Summary of the Union Budget, 2008-09
The following summary of the Union Budget, 2008-09 was released by the Press Information Bureau.
Rs. 60,000 crore debt relief package benefiting four crore farmers, increase in spending on social sector schemes and relief to income-tax payers are some of the highlights of the Union Budget for 2008-09.
Presenting the budget in the Lok Sabha today, Finance Minister, Shri P. Chidambaram, announced a new insurance scheme for workers in the unorganized sector, setting up of institutes of higher learning and 6000 high-quality model schools, and provision of Rs. 16,000 crore to cover all rural districts under National Rural Employment Guarantee Scheme (NREGS).
Under the debt waiver and relief package, small and marginal farmers (with holdings up to 2 hectare) there will be a complete waiver of all loans overdue on December 31, 2007 and which remained unpaid until February 29, 2008. For other farmers, there will be a one-time settlement (OTS) scheme. Under the OTS, a rebate of 25 per cent will be given against payment of the balance 75 per cent. Loans re-scheduled in 2004 and 2006 through special packages and those re-scheduled in the normal course will also be eligible for a waiver or an OTS. The debt relief scheme will be implemented by June 30, 2008 and the covered farmers will be entitled to fresh farm loans from banks in accordance with normal rules. The total value of overdue loans being waived is estimated at Rs. 50,000 crore and the OTS relief at Rs.10,000 crore. The scheme is likely to benefit about three crore small and marginal farmers and one crore other farmers.
Expressing the hope that the target of agricultural credit for 2007-08 would be exceeded, the Finance Minister has set the target of Rs. 280,000 crore farm credit in 2008-09. Short-term crop loans will continue to be disbursed at interest rate of 7 per cent per year.
More investment is flowing into the irrigation sector. Under the Accelerated Irrigation Benefit Programme, 24 major and medium irrigation projects and 753 minor projects will be completed. The outlay for this programme is being raised from Rs 11,000 crore last year to Rs. 20,000 in 2008-09. The Rain-fed Area Development Programme will be implemented, with an allocation of Rs. 348 crore. The Government will establish the Irrigation and Water Resources Finance Corporation with an initial capital of Rs. 100 crore. This Corporation will mobilize resources for major and medium irrigation projects.
Initiatives for rejuvenating the agricultural sector include setting up of 500 soil testing laboratories, introduction of crop insurance scheme for plantation crops and support to cooperative sector reforms.
The budget provides Rs. 32,667 crore for food subsidy under the Public Distribution System (PDS). As a new initiative for efficient delivery of food grains under the PDS, smart cards are being introduced in Haryana and Chandigarh, on pilot basis.
Keeping in mind the higher cost of construction of houses by the poor, the subsidy per unit for new houses sanctioned under Indira Awas Yojana after April 01, 2008 is being enhanced from Rs. 25,000 to Rs.35,000 in plain areas and from Rs.27,500 to Rs.38.500 in hilly/difficult areas. The subsidy for upgradation of houses goes up from Rs. 12,500 per unit to Rs.15,000. Loans up to Rs.20,000 per unit under the Indira Awas Yojana will be available at the interest rate of 4 per cent.
Calling the education and health sectors ‘the twin pillars on which rests the edifice of social sector reforms’, the Finance Minister announced 20 per cent increase in budget allocation for education and 15 per cent for the health sector.
In the area of school education, a model school programme with the aim of establishing 6,000 high quality model schools has been announced. Mid-day meal scheme is to be extended to upper primary classes in Government and Government-aided schools in all blocks of the country. Nehru Yuva Kendras will be opened in all the 123 districts which presently do not have an NYK. In higher education, three IITs are to be set up in Andhra Pradesh, Bihar and Rajasthan; two IISERs at Bhopal and Thiruvananthapuram; two Schools of Planning and Architecture at Bhopal and Vijayawada; and one Central University in each of the hitherto uncovered States. To encourage children to take up science and R&D, scholarships will be given to students under a new scheme, Innovation in Science Pursuit for Inspired Research (INSPIRE).
Highlighting the need for launching a world class skill development programme in mission mode, the budget seeks to establish a non-profit corporation. The Government will put Rs. 1,000 crore as initial equity in the corporation. Continuing the scheme of upgradation of ITIs, the budget provides Rs.750 crore for upgrading 300 more ITIs in 2008-09.
