Although the concern of my government and our electoral promises were based on the “aam-aadmi”, I have tried to focus more on the “gaon ka aadmi” (the Rural Indians). Ours is a country of villages and villagers and if there has to be growth we need to make them an integral part of our growth plans.
Dear People
Open letter from Mr. Finance Minister to the people of India, post Budget 2009-10
The budget presentation in the parliament is over and the news papers and media would be buzzing with analysts and columnists giving their ideas and views of what I should have done and what I did and where I was right and where I was wrong and so on and so forth.
I am writing this in reply to the pre-budget letter sent by you-the people of India. I have tried to satisfy many of your expectations if not all. I would like to put forth my views on the same in the following few words…
Basic Theme of budget
The core aim of my fourth budget (two full budgets and two interim budgets, a record in itself!) was to ensure that the Indian Economy is back on track to high growth. I wish to get the GDP growth rate to 9% as soon as possible and hence my efforts in the budget.
Although the concern of my government and our electoral promises were based on the “aam-aadmi”, I have tried to focus more on the “gaon ka aadmi” (the Rural Indians). Ours is a country of villages and villagers and if there has to be growth we need to make them an integral part of our growth plans.
My third agenda has been to reduce the difference between income and expenditure; the Fiscal deficit. In spite of all attempts It has rise to 6.2%. I have been clear enough not to mop up this difference by adding any taxes on to your existing burden.
The Plans and how it could help you – the aam aadmi!
Infrastructure: To ensure that the GDP grows at the rate we wish to, our nation has to have stronger infrastructure. With this in mind I have made provisions for improving the allocation for infrastructure and improve the Public Private Partnerships in critical sectors. This includes a 23% higher allocation to Highways and over 45% higher allocation to the railways. To convert our cities into world class cities I have raised the allocation for Urban Renewal by over 87%. To ensure that we become a “power”ful nation, I have increased the allocation for Power Development by 160 percent. Those power cuts could be story of the past soon!
For the “gaon ka aadmi”
To ensure our rural brethren become an integral part of growth I have increased the allocation to the National Rural Employment Guarantee Scheme (NREGS) to Rs 39,100 Crores. And to improve the efficiency of the NREGS I have decided to converge other sectors like forests, water resources etc which can assist to NREGS.
Giving more time for our farmers to get benefited from debt waiver and also providing them with easier credit to invest in the farms will be a priority this year. This should ensure food sustainability in the long run.
To provide our rural brothers and sisters with shelter I have allocated 2000 crores for the Rural Housing Fund. Much against your expectations I could not give any thought to the housing loan industry. Probably next time!
About divestment & Financial Markets
Your request for participation in divestment programs has been noted. But, at present I am unable to give a clearer idea of how and when and what would be part of the divestment. Analysts had earlier said that I could mop up to 25,000 crores by selling government companies. An easy way, but I would like more time to decide on that.
Considering the mess the Financial World has put itself into across the world I am clear that Banks and Insurance will not be part of any Divestment program and rather we would pump in funds to improve stability and growth.
For Students and job seekers
I have recommended full interest subsidy to cover loans to pursue ANY approved courses of technical/professional study after schooling. Also to help the student community get jobs, it has been decided to modernize the Employment Exchange and facilitate online registration.
The focus on Rural India would also provide many opportunities for Entrepreneurship to your lot. It is about time you too contributed by looking for business opportunities in Agriculture and Rural infrastructure. Assistance for such projects would be surely forthcoming from my government.
I have also allocated over 900 crores to setup more polytechnics, Rs 897 crores to open new central universities and 450 cores to start more IITs and NITs.
Pensioners and senior citizens.
Although at the moment I have not given any great value addition to the senior citizens, I have some ideas for retired ex-servicemen. Pension would be given in terms of rank rather than year of retirement to ensure evenness.
I have raised the exemption limit for your personal income tax by Rs 15000/-. Amendments have been made to the National Pension Scheme to make it more profitable.
On the taxation front
Tax reforms are a long term process and not the result of one budget speech. Hence in-spite of all the expectations relating to taxes and removal of many taxes or hiking of income tax slabs I have not given much thought in this budget.
Personal income tax exemption has been raised by Rs 10000/- to Rs 1.60 lakhs for men and Rs 1.9 lakhs for women.
My effort would be to first simplify the Taxation process and the Direct Tax code. The code will be open for your inputs and a bill will be tabled in the winter session. Much against expectations I have not touched the Corporate Tax Rates. I am sure that this in itself would be good news for businesses who would be better off focusing on growth in the current recessionary environment rather than spending energy on any new changes at least for now! As good news I have decided to do away with the FBT and CTT. GST implementation too would be speeded up. Surcharges too would soon go.
Small and Medium businesses can declare income as a flat 8% of your turnover and avoid maintaining books of accounts, also, you need not pay any advance tax. This would help your focus better on business development.
For the rest of us
Some commodities like Gold bars, Bulbs costing above Rs 20, High end footwear and many food items (excluding biscuits, cakes, sherbets etc) would be costlier on account of the hike in Excise duty to 8% form 4%.
At the same time LCD TVs, Branded Gold Jewellery, Life saving drugs and medical equipment will be cheaper on account of reduction in Customs duty. Water sports would become affordable with the full exemption to accessories used for water sports like skis and other equipment from customs duty.
ATM penetration would be higher with the allowing of banks to set up off-site ATM’s without approval.
Price hikes in Petrol and Diesel will not be very steep hence forth. This is because of a fixed excise duty of Rs 14.5 per liter of petrol and Rs 4.75 per liter of diesel instead of 6% of the price.
Closing lines
From the way that the Bond, Currency and Equities markets tumbled on 06 July 2009, I can sense that the expectations were really high from the Finance Ministry to wave a magical wand to satisfy all needs and wishes. But given the long term approach I wish to take, these wishes have to wait.
As of now, my focus would be on getting the Infrastructure on track to ensure 9% GDP growth and also to include the Rural Indians in any future growth stories. On the fiscal deficit front I already have a great task of generating revenue. It would be my honest effort not to reduce the deficit by cutting on spending targets especially Infrastructure and Rural development. The other task would be fund the projects without borrowing money that would increase the deficit even more.
I look forward to giving you more happier news and take India to being a super growth story. Time will tell. Till then…
Yours truly
Mr. Finance Minister.