When Finance Minister Pranab Mukherjee, 73, unveils the budget for 2009-10 on Monday, he is expected to build on such flagship programmes of the UPA government that are widely credited for the decisive verdict in the April-May elections.
<b1>Coming as it does at a time when the Indian economy is recovering from a worldwide economic downturn, the budget would also strive to strengthen the positive momentum seen in recent months.
Officials familiar with the exercise told Hindustan Times that planned expenditure is expected to increase by Rs 50,000 crore to Rs 3,15,000 crore.
The bulk of the additional spending would be allocated towards flagship schemes such as the national rural employment guarantee scheme, the rural health mission and education sector programmes.
All told, the budgetary allocation for the flagship schemes for 2009-10, which will be indicated in the Budget, is likely to be over Rs 1,20,000 crore.
On the direct tax front, a hike in deduction for housing loan interest is expected from the Rs 1.5 lakh per annum at present.
The stage is also set for introducing a new set of tax reforms including possible phasing out of the fringe benefit tax (FBT) and the securities transaction tax (STT).
FBT, introduced in 2005-06, is imposed on perquisites and fringe benefits. It added close to Rs 8,000 crore to central tax revenues in 2008-09. It is imposed on perquisites and fringe benefits — with the responsibility of paying tax lying with the employer —passed onto employees in most cases.
“The budget may also offer FBT exemption to exporters and small and medium enterprises (SMEs),” said Manoj Vohra, director (research), Economist Intelligence Unit. “The government, however, needs to be mindful of the tax revenue loss. It must identify alternate revenue mechanisms. Its ballooning budget deficit needs to be kept in check.”
Mukherjee is also expected to lay down the broad contours of a comprehensive disinvestment policy articulating the need for companies to raise capital without affecting the shareholding pattern of majority government ownership.
Major boosts for the housing, and highway sectors are also expected as a worried government seeks to spur domestic demand to sustain growth.
The government is also likely to announce further interest rate subsidies for exporters and labour intensive sectors such as textiles, gems and jewellery and handicrafts.