Finance Minister Pranab Mukherjee, unveiled a massive hike in expenditure to put the economy on growth path.

- Total expenditure increased by 36 per cent; plan expenditure to go up 34 per cent to Rs. 3,25,149 crore.

- Non-plan expenditure to go up by 37 per cent.

- Target for agricultural credit flow set at Rs. 3,25,000 crore. Allocation under     Rashtriya Krishi Vikas Yojana increased by 30 per cent and under accelerated     irrigation benefit programme increased by 75 per cent.

- Allocation under NREGS hiked by 144 per cent to Rs. 39,100 crore.

- Allocation under Bharat Nirman increased by 45 per cent; Pradhan Mantri Gram    Sadak Yojana, Rajiv Gandhi Grameen   Vidyutikaran Yojana and Indira Awaas    Yojana get substantial hike.

- New scheme of Pradhan Mantri Adarsh Gram Yojana to be launched on pilot basis.

- All BPL families to be covered under Rashtriya Swasthya Bima Yojana.

- Unique Identification Authority of India gets Rs. 120 crore.

- One-rank one-pension committee report accepted. Pre-1997 and Pre-2006 below officer rank defence     pensioners to benefit.

- Outlay for Commonwealth Games increased to Rs. 3472 crore.

- No change in Corporate Tax rates.

- Income tax exemption limit increased by Rs. 10,000 from Rs. 1.5 lakh to Rs. 1.6    lakh, from Rs. 1.8 lakh to Rs. 1.9 lakh for   women tax  payers and Rs.2.25 lakh to    Rs. 2.4 lakh for senior citizens.

- 10 per cent surcharge on income tax goes.

- Fringe Benefit tax to be abolished.

- Minimum alternate tax increased from 10 to 15 per cent.

- Commodity Transaction tax to be abolished.

- Television set-top box to attract 5 per cent customs duty.

- Customs Duty on bio-diesel reduced from 7.5 to 2.5 per cent on LCD panels from 10 per cent to 5 per cent    and on 10 specified life saving drugs/vaccine from 10 per cent to 5 per cent.

- Customs duty on gold increased from Rs. 250 per 10 grams to Rs. 500.

- Excise rate hiked from 4 to 8 per cent for a number of products barring specified food items, drugs and    pharmaceuticals, medical equipment, paper and paper boards, pressure cookers    and cheap footwear.

- Excise Duty on Naptha, slashed to 14 per cent while high speed diesel blended    with 20 per cent bio-diesel fully exempted from excise duty.

- Excise Duty on man-made fibre, polyester chips, PTA and DMT to be increased    from 4 per cent to 8 per cent.

- Service Tax to be imposed on cosmetic and plastic surgery, transport of    goods    by rail and coastal and inland waterway cargo.

- Revenue Deficit projected at 4.8 per cent of GDP.

- Fiscal Deficit pegged at 6.8 per cent.

The Focus of Budget 2009-10

The Finance Minister has outlined the focus areas to anchor its policy frame work for 2009-10. While presenting the Budget proposal for the year 2009-10, in Lok Sabha, he pointed out that the policies in a medium term perspective would have to pay attention to:

(a) Sustain a growth rate of at least 9 percent per annum over an extended period of       time.

(b) Strengthen the mechanisms for inclusive growth for creating about 12 million       new work opportunities per year.

(c) Reduce the proportion of people living below poverty line to less than half from current levels by 2014.

(d) Ensure that Indian agriculture continues to grow at an annual rate of 4 per cent.

(e) Increase the investment in infrastructure to more than 9 per cent of GDP by 2014.

(f) Support Indian industry to met the challenge of global competition and sustain the growth momentum in       exports.

(g) Strengthen and improve the economic regulatory frame work in the country.

(h) Expand the range and reach of social safety nets by providing direct assistance to vulnerable sections.

(i) Strengthen the delivery mechanism for primary health care facilities with a view to improve the preventive and       curative health care in the country.

(j) Create a competitive progressive and well regulated education system of global standards that meets the       aspiration of all segments of the society.

(k) Move towards providing energy security by pursuing an Integrated Energy Policy.

