpus of Rs.4,000 crore.
- Social Security: New scheme called 'Aam Admi Bima Yojana' to be introduced
households which enjoy no cover at all today; head of family or one earning
member in family to be insured; Government to bear 50% of premium of
Rs.200 per year per person; Rs.1,000 crore to be placed in a fund to be
maintained by LIC.
INVESTMENT
- Gross domestic capital formation in 2005-06 grew by 23.7 per cent; in April-
and outpaced portfolio investment of US$6.8 billion; Central Public Sector
Enterprises to invest Rs.165,053 crore through internal and extra budgetary
resources in 2007-08; Government to provide equity support of Rs.16,361
crore and loans of Rs.2,970 crore.
INFRASTRUCTURE
- Power: Seven more Ultra Mega Power Projects under process and at least
up of merchant power plants by private developers and private participation
in transmission projects; Accelerated Power Development and Reforms
Project being restructured to cover all district headquarters and towns with a
population of more than 50,000; budgetary support for APDRP to increase
from Rs.650 crore to Rs.800 crore; Rajiv Gandhi Grameen Vidyutikaran
Yojana: allocation to increase from Rs.3,000 crore to Rs.3,983 crore.
- Coal: 26 coal blocks with reserves of 8,581 million tonnes and four lignite
and approved end users; definition of specified end use to be enlarged to
include underground coal gasification and coal liquefaction.
- National Highways: Provision for National Highway Development
bridge at Bogibeel, Assam, over Brahmaputra, to be taken up as a national
project.
- Public Private Partnership and Viability Gap Funding: Revolving fund with
contribute up to 75% of preparatory expenditure in the form of interest free
loan to be recovered from the successful bidder.
INDUSTRY
- Petroleum and Natural Gas: 162 production sharing contracts awarded;
blocks awarded for exploration.
- Textiles: Provision for Scheme for Integrated Textiles Parks to increase from
continue with provision of Rs.911 crore.
- Handlooms: Additional 100-150 clusters to be taken up in 2007-08; health
include ancillary workers; allocation for the sector to be enhanced from Rs.241
crore to Rs.321 crore.
- Small & Medium Enterprises: Increase in outstanding credit from Rs.135,200
- Coir Industry: Scheme for modernisation and technology upgradation with
provision of Rs.22.50 crore.
- Foreign Trade: Merchandise exports expected to cross US$125 billion by
- Tourism: Provision for tourist infrastructure to increase from Rs.423 crore
FINANCIAL SECTOR
- Banking: Under Differential Rate of Interest scheme providing finance at a
occupations, limit of loan to be raised from Rs.6,500 to Rs.15,000 and limit
of housing loan to be raised from Rs.5,000 to Rs.20,000 per beneficiary.
- Regional Rural Banks: To open at least one branch in 80 uncovered districts
Enforcement of Securitisation of Interest (SARFAESI) Act to be extended to
loans advanced by RRBs; to be permitted to accept NRE/FCNR deposits;
and those which have a negative net worth to be recapitalized.
- Housing Loans: National Housing Bank to introduce 'reverse mortgage' under
of income against mortgage of his/her house, while remaining the owner and
occupying the house throughout his/her lifetime, without repayment or
servicing of the loan; regulations to be put in place to allow creation of
mortgage guarantee companies.
- Insurance: Exclusive health insurance scheme for senior citizens offered by
to offer a similar product to senior citizens; Micro Financial Sector
(Development and Regulation) Bill and a comprehensive Bill to amend
insurance laws to be introduced in Budget Session.
- Financial Inclusion: A Financial Inclusion Fund to be established with
a Financial Inclusion Technology Fund to be also established to meet costs
of technology adoption; each fund to have an overall corpus of Rs.500 crore,
with initial funding to be contributed by Government, RBI and NABARD.
- Capital Markets: PAN to be made sole identification number for all
distinguish a particular kind of account; idea of Self Regulating Organisations
(SRO) to be taken forward for different market participants under regulations
to be made by SEBI; mutual funds to be permitted to launch and operate
dedicated infrastructure funds; individuals to be permitted to invest in overseas
securities through Indian mutual funds; short selling settled by delivery, and
securities lending and borrowing to facilitate delivery, by institutions to be
allowed; enabling mechanism to be put in place to permit Indian companies
to unlock a part of their holdings in group companies for meeting their
financing requirements by issue of Exchangeable Bonds.
