Discussion in 'Economy & Infrastructure' started by Rage, Feb 23, 2011.
The BJP should stop playing spoilsport wrt to the GST. The JPC probe is happening, so that doesn't leave them with many excuses.
Budget '11: Opportunity to accelerate GST reform
S Madhavan / February 21, 2011, 0:41 IST
Lurkerbaba, I agree with that. You know, if only for once, these parties would think of this nation first, instead of themselves. Especially given, that the BJP would do the exact same thing when they came to power. Some of the BJP-ruled states and traders-associations are saying, that they oppose the GST because it will erode into their fiscal autonomy and because of a lack of clarity. The GST will not erode into fiscal autonomy, but improve it. There have been several rounds of talks and negotiations on this already, so what kind of lack of clarity are they talking about?
The Task Force on Goods and Services has already defined what autonomy in the case of exercise of taxation powers would mean. It would mean that, the centre or state, as the case may be will:
a) Retain the power to enact the tax;
b) Enjoy the risks and rewards of â€˜ownershipâ€™ of the tax (i.e., not be insulated from fluctuations in revenue collections);
c) Be accountable to their constituents; and
d) Be able to use the tax as an instrument of social or economic policy.
Anyway, here's what the BJP trader-association chvtiyas are saying:
Young India: Budget 2011
With Rajeev Chandrasekhar, Independent MP; Conraad Sangma, Member of Legislative Assembly, Leader of Opposition, Meghalay; Chhavi Rajawat, Sarpanch, Soda Village, state of Rajasthan; and Vikram Akula, Founder & Chairman SKS Microfinance.
hope at least 2.6% of GDP will be utilized for the defense of our country
Markets steady ahead of Union Budget 2011
Defence Budget is 1.64 lac crore..
Budget 2011: Tax exemption limit raised to Rs 1,80,000
NEW DELHI: Finance minister Pranab Mukherjee is presenting Union Budget 2011 in Parliament.
INFLATION: The finance minister opened his speech with reference to inflation saying that food inflation came down from 20.2% last year to 9.3% in January 2011 but it was still a matter of concern. "Government's principle concern is high food prices... food prices were high for cereals, there was a spurt in prices of onions and milk," he said. ( Inflation remains principal concern, to fall next year )
AGRICULTURE: In what may be a big relief for farmers, the FM said credit flows to farmers will be raised from Rs 3.75 lakh crore to Rs 4.75 lakh crores and the allocation under Rashtriya Krishi Vikas Yojana will be raised from Rs 6755 crore in the current year to Rs 7860 crore. ( Farm loans at 4%; credit target raised to Rs 4,75,000cr )
An additional Rs 300 cr will be provided to promote pulses cultivation in rain-fed areas and another Rs 300 cr to promote farm product cultivation.
In joy for anganwadi workers, their remuneration is being raised from Rs 1500 to Rs 3,000 per month. Anganwadi helpers will get Rs 1,500 from Rs 750, Pranab said. ( Social spending to be raised by 17% )
Old age pension to persons of over the age of 80 will be raised from Rs 200 to Rs 500.
DEFENCE: The finance minister has allotted Rs 1.64 lakh crore for defence saying that more will be given if required. Rs 9 lakh compensation will be given to men of defence and central paramilitary forces for permanent disability and on being discharged from service.
TAXES: No change in tax slabs has been proposed. The tax exemption limit for general category has been raised from Rs 1,60,000 to Rs 1,80,000.
For senior citizens, exemption age limit has been reduced from 65 to 60. Their tax exemption limit will be Rs 2,50,000.
Apart from this, a new exemption bracket has been created for those above 80 years of age. Their tax exemption limit will be Rs 5,00,000.
The FM announced that Direct Tax Code will be implemented from April, 2012 and the Goods and Services Tax Bill is to be introduced in Parliament this year. ( Direct Taxes Code to be implemented from April 1, 2012 )
There is a proposal to introduce self-assessment of customs duty wherein importers and exporters will themselves assess payment of duty.
A new scheme is to be introduced for refund of service tax on the lines of drawback of duties, he announced. Also, capital investment in fertiliser production will be considered as infrastructure sub-sector, Pranab said.
Tax-free bonds of Rs 30,000 cr will be issued for infrastructure development which will cover Warehousing Corporation, NHAI, IRFC and HUDCO.
EDUCATION: A Rs50cr grant is being allocated to Aligarh Muslim University centres in Murshidabad in West Bengal and Malappuram in Kerala. Also, the government has decided to allot Rs 100 cr to IIT Kharagpur.
GROWTH: Predicting growth patterns over the next fiscal, Pranab said the overall economic growth in the current fiscal was expected at 8.6 %, agriculture growth at 5.4 %, industry at 8.1 % and services 9.3 %. In the next fiscal, economic growth was likely to be 9%, he said. ( Economy grew 8.2% in last 2010 quarter )
Pranab said India raised foreign institutional investor limit in 5-year corporate bonds for investment in infrastructure by $20 billion.
The government, he said, aims to provide Rs 201.5 billion capital infusion in state-run banks in 2011-12 and Rs 3 billion for 60,000 hectares under palm oil plantation
"I see Budget 2011-12 as transition towards more transparent and result-oriented economic management," he said adding that stronger fiscal coordination was needed.
He said that corruption continued to be deterrent in the country's development and had to be fought extensively.
Pranab Mukherjee said the government plans to create a Women Self Help Group development fund with a corpus of Rs 500 crore. There is also a proposal to increase rural housing fund to Rs 3,000 crore. ( Low-cost housing loans of Rs 15 lakh to get 1% interest sop )
He also announced benefits for Below Poverty Line families by allowing direct transfer of subsidies in kerosene and LPG for such individuals.
NABARD capital base to be strengthened, Rs 10,000 cr to be provided to it as short term credit fund.
He announced the formation of Indian micro finance equity with SIDBI at Rs 100 crore. Another Rs 6,000 cr will be given to public sector banks to maintain capital-to-risk assets ratio norms, he said.
Read more: Budget 2011: Tax exemption limit raised to Rs 1,80,000 - The Times of India http://timesofindia.indiatimes.com/...-180000/articleshow/7592516.cms#ixzz1FEhv4lMp
Pranab Mukherjee allocates Rs154,415 crore ($34 billion)for defence
National security is high on the United Progressive Alliance Government's agenda.Finance Minister Pranab Mukherjee allocated Rs154,415 crore ($34 billion)for defenceand said that more will be given if required.
This will mark an over four percent increase from the 2010-11 allocation of Rs.147,344 crore.
Mukherjee also told the Lok Sabha while presenting the annual budget that the capital expenditure for defence in 2011-12 would be scaled up to Rs.69,199 crore, up from the Rs.60,000 crore in 2010-11.
He said any further requirement for defence of the country would be met.Budget allocation of Rs 100 cr for Ladakh and Rs 150 cr for Jammu for implementation of projects identified by taskforce.
Mukherjee announced Rs nine lakh compensation to be given to men of defence and Central paramilitary forces for permanent disability and discharged from service.
Finance Minister Pranab Mukherjee allocated Rs 1,47,344 crore towards defence in 2010-11 budget. In 2009-10 the allocation for defence was Rs 1,41,703 crore.
The Ministry of Defence (MoD)accounts for one-seventh of the total union budget,with major emphasis on purchasing arms and hi tech weapons and also icrease in pay and allowance which constitutes a major part of the defence budget. The question is whether the defence budget, which impinges upon national security, should be subject to fiscal austerity.
According to study by ( CII )Confederation of Indian Industry ,India is in the process of signing defence deals worth nearly $42 billion, including a $10.4-billion deal for 126 multi-role combat aircraft, making it one of the most attractive markets for both global and domestic arms industry.
The joint study by industry body Confederation of Indian Industry (CII) and audit firm KPMG has also assessed that India has already signed defence deals worth nearly $25 billion in the last four years.
"Our research indicates that deals worth $24.66 billion have been signed by the Indian defence ministry with global integrators in the past 48 months and another $41.99 billion worth of deals are in the process of getting,the study said.
ok i believe what has happened is 1,54,000cr is the defence budget, and 10,000cr has been allocated for defence related infrastructure projects, and so the clubbed figure of 1,64,000cr.
there are few things equally important.
1. Managing Fiscal deficit so that foreign investors are happy, we are no china or some middle east country who enjoy surplus or US who gets a AAA rating despite having huge deficits. We can see how Europe got hammered with their deficits. if western countries suffered so much, no need to say what will be fate of India if deficits are high.
2. Spending on Education, Health where things are really lacking.
3. Food & Fuel Subsidies
4. Spending on Infrastructure for sustaining growth.
5. oil prices and imports continue to put pressure on govt finances, balance of payments, rupee. ultimate effect our GDP. Govt would definitely have far more freedom to spend to defense, education, food if we didn't have to import any oil.
still i guess budget size has never been a problem, Govt has not refused a project citing funds shortage.
let it be FGFA project, nuclear submarine, three aircraft carriers.
I have a not seen a country pursuing such hi-tech force in sizable numbers despite having challenges in finance, economic and social fronts.
I have read a report in ToI (or some other paper, sorry don't remember exactly), that GST will bring in 200 billion uSD transaction worth of relaity transaction in purview of indirect taxes. Hope we can understand the opposition clearly now
fiscal deficit in a real mess. 10% of gdp for states and center combined, center reeling at 5%. this is a very dangerous line we are treading, hope we dont trip, but things arent looking good at all. i dont mind sacrificing 1-2% point of real gdp growth but the liquidity needs to be removed, borrowing to be significantly curtailed, governemtn has to get over with the obsession of high gdp growth figures and make the economic health of india more manageable and sustainable.
