Duty on small cars reduced in Budget

     New Delhi: Aerated drinks and small cars are to cost less. Union Finance Minister P. Chidambaram has proposed to reduce excise duty on aerated drinks and small cars from 24 percent to 16 percent. Announcing this in the Lok Sabha today while presenting the General Budget for 2006-07, Chidambaram said that the Government's intention is to converge all rates at the Central Value Added Tax (CENVAT) rate, which is now at 16 percent. The Finance Minister said that a small car, for this purpose, would mean a car of length not exceeding 4,000 mm and with an engine capacity not exceeding 1,500 cc for diesel cars and 1,200 cc for petrol cars. Chidambaram expressed confidence that the industry would seize the opportunity to make India a hub for the manufacture of small and fuel efficient cars.

    Announcing that more services are proposed to be brought within the service tax net, Chidambaram said the new services to be covered include ATM operations, maintenance and management, registrars, share transfer agents and bankers to an issue. Besides, sale of space or time for advertisements other than in the print media, sponsorship of events by companies other than sports events, international air travel excluding economy class passengers, container services on rail excluding the railway freight charges, business support services, auctioneering, recovery agents, ship management services, travel on cruise ships and public relations management services will also fall in the category of increased service tax. The Finance Minister said that in 2005-06, the services sector is estimated to contribute 54 percent of GDP. Naturally, it should also contribute significantly to the exchequer. Excise duty on all man-made fibre yarn and filament yarn, has been, however, reduced from 16 percent to 8 percent. Chidambaram said that simultaneously, the import duty on all man-made fibres and yarns is proposed to be reduced from 15 percent to 10 percent. Consequently, the import duty on raw materials such as DMT, PTA and MEG will also be reduced from 15 percent to 10 percent. Chidambaram said that the import duty on paraxylene is proposed to be reduced to two percent.

     With a view to giving a fillip to the Food Processing industry, the Finance Minister proposed to fully exempt excise duty from condensed milk, ice cream, preparations of meat, fish and poultry, pectin, pasta and yeast. On ready-to-eat packaged foods and instant food mixes like Dosa and Idli mix, excise duty will be reduced from 16 per cent to 8 per cent. The Budget also proposed duty concessions to vital drugs on 10 anti-AIDS and 14 anti-cancer drugs to 5 per cent. The Government also proposed to reduce the duty on certain life-saving drugs, kits and equipment from 15 per cent to 5 per cent. The peak rate customs duty on non-agricultural products was also proposed to be reduced from 15 per cent to 12.5 per cent. The Finance Minister further proposed to reduce customs duty on mineral products from 15 per cent to 5 per cent, with a few exceptions. He also proposed to reduce the customs duty on ores and concentrates from 5 per cent to 2 per cent. Customs duty on basic inorganic chemicals will be reduced from 15 to 10 per cent while the duty on basic cyclic and acyclic hydrocarbons and the derivatives is to be reduced to 5 per cent. There will be no change in the rates of personal income tax or corporate income tax.

Finance Minister presents Budget for 2006-07

     New Delhi: Finance Minister P Chidambaram on Tuesday presented the Union Budget for the fiscal year 2006-07 in the Lok Sabha. Presenting his fifth Union Budget, the Finance Minister announced that Rs 14,300 crores would be allotted for rural employment programme during 2006-07, out of which Rs 11,300 crores for National Rural Employment Guarantee (NREG) programme and Rs 3,000 crores for Sampoorna Gramin Rozgar Yojana (SGRY). Chidambaram said that eight flagship programmes of the United Progressive Alliance (UPA) Government, including Sarva Shiksha Abhiyan and Mid-Day Meal Scheme, would get a total allocation of Rs 60,015 crore in 2006-07 as against Rs 34,927 crore in the current year. Rajiv Gandhi drinking water programme will get Rs 4680 crores in the next fiscal as against Rs 3645 crores this year, while the National Health Mission will be allotted Rs 8207 crores in 2006- 07, which will be Rs 1654 crores more than what is being given in the current year. To eradicate polio completely from the country by 2007, Chidambaram said, a massive immunisation programme will be launched. Old age pension will be increased to Rs 200 per month for above 75 years of age, Chidambaram said, adding that allocation for it put at Rs 1430 crore from the Centre and the State Government to provide matching contribution.

