Budget in Detail (2005-06)

INFRASTRUCTURE

Under National Highway Development Programme, Rs. 1400 Crore allocated for converting 4000 km-National Highway into 4 lanes highway.
A sum of Rs 8000 crore will be provided for the rural infrastructure development fund(RIDF)
Under Indira Awas Yojna Scheme, 15 lakh more houses to be constructed.
Outlay of Rs 5,500 Crore under the national Renewal Mission to cover 7 mega cities and some towns
To increase Telephone Density, allocation is Rs.1200 Crore in 2005-06
Rs.1,100 Crore allocation for Rural Electrification Scheme for covering 1.5 lakhs villages
Bio Technology and Pharmaceuticals Sector Research Institute foundation funds to rise.
For Tsumami regeneration programme, Rs. 10216 Crore allocated.
For Industrial development, Small scale and medium industry schemes allocation to increase from Rs 135 Crore to Rs.173 Crore in 2005-06.

HIGHLIGHTS OF INDIAN ECONOMY'S PERFORMANCE IN 2004-05

By 2008-09, exports from India to grow by $150 billion.
Automobile, Software, Telecom and Electronic sector benefited by FDI.
CSO estimates GDP growth rate as 6.9% with manufacturing expected to grow at 8.9%
Inflation brought down and business confidence restored. Inflation measured in terms of WPI stood at 5.01% on Feb 21 2005

FOOD ALLOCATION

New Food Credit increased by 21.2% in 2004-05
The National Food for work program to be converted into the National Rural Employment guarantee Scheme with an allocation of Rs 11000 crore.
Antyodaya Anna Yojna will be extended to 2.5 Crore families.
Mid Day Meal scheme to 11 Crore children covered.

FOR CHILDREN, RURAL HEALTH AND EDUCATION

Integrated child development service (ICDS) scheme will be expanded with creation of 1,88,168 additional Anganwadi centres.
Allocation under mid-day meal scheme will be increased from 1675 crore in 2004-05 to Rs 3010 Crore in 2005-06
'Prarambhik shiksha kosh' to be created for funding sarv shiksha abhiyaan with an allocation of Rs 7156 crore
rajiv Gandhi national fellowship will be introduced for SC and ST students for pursuing M.Phil and PHD courses in some universities
backward region grant with an allocation of Rs 5000 crore to be set up in 2005-06
as a new measure for the development of SC and ST, the budget provides Rs. 6253 Crore.
equity support for the national minorities development and finance corporation (NMDFC) to increase

ON EMPLOYMENT FRONT:

In IT sector by 2009, 70 Lakhs Jobs to be created .
Food Processing Industry to create 2.5 Lakhs Jobs every year.

AGRICULTURE

For National Horticulture Mission, Rs.630 Crore allocated. National project for repair, renovation and restoration of water bodies to be launched in March 2005
Agriculture credit of Rs 108500 crore will be disbursed in the current year and the credit flow will increase by 30% in next fiscal
In Agriculture Market private and public investment to go up.
National agriculture insurance scheme will continue for rabi and kharif 2005-06
Micro finance development fund to be called micro finance development and equity fund with an increased sum of Rs 200 crore.
Knowledge center to be set up in every village by 2007, Rs 1000 crore required,funding from RIDF
For Agriculture research, National Fund to be created.
For Plantation Sector expert committee to be set up for massive regeneration.
Decenteralized procurement for Agriculture planned.

EDUCATION

Education Allocation to be Rs.18336 Crore
Additional grant of Rs 100 crore for making Indian Institute of Science, Banglore, a world class university.

UNDER BHARAT NIRMAN PLAN (which is for building infrastructure in rural India)
Villages with 1000 population and above will be linked to Roads.
For increasing investment in agriculture, Central Assistance to States to increase.
Provision of Drinking Water for 74000 new villages proposed.
Electricity connection to be given to 2.3 crore household
For rest 66822 villages Telephone Lines to be created.
Accelerated irrigation project reviewed and it is increased to Rs.20800 Crore in 2004-05 to Rs.40800 in 2005-06.

PROVISIONS FOR STATES UNDER SPECIAL CATEGORY

Special Plan assistance for J&K to be provided
Package of Rs 450 crore for highway development in Northeast announced
For development of Bihar, for year 2005-10, allocation will be Rs. 7975 Crore.

MANUFACTURING SECTOR

Launch of manufacturing competitiveness programme to help small and medium enterprises
108 Items under dereservation category
For 67 ITIs development, Rs 1.6 Crore allocation
Government will extend full support to IRDA for promoting Micro Insurance.
Rs 435 crore allocated for Technology Upgradation Fund (TUF) in textiles sector
introduction of 10% Capital subsidary Scheme in Textile Sector
In Textile Sector, allocation of Rs.20000 Crore in 2004-05 increased to Rs.30000 Crore in 2005-06
Rs.20 Lakh new weavers included in Life Insurance Scheme
For sugar industry, NABARD to provide a financial package with a two year moratorium on principal and interest
OTHERS

Interest rate of 2 percent points below the bank rate will be applicable to outstanding loans as on October 21, 2004
Amendments to be made in Banking Regulation act 1949 to remove upper and lower bounds to the statutory liquidity ratio and to allow banking cos to issue preference share
Amendments to be made in RBI Act, 1934, to remove limits of the CRR
Under FSPV Scheme credit limit is Rs.10000 Crore.
For making Mumbai Regional Finance Centre, Special Comittee establishment proposed.
SCRA which was amended recently requires all corporates to be corporatized. One time exemption to Stamp Duty given.
For Defense expenditure, allocation is Rs. 83000 Crore. provided in 2005-06 of which 3375 Crore is for Catipal Expenditure.
Mechanism to be put in place for measuring development outcomes in the country.
Central Govt. Subsides to be restructured.
Gross Budgetary support for the plan in 2005-06 is Rs 172,500 crore which is 16.9% higher
Support for central plan increased by 25.6%
For Fiscal Correction, the R.E (2003-04) suggest revenue defict was 2.7% of GDP and Fiscal defict was 4.5% of GDP. This is to be brought down by 0.5% and 0.3% respectively in this Fiscal.
For NCMP, additional sum of Rs 25000 crore proposed for next fiscal
Total allocation for department of health and family welfare will up from Rs. 8420 to 10280 Crore in 2005-06.
For child & women development Rs. 14379 Crore allocated
TAX PROPOSALS
CUSTOMS:
Reduction of peak rate for the non agricultural products from 20% to 15%
Reduction of customs duties on selected capital goods and parts to below 15%, to 105 in some cases and 55% in some others
Reduction of duty on textile machinery and refrigerated vans from 20% to 10%
Reduction in duties of 7 specified machinery used inleather and footwear industry from 20 to 5%
On Lead, duty reduced to 5%. Duty on coal and high ash content will go down to 10%
Credit for CVD eill be available against payment of excise duty
IT Software to be exempt from CVD
In Textile Sector, Duty on Polyester, Textile fibre, Garment Fabric reduced from 20% 15%.
EXCISE DUTY:
Govt intends to bring most of the goods under CENVAT rate of 16% ; VAT implementation in full swing.
AC, polyester filament yarn, tyres' duties reduced to 16%.
Import duty on atmospheric drinking water generation reduced from 20% to 5%.
No change in duties on cars and aerated drinks
Excise duty on imitation jewelry down to 8%.
Parts of Medical equipment reduced from 20% to 5%.
Industrial Raw Materials custom duty reduced to 10%
Increased duty rate on cigarette by about 10%, Bidis exempted.
Customs duty on crude petroleum to be down to 5%
On LPG and on subsidized kerosene, no custom duty.
Surcharge of Re 1 per kg on tea, duty of Re 1 per kg on refined edible oil and Rs 1.25 per kg on vanaspati to be abolished
For NHDP, increase in diesel and petrol cess by 50 paise.
Duty on molasses to increase from 500 to 1000 Rs per MT
To widen service tax net, but those whose gross turnover is less than 4 lakh per year will be exempt
Service Tax Rate fixed at 10% for this fiscal
Excise duty on Matches making industry dropped from 16% to 12%.
Specific rate on cigarettes to be up by 10% a surcharge of 10% to be imposed on ad valorem duties of other tobacco products

DIRECT TAX

NEW INCOME TAX BRACKETS ARE AS UNDER

upto 1 lakh - Nil
1 lakhs to 1.5 lakhs -10%
1.5 lakhs-2.5 lakhs -20%.
2.5 lakhs and above -30%.
Under Income Tax, Threshold exemption limit incresed to 1.25 lakh for women and 1.5 lakh for senior citizens
In addition to the above, consolidated limit of Rs.1 lakh for savings to be exempted which will be deducted before tax is calculated.
Sectoral caps to be removed
Exemption on Tax on interest earned by NRIs continued.
Transport service by workers and canteen service in office will be outside tax.

CORPORATE TAX

Corporate Income Tax rate for domestic companies will be 30% and additional surcharge of 10%.
Initial depreciation rate increased to 20%, general deprecation rate 15%.
Credit for MAT allowed.
Withholding tax on technical services is also to be reduced to 10% from 20%
Extension on terminal date on exemptions given for specific purposes from March 31,2005 to March 31, 2007
No change in foreign companies tax rate.

SOME MORE TAX REFORMS

100% Tax Deduction for Science and industrial research institute.
Deduction of profits of new undertakings in J&K
Levy a tax of 0.1% on withdrawing Rs. 10000 more on a single day as an anti black money measure.
Banks required reporting all deposits, which are exempt from TDS on interest. This is also viewed as a anti tax evasion measure
A nominal increase from 0.015% to 0.02% in the rates of securities transaction tax for all categories of transactions
Mobile telephone is to be removed from the criteria for filling income tax, instead, payment for electricity bill exceeding Rs 50000 a year to be included.