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Deep deficit, shallow response make hope, market sink
The unambiguous mandate that the Congress-led UPA received in the general elections had re-ignited expectations of systematic reforms over the next five years. Mukherjee did not manage expectations well and missed an opportunity to showcase UPA II’s commitment to bold actions on several fronts — be it disinvestment, labour flexibility, targeted subsidies or structural tax reforms.
On cue, the Bombay Stock Exchange Sensitive Index (Sensex) tanked 870 points or 5.83 per cent, the sharpest fall ever on a Budget day.
Mukherjee’s speech had all the accompaniments of a Budget that he would have presented 25 years ago. Old-fashioned but shrewd, the Finance Minister showered benefits on all stakeholders: marginal tax sops for the salaried, excise duty cuts on a host of items — from LCD panels to gems and jewellery — retaining excise, customs and service tax rates at existing low levels and, surprisingly, giving a bonanza to the upper middle class by doing away with the distortionary 10 per cent surcharge and doubling the threshold on wealth tax of 1 per cent to Rs 30 lakh.
He kept the central excise rate, customs duty and service tax rates intact. He hiked the minimum alternate tax for zero-tax companies to 15 per cent — not seen lightly by India Inc. Even as he did away with the commodities transaction tax, he retained the securities transaction tax creating arbitrage opportunities between two segments of financial markets. Mukherjee’s direct tax measures were revenue neutral, but in indirect taxes, the additional resource mobilization was a meagre Rs 2,000 crore.
After all, it was an expenditure budget.
He used all available resources for enhancing allocations of existing flagship programmes such as the National Rural Employment Guarantee Act.
He also set aside modest sums for new social sector schemes such as Rajiv Awas Yojana and Pradhan Mantri Adarsh Gram Yojana for villages which have a Scheduled Caste majority.
His large expenditure plan — the total spend tops Rs 10 lakh crore for the current fiscal — has given him the confidence to assume a growth rate of 7 per cent in the current fiscal with inflation stabilizing between 2 per cent and 4 per cent by March 2010.
Playing along the fiscal stimulus plan and recognising that infrastructure was one area neglected in the last few years, Mukherjee facilitated Rs 1,00,000 crore worth investment in public private partnership projects through a refinance window made available by IIFCL.
The veteran politician in Mukherjee ensured that his presentation was not chaotic — just two interruptions by Lalu Prasad Yadav and Mulayam Singh Yadav — and devoid of announcements that would evoke strong sentiments. “He did not have to make big announcements just for the market,” said Vijayan Krishnamurthy, Executive Chairman, JP Morgan AMC, adding these can be undertaken outside the Budget.
The speech, as expected after the poll outcome and the President’s speech, focused on inclusive growth and bridging the rural-urban divide by promising banking presence in all unbanked blocks, housing for urban poor, 1 per cent interest relief for farmers who paid short-term crop loans on time, 45 per cent hike in allocation for Bharat Nirman and a new scheme for 1,000 villages with Scheduled Caste majority.
Perhaps, Mukherjee believed that big-ticket reform measures need not be announced in the Budget. Yes, he did not steal the thunder of his Cabinet colleagues but did not read the pulse of the market either.
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This budget is benefitted for exporters and some corrupt farmers. Most of our currupt netas are from villages they have huge farming lan on there name.They take heavy loan on that farming land and never return the money back to the bank. and the reason is same loss in farming.so please dont give so much exemptions to farmers.
The Union budget 2009 has brought in some goodies for Aam Aadmi. The budget has kept the continuity of stimulus package through spending in sectors like infrastructure and agricultural sectors. Further, focus on delivery mechanism is also a welcome move. Presenting an inclusive budget, the Finance Minister promotes job creation in rural India, targets reduction of poverty level to half by 2014, attempts to improve education and healthcare system, and increase rural housing and urban and rural infrastructure spend to 9% of the GDP apart from providing energy security.
This Budget is the worst ever General budget in the last 18 years since 1991. What Mr Pranab Mukherjee has done is far far below expectations and in no way help the Indian economy or the common man on the street. While the prices of food are going through the roof and there is a lack of confidence in the market, the FM has lost a golden opportunity to bring the economy on the path of economic reforms. A poor and lacklusture Budget indeed.
Tax relief increased only 10,000 that is very less. We expected it atloeast by 50000. Due to sixth pay commission there was 30-40% increase in salary that increase will be be deducted in the income tax. So there is no benefit to the salaried person. The limit of saving is also not inceased by 100000. All these things should be revised in the favour salaried person
Raising the IT limit by 10000 shows how warped up in the past the FM is. If he really cared about the Aam aadmi he should have raised it to at least 200000 for the aam aadmi.He also didn't raise the interest limits or section 80c limits to encourage investments either in property or the market. What a colossal waste of time. Did he forget some of the papers at home. He certainly seems to have forgotten a lot of things that could have made the difference
Can't understand the connect between the contents of the news and headline of the news.Why IE is doing 'Chamchagiri' of government or shouting its slogan even where it does not fits.