In the Health sector two major interventions are planned. Under the Rashtriya Swasthya Bima Yojana every worker in the unorganized sector falling under the BPL category and his family will get health cover of Rs. 30,000. For the elderly a National Programme for the Elderly is to be started in 2008-09.
The budget provides for Rs. 1,000 crore for the Aam Admi Bima Yojana that provides insurance cover to poor households. This will cover one crore poor households in addition to the one crore likely to be covered by September 30 this year. Funds have also been enhanced for the Indira Gandhi National Old Age Pension Scheme. This Scheme has been expanded from November 19 last year to include all persons over 65 years falling under the BPL category.
Allocations for the Flagship Programmes have been enhanced. Provision has been made to expand the National Rural Employment Guarantee Scheme to cover all 596 rural districts. For providing potable water to schools in water deficient habitations, provision for installing stand-alone systems is being made under the Rajiv Gandhi Drinking Water Mission.
Schemes benefiting SCs and STs exclusively have been provided Rs. 3,966 crore and for schemes where at least 20 per cent of the benefits are earmarked for SCs and STs, the budget provides Rs. 18,983 crore.
The schemes announced for the welfare of the minorities include a multi sectoral development plan to be drawn for each of the minority concentration district and a scheme for modernizing Madrassa education. The allocation to the Ministry of Minority Affairs has been doubled to Rs. 1,000 crore.
The budget has a number of initiatives for women and children. The allocation to the Ministry of Women and Child Development has been enhanced by 24 per cent to Rs. 7,200 crore. For the first time, a statement on child related schemes has been introduced in the budget. The total expenditure on schemes for child welfare would be of the order of Rs. 33,434 crore. Rs.11,460 crore has been provided for 100 per cent women specific schemes and Rs. 16,202 crore for schemes where at least 30 per cent is earmarked for women-specific programmes. LIC is being asked to extend the Janashree Bima Yojana to cover all women Self Help Groups that are credit-linked to the banks.
The North-Eastern region continues to receive special attention in this year’s budget also. The total budget allocation for this region has been raised by over Rs. 2,000 crore to Rs. 16,447 crore. The government proposes to identify the urgent need of border areas in the north-east and address them through a special mechanism, and for this a Rs. 500 crore fund is being established.
The Finance Minister has raised the income tax exemption limit from Rs. 1,10,000 to Rs. 1,50,000, thus giving every assessee a relief at minimum of Rs. 4,000. The tax rate will be 10 per cent for the income slab between Rs. 1,50,001 and Rs. 3,00,000 and 20 per cent between Rs. 3,00,001 and Rs. 5,00,000. For income of Rs. 5,00,001 and above the income tax rate will be 30 per cent. The exemption limit for women assessees has been increased to Rs. 1,80,000 and in case of senior citizens to Rs. 2,25,000. The Finance Minister has not proposed any change in corporate income tax and in the rate of surcharge. A person paying medical insurance premium for his parents will be allowed an additional deduction of Rs. 15,000 under Section 80D. Justifying the changes in the slabs for personal income tax Shri Chidambaram said that moderation will beget revenues and fairness will beget compliance.
The Finance Minister has brought four more services under the service tax net. They include asset management service provided under ULIP, services provided by stock/commodity exchanges and clearing houses, right to use goods in cases where VAT is not payable, and customized software. He also clarified that money changers, persons running games of chance and tour operators using contract carriage vehicles are liable to service tax. He, however, increased the threshold limit of exemption for small service providers from Rs. 8,00,000 per year to Rs. 10,00,000. He said 65,000 small service providers will go out of the tax net.
On the indirect taxes front, the Finance Minister has made no change in the peak rates of customs duty. The customs duty on project imports has been reduced from 7.5 per cent to 5 per cent. He has proposed to impose a 4 per cent special countervailing duty on a few specified projects in the power sector. Duty on steel melting scrap and aluminum scrap has been reduced from 5 per cent to nil. Customs duty on certain life saving drugs and on the bulk drugs used in the manufacture of such drugs has been reduced from 10 per cent to 5 per cent and also to totally exempt them from excise duty or countervailing duty. Specific parts of set top boxes and specified raw materials for use in IT and electronic hardware industry have been fully exempted from customs duty. Specific machinery for manufacturer of sports goods, vitamin pre-mixes, mineral mixtures and phosphoric acid used for manufacture of cattle and poultry fields have been given duty concession.
Courtesy: Hindu
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