Important Highlights in Detail

Presumptive taxation to cover all small businesses of up to Rs. 40 lakh turnover

Finance Minister Shri Pranab Mukherjee, in his Budget speech today, has proposed to expand the scope of presumptive taxation to all small businesses with a turnover of up to Rs.40 lakh. This will facilitate the business operations of all small tax payers and to reduce their compliance burden. Accordingly, all such tax payers will have the option to declare their income from business at the rate of 8% of their turnover and simultaneous enjoy exemption from the compliance burden of maintaining books of accounts.

Mukherjee added that these small tax payers will be allowed to pay their entire tax ability from business at the time of filing their return by exempting them from paying advance tax. He informed that a new scheme will come into effect from the financial year of 2010-11.

'Takeout financing' scheme to be evolved by IIFCL

The India infrastructure Finance Company Limited (IIFCL) will evolve a ‘takeout financing’ scheme in consultation with banks to facilitate incremental landing to infrastructure sector. This was announced today by the Union Finance Minister, Shri Pranab Mukherjee while presenting the General Budget 2009-10.

‘Takeout financing’, an accepted international practice of releasing long term funds for financing infrastructure projects, can be used effectively to address the asset liability mismatch of commercial banks arising out of financing infrastructure projects. It can also be used effectively to free up capital for financing new projects.

The Finance Minister has also announced the Government’s decision that IIFCL will refinance 60 per cent of commercial bank loans for PPP projects in critical sectors over the next 15 to 18 months. This is to ensure that infrastructure projects in sectors such as telecommunication, power generation, airports, ports, roads and railways, do not face financing difficulties arising from the current downturn. The Minister stated that the IIFCL and Banks are now in a position to support projects involving a total investment of Rs.100,000 crores in infrastructure. Combined with the steps taken by the government to increase public investment in infrastructure, this step is expected to provide a big boost to such investment.

Increased allocations for infrastructure development

Pranab Mukherjee in his budget speech today has announced higher allocations in a number of infrastructure sector.

23% increase for Highways: The allocation during the current year to the National Highways Authority of India (NHAI) for the National Highways Development Programme (NHDP) has been stepped up by 23 per cent over the 2008-09 (BE).

Rs.5,000 crore increase for Railways: The allocation for railways has been increased from Rs.10,800 crore made in the Interim Budget 2009-10 to Rs.15,800 crore.

87% increase for JNNURM for Urban Infrastructure: In recognition of the role of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), which has been an important instrument for refocusing the attention of the State Governments on importance of urban infrastructure, the allocation for this scheme has been stepped up by 87% to Rs.12,887 crore in the current budget. To improve the lot of the urban poor, the allocation for housing and provision of basic amenities to the urban poor has been enhanced to Rs.3973 crore in current year’s budget. This includes the provision for Rajiv Awaas Yojana (RAY), the scheme announced in the address of the President of India.

160% increase in APDRP for Power: The allocation for the Accelerated Power Development and Reform Programmes (APDRP) has been increased to Rs.2080 crore, a steep increase of 160% above the allocation in the BE of 2008-09.

Fringe Benefit Tax and Commodity Transaction tax to be abolished

The Finance Minister has proposed to abolish Fringe Benefit Tax on the value of certain fringe benefits provided by employers to their employees. He also proposed to extend the sun-set clauses for deduction in respect of export profits under Section 10A and 10B of the Income Tax Act by one more year i.e. for the Financial Year 2010-11. However, the Finance Minister proposed no changes in the Corporate Tax rates.

Shri Mukherjee stated that the tax exemptions are largely profit link under the present scheme of the Income Tax Act and such incentives are inherently inefficient and liable to misuse. He, therefore, proposed to incentivise businesses by providing investment linked tax exemptions rather than profit-linked exemptions. To begin with, the Finance Minister proposed to extend investment linked tax incentives to the businesses of setting up and operating ‘cold chain’ warehousing facilities for storing agricultural produce and business of laying and operating cross country natural gas or crude or petroleum oil pipe line network for distribution on common carrier principal. Under this method, all capital expenditure, other than expenditure on land, goodwill and financial instruments will be fully allowable as a deduction, he added.