Respected Sir,I know it is not easy to make everyone happy. But please consider the interests of ex-servicemen also while framing budget.
budget comes and budget goes but suicide affected areas of vidarbh could not conserve water for want of funds.like contracters in PWD there can be registered contracters for small farm ponds.then only water harvesting on mass scale will be possible. IT is problem of right thinking for system and funds.
Market reactions are evident of the budget proposed by FM. he failed to meet "aam admis" expectation. Raising 10000Rs exemption slab and abolishing surcharge of 10% over 10 Lakh rupees taxable income is certainly not going to help.
Raising incometax basic limit by Rs.10000 is a joke on aam aadmi.While the prices of petroleum products have been raised just before the budget, the common man will bear the cascading effect of this price rise. All the biased media knows only one thing: To praise this government.The media do not want to understand the truth that the common man does not give a damn to what they say.
Closed useless companies like Air India and ITI.
It is nice for farmers and agriculture thats the India's strength but FM should make the IT limit for at least 2Lac for normal man.My good wishes for growth of India.
dear indiansagriculture is the main income, dont think of development, only think about food for lifetime. thats our governments life time aim
OROP by definition means officers and men since we all are known by our ranks.Is the government trying to drive a wedge between officers and PBORS.I appeal to the the senior beauracrats to include officers also in OROP scheme of things to aviod sending conflicting signals. Dr MMS and paranab Mukherjee are laerned people who should intervene and set this anomoly right ASAP else it will snowball into a bigger controversy
It is heartening to note that the Finance Minister has made a slew of concessions for the income tax payees. He has also done the right thing by deciding to invest heavily in Infrastructure . But the moot point is how the finance minister spends and invests money will ultimately affect the fiscal deficit, which will be the central point. Also containing the fiscal deficit is a huge task for the finance minister. We understand that the fiscal deficit is pegged at Rs 3, 32,000 crores which is a colossus amount. The most important question is how this deficit will be funded. Ultimately the source of funding used to finance the deficit will have an influence on the money supply and the interest rates. Leading economists will agree that If government borrows from the open market, the interest rates will go up (which is not welcome at this point). High interest rates mean higher cost of capital for the industry, lower profits, and hence lower stock prices.
very dissappointing...!! Market reaction tells us the story!!
its really Joke of the Day, i think it is very funny decision
Pranab Dada, a seasoned politician has given a good budget which focusses on the Aam Aadmi and has not given leeway to the greedy wishes of the Corporates and Multi Nationals. He has tried his best to extend concessions to all sections of the Society and I would rate this Budget on a score of 8/10.
hopeless budget
The budget seems short of vision, lacking stimulus for infrastructure and long term growth. The very fact that the sensex kept tumbling while the speech itself was going on, resounds the sentiments of the market, which is almost 800 points down as of now! Even much hyped OROP (One Rank One Pension) for Ex-Servicemen seems to has been partisan, with the officer class being totally excluded. A rather insipid budget.
The Union budget 2009 seems to be a well balanced budget with empahasis on infrastructure ,health, housing ,employment ..the provision of keeping the banks and insurance under public sector control is right under the present recessionary scenario...the major cause of worry is however, the increase in fiscal deficit to 6.8% of GDP -a large magnitude no doubt.....but the emphasis on the social sector development and special emphasis on education is welcome step....but i thnk more should have been done for the primary sector(agriculture)..the provisions of interest rate incentive and fertilizer subsidy as well as allocation for irrigation development is fine but more emphasis should also have been given on the proper marketing and storage facility for the agricultural goods.The emphasis on provision of Rs100 per day under NREGA is a pleasant step as well as the refoms in the employment exzchanges was long overdue.Overall a well drafted budget and much wud depend on its steady and effecient implementation.
The budget can only raise wishful hopes in the common man that higher lay outs for the schemes will generate more employment and true increase in resouces of the poor rural . With rampant coruption resulting in funds going to the pockets of bureucrats and politicians there will only be marginal delivery rural poor. Maximum 10 paisa of one rupee. Food security scheme is the other benefit to the poor but tthe implementation only will reveal how much relief goes to the actually poor. The pensive mood of Rahul Gandhi when he sat listening to the budget speech reflects the doubts of the right thinking people about the good part of the budget. As regards the Income Tax relief less said the better. The FM has played a cruel joke. Even a peon working in a Government office will get lesser money to spend in running his house hold. With the present CPIndex provisions of 80(C) can not help him to come in Zero Tax zone. Others will also little relief. Mr. FM we cannot thank you.
Government is asking banks to lower interest rate on house building loan. They should have increased the IT exemption limit on both interest and principle component of house building loan to boost the infrastructure market. Also nothing for the common tax payer. The budget is a huge disappointment.
Aam Admi will eat kuchha aam. Minority Admi will eat mita Halwa. Hopeless budget from old Dada
Tax exemption limited raised by Rs.10,000/-, big deal. Savings limit not raised beyond 1 Lakh. No Standard deduction. Really a disappointing budget for Working class.Middle class is not taken into consideration at all although they are the worse hit always everywhere. Not upwards