- Innovative Financing for Infrastructure: Funds from National Small Savings
Limited; suggestions of Deepak Parekh Committee to be examined for
establishment of two wholly-owned overseas subsidiaries of IIFCL with
objectives to (i) borrow funds from RBI and lend to Indian companies
implementing infrastructure projects in India, or to co-finance their ECBs
for such projects, solely for capital expenditure outside India; and (ii) borrow
funds from the RBI, invest such funds in highly rated collateral securities
and provide 'credit wrap' insurance to infrastructure projects in India for raising
resources in international markets.
OTHER PROPOSALS
- Defence Expenditure: Allocation to increase to Rs.96,000 crore.
- Information Technology: Allocation for e-governance to increase from Rs.395
increase from Rs.300 crore to Rs.500 crore; Rs.33 crore to be provided for a
new scheme of manpower development for software export industry.
- Backward Regions Grant Fund: Allocation to increase from Rs.5,000 crore
- Mumbai as a Financial Centre: Report of High Powered Expert Committee
- Vocational Education Mission: An initial provision of Rs.50 crore proposed
on public-private partnership.
- Upgradation of ITIs: 1,396 ITIs to be upgraded into centres of excellence in
provide financial assistance by way of seed money; an interest free loan up
to Rs.2.5 crore to be granted to each ITI for upgradation and revision of
courses; Rs.750 crore set aside for this purpose.
- Employment for Physically Challenged: To incentivise employers in organised
scheme proposed to reimburse employer's contribution to Employees
Provident Fund and Employees State Insurance for first three years; to support
creation of about 100,000 jobs every year for physically challenged persons
with a salary limit of Rs.25,000 per month; Rs.1,800 crore earmarked.
- Debt Management Office: An autonomous DMO to be set up with a Middle
- Development Cooperation: Activities relating to development cooperation
Cooperation Agency (IIDCA) to be set up.
- Climate Change: An expert committee to be appointed to study impact of
- Commonwealth Games: Provision of Rs. 150 crore to Ministry of Youth
Games 2010 in Delhi and of Rs.50 crore for Commonwealth Youth Games
2008 to be held in Pune.
- History and Culture: Rs.30 crore to be provided for Sabarmati Ashram,
Institute, Pune; and Rajendra Smriti Sanghrahalaya, Patna; Rs.20 crore to be
provided to reposition Nehru Memorial Museum and Library, Delhi, as a
major centre of intellectual activity; scholars from Indian and foreign
institutions to be engaged to work on specific projects and an initial grant of
Rs.5 crore to be made to encourage this effort.
- Institutions of Excellence: Special grant of Rs.50 crore each to be made to
and Tamil Nadu Agricultural University, Coimbatore.
PUBLIC FINANCE
- Rs.110,268 crore of States' debt has been consolidated; twenty States have
duties to increase from Rs.120,377 crore to Rs.142,450 crore; grants & loans
to States and UTs to increase from Rs.90,521 crore to Rs.106,987 crore.
- VAT, CST and a Roadmap towards GST: Agreement reached with State
effect from April 1, 2007; Rs.5,495 crore provided for compensation for
losses, if any, on account of VAT and also on account of CST; a roadmap for
introducing a national level Goods and Services Tax (GST) with effect from
April 1, 2010 to be prepared.
BUDGET ESTIMATES FOR 2007-08
- Plan expenditure at Rs.205,100 crore; Non-Plan Expenditure (net of the SBI
6.5%; Revenue deficit estimated at Rs.71,478 crore (1.5% of GDP) and
fiscal deficit at Rs.150,948 crore (3.3% of GDP).
TAX PROPOSALS
Indirect Taxes:
Customs duties:
- Reduction in peak rate for non-agricultural products from 12.5% to 10%.
- Reduction in duty on most chemicals and plastics from 12.5% to 7.5%; on
- All coking coal irrespective of ash content to be fully exempt.
- Reduction in duty on polyester fibres and yarns from 10% to 7.5% and on
polished diamonds from 5% to 3%; on rough synthetic stones from 12.5%
to 5%; and on unworked corals from 30% to 10%.
- Dredgers to be fully exempt from import duty.
- To augment irrigation facilities and processing of agricultural products,
food processing machinery from 7.5% to 5%.
