Budget 2007-08: Highlights

The Government is concerned about the inflation but it is confident that it will not affect growth, said Finance Minister P Chidambaram while presenting the Union Budget on Wednesday.

GDP growth will be 9.02 per cent this year, the Finance Minister said. The Government promises to bring out a number of measures to make agriculture profitable.

Chidambaram also announced that bank credit rate grew by 29 per cent during first 10 months of 2006-07.

There will be no new forward contract to be launched on wheat and rice from today. He said that Abhijit Sen report on forward trading to be submitted in two months' time.

Chidambaram added that additional irrigation potential of 24 lakh hectares to be implemented, including nine lakh hectares under Accelerated Irrigation Benefit Programme.

About 15,054 villages have been covered under rural telephony and efforts to be made to complete the target of covering 20,000 villages by 2006-07.

According the Budget allocation on healthcare will increase by 21.9 per cent and allocation for education to be enhanced by 34.2 per cent.

Highlights of Union Budget for 2007-08.

• Inflation during 2006-07 estimated at between 5.2 and 5.4 per cent against 4.4 per cent during the previous year. The Finance Minister said that he is confident of managing inflation.
• Bank credit rate grew by 29 per cent during first 10 months of 2006-07.
• Additional irrigation potential of 24 lakh hectares to be implemented, including nine lakh hectares under Accelerated Irrigation Benefit Programme.
• Economy in a stronger position than ever before, Chidambaram said.
• 15,054 villages have been covered under rural telephony and efforts to be made to complete the target of covering 20,000 villages by 2006-07.
• Allocation on Healthcare to increase by 21.9 per cent.
• Allocattion for education to be enhanced by 34.2 per cent.
• Two lakh more teachers to be employed and five lakh more classrooms to be constructed.
• Secondary education allowance to be increased from Rs 1,837 crore to Rs 3,794 crore.
• The Finance Minister confirmed that the Government is committed to fiscal reforms.
• Foreign exchange reserves stand at 180 billion dollars.
• Allocation under Rajiv Gandhi Drinking Mission stepped up from Rs 4,680 crore to Rs 5,850 crore.
• Already a number of steps on fiscal, monetary and supply management side have been taken, the Finance Minister said.
• Annual target of 15 lakh houses under Bharat Nirmal Programme to be exceeded.
• Allocation for National Rural Health Mission stepped up from Rs 8,207 crore to Rs 9,947 crore.
• Gross budgetary support in 2007-08 raised to Rs 2,05,100 crore from 1,72,728 crore in 2006-07. Of this, budgetary support to the Central plan will go up to 1,54,939 crore against 1,72,728 crore.
• Allocation for AIDS control programme to be raised to Rs 969 crore.
• School dropout rates high. To prevent dropout, a National Means-cum-Merit scholarship to be implemented, with an allocation of Rs 6,000 per child.
• Rs 1,290 crore to be provided for elimination of polio. Intensive coverage will be undertaken in 20 districts in UP and 10 districts in Bihar. This will be integrated into NRHM.
• Measures for significant improvement of health care in rural area.
• 130 more districts under National Rural Employment Guarantee Act (NREGA). Additional allocation of Rs.12,000 crore for it.
• Rs 800 crore for Sampoorna Gram Rozgar Yojana in districts not covered by NREGA. Swarna Jayanti Swarozgar Yojana allocation increased from Rs 250 crore to Rs 344 crore.
• Allocation for schemes only for SCs and STs to be increased to Rs 3,271 crore.
• Rs 63 crore for share capital for National Minorities Development Finance Corporation following Sachar Committee recommendations.
• Allocation for SC/ST scholarships enhanced from Rs 440 crore to Rs 611 crore.
• Scholarships programme for minorities students to be of the order of Rs 72 crore for pre-metric, Rs 48 crore for graduate and postgraduate.
• Total Budget for the Northeastern region raised from Rs 12,041 crore to Rs 14,365 crore. New Industrial Policy for the northeastern region to be in place before March 31.
• Rs 7,000 crore allocation for better tax administration to be used for social schemes.
• Rs 2,25,000 crore farm credit proposed in the new budget. A target of additional 50 lakh farmers to be brought under farm credit.
• Farmers' credit likely to reach Rs.1,90,000 crore as against the targeted Rs.1,75,000 crore during 2006-07.
• Rs 100 crore allocated for National Rainfed Area Authority.

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• 100 per cent subsidy for small farmers and 50 per cent for other farmers for water recharging scheme.
• National Agricultural Insurance Scheme to be continued for Kharif and Rabi this year.
• Bonds worth Rs 5,000 crore to augment (National Bank for Agriculture and Rural Development) NABARD to be issued.
• Death and disability cover for rural landless families to be introduced, known as 'Aam Aadmi Bima Yojana'.
• Seventy lakh households to be covered under a social welfare scheme with LIC and with support from state governments. Fifty per cent of the premium at Rs 200 per household to be given by the Centre. Rs.1,000 crore fund to be maintained by LIC for the purpose.
• Central public sector enterprises will be given Rs 16,261 crore as equity support and loans of over Rs 2,600 crore.
• FDI inflows between April and January this fiscal touched $12.5 billion while portfolio investment reached $6.8 billion.
• Allocation for National Highway Development programme to be stepped up from Rs 9,955 crore to Rs 12,600 crore.
• Work on Golden Quadrilateral road project nearly complete. Considerable progress made on North-South, East-West corridor and likely to be completed by 2009.
• Textile Upgradation Fund raised to Rs 911 crore as against Rs 535 crore during 2006-07.
• Health insurance cover for weavers to be enlarged to ancillary industries. Allocation increased from Rs 241 crore to Rs 321 crore.
• A scheme for modernisation and technological upgradation of choir industry has been introduced and for which Rs 23.55 crore has been earmarked.
• Tourism infrastructure to get an allocation of Rs 520 crore as against Rs 423 crore last year.
• The ceiling of loans for weaker sections under differential rate of interest scheme will be raised from Rs 6,500 to Rs 15,000 and in housing loan from Rs 5,000 to Rs 20,000.
• Regulations would be put in place for mortgage guarantee company for housing loans.
• Regional Rural Banks, which are willing to take up greater responsibilities, to undertake aggressive branch expansion programme. One RRB branch for each of 80 districts so far uncovered.
• Insurance companies to launch a senior citizens scheme in 2007-08.
• Indian investors to be allowed investment in overseas capital markets through mutual funds. Mutual funds to set up Infrastructure Fund schemes.
• Defence allocation increased to Rs 96,000 crore. This includes capital expenditure of Rs 41,922 crore.
• Backward Regions Grant Fund to be raised to Rs 5,800 crore.
• E-governance allocation to be increased from Rs 395 to Rs 719 crore
• A high-powered committee report aimed at making Mumbai a world class financial centre submitted. Public suggestions will be invited.
• Rs 50 crore provided to begin work on vocational education mission for which task force in Planning Commission is chalking out a strategy.
• 1,396 Indian technical institutes to be upgraded to achieve technical excellence.
• An autonomous Debt Management Office in government to be set up.
• Government to create one lakh jobs for physically challenged. Government will reimburse the EPF contributions of employers in the case of physically challenged people taken on rolls of the company and included in the PF scheme. A fund of Rs 150 crore to be started which will go up to Rs 450 crore.

