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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