     On the agriculture front, the Finance Minister announced that six lakh hectares of irrigation potential was expected to be created this year, adding that separate window would also be set up for tenant farmers to ensure loan share. Agricultural credit is proposed to be increased to Rs 175,000 crores as against Rs 1,41,500 crores, covering additional 50 lakh farmers. Rs 4,481 crores have been allocated for improving 20,000 water bodies across the country to provide irrigation to 14.7 lakh hectares of command areas. He also proposed to set up a central horticulture institute in Nagaland and a national fisheries development board. The Union Budget also allotted Rs 10,000 crore for Rural Infrastructure Development Fund in 2006-07. Chidambaram further announced that one thousand schools for girls of Scheduled Caste, Scheduled Tribe, Other Backward Castes (OBC) and minorities to be set up. He also said that a girl child would get Rs 3,000 deposited in a bank account after she enrols for eighth class examination and the amount would be given when she becomes an adult, i.e. 18- year-old. On power reforms in the country, Chidambaram said that eighty-two power projects are in various stages of implementation in the country to overcome power shortage. This, when completed in one to three years, will generate 33,000 mws of power in Public Sector Units and 6500 mws in private sector. Of this, 15,000 mw of power generation is to be installed by March 2007, he said. "Five mega power projects of Rs 4000 crore each, is to be set up for which clearance is to be given by March 31, 2006. Of this, one each will come in Chhattisgarh and Madhya Pradesh. The remaining three will be in coastal areas of Maharashtra, Karnataka and Gujarat. NHAI (National Highway Authority of India) to be reconstituted to make it more effective," said Chidambaram.

    The minister proposed a number of steps to broaden and strengthen the capital market. Outlining the details of the proposal, Chidambaram said that the limit on FII investment in Government securities would be increased from 1.75 billion dollars to two billion dollars and the limit on FII investment in corporate debt from 0.5 billion dollars to 1.5 billion dollars. The ceiling on aggregate investment would be raised by mutual funds in overseas instruments from one billion dollar to two billion dollar sand the requirement of 10 per cent reciprocal share holding would be removed. Chidambaram added that a limited number of qualified Indian mutual funds to invest, cumulatively up to one billion dollars, in overseas exchange traded funds would be allowed, and an investor protection fund under the aegis of Securities and Exchange Board of India (SEBI), funded by fines and penalties recovered by it, would also be set up. A window will be created for equity participation and viability gap funding for the growth of sunrise IT sector, which will be kept open for three years. Small and Medium-Sized Enterprises (SME) in service sector will get the status of Small Scale Industry (SSI) in manufacturing sector. To fund them a corpus will be raised by the Small Industries Development Bank of India (SIDBI) for Rs 2500 crores from the present Rs 1122 crores in the next five years, he said, adding that an empowered group of ministers would be set up for the development of industrial clusters in the country. Looking at the increased number of foreign tourists in the country, Chidambaram said that fifteen tourist development circuits have been identified for development and proposed to increase plan allocation of Ministry of Tourism from Rs. 786 crores to Rs. 830 crores. During the year 2006-07, the Ministry of Tourism will identify 50 villages with core competency in handicrafts, handlooms and culture, close to existing destinations and circuits and develop them for enhancing tourists experience, and establish 4 new institutes of hotel management in Chhattisgarh, Haryana, Jharkhand and Uttaranchal.

Highlights of General Budget 2006-07

      New Delhi: Union Finance Minister P.Chidamabaram on Tuesday presented the General Budget for the financial year 2006- 07. The following are the highlights of the proposed Budget: * Constituency allowances of MLAs to be treated for income tax purposes * Constituency allowances of MPs to be treated for income tax purposes * More transactions to come under PAN * Banking cash transaction tax introduced last year will continue * Fringe Benefit Tax modified * Threshhold limits of FBT raised * FBT will remain as it is * FBT is justified for ensuring horizontal equity * FBT on tour and travel reduced to 5 pc from 20 pc * Income tax dept to be computerised by next year * Small cars are the biggest winner * Food processing, irrigation, metro rail, benefeciaries * Pharma and oil sectors losers * MAT credit positive for Dabur and Infosys * Cess on domestically-produced petroleum crude raised from Rs 1800/t to Rs 2500/t * Entire amount to be absorbed by oil producing companies * Excise duty on cigarettes increased by five per cent * Many tax exemptions in customs and excise to be removed barring SSI * No change in rates of personal or corporate income taxes * No new taxes are being imposed * One-by-six scheme for filing of income tax returns abolished * Excise duty on cigarettes up 5 pc * MAT rate inc from 7.5 pc to 10 pc * April 1, 2010 date for introduction of GST * Service tax raised to 12 pc * Bank Fds upto 5 yrs is included in 80-C reduction * Samll cars, ice cream get cheaper * Rs 10,000 tax exemption limit for pension funds * FDs in scheduled commercial banks with five year maturity will get tax exemption under Section 80C * Rs 10,000 exemption limit for investment in pension funds under Section 80CCC removed * These investments would be brought under Sec 80C subject to a ceiling of Rs 1 lakh * Minimum alternate tax * Banking cash transcation tax to continue * Customs duty on vanaspati raised to 8 pc * Gross Capital formation up 30 pc in FY 05 * Savings up 21.9 pc of GDP * Gross capital formation up 30 pc in FY 05 * Agricultural growth up by 2.1 pc * AIM 10 pc economic growth * Non-food credit growing by 25 pc * Gross capital formation up 30 pc in FY 05 * 90 pc golden quadrilateral completed by 90 pc in June 2006 * GDP growth target for tenth plan at 8 pc * 11, 7000 spent on rural employment scheme * Govt determined to take growth rate to 10 per cent * Manufacturing sector to grow at 9.4 per cent in FY 06 07 * Highway scheme progressing at 4.4 km per day * 96 per cent of GQ to end by June 2006 * Food grain output this year at 209.5 mt * 8.7 lakh rural houses constructed by bharat nirman * Inflation at 4.02% * 5083MW more power to be added in 2006 * 10,366 villages electrified this year * Rs 11,700 cr to be spent on rural employment * Govt's aim is to ensure monetary stability and managing external debt * Education outlay Rs 24,115 crore * Rs 3010 crore outlay for midday meal scheme * Rs 944 crore has been given for irrigation * Rs 720 cr for rural sanitation * Hyderabad Metro rail to be considered * Old age pension (above 75 years) - Rs 200 per month * Five lakh additional class rooms to be constructed * 1.5 lakh additional teachers to be appointed * Allocation for education increased by 31.5 pc to Rs 24,150 crore * Allocation for healthcare raised by 22 pc to Rs 12, 546 crore * Destitute pensioner to get Rs 400 per month with the help of states * Rs 10,041 cr for Sarva Shikhsha Abhiyan * Massive polio immunisation programme from 2007 * 54 pc hike for Bharat Nirmal Programme at Rs 18,696 crore * Incentive for girl child who passes 8th standard - Rs 3000 award after she turns 18 * Gender budgeting on in 32 ministries * Rs 24,115 crore for education * Rs 4680 cr outlay for drinking water * Total budget for Northeast will be Rs 12,041 crore * Rs 1,350 crore for the ministry of NE development * Rs 16.4 cr for National Minorities Development Corporation * Rs 8207 crore for rural health spending * Rs 4,680 crore for Rajiv Gandhi water drinking plan * Rs 16,000 cr allocation for PSUs * Expert body to be set up for jems and jewellery sector * Farmers to receive short term credit at 7 per cent * Gross budgetary support for Plan expenditure up 20.4 pc at Rs 1,74,725 crore * Special tea fund of Rs 100 cr for Assam,TN,Kerala, Uttaranchal * Stress on development of micro-finance sector * Rs 4,595 cr for urban renewal mission * Programme for reconstruction of calamity-hit areas. * Rs 28,737 crore allocated for gender budgeting * Allocation for national Urdu education programme increased to Rs 13 crore * Rs 10, 000 cr allocation for rural infrastructure * Special schemes for STs and SCs for their development. * India to be made manufacturing hub for textiles, steel * India to be made manufacturing hub for metals and petro products * Maulana Azad Educational Foundation corpus for minority welfare doubled to Rs 200 crore * New towns to be established on specific themes * Farm credit to benefit Allahabad Bank and SBI * Govt aims to double farm credit in three yrs * More infrastructure to benefit cement industry * Outcome of Budget to be tabled on March 17 * 1,000 schools for SCs, STs, OBCs and minorities girls * Foreign tourist arrival 3.92 million in 2005 * Agricultural credit proposed to be increased to RS 175,000 crore * 50 lakh additional farmers to be covered * Agricultural insurance scheme to continue * Central horticulture institute in Nagaland * FDI flow put at $4 billion up to November, 2005 * Budgetary loan for PSEs has been fixed at Rs 16901 crore * Budgetary loan of Rs 2791 crore for Railways * 4.7 pc growth in power generation in 2005 * Rs 4,481 crore allocated for improving 20,000 water bodies * National fisheries development board to be set up * 82 power projects under construction * 4 new hotel management institutes in Chattisgargh, Haryana, Jharkhand and Uttaranchal. * Five ultra-mega power projects before Dec 2006 * Rs 597 cr for non-conventional resources * Tourism plan spending at 830 cr * National Highway Authority of India to be restructured * 2 pc of the borrowers' interest liability up to Rs 1 lakh principal of crop loans taken for kharif and rabi this year is to be reimbursed to farmers before March 31 this year * Allocation for Rural Infrastructure Development Fund has been stepped up to Rs 10,000 crore in 2006/07 * Textile upgradation fund allocation to be raised to Rs 55 crore * 12 textile industry parks to be set up * An allocation of Rs 189 crore provided for this * A National Jute Board to be set up * Like woolmark, there will be a handloom mark to certify quality * A window to be created for equity participation and viability gap funding for the growth of sunrise IT sector * Tax rationalisation for jewelry and gems import * Food Processing Sector to be a priority sector for bank credit * 15 tourist areas to be developed * Services sector put on par with manufacturing sector * SMEs in service sector to get the status of SSI in manufacturing sector * Rs 1500 cr allocation to boost telephone connectivity * Plan allocation for shipping up 37 pc * Bill on cellular telephony in rural areas soon * 40,000 more villages to be electrified under Rajiv Gandhi Gramin Vidhyutikaran Yojana * 82 power projects are in various stages of implementation in the country to overcome power shortage * Work on to identify a deep draft port in West Bengal * To promote India as a semi-conductor hub * Introduction of a comprehensive bill on insurance in 2007 * Biotechnology will be the big focus in FY 06-07 * 180 items to be de-reserved from SSI list * Thrust industries: textile and food processing * Rs 97 crore for upgrading IITs * FII investment limit in stock markets will be raised from $1.75 billion to $2 billion * National e-governance plan to be approved shortly * Telephone connection on demand in rural areas in three years * Raise in the aggregate investment of overseas investors from $1billion to $1 billion * An investment protection fund under the aegis of SEBI would be set up * Rs 100 crore special grant for Punjab Agricultural University * Food fertilizer and petroleum industries to be under subsidies * Defence budget raised to Rs 89,000 crore in 2006-07 from Rs 83,000 crore last year * Rs 37,458 crore would be capital expenditure in defence * Thrust on farm sector positive for fertilizer companies * Govt urges consensus in Parliament on subsidies in fertiliser, petrol and food * Allocation to the states from the central pool up to RS 1,03,710 cr from Rs 94,402 cr * Revenue deficit to be 2.1 per cent of GDP * Fiscal deficit 3.8 per cent of GDP im 2006-07 * After 20 years, gross fiscal deficit is less than gross budgetary deficit * Plan expenditure has gone up to 30.6 per cent Gross tax revenues increases by 19.4 pc in 2004-05 * Customs primary and non-primary steel and alloy products down to 7.5 pc from 10 pc * Customs on mineral products down to 5 pc from 15 pc barring some items * Customs duty on ores and concentrates reduced to 2 pc from 5 pc * Customs duty on refractories reduced to 7.5 pc * Customs duty on 10 anti-AIDS and cancer drugs down to 5 pc * Customs duty on life-saving drugs down to 5 pc from 15 pc * Rs 300 cr as VAT compensation to states * Customes duty on ferrous alloy down to 7.5 pc from 10 pc * Peak customs duty reduced from 15 to 12.5 pc * Customs duty on naptha reduced to nil * Duty on packaging machines reduced to 5 pc * Duty on major bulk plastics down from 10 to 5 pc * 4 pc CVD on all imports * Countervailing duty on most imports * Excise duty on small cars reduced to 16 pc * Duty on aerated drinks cut to 16 pc * Duty on footwear priced between Rs 250 and Rs 750 down from 16 pc to 8 pc * Duty on printing paper reduced to 12 pc * Import duty on manmade fibre cut from 15 pc to 10 pc * Customs duty on packaging machines reduced from 15pc to 5 pc * 8 pc excise duty on packaged software * Excise duty on compact fluorescent lamps cut from 16 pc to 8 pc * Nil customs duty on set-top boxes * Duty on instant food cut to 8 pc

CII welcomes budget by Gyanendra Kumar Keshri

     New Delhi: The Confederation of Indian Industry (CII) on Tuesday welcomed Finance Minister P.Chidambaram's budget proposals for 2006-07 presented in the Parliament, saying that it would set the path for inclusive growth to boost employment generation. The representative industry body described the budget as a continuation of the growth oriented measures announced by Chidamabaram in his previous two budgets that "aim to make India a global manufacturing hub and at the same time target growth in the rural sector to enable the effect of growth trickle down to the "aam admi".

     It said that the large number of measures announced would go a long way in boosting the agricultural, food processing and the rural sector. YC Deveshwar, President CII, while commenting on the Union Budget 2006-07 said that Chidambaram had also given emphasis on developmental aspects of growth, which included substantial increase in outlay of 31 percent on education and 22 percent increase in outlay on health compared to the previous budget. The CII also said that the increased budgetary allocation for Bharat Nirman program by 54 percent would help accelerate development of rural infrastructure, which is a critical need to unlock the potential of the rural hinterland. It said that the Finance Minister has treated food-processing sector as a priority sector for bank credit, which will help this sector realize its growth and employment generation potential.

    According to CII, the Finance Minister performed a fine balancing act by not introducing new taxes or increasing tax burden but at the same time has increased budgetary allocation to social and rural sectors. This has been possible only through efficient tax administration and expanding tax base by bringing in more services under the tax net along with proposals to streamline and network tax administration across the country. On fiscal consolidation, Deveshwar expressed appreciation on the control exercised by the Finance Minister on the deficit situation. The revenue deficit for the year 2005-06 has been contained at 2.6 percent and the fiscal deficit at 4.1 per cent and these are well below the budget estimates of 2005-06, he added. This, he said, augurs well with the fact that strict fiscal discipline is necessary to maintain high rates of growth coupled with macro economic stability. CII was particularly happy that infrastructure, an important element of manufacturing sector has also got a face lift in terms of FDI policy changes that would attract India as a favorable investment destination for manufacturing sector. CII feels that this initiative will give a boost to Indian manufacturing sector especially in textiles, automobiles and components, Metals and petroleum based industries. Implementation is the key to infrastructure development. Instead of announcing new schemes, this year budget has focused on consolidation and implementation is a welcome change. Overall, the CII said that the budget focused on growth, employment generation and bringing rural India within the ambit of the growth process.

Left, BJP term Budget 2006-07 anti-poor

      New Delhi: The opposition National Democratic Alliance (NDA) and the Left, which offers outside support to the ruling UPA headed by Prime Minister Manmohan Singh, today described the Budget proposals for 2006-07 announced by Finance Minister P.Chidamabaram as anti-poor and pro-rich. Reacting to the Budget, senior BJP leader L.K.Advani said that it was a complete reversal of the creative energies unleashed successfully by the NDA when it was in power. He said that while the NDA had promoted all-round infrastructure growth, low inflation that ensured prices of essential commodities were held down, and low interest rates, besides keeping tax rates low, the 2006-07 Budget proposals had reversed all these gains. "The Economic Survey identified infrastructure and inflation as the biggest concerns for the economy. The Budget has chosen to ignore both these warnings. The Government which tom-toms its so- called commitment to the Aam Aadmi, has provided only Rs.4000 crores - just one percent of the Budget - for Agriculture which contributes 24 percent of India's GDP," Advani said. "It is a Budget that ignores the Kisan, punishes the middle class and gladdens only the affluent," Advani said. Former Prime Minister and NDA Chairperson Atal Bihari Vajpayee said the budget provisions would lead to spiralling prices, hit the common man hard and there was nothing to cheer about for the farmers. "This budget has deceived the common man. The tax system is regressive. Heavy concessions have been granted to the corporate sector and spending on education and healthcare has not been increased to the expected levels," CPI leader Gurudas Dasgupta told reporters here. In the same vein, his CPI(M) colleague Basudeb Acharia said the UPA government has not paid any heed to the suggestions given by the Left parties on resource mobilisation and continued to burden the common people to raise resources and was "a regressive budget".

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