Central Govt spends only 26000 crore on health?, 52000 crore on education also doesn't seem to be enough.
am i reading something wrong. Do State Govts spend big amounts on health & education?.
for me personally , food is becoming biggest running expenditure. Regd fuel costs, at least we can think about fuel-efficiency ways or public transport. But if we try to avoid food, immediate thought comes like "whats the use of earning if we are giving up on basic thing like food".
Excise remains the same. Has a big bearing on my costing. So without having gone through anything else in the budget and scouting for excise information, i am happy!!
some largest expenditures this year,
Debt Servicing- Rs 2.76 Lakh crore (60 billion USD approx)
Defence - 1.64 Lakh crore (36 billion)
Rural Development- 87.8K crore (19.42 billion)
Food Subsidy- 60K Crore (13 billion)
Fertilizer subsidy- 49.9K Crore (11 billion)
Education (HRD Min)- 52K crore (11.5 billion)
Pensions- 54K crore (11.9 billion)
Police - 29K crore (6.4 billion)
Health - 26.7K crore (5.9 billion)
Petroleum Subsidy- 23K crore (5.08 billion)
List of major Capital expediture for Defence.
Airforce- Aircraft & Engines- 22,000 crores
Army - other equipment - 10,885 crores
Naval Fleet- 7300 crores
Air force- other equipment- 6279 crore
R&D - 4628 crores
Army Construction- 4722 crores
Navy Aircraft - 2900 crores
Army Aircraft- 2200 crores
Navy other equipment- 2100 crores
Buying aircraft is probably the largest component of capital outlay, nearly 40% of entire outlay.
Budget: the story behind the numbers
If the govt says that growth next year will be 9%, doesnâ€™t it mean that the interest rate hikes are not working and that monetary policy needs to get even more restrictive in future?
It took less than a couple of hours for the stock market to figure out that the projected improvement in the fiscal deficit to 4.6% of gross domestic product (GDP) is unlikely to happen. The Sensex ended the day lower than where it was at the start of the budget speech. The bond markets, too, after an initial rally prompted by the government borrowing figure being lower than expected, gave back some of its gains.
What is in the numbers that is so unsettling? First, consider that growth in total expenditure is projected at 3.4% for 2011-12, compared with 18.7% growth in 2010-11. Since the budget assumes that nominal GDP will increase by 14% in 2011-12, growth in government expenditure is far below the increase in nominal GDP. Given the governmentâ€™s track record, curbing expenditure to such an extent is extremely unlikely.
How has the government been able to show such a low level of expenditure? The finance minister says that subsidies in 2011-12 will be lower by Rs. 20,583 crore than the amount spent on subsidies in the current fiscal. Though oil prices are high, the petroleum subsidy is lower by almost Rs. 15,000 crore. Although the government plans to introduce a right to food Bill, it has kept the food subsidy figure flat. Even the fertilizer subsidy is budgeted at a lower level. Apart from subsidies, guess how much this government for the â€˜aam aadmiâ€™ is spending under the head â€œsocial security and welfareâ€? Budgeted expenditure is Rs. 3,401 crore in 2011-12, while they spent Rs. 18,427 crore this fiscal. Either the â€˜aam aadmiâ€™ tag is hot air, or the numbers are bound to go up.
What about capital expenditure? The outlay for total capital expenditure in 2011-12 is lower than in 2010-11, but the finance minister says that part of the revenue expenditure is for the creation of capital assets. Taking that into account and after adjusting for capital expenditure on defence, the rate of growth in capital expenditure works out to 23.5%, which is good. Unfortunately, the budget does not give the amount of grants for creation of capital assets in 2009-10, so we do not know what the growth rate has been this fiscal and whether the projected growth rate is achievable. Interestingly, the increase in total capital expenditure, without taking the grants for creation of capital assets into consideration, was a huge 44.6% in 2010-11. By that reckoning, although the 23.5% growth looks impressive, itâ€™s actually quite a deceleration from government capital expenditure in the current fiscal.
Consider also that, in spite of such a huge growth in government capital expenditure in the current fiscal, the trend on gross fixed capital formation this year hasnâ€™t been encouraging. According to the third quarter GDP numbers, growth in gross fixed capital formation has been decelerating steadilyâ€”it was 25.7% in the first quarter, 17.8% in the second and a mere 6% in the third quarter.
On the receipts front, the projection of growth in tax revenue for 2011-12 is 17.9%, well below this fiscal yearâ€™s growth of 23.5%. With a nominal GDP growth of 14%, that should be achievable.
The rally in the markets on Monday was, therefore, a relief rally, relief that the finance minister has, at least, done no harm. As the heroic assumptions behind the budget projections for 2011-12 sink in, even the relief may fade away.
The government says that GDP growth next fiscal is going to be around 9%. This fiscal, growth is expected to be around 8.6%. The Reserve Bank of India (RBI) has been saying, ad nauseam, that demand conditions are so strong that interest rates need to be raised. But if the government says that growth next year will be 9%, doesnâ€™t it mean that the interest rate hikes are not working and that monetary policy needs to get even more restrictive in future? By insisting that growth will be 9%, the government may be making things even more difficult for RBI.
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