New Delhi, Feb 26 (IANS) India Friday proposed a sizeable tax relief for individuals but hiked excise rates and minimum alternate tax in the Rs.11,08,749-crore ($221.75 billion) budget for 2010-11 that steps up outlays for welfare schemes and assures high, inclusive growth.

Individuals stand to gain on account of a revision in tax slabs. But they will have to pay more for cars, cigarettes, petrol, diesel, cement, jewellery and a host of consumer goods, even as they have to shoulder higher airfare due to service tax on such travel.

Presenting the budget in the Lok Sabha, the lower house of parliament, Finance Minister Pranab Mukherjee also estimated a lower fiscal deficit of 5.5 percent of gross domestic product (GDP), against the revised estimates of 6.7 percent for this fiscal.

He said 46 percent of the plan allocation will be set aside for infrastructure alone and 37 percent for social welfare programmes, while substantially hiking outlays for rural and urban development schemes, as also for education and healthcare.

"Today, as I stand before you, I can say with some confidence that we have weathered the crisis well," Mukherjee said in his 100-minute speech, recalling the hard days faced by the economy in the past two years, while rolling back some purse-loosening measures.

"That is not to say the challenges today are any less than they were nine months ago, when the UPA (United Progressive Alliance) was voted back to power under the leadership of Sonia Gandhi and Prime Minister Manmohan Singh."

Mukherjee proposed the following tax slabs for individuals: No tax for an annual income of up to Rs.160,000, a rate of 10 percent for up to Rs.500,000, then 20 percent for up to Rs.800,000 and finally 30 percent on anything higher. (Rs.50 approximately equals $1)

At the peak rate this will entail a saving of up to Rs.50,000, and an overall hit of Rs.26,000 crore ($5.2 billion) for the exchequer. "The proposal to reduce the tax slab will benefit 60 percent of all tax payers," said Mukherjee, bringing cheer to people.

But he also sought to hike the minimum alternate tax to 18 percent of book profits from the present 15 percent, though he lowered the surcharge from 10 percent to 7.5 percent, which will have a direct impact on the bottomlines of large companies.

The finance minister was interrupted several times, led by an eventual walkout by most opposition members, when he sought to restore the 5 percent basic duty on oil and 7.5 percent each on petrol and diesel, and imposed a Rs.1 excise on these two fuels.

"The customs duty was withdrawn when the prices of the petroleum crude reached as high as $122 per barrel. When it is much softer, there is no reason to continue the same concession," he told reporters later, setting the stage for higher fuel prices.

On augmenting resources, Mukherjee said Rs.25,000 crore ($5 billion) was raised by way of divestment in state-run companies during the current fiscal, adding that he was budgeting for Rs.40,000 crore ($8 billion) for the ensuing year.

The finance minister also promised to implement the direct tax code from April next year and assured a simplified foreign investment policy soon, even as excise rates were hiked across the board by 200 basis points.

Those in the packed house presided over by Speaker Meira Kumar included Prime Minister Manmohan Singh, United Progressive Alliance (UPA) chairperson Sonia Gandhi and Leader of Opposition Sushma Swaraj.

This was Mukherjee's fourth budget of his career as finance minister and the second for the United Progressive Alliance (UPA) government in its second straight term after being voted back to office in May last year.

"The finance minister has done a right mix of estimating the growth requirements and at the same time building in it a certain amount of moderation on the price front," said Manmohan Singh, who has himself presented five budgets in the past.

"He has done a commendable job."

Stock markets also gave thumbs up to the budget, which resulted in the sensitive index (Sensex) of the Bombay Stock Exchange closing with a gain of over 175 points, or 1.08 percent, while industry hailed the proposals as pragmatic and growth oriented.

During his speech, Mukherjee said three challenges remained for the economy - to quickly revert to high growth of 9 percent and cross to double-digit expansion; make growth more inclusive and develop infrastructure; and strengthen food security.

"We hope to breach the 10 percent growth mark in not-too-distant future."

Budget: Congress on collision course with opposition, others

New Delhi, Feb 26 (IANS) Finance Minister Pranab Mukherjee's move to hike central duty on petrol and diesel has set the Congress-led government on a collision course with the opposition and other parties.

The announcement, coming a day after the two houses of parliament discussed price rise has provided a rallying point to the opposition.

Some of parties which extended outside support to the United Progressive Alliance government -- like the Samajwadi Party (SP), Rashtriya Lok Dal (RLD) and the Bahujan Samaj Party (BSP) -- have joined hands with the opposition on the issue of price rise.

"We oppose the government on the issue of price rise. The budget has nothing for the common man," Vijay Bahadur Singh, BSP MP from Hamirpur, told IANS.

The BSP joined other opposition parties during Friday's walk-out from the Lok Sabha while Mukherjee was still making his budget speech, the first incident during budget presentation.

The opposition parties earlier cautioned the government against hiking price of petrol and diesel prices.

SP leader Mulayam Singh Yadav said the decision to hike central tax on petrol and diesel had come within hours of discussion in parliament on price rise.

The BSP, SP and RJD, which have their differences with the Congress, together have 47 MPs in the 545-member Lok Sabha and can create trouble for the government if they side with the opposition during vote on a cut motion.

However, the government did not betray signs of any nervousness.

Parliamentary Affairs Minister Pawan Kumar Bansal said the government was "confident" of getting its financial agenda through.

On the possibility of withdrawing tax hike on petroleum products, Bansal said the excise duty had earlier been reduced to offset increase in international prices of crude oil and Mukherjee's announcement was actually a "rollback".

Though the government is in a minority in the Rajya Sabha, the upper house of parliament has no statutory authority to defeat a finance bill.

The Left parties, which have to face a resurgent Trinamool Congress-Congress alliance in the next year's West Bengal assembly polls, indicated that larger opposition unity on price rise will continue.

"The opposition is united. We will carry the movement forward," Communist Party of India-Marxist leader Basudeb Acharia said.

The Congress said the budget had spelt out the government's thrust on improving the lot of poorer sections while also taking care of growth imperatives.

Party leader Salman Khursheed said much thought had gone into the process of budget formation and the government will fulfil all its commitments.

Corporate sector hails budget, but expresses reservations too

New Delhi/Mumbai, Feb 26 (IANS) The corporate sector has largely hailed Budget 2010-11, despite feeling it has not addressed many of their concerns.

Ankur Bhatia, executive director of the Bird Group, said the budget for 2010-11 was definitely better than expected.

"But our demand for the two-star and above hotel industry to be categorized as an infrastructure sector has gone unheard," he added. "This needs urgent intervention as the country is already short of star category rooms across the country," he said.

Karl Slym, president & Managing Director, General Motors India, said the budget failed to meet the expectