BUDGET - 2007

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Highlights of Economic Survey 2007-08

Dear Friends

Finance Minister Shri P. Chidambaram has presented Economic survey 2007-08 on 28th Feb.'08 Its highlights are :

1.GROWTH

.01 FY 2007-08 GDP is projected to be USD 1.16 trillion ; economic growth estimate of 8.7% may be revised upwards ; absolute need of progressive reforms to achieve GDP growth rate to 10% ; Economy decisively moving to a higher growth phase ; Growth in services sector continues to be broad-based and GDP growth rate during 2004-2007 averages at 9%

.02 Rising rupee and slowdown in consumer demand can slow the growth
.03 High interest rates responsible for slack demand of consumer goods
.04 Investment climate in India is promising and displays optimism while the macroeconomic fundamentals show confidence ; Consumption growth slow vs income growth as savings up

2. INFLATION

.01 FY 2007-08 average inflation rate likely at 4.4% despite high commodity prices ; monetary policy has to manage stress from high FX flows ; Farm price movement crucial on rising per capita income, falling poverty and Supply management also crucial ;

.02 Global prices having more pronounced impact on local prices

.03 Supply side pressure also seen in infrastructure sector

.04 Prices rose FY08 on build-up of inflationary, demand-supply mismatch

.05 Large capital flows has been putting pressure on liquidity condition

.06 Wheat, pulses, edible oil FY07 shortfall increased demand-supply mismatch
3. The survey can be viewed on Finance Minisry’s website at :
http://indiabudget.nic.in/es2007-08/esmain.htm

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Imp. Features - Union Budget - 2007- 08

[A] Positive Factors:

1. Farm Sector Credit to be raised to 125,000/- crs.

2. Infrastructure boosting by way of :

.01 Dedicated Mutual Fund schemes and

.02 Utilisation of Foreign Exchange Reserves by way of borrowing from Reserve Bank of India and lending to Infrastructure Companies..

3. World class financial cetre to come up at Bombay.

4. Custom duty on diamonds favorably reduced.

5. Urban infrastructure tax free bonds for urban local institutions.

6. 2, 3 & 4 Star hotels in Delhi area granted tax holidays for 3 years.

7. Promoters allowed raising of capital against their Equity by issue of convertible bonds.

8. Institutions allowed delivery based short selling.

9. Individuals allowed to invest abroad though Mutual funds.

[B] Negative Factors:

1. The poor man is totally ignored in the budget.

2. For industries also budget has negative factors.

3. IT companies to pay minimum alternative tax of 11.22%.

4. Ordinary investors effected by dividend distribution tax raised from 12.5% to 15%.

5. Property owners effected by payment of service tax of 12.5% on rental income from commercial properties.
6. Corporates in Retail and IT also to feel the brunt of service tax on rent of commercial properties.

.04 Employee stock Options bought to tax is negative too.

.05 Tax exemption should have been raised to 150,000/-.

.06 Farm Sector not doing good is matter of concern inspite of farm credit of Rs.190,000/- crs. over last 2 years.

.07 No proposal for relief to common man.

.08 Cement price control bad for infrastructure development and speaks petty and mean.

Highlights - Union Budget - 2007- 08

Dredgers completely exempted from import duty

Bio-Diesel fully exempt from excise duty

Excise exemption to pipes (more than 200mm diameter)

Additional CVD of 4% lifted from crude & refined edible

Customs on most chems & plastics dn to 7.5% frm 12.5%

Water purification devises fully exempted from excise

Excise on parts of footwear reduced to 8% from 16%

Corporate income tax remains unchanged

Weighted deduction for R&D extended by 5 years

Ad valorem excise down to 6% from 8% (petrol & diesel)

