Budget: Thrust on education, social sectors

BANGALORE, INDIA: The highlight of this year's Union Budget is the largest ever farm loan waiver (Rs 60,000 crore) to small and marginal farmers in India.

Keeping the inflation in check as the corner stone of his policy, Finance Minister P Chidambaram has increased allocation on education, health care and social sectors.

Chidambaram also proposed an allocation of Rs 16,534 crore for the healthcare sector with health cover of Rs 30,000 for every worker under the below poverty line category.

While all these are supposedly part of the government's plan for "inclusive growth," it is a clearly seen as a populist move aimed at the coming general elections.

The IT industry has little to cheer about. The much-awaited extension of STPI tax holiday was ignored, but excise duties on many IT components were reduced.

Chidambaram, however, reiterated that services and manufacturing would continue to be drivers of growth.

"The year 2007-08 was most challenging. But we are confident of 8.8 per cent growth," said the finance minister.

Highlights of the Budget

Keeping inflation in check is corner stone of the policy

India has recorded average growth rate of 8.8 per cent

Proposal to enhance the allocation to the Department of Information Technology from Rs 1,500 crore in 2007-08 to Rs 1,680 crore in 2008-09.

Education gets a boost

· Investment on education and health up by 20 per cent

· Has proposed Rs 34,400 crore for education and health

· Grant of Rs 5 crore to Deccan College of Post Graduate Research Institute, Pune

· Proposes 3 IITs, in Bihar, AP and Rajastan

· To set up 2 IISERs Bhopal and Thiruvananthapuram

· Two schools of Planning and Architecture to be established

· 16 central universities in 2008-09

· Rs 100 crore for IT Ministry for interconnecting educational institutes through National Knowledge Network

· To encourage children to take up science and R&D

· Scholarships to be given to students under a new scheme, Innovation in Science Pursuit for Inspired Research (INSPIRE).

· Rs 85 crore for `Inspire' scheme for the S&T ministry · Rs 16,000 crore to cover all rural districts under National Rural Employment Guarantee Scheme (NREGS)

· To launch non-profit corporation skill development programme in mission mode

· The government will put in Rs. 1,000 crore as initial equity in the corporation.

· Rs 750 crore for upgrading 300 more ITIs in 2008-09

Income Tax



· Income tax exemption limit hiked to Rs 1.5 lakh

· 10 per cent tax for income between Rs 1.5 lakh and Rs 3 lakh

· 20 per cent between Rs 3 lakh and Rs 5 lakh

· Income above Rs 5 lakh to attract 30 per cent tax

· For women exemption limit increased to Rs 1.8 lakh

· For senior citizens exemption till Rs 2.25 lakh

Others

· PDS, smart cards pilot project in Haryana, Chandigarh.

· To establish 100,000 broadband internet-enabled Common Service Centers in rural areas

· Rs 75 crore for Common Service Centers Rs 450 crore for State Wide Area Networks (SWAN) projects in states

· State Data Centers get Rs 275 crore

· PAN requirement in all financial transactions

· Emphasis on going green – promote clean technology product

Direct and Indirect tax

· Revenue deficit estimated at Rs 55,184 crore

· Fiscal deficit pegged at 2.5 per cent of GDP

· No change in the peak rate of customs duty

· No change in corporate income tax rates

· No change in surcharge in corporate tax

· CENVAT reduced from 16 to 14 per cent on all goods

· Central Sales Tax to be reduced to 2 per cent

· Tax on convergence products reduced from 10 per cent to 5 per cent

· Reduced excise duty from 16 per cent to nil on wireless data cards

· Increase excise duty from 8 per cent to 12 per cent on packaged software

· Excise duty on yarn is put on to cellular phones

· Customized software to bring it on par with packaged software

· Tax exempted on set top boxes

· Few IT and hardware components exempted from custom duty

· Threshold limit of exemption for small service providers increased from Rs 8 lakh to Rs 10 lakh

· 65000 small service providers go out of tax net

· Short-term capital gains tax up to 15 per cent

· Allocation increased to 6886 crore for Jawaharlal Nehru Urban Renewal Mission

· Fresh facilities, encouragement to sports and guesthouses exempted from Fringe Benefit Tax

· To provide Rs 33 crore for a new scheme of manpower development for the software export industry.