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• An Expert Committee to be set up to study the impact of climate change in India.
• Rs 150 crore to be given to Ministry of Youth and Sports for Commonwealth Games and Rs 350 crore to the Delhi Government for the purpose. Rs 50 crore to be provided for the Commonwealth Youth Games in Pune.
• Rs 100 crore for recognising excellence in the field of agricultural research.
• VAT revenues increased by 24.3 per cent in the first nine months of 2006-07.
• A national level goods and services tax to be introduced from next fiscal.
• Fiscal deficit to be 3.7 per cent in the current year and revenue deficit 2 per cent.
• Fiscal management enabled states consolidate debt to the tune of Rs 1,10,268 crore and 20 states availed of debt waiver to the tune of Rs 8,575 crore.
• Increase in gross tax revenue by 19.9 per cent, 20 per cent and 27.8 per cent in first three years of UPA government. The Finance Minister said that he intended to keep tax rates moderate.
• Peak customs duty rate on non-agricultural items reduced from 12.5 to 10 per cent.
• All coking coal fully exempted from duty.
• Duties on seconds and defective reduced from 20 to 10 per cent.
• Customs duty on polyester to be reduced from 10 per cent to 7.5 per cent.
• Fiscal deficit for 2007-08 pegged at 3.3 per cent of GDP at Rs.1,50,948 crore. Revenue deficit at Rs.72,478 crore which will be 1.5 per cent. Total expenditure during 2006-07 estimated at Rs 6,80,521 crore including Rs 40,000 crore for SBI shares.
• Duty on lift irrigation, agricultural sprinklers and food processing equipment reduced from 7.5 per cent to 5 per cent.
• Duty on pet food reduced from 30 per cent to 20 per cent.
• Duty on sunflower oil to be reduced by 15 per cent.
• Duty reduced on watch dials and umbrella parts from 12.5 to 5 per cent.
• Import duty of 15 specified machinery to be reduced from 7.5 per cent to 5 per cent.
• Three per cent import duty to be levied on private importers of aircraft including helicopters.
• No change in general Central Value Added Tax (CENVAT) rate.
• Ad valorem duty on petrol and diesel to be brought down from 8 to 6 per cent.
• Export duty on iron ore and concentrate at the rate of Rs 300 per tonne. Export duty on Chromium proposed at Rs 2,000 tonne.
• Small scale industries excise duty exemption raised from Rs 1 crore to Rs 1.5 crore.
• Excise duty for plywood reduced from 16 per cent to 8 per cent.
• Food mixes to be fully exempted from excise duty.
• Bio-diesel to be fully exempted from excise duty.
• Water purification devices, small and big, fully exempted from excise.
• Specific rates of excise duty on cigarettes increased.
• Excise duty on pan masala without tobacco as mouth freshners reduced from 66 per cent to 45 per cent.
• Excise duty on cement reduced from Rs 400 per tonne to Rs 350 per tonne for cement bags sold at Rs 190 per bag at retail market. Those sold above Rs 190 will attract excise duty of Rs 600 per tonne.
• Two lakh people to benefit out of service tax exemption. Government to lose Rs 800 crore as a result.
• Income tax exemption increased: Upto Rs,110,000 for men, upto Rs145,000 for women and upto Rs 195,000 for seniorr citizens
• Deduction in respect of medical insurance under Section 80 (D) increased to Rs 15,000 and Rs 20,000 for senior citizens.
• Service tax on Residents Welfare Associations whose members contribute more than Rs 3,000.
• Surcharge on corporate income tax on companies below Rs 1 crore removed.
• Tax free bonds to be issued by state-owned urban local bodies.
• Five-year tax holiday for two, three, four star hotels and convention centres with a seating capacity of 3,000 in NCT of Delhi, Gurgaon, Ghaziabad, Faridabad and Gautam Buddha Nagar for Commonwealth Games. Twenty thousand more rooms required.
• Minimum Alternate Tax being extended.
• Benefits of investment in venture capital funds confined to IT, bio-technology, nano-technology, seed research, dairy among some others.
• Dividend distribution tax raised from 12.5 to 15 per cent.
• Expenditure on samples and free distribution items to be exempted from fringe benefit tax.
• Additional revenue from direct taxes to yield Rs 3,000 crore and indirect tax revenue neutral.
• Withdrawals by Central and state governments exempted from Banking Cash Transaction Tax. The limit for individuals and HUF raised from Rs 25,000 to Rs 50,000.

(With PTI inputs)