Union Budget 2008-09 Highlights

In the backdrop of a projected fiscal deficit of 3% by the pre-budget Economic Survey, all eyes were on how the FM would balance conflicting interests in an election year, continue with reforms to sustain growth while making it more inclusive, tackle the agricultural crisis as well as infrastructural bottlenecks and keep inflation under check. At first glance, here are some of the major highlights of Budget 2008.

Education

• Total Education Budget hike from Rs 28,674 crore to Rs 34,400 crore

• Moving towards the vision of making India a knowledge economy, 6,000 high quality 'model schools' proposed to be set up at a cost of Rs 600 crore

• Rs 13,100 crore allocated for the Sarva Siksha Abhiyan

• Mid-day meal scheme extended to upper primary level

• 16 Central Universities to be opened

• Three IITs in Andhra Pradesh, Bihar and Rajasthan

• Rs 100 crore allotment for the Information Technology ministry to set up national knowledge centres

• Scholarships worth Rs 85 crore for students pursuing higher studies in Science

• Indian Institutes of Science Education and Research to be set up at Bhopal and Thiruvananthapuram

Health

• Total health outlay raised by 15%

• Rs 12050 crore to be given for the National Rural Health Mission

• Allocation for Integrated Child Development schemes increased to Rs 6300 crore

• Rs 992 crore for National AIDS Programme

• Health Insurance Scheme to cover 75 lakh people
  

Social and Economic Development

• National programme for elderly at a cost of Rs 400 crore

• Allocation for Rajiv Gandhi Drinking Water at Rs 7,300 cr and desalination plant in Chennai for Rs 300 crore

• Increased allocation for schemes in the North-east as well as for urgent development needs in border areas like Arunachal Pradesh

• Allocation for Ministry of Women and Child Development raised by 24%

• Rs 500 crore for corpus fund to subsidise all women Self Helf Groups

• In districts with concentration of minority community, 288 branches of public sector banks to be opened up, and Rs 540 crore allocated for multi-sectoral development plan

Agriculture and Rural Development

• National Rural Employment Guarantee Scheme in all rural districts

• Agriculture credit for the year targeted at Rs 2.8 Lakh Crore

• Complete waiver of loans for marginal farmers owning land up to one hectare and small farmers owning land up to 1 and 2 hectares. Loans disbursed by scheduled commercial banks, regional rural banks and cooperative credit institutions till March 2007, and due by December 2007, waived. Agriculture loans restructured and rescheduled by banks from 2004-06, and loans normally rescheduled as per RBI guidelines also fall under waiver scheme.

• One-time settlement of loans for other farmers

• Rs 20,000 crore allocated for irrigation projects under Accelerated Irrigation Benefit Programme

• Rs 644 crore for National Agriculture Insurance Scheme

• Rs 14000 crore for Rural infrastructure development fund

Energy and Power

• Rs 800 crore for accelerated power reforms programme.

• New Oil blocks expected to attract foreign investment of 3.5 to 8 billion in exploration and development

Industry

• Good news for Textiles with doubling of the allocation for Textile Upgradation Fund

• Special attention will be given as before to micro, small and medium enterprises

• All market transactions will now require PAN

• Risk Capital Fund to be set up in Small Industrial Development Bank of India

Other expenditure

• Defence allocation to be increased from Rs 96,000 crore to Rs 1,05,600 crore (10%)

• Rs 624 crore allocated for Commonwealth Games

• One time grant of Rs 50 crore for the National Tiger Fund Authority

• 6th Pay Commission will table report by March 31, 2008

• Three schemes shall be introduced for providing social security to unorganised sector workers

Taxes and duties

• Tax exemption raised from Rs 110,000 to Rs 150,000. Exemption for women will be Rs 180,000.

• New Slabs:
  Rs 150,001 to Rs 300,000 – 10%
  Rs 300,001 to Rs 500,000 – 20%
  Above Rs 500,000 – 30%

• Minimum Relief of Rs 4000 for all assesses

• Tax exemption for senior citizens will be Rs 225,000

• No change in corporate income tax rates or surcharge tax

• Threshold for small service providers is now raised from Rs.800,000 to Rs 10,00,000

• Asset management service under mutual funds, services by stock exchanges shall be brought under Services Tax net

• Central sales tax reduced to 2%

• Short term capital gains to be taxed at 15%

• Tax on banking cash transaction will be removed with effect from April 1, 2009

• Five year tax holiday for setting up hospitals in tier II and tier III regions for providing healthcare in rural areas from April 1, 2008, and also for promoting cultural tourism

• Excise reduction: Water purification items, anti-AIDS drugs, paper and paper products, buses, chassis, small cars, two-wheelers, pharma goods, wireless data cards

• Duty raised on non filter cigarettes

• General CENVAT reduced from 16% to 14% on all goods

• Other duty exemptions on naptha (except that used for fertilizers), convergence products, set-top boxes, crude sulphur, steel melting scrap, some life-saving drugs

• No change in peak customs duty rate

• Special Countervailing Duty on power imports

• Commodities Transaction Tax to be introduced on the lines of Securities Transaction Tax and at the same rate