Union Budget 2006-07

Hello, here some of the high lights of the Union budget presented in the Lok Sabha by the Finance Minister, Shri. P Chidambaram on February 28th.

Highlights of the Union Budget 2006-07

• GDP growth for FY06 likely to be 8.1% with the manufacturing sector at 9.4% ; agricultural growth bounced back to 2.3%; inflation, as on February 11, 2006 was 4.02%; non-food credit growing by over 25%.
• BHARAT NIRMAN: In the first year of implementation, 2005-06: Rs 944.18 crore released so far as grant under AIBP, target of 600,000 hectares of irrigation potential expected to be created this year; against target of 56,270 habitations, 47,546 habitations covered until January, 2006.
• Sarva Siksha Abhiyan: 93% of children in age group 6-14 years are in school, number of children not in school has come down to about one crore; outlay to increase from Rs 7,156 crore to Rs 10,041 crore in 2006-07; 500,000 additional class rooms to be constructed and 150,000 more teachers to be appointed; Rs 8,746 crore to be transferred to the Prarambhik Siksha Kosh from revenues through education cess.
• ational Rural Employment Guarantee Scheme: allocation of Rs 14,300 crore for rural employment in 2006-07 with Rs 11,300 crore under NREG Act and Rs 3000 crore under SGRY, more funds to be provided according to need.
• Tourism: development of 15 tourist destinations and circuits to be taken up; 50 villages with core competency in handicrafts, handlooms and culture, close to existing destinations and circuits, to be identified and developed; 4 new institutes of hotel management to be established in Chhattisgarh, Haryana, Jharkhand and Uttaranchal; Plan allocation increased from Rs.786 crore to Rs.830 crore.
• Telecommunication: to reach 250 million connections by December, 2007, provision of Rs 1,500 crore for Universal Services Obligation Fund in 2006-07; more than 50 million rural connections to be rolled out in three years.
• Power: five ultra mega power projects of 4,000 MW each to be awarded before December 31, 2006; to create an enabling and empowered framework to carry out reforms an Empowered Committee of Chief Ministers and Power Ministers to be setup
• Petroleum: under NELP VI., 55 blocks and area of 355,000 sq kms offered; investment of Rs.22,000 crore expected in the refinery sector, in the next few years.

Media Reaction:

No big ticket reforms, PC plays it to the gallery

The Union Budget for 2006-07 proposes no changes in personal and corporate Income Taxes, slashed customs and excise duties on a number of items - including small cars and aerated soft drinks - and brought 16 more items like ATM operations and luxury class air travel under the service tax net.

Presenting his third Budget in Lok Sabha on Tuesday, Finance Minister P Chidambaram also abolished the one-by-six scheme for mandatory filing of tax returns and proposed across the
board increase in the Securities Transaction Tax while announcing a roadmap for a Goods and Service Tax in four years.

He did not bow to the demand of the industry to withdraw the controversial Fringe Benefit Tax but modified it to remove some of the glitches in its implementation. Similarly, he ruled out withdrawal of Banking Cash Transaction Tax.

Pegging the Fiscal Deficit for 2006-07 at 3.8 per cent of GDP at Rs 1,48,686 crore and Revenue Deficit at 2.1 per cent at Rs 84,727 crore, Chidambaram raised gross budgetary support for plan to Rs 1,72,728 crore, an increase of 20.4 per cent. Out of this, the central plan will receive a support of Rs 1,31,285 crore.

Defence allocation has been increased by Rs 6,000 crore to Rs 89,000 crore with allocation for capital expenditure raised to Rs 37,000 crore.

To encourage savings, the Finance Minister announced that fixed deposits in banks with at least five year maturity will get rebate under income tax for savings under Section 80C.

Chidambaram made changes in FBT relating to valuation of benefit on tour and travel at five per cent instead of 20 per cent. On hospitality and hotel boarding and lodging in case of airlines and shipping industry too, the benefit is to valued at five per cent.
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PC paints magical picture, pleases all

Finance Minister Palaniappan Chidambaram told Parliament Asia's third-largest economy was likely to grow 8.1 per cent in the financial year ending on March 31 but the government was determined to raise that to 10 per cent in the next few years.

"The assault on poverty and unemployment continues. I believe that growth is the best antidote to poverty," he said.

Chidambaram said the budget for the year ending in March 2007 set the allocation for spending on a rural jobs guarantee scheme at 143 billion rupees ($3.2 billion) from 117 billion in 2005/06.

He also planned to increase expenditure on education by 31.5 percent, health by 22 percent and boost spending on rural infrastructure projects to 186.96 billion rupees in the coming year.

INFRASTRUCTURE:

* Government aims to raise power generation capacity by 15,000 megawatts by March 2007

* Comprehensive review of coal policy needed

* Government expects investment of 220 billion rupees in oil refining over next few years. The government will encourage investment in refineries, pipelines and green fuel.

* Highways development programme to receive 99.45 billion rupees in 2006/07. The government has identified three new road projects to be built under a new special purpose vehicle.