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Here presents the Union Budgets 2008-09 highlights:

• Debt Waiver: Total estimate Rs 60,000cr; Overdue loans to be waived will be Rs 50,000 crore. One-time settlement estimated at Rs 10,000 crore; all agriculture loans by RRBs (Railway Retirement Board), co-operatives, SCBs (State Controlling Body) overdue taken before March 2007 and outstanding on December 2007 are covered. Loans waived for marginal farmers holding up to 1 hectare and small farmers up to 2 hectare..

Union Budget 2008-09

• Excise on two-wheelers reduced from 16% to 12%
• Hikes tax-free income from Rs 1,10,000 to Rs 1,50,000
• 10% tax on income from Rs 1,50,000 to Rs 3,00,000
• 20% tax on income from Rs 3,00,000 to Rs 5,00,000
• 30% tax on income over Rs 5,00,000
• Women exemption increases from Rs 1,45,000 to Rs 1,80,000
• Senior citizen exemption increases from Rs 1,95,000 to Rs 2,25,000
• Banking cash transaction tax to be removed
• Tax on short term capital gains increased to 15% from 10%
• Service tax limited hiked to Rs 10 lakh.
• Reduced general CENVAT (Central Value Added Tax) from 16% to 14%
• Duties on iron ore exports increased to Rs 3,000 per tonne.

Mr.P.Chidambaram

• Project import customs duty reduced from 7.5% to 5%; Steel melting scrap and aluminum scrap made nil; Life saving drugs customs duty from 10% to 5%;
• No change in peak rate of customs duty;
• Revenue deficit at 1.4% against budget estimate of 1.5%; To eliminate revenue deficit in Fiscal Year 2010; Fiscal deficit at 3.1% against budget estimate of 3.3%; Plan expenditure Rs 2,43,386 crore;
• Defence allocation increased from Rs 96,000cr to Rs 1,05,600 crore; Food subsidies at Rs 32,667 crore;
• Exchange-traded currencies; interest rate derivatives to be introduced;
• TUF (Technology Up gradation Fund) to increase to Rs 1,090 crore; Rural Infrastructure Development Fund increased to Rs 14,000 crore;
• Saving rate at 35.6%, investment rate at 36.3 %;
• Rs 1,000cr to be placed with LIC for covering an additional 1 cr landless households; PAN to be extended for all transactions in financial markets
• Coal regulator to be set up; GQ (Golden Quadrilateral) completed 96.48%
• Government to interconnect all national institutions on a knowledge network; Government to establish 16 central universities; 3 IITs in Bihar, Andhra Pradesh and Rajasthan;
• To continue with fertilizer subsidies, may move to nutrient-based subsidies; Rs 20,000 crore allocated for irrigation; Agricultural credit at Rs 2,80,000 crore; To mobilse Rs 10,000cr for plan capital expenditure;
• ·Rs 16,202cr scheme that will cover at least 33% women.

Budget 2008-09

• Chennai desalination plant to get Rs 300 cr in 08-09;
• JNURM (Jawaharlal Nehru Urban Renewal Mission) to get Rs 6,866cr in 2008-09 from Rs 5,482cr in 07-08;
• Anganwadi workers remuneration to be increased to Rs 1,500 per month.
• Rs 30,000 cover for unorganized sector; Center to share Rs 200 cr premium; Health allocation increased by 15%
• Mid-day meal scheme extended in government and government aided schools in upper primary classes. Total coverage of 13.9 crore children; Education allocation increased by 20%
• 2008-09 should be a year of consolidation; We can; The government will manage capital inflows along with RBI (Reserve Bank of India);
• Total agricultural output 219.32 million tone. Agriculture growth rate at 2.6% in 2007
• The next Union Budget will be a vote-on-account because of general elections.

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Remember my last post How Budget is prepared:

How India’s Budget is prepared..

Here goes the second part that is: 2) Expenditure side

Parallel to all this, the Planning Commission goes into stock-taking mode. It starts meeting with individual ministries in the month of September-October and reviews ongoing schemes of the ministries, considers allocation for them, etc.

It may decide to stop some ongoing scheme or merge two similar schemes.
Thus, an estimate of Plan Budget is prepared.

The Planning Commission conveys to the ministry of finance that it requires so and so amount to run planned schemes for the next financial year(lst April to 31st March).

Budget 2008

The finance minister and the Deputy Chairman of Planning Commission discuss the demand in detail. This way Plan Expenditure is ready. Different ministries are also asked to tell about their fund requirement, which forms a part of budget estimate.

Side by side, Department of Economic Affairs meets representatives of trade unions, industry chambers, economists and other groups. In the Budget-making exercise, suggestions of different stakeholders(a party who affects, or can be affected by, an organization’s actions) are kept in mind.

Finance Minister has to decide with his team

By this time, the finance minister is in a position to estimate as to how much it will get through taxes and how much it has to spend in coming financial year.
The finance minister has other constraints also. He has to abide by FRBM Act and cut fiscal deficit [the difference between the government’s total expenditure and its total receipts (excluding borrowing)].

Keeping in mind all these, the finance minister - with his team - decides whether some new taxes should be changed to collect more tax, how to widen tax net in order to earn more revenue. While doing so the suggestions from various interest groups are duly taken into account.

GDP assessment

GDP is gross domestic product and it is one of the ways of measuring the size of its economy. The GDP of a country is defined as the total market value of all final goods and services produced within a country in a given period of time (usually a calendar year)

The Department of Expenditure and the Department of Economic Affairs sit to decide GDP assessment for next year. Generally, a nominal growth in GDP is projected. Actual growth in GDP is - nominal growth of GDP reduced by inflation figure.

Budget 2008

The Budget Speech of the Financial Minister

Now comes the Budget Speech. It is fine-tuned to the last minute. Around February 15, some of the Budget documents are almost ready and goes for printing to a press located in North Block (Secretariat Building, a set of two buildings on the opposite side of Raj path: the North Block and the South Block) itself.

Security agencies ring off the press and entry is almost prohibited.

The D-Day

The finance minister delivers the Budget Speech in Parliament. Normally, on February 28, the finance minister delivers the Budget Speech in Lok Sabha. After which Budget documents are made available.

These are also put on the Web site Click Here to visit the site.
However, 2008 being a leap year, this time the Budget would be presented to Parliament on February 29.

Mr.Lalu Prasad Yadav(Railway Minister)

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