Excise on pan masala (ex-tobacco) cut to 45% frm 66%

Duty on mouth fresheners cut to 45% MOUTH

Excise duty on plywood cut to 8% from 16%

Zero Excise on biscuits below Rs 50/kg

Ad-valorem on petrol & diesel cut from 8%to 6%

No excise on instant food mixes

General effective customs duty rate reduced to 34.13%

Excise on plywood cut to 8% from 16%

Effective corporate tax rate at 19.2%

Tax concession for Gas networks and navigation

No excise on instant food mixes

Aircraft imports by non-airlines: Duty at 3%

Telecom taxes to be bundled into one rate

Excise cut on cement (till Rs 190/bag) to 350/mt

Bio-Diesel fully exmpt from Excise Duty

Excise on cement (above Rs 190/bag) at Rs 600/mt

Service tax exemption on tech biz incubators

Differential excise duty on cement

Cement excise: Rs.350/tn on Rs.190/bag

Duties on agri products cut from 7% to 5%

Ad valorem duty on Petrol & Diesel cut to 6%

Edible Oil exempt from CVD

Cut import duty on medical equipment to 7.5%

Watch , Umbrellas duty cut

Duty on PTA, DMT, MEG cut to 7.5%

Irrigation, Food processing tariffs cut to 5%

Import duty of 3% on pvt aircrafts

LTCG EXEMPTION TO CONTINUE THIS YEAR

DIVIDEND DISTRIBUTION TAX HIKED TO 15%

FBT CHANGE: ESOPS TO BE TAXED

ATF BENEFIT EXTENDED TO ALL SMALL AIRCRAFT

1% ADDL EDU CESS FOR SECONDARY, HIGHER EDU

ESOPS TO ATTRACT FBT

EDUCATION CESS HIKED TO 3% FROM 2%

BANK CASH TRANSACTION TAX LIMIT RAISED TO RS.50K

CAPITAL GAINS BOND TO CONTINUE

VC INVST IN BIOTECH, IT, NANO TO GET TAX SOPS

MAT EXTENDED TO COS UNDER SEC10A & 10B

MAT EXTENDED TO IT COMPANIES

5-YR TAX HOLIDAY FOR 2, 3, 4 STAR HOTELS

INCOME TAX: EXEMPTION AT RS.1.45 LK FOR WOMEN

INCOME TAX: EXEMPTION RAISED TO RS.1.10 LAKH

INCOME TAX EXEMPTION HIKED BY RS 10,000

Customs duty on man made yarn & poly fibre cut to 7.5%

Cut and polished diamonds duty cut to 3%

Coking coal exempt from customs duty

Peak Customs duty on non-agro prod cut to 10%

Tax as % of GDP at 11.4%

Estimates rev deficit at 1.5%; fiscal deficit at 3.3% of GDP

Total expenditure at Rs.6.8 lakh cr

Revenue deficit 2%, fiscal deficit 3.7%

Revenue deficit at 2%; fiscal deficit at 3.7%

Revenue deficit to be 2%; fiscal deficit to be 3.7%

Introduce Natl level goods & services tax fm Apr 1

Losses on CST,VAT Rs5495cr;to be compensated

CST rate to be cut to 3%; Rs.5497cr for compensation

CST to be phased out

VAT revs a success; revs up 24% in '07

Centre to give states Rs.142,450 cr to rejig debt

Centre to give Rs.1.42 lakh cr to states in '08 taxes

Centre to give Rs.1.2 lakh cr to states in '07 taxes

Centre to give Rs.1.2 lakh cr to states in '07 taxes

Centre to give Rs.1.2 lakh cr to states in '07 taxes

Centre to give Rs.1.2 lakh cr to states in '07 taxes

State debt consolidated, 20 states restructured debt

Rs150cr for Min of Youth for Commonwealth Games

Rs.1800cr for pvt cos which regularise the disabled

To set up an autonomous debt management office

To create 1 lk jobs for physically challenged ppl

Int free loan of upto Rs2.5cr for upgradation of ITIs

Rs.750cr set aside for loans for ITI upgradation

To allocate Rs.750cr for setting up ITIs

Mumbai revival report to be made public soon: FM

Will make Mumbai a world-class financial city

E-Governance expenditure hiked to Rs.719cr

E-governance allocation doubled to Rs 700-plus cr

Use part of FOREX reserves for infrastructure finance

Defence allocation up at Rs.96,000cr

Defence Budget hiked by Rs.96000cr

Short selling by institutions; settlement by delivery

Overseas invst to be allowed by individuals via MFs

MFs to be allowed to launch infrastructure funds

PAN to become sole identification number

PAN mandatory for all security transactions

Urge banks to look at credit rating of SMEs

To set up mortgage guarantee Cos

To ask RRBs to launch branch expansion prog

Allocation for tourist infrastructure up at Rs.520cr

Coir industry modernisation provision at Rs 22.5 cr

Banks to check rating for small Co loans

Health insurance allocation for weavers hiked to Rs321cr

100-150 handloom clusters to be taken up in FY'08

Allocation to handloom sector hiked to Rs.321cr

Rs.425cr allocation for textile parks

To increase allocation for textile parks by Rs.425cr

Road-rail projs in Bihar, Assam will be nat'l projs

Allocation to NHDP hiked frm Rs 9945cr to Rs10667cr

To spend Rs.3983cr on rural electrification

Pvt investment under NHDP more than Rs 25,000 cr

Golden quad project almost complete

Allocation of Rs.3983cr for rural electrification

Hikes allocation to APDRPs to Rs800cr fm Rs 650 cr

APDRPs to cover districts with population >50000

7 UMPPs under review; 2 to be approved by July

Central PSUs to invest Rs 1.6 lakh cr this year: FM

FDI in April-Jan was $12.5 bn

Gross domestic capital formation up 23%

Rural landless households covered under AABY

Govt to pay 50% premium, states to pay other half

Separate window for rural roads under RIDF to remain

Death & disability insurance for rural landless households

Social Security Scheme for unorganized workers

Fertiliser subsidy in FY'07 at Rs.22,450cr

To launch weather based crop insurance scheme

NABARD to issue rural bonds worth Rs 5,000cr

NABARD's rural bonds to get tax exemptions

Govt to start weather based crop insurance scheme: FM

Subsidy to fertilizer sector hiked to Rs 22452cr

India has find alternate method for fertiliser subsidy

Training & Visit system for farmers to be revived

Wrld Bk loan to TN-Rs2182cr to restore water bodies

Rs 22,452cr already spent on fertiliser subsidy: FM

World Bk to assist Andhra water bodies restoration

To provide additional Rs.1800cr to NABARD

Rs.11000cr outlay for irrigation projects

Rs 100 cr for New Rainfed Area Dev Prog: FM

To start special funds for coffee, spices, rubber

New funds for replanting coffee, cashew, coconut: FM

Farm institutes, pvt cos to advise on better seeds: FM

Pvt Cos invited to submit plans for certified seeds

Target for farm credit in '08 at Rs2.25 lk cr vs Rs1.9 lk cr

Rs.153cr for high-yielding milch animals scheme

Govt concerned about farm productivity: FM

Rs 2,25,000 cr credit for farming

Farm credit in FY'07 at Rs.1.90 lk cr

Farm credit growth doubled in 2 years: FM

Initial allocation for NREGS at Rs.12,000cr

NREGS to be expanded to 330 districts

NRHM allocation up from Rs 8207 cr to Rs 9947cr

Scholarship for 9-12th std students to stop dropouts

Provision for AIDS control prog up to Rs 969 cr

Anti-Aids programme allocation up at Rs.969cr

All distt to complete distt health action plans by Mar'07

Allocation for sanitation up at Rs.950cr from Rs.720cr

Sanitation campaign up from Rs 720 cr to Rs 954cr

To lower dropout rate via Nat'l Scholarship Scheme

Rs 750cr to fund Nat'l Scholarship Scheme: FM

Primary edu allocation up from Rs1837cr to Rs 3794cr

Allocation to health hiked by 21.9% to Rs 15291cr

2 lakh new teachers will be appointed next year

To hire 2 lk new teachers make 5 lk new classrooms

To hire 2 lk more teachers; 5 lk more classrooms

Allocation for school education up to Rs.23,142cr

Allocation to education hiked by 34.2% to Rs32352cr

Education allocation up 34.2%;school education 35%

Bharat Nirman allocation up 31.6% to Rs.24600cr

Education spend up 44.2% to Rs 32,352 cr

GBS for Bharat Nirman hiked to Rs.24,603cr, up 31.6%

7.83 lakh rural houses built upto Dec 2006

Average inflation seen between 5.2%-5.4% in '07

Committee for forward trading in essential comm

24 lakh hectares under new irrigation projects: FM

Agriculture avg growth rate in 2002-07 is 2.3%

Bharat Nirman remains cornerstone of govt policy

Confident we can moderate inflation trend: FM

Committee to study forward trade impact on prices

PM has written to all CMs to monitor hoarding

Global commodity prices put pressure on inflation

To present new proposals on agriculture

Bank credit grew 29.6% till February

Monetary trends have put pressure on prices: FM

Govt committed to monetary stability & inclusive growth

Per capita income grew 7.5% last year

Agri growth at 2.3%, lower than desired 4%

Average growth rate in UPA Govt tenure at 8.2%

GDP growth average 8.5%

Growth rate of GDP has improved to 9.2%: FM

GDP growth seen at 9.2% in 2006-07

Garnered additional revenues this fiscal: FM

Savings rate at 32.4%: FM

Have noticed sharp ups & downs in agriculture

Agri must top agenda of policy makers: FM

Farm sector avg growth 2.3% in 5 years

courtesy : BSE India