India Budget 2009-10 spoils the party

I am not enjoying writing this post. Why? Actually, I along with millions of Indian citizens was expecting so much from this budget . Alas ! it fails to deliver completely. That's why I didn't feel like writing about it. But we can't ignore it either. First have a look at the highlights and my comments.

Highlights of the budget

(Fiscal year: April 1 – March 31)

§ Real GDP growth assumed at 6.5% in fiscal year 2009-10 – Quite realistic

§ Fiscal deficit projected at 6.8 % of GDP – No roadmap for fiscal consolidation

§ Total expenditure increased by 36 % to Rs 10,208.38 bn over 2008-09 – Govt will have to borrow from markets, leading to upward pressure on interest rates

§ Allocation for the National Highway Development Programme (NHDP) increased 23% in 2009-10. Also, allocation for Bharat Nirman increased 45% in 2009-10 - Infrastructure gets a focus

§ Allocation under National Rural Employment Guarantee Scheme (NREGS) increased by 144 % to Rs 391 bn in 2009-10 – NREGS has been quite successful in the past and will provide further support to the poor

§ Unique Identification Authority of India (UIDAI) to set up online data base for Indian residents and provision of Rs 1.2 bn made for this in the budget – a welcome step

§ No change in corporate tax rate – No relief to corporate India

§ Fringe benefit tax (FBT) to be abolished – Will provide immense relief to millions of people

§ Commodity transaction tax (CTT) to be removed

§ Minimum alternate tax (MAT) to be increased from 10% to 15% of book profits

§ Raised the exemption limit of personal income tax by Rs 10,000 for all categories of individual taxpayers; by Rs 15,000 for senior citizens. Also, surcharge of 10% eliminated on personal income tax – people will have more money to spend

Finance minister Mr. Pranab Mukherjee disappointed the country by presenting a very ordinary (or call it hopeless) budget on July 6. The whole country was waiting for this event desperately; more so because the Congress had received a renewed mandate following the general election in May09. The newly elected government was expected to bring some revolutionary reforms to set the country on a higher growth trajectory. Nothing of this sort happened. On the contrary, there was no clear road-map on how the government is going to tackle the high fiscal deficit, which has been projected at 6.8% of GDP in FY10. Here are the key numbers from the budget.

But don’t get too disheartened. Budget is not the only platform to declare all the reformatory actions. The government might declare some more actions whenever it gets ready for them. Think positive!!