The budget 2010 gave a lot of hope to people in the country. There were many new schemes introduced by the government aiming at the growth and development of the country. Although many promises have not yet seen the light of the day some of the schemes that were introduced have been successfully carried out. Read further…
Personal income tax
The government introduced the new section 80CCF in the Income-tax Act to in the budget 2010. This was introduced in order to promote investment in the infrastructure sector. People expected the value of exemption on tax under section 80C to go up to Rs.300, 000 but that did not happen rather the government introduced the 80CCF. According to section 80CCF long term investments on infrastructure bonds with upper limit of Rs.20, 000 shall be allowed as deduction in computing the income of an individual or a Hindu undivided family. This deduction will be over and above the existing overall limit of tax deduction on savings of up to Rs.1 lakh under section 80C, 80CCC and 80CCD of the Act.
The term of the Bonds shall be a minimum of ten years with a lock-in period of five years for an investor. These kinds of bonds were last issued in the year 2002 and 2003 but gradually started declining and after the introduction of the 80CCF many companies have started issuing this bond. Some of the private companies like L&T have also started issuing these bonds after budget 2010.
Dilution of stake in PSU Companies
The other exciting implementation of the budget 2010 is the issue of IPO. The government had announced that it was going to raise money through the IPOs that were to be issued in the year 2010. According to the published data as on December 2010, the Year 2010 has had 70 public issues out of which 62 initial public offerings (IPOs) and eight are follow-on public offerings (FPOs). The total fund raised through these issues was about Rs. 71,114 crore. Of this, fund-raising through 62 IPOs was worth about Rs. 39,710 crore.
Recent reports suggest that the government has raised Rs 21,000 crore till the end of 2010 by cutting its stake in companies like Engineers India Ltd, Coal India Ltd (CIL) and MOIL Ltd. This inflow has helped the government reduce the deficit by a huge extent.
National Rural Employment Guarantee Scheme
The NREGS had been given an allotment of Rs 40000 Crores to help unemployed people mainly in rural areas to earn some basic wage. As of end of December an amount in excess of Rs 20000 Crores has been utilized and the balance also is being used. Given a recent hike of minimum wage from January, a huge part of this amount could be utilized in the period from Jan to March.
PSU Banks recapitalization to ensure stability
Rs.16, 500 Crores had been budgeted for providing the Tier I capital required for some PSU banks. This was done with the intention to improve the lending capacity of these banks. The Budget 2010 had also made additional provisions of capital for lending to Rural Areas.
The government exceeded this target and as on date the capital infusion into PSU banks during the fiscal year stands at over 21000 Crores. This funding has helped these banks to support lending to Agriculture and Microfinance in a major way.