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Social sectors, tax reforms focus of Budget
India's $116-billion national budget, while pushing the pause button on fiscal prudence, provides higher outlays for social sectors.
India's $116-billion (Rs 514,344-crore) national budget, while pushing the pause button on fiscal prudence, provides higher outlays for social sectors and proposes major tax reforms in tune with the Government's economic liberalisation agenda.
The budget, presented in Parliament on Monday by Finance Minister P Chidambaram, prunes the personal income tax rates and revisits exemptions, but expands the base with more services under the net.
"India is not a poor country. Yet, a significant number of our people are poor," the finance minister told Parliament in a 90-minute budget speech in Lok Sabha, the lower house of Parliament.
"The whole purpose of democratic Government is to eliminate poverty and to give to every citizen the opportunity to be educated, to learn a skill and to be gainfully employed," he said.
His new slabs for personal income tax rates has been fixed at zero per cent for income up to Rs 100,000, 10 per cent for between Rs 100,00 and 150,000, 20 percent for Rs 150,000 and Rs 250,000 and 30 per cent for above Rs 250,000.
The 10 per cent surcharge would apply to incomes only above Rs 1 million, the finance minister said. His proposals will benefit taxpayers in every tax slab, he added.
Yet, he started a drive to clean up the plethora of exemptions, even while allowing the taxpayer a greater flexibility in making investment and savings decisions.
The Harvard-educated lawyer-turned-politician also spelt out major changes in the indirect tax administration and proposed to bring down the peak customs duty on non-agriculture products to 15 per cent from existing rate of 20 per cent.
The focus on rural development, education, health, employment, water and family welfare is aimed at keeping together the 24-party ruling coalition at the Centre that faces a crisis after the election results in three state assemblies.
"The finance minister has done an outstanding job," said Manmohan Singh soon after Chidambaram's budget speech.