- Reduction in general rate of import duty on medical equipment to 7.5%.
- To make edible oils more affordable, crude and refined edible oils to be
oil, both crude and refined, by 15 percentage points.
- Reduction in duty on pet foods from 30% to 20%; on watch dials and
and development, concessional rate of 5% duty to be extended to all research
institutions registered with the Directorate of Scientific and Industrial
Research; reduction in duty from 7.5% to 5% on 15 specified machinery
for pharmaceutical and biotechnology sector.
- Duty of 3% (WTO bound rate) to be levied on all private import of aircraft
additional customs duty.
- Duty of Rs.300 per metric tonne to be levied on export of iron ores and
concentrates.
Excise Duties:
- Reduction in ad valorem component of excise duty on petrol and diesel
- Relief to deserving cases especially job creating sectors: exemption limit
to encourage food processing sector, biscuits whose retail sale price does
not exceed Rs.50 per kilogram and all kinds of food mixes including instant
mixes to be fully exempt; reduction in duty on umbrellas and parts of
footwear from 16% to 8%; on plywood from 16% to 8%; biodiesel to be
fully exempt.
- To provide access to pure drinking water, water purification devices
filters not using electricity to be fully exempt; exemption on pipes used for
carrying water from a water supply plant to a storage facility to be extended
to all pipes of diameter exceeding 200 mm used in water supply systems.
- Reduction in the rate of duty from Rs.400 per metric tonne to Rs.350 per
of Rs.600 per metric tonne on cement that has a higher MRP.
- Specific rates of duty on cigarettes to be increased by about 5%; duty
non-machine made biris and from Rs.17 to Rs.24 per thousand for machine
made biris; duty on pan masala not containing tobacco to be reduced from
66% to 45%; withdrawal of exemption for pan masala containing tobacco
and other tobacco products given to units in the North Eastern States.
Service tax :
- Exemption limit for small service providers to be raised from Rs.400,000
- Extension of service tax to: services outsourced for mining of mineral, oil
(residential properties, vacant land used for agriculture and similar purposes,
and land for sports, entertainment and parking purposes & immovable
property for educational or religious purposes to be excluded); development
and supply of content for use in telecom and advertising purposes; asset
management services provided by individuals; design services; services
involved in execution of a works contract with an optional composition
scheme under which tax will be levied at only 2% of the total value of
works contract.
- Exemption to: Services provided by Resident Welfare Associations to their
services provided by technology business incubators, their incubatees whose
annual business turnover does not exceed Rs.50 lakhs to be exempt for
first three years; clinical trial of new drugs to make India a preferred
destination for drug testing.
- Department of Telecommunications to constitute a committee to study the
Direct Taxes
- Threshold limit of exemption in the case of all assessees to be increased by
woman assessee, threshold limit to be increased from Rs.135,000 to
Rs.145,000 and in case of a senior citizen from Rs.185,000 to Rs.195,000
giving him or her a relief of Rs.2,000; deduction in respect of medical
insurance premium under section 80D to be increased to a maximum of
Rs.15,000 and, in case of a senior citizen, a maximum of Rs.20,000.
- Surcharge on income tax on all firms and companies with a taxable income
- Benefit of Section 36(1)(viii) to be available to cooperative banks; to be
under section 36(1)(viia); amalgamation and de-merger of banking
companies is tax neutral - benefit to be extended to cooperative banks.
- Concessions under section 80IA for infrastructure facilities to be extended
and storage facilities integrated to the network; and to navigation channel
in the sea.
- To facilitate creation of urban infrastructure, issue of tax-free bonds through
local bodies to be allowed.
- A benign assessment procedure to be introduced for assessees engaged in
at 8% or more of turnover.
- A five year income tax holiday for two, three or four star hotels and for
should be completed and begin operations in National Capital Territory of
Delhi or in the adjacent districts of Faridabad, Gurgaon, Ghaziabad or
Gautam Budh Nagar during April 1, 2007 to March 31, 2010.
- Concession under section 35(2AB) to be extended for five more years until
- Tax holiday to undertakings in Jammu & Kashmir to be extended for another
- Minimum Alternate Tax (MAT) to be extended to income in respect of
section 36(1)(viii) to be restricted to 20% of profits each year.
website : http//indiabudget.nic.in
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