Budget 2010-11: Cheers for the Tax payer

According to Pranab Mukherjee, Minister of Finance "The union budget cannot be a mere statement of government accounts. It has to reflect the government's vision and signal the policies to come in future." Viewed in the context of this statement, the Union budget presented by the FM on 26th February 2010, is a precurser of the changes envisaged during the remaining tenure of UPA II government.

FM has enumerated the undernoted challenges before the government:

• Quickly revert to the high GDP growth path of 9%, and then find the means to cross the 'double digit growth barrier'.
• Harness economic growth to consolidate the recent gains in making development more inclusive within a fixed time frame.
• Remove weaknesses in the government systems, structures and institutions at different levels of governance.

The message of the FM is pretty loud and clear: Growth cannot be sacrificed at any cost. Some economists may term the budget as inflationary, but the govt. is confident that the growth in demand complimented by augumenting the supply side mechanism can stiill avoid an inflationary bias, while steering the economy on the growth trajectory. Budgetary allocation fo infrastructure development has been raised to Rs.1,73,552 crores (46% of total plan outlay), and spending on social sector has gone up to Rs.1,37,674 crores (37% of total plan outlay). Augumenting fresh resources to the tune of Rs.75,000 crores through disinvestment of PSU stock and 3-G spectrum sale will enable the FM to reign in the fiscal deficit to 5.5% in 2010-11, as against 6.9% envisaged in the revised estimates for the year 2009-10.

In his endeavour to deliver inclusive growth, FM has made sure that while selective subsidies and cash subvevtion would continue to be made available to the weaker sections of the population, the burden of taxes shall be shared amongst a large cross section of the population rather than a handful of tax payers. The tax bonanza to IT payers is a step in this direction. The revision of tax slabs upwards will lead to a substantial cash in the hands of individual tax payers which will give the necessary boost to consumption and saving, and lead to the feel good factor amongst the honest tax payers of the economy. Whereas these measures would lead to a revenue loss to the govt. agg. Rs.26,000 crores on the direct tax front, shall be more than made up by the additional revenue of Rs.46,500 crores through indirect taxes including service tax. There has been an appreciable shift towats indirect taxes to ensure inclusive participation in taxation.

In meeting the third objective, FM has spelt out the following initiatives:

• Tax reforms: Roadmap for role out Goods and Services tax (GST), and the Direct Tax Code (DTC), wef 01.04.2011 has been laid. This will lead to uniformity and simplicity in the tax structure.
• Nutrient based fertiliser policy already notified shall be applicable from 01.04.2010. FM has spelt out that Kirit Parikh committee recommendations on deregulation of motor fuels shall be taken up by the cabinet soon.
• Companies bill 2009, will address issues related to 'Corporate governance'.
• National Clean Energy fund will encourage research in innovative projects and will ensure use of alternate energy resources like solar and wind energy.
• Unique Identification Authoriry of India (UIDAI) under the Charmanship of Nandan Nilekeni will be able to roll out the first set of UID numbers in the current year.

Individual Tax payers owe a special thanks to the FM for the special IT bonanza in this years budget.