Budget 2007-08 Shubhashis Gangopadhyay India Development Foundation (March 7, 2007) Prepared for the...
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Budget 2007-08 Shubhashis Gangopadhyay India Development Foundation (March 7, 2007) Prepared for the joint discussion with ICRIER, NCAER and NIPFP; Jacaranda Hall, IHC
Budget 2007-08 Shubhashis Gangopadhyay India Development Foundation (March 7, 2007) Prepared for the joint discussion with ICRIER, NCAER and NIPFP; Jacaranda
Budget 2007-08 Shubhashis Gangopadhyay India Development
Foundation (March 7, 2007) Prepared for the joint discussion with
ICRIER, NCAER and NIPFP; Jacaranda Hall, IHC
Slide 2
The Document Annual book-keeping Policy statement Tax
implications Sops, exemptions and largesse
Slide 3
The Basics Receipts and expenditure Revenue deficit is down
(2.0 to 1.5) Fiscal deficit is down (3.7 to 3.3) Capital versus
revenue expenditure
Slide 4
Fiscal Management
Slide 5
Showing Restraint
Slide 6
Managing Cash Flow
Slide 7
Macro versus Micro Overall deficit targets are being met
Composition of expenditure a bit suspect
Slide 8
Setting Start of the plan period Continuity towards long term
goals CMP Inflation and elections
Slide 9
CPI for Agriculture
Slide 10
Is NREG the Culprit?
Slide 11
Keeping Above the Water
Slide 12
Inference NREG disbursement raises local food prices But rural
wages have been increasing Real wage rise small but positive
Agriculture is highly fragmented Differing prices in adjoining
states
Slide 13
Focus on Health
Slide 14
HIV/AIDS NACP III to begin in 2007 -2008 Budget allotted for
2007-2008 is 969 crores Steps by the government to destabilize
HIV/AIDS by keeping the prevalence to < 1per cent in the
population Focus on high risk groups in all states Access to
condoms Universal screening of blood and safe blood Hospitals to
prevent mother to child transmission of HIV/AIDS To follow protocol
for paediatric dosage developed by Indian doctors
Slide 15
ICDS Budget increased from INR 4087 crore to INR 7061 crore for
2007-2008 173 new ICDS projects 1,07274 anganwaadi centres 25,961
mini anganwaadi centres Government committed to cover all
habitations and settlements by ICDS during the 11 th plan
Slide 16
National Rural Health Mission (2005-12) Decentralisation of
health planning and management Village Health Plan/District health
plan all districts will be ready with District health plans by
March 2007 Integration with programmes on health determinants
(nutrition,sanitation etc.) Recruitment of ASHAs (Accredited Social
Health Activists) 320,000 recruited and 200,000 undergone
orientation training Mainstreaming of AYUSH (Ayurveda,Yoga and
Naturopathy, Unani, Siddha and Homeopathy) into the public health
system budget increased by 26 percent Integration of vertical
health and family welfare programmes and funds (e.g. Polio
allocated 1290 crores)
Slide 17
Medical Equipment and Drugs General rate of import duty on
medical equipment reduced to 7.5 per cent (equipment are taxed at
12.5 per cent at present with a concessional duty of 5 per cent on
specified equipment) Duty on 15 specified machinery in
pharmaceutical and biotechnology sector reduced from 7.5 percent to
5 percent Duty on most chemicals and plastics reduced from 12.5
percent to 7.5 percent
Slide 18
Clinical Trials Exempted from service tax Advantages:
Disadvantages:
Slide 19
Expenditure on Education
Slide 20
Primary Education Focus SSA allocation increased by 35% Mid-day
meal scheme to cover upper primary Teacher training boost
allocation almost tripled to Rs. 450 crores 200,000 teachers to be
added Classrooms to increase by 500,000
Slide 21
School Education Problem dropout rate high Critical class 8 th
to 9 th class Solution Scholarships from 9-12 100,000
means-cum-merit scholarship Rs. 6000/- a year Rs. 750 crores in
2007-08
Slide 22
Secondary Education Allocation increase INR 1837 crore to INR
3794 crore Scholarships Through a fund with SBI
Slide 23
Education and R&D Promoting Ph.D.s for some sections
Research institutions customs duty exempt Corporate in-house
R&D 150% deduction continued
Slide 24
Vocational training Vocational education mission INR 50 crore
Based on PPP concept ITIs 1396 centres of excellence 300 more ITIs
to be covered Academic and financial autonomy 2 nd shift
allowed
Slide 25
Physically Challenged Subsidy for regular employment Employer
contribution to PF reimbursed
Slide 26
SME Increase in outstanding credit from INR 135,200 crore to
INR 173,460 crore at end Dec 2006 Government to encourage banks to
lend to SMEs Proposal to allow credit rating of SMEs to fix
interest rates by bank Exemption limit for SSI raised from INR 1
crore to INR 1.5 crore
Slide 27
Food Processing Customs duty on food processing machinery
reduced from 7.5% to 5% Exemption on crude and refined edible oil
from additional CV duty of 4% and reduction on duty on crude and
refined sunflower oil by 15 percentage points Biscuit below INR 50
per Kg and all food mixes fully exempted
Slide 28
Urban Development Increase in allocation for SJSRY from INR 250
crore to INR 344 crore Promoting world class financial centre in
Mumbai Five year tax holiday for luxury hotels in NCT regions like
Gurgaon, Faridabad and Ghaziabad
Slide 29
Indirect taxes Reform continued Move toward general sales tax:
central sales tax reduced 4% to 3% states to be compensated revenue
loss Peak customs duty to ASEAN levels: reduced - 12.5% to 10%
Slide 30
Reducing customs duty Controlling inflation Chemicals and
plastics 12.5% to 7.5% Steel seconds 20% to 10% Coking coal duty
exempt Polyester yarn and fibres 10% to 7.5% Diamonds 5% to 3%
Dredgers duty exempt Food processing machinery 7.5% to 5% Medical
equipment 12.5% to 7.5% R & D 5% duty extended to all research
institutions Pharmaceuticals and biotechnology specified machinery
7.5% to 5%
Slide 31
Reducing excise duty Ad valorem duty on petrol and diesel 8% to
6% Other reductions Job-creating sectors Food processing Cement
Umbrellas, footwear, plywood Biodiesel, water carrying pipes -
exempt
Slide 32
Service tax Service tax extended to a no. of services
Exemptions Technology business incubators Clinical trials for new
drugs
Slide 33
Direct taxes Personal income tax (lower) Standard exemption
increased - all assessees, senior citizens, women Deduction for
medical insurance premia increased
Slide 34
Direct taxes Corporate income tax Infrastructure companies
exempt gas pipeline and distribution; sea navigation channel
In-house R&D 150% deduction continued until 2012 Hotels (2,3,4
star) in the NCR region 5-year tax holiday CESS on education
secondary and higher 2% - what for? (could it be scholarships in
private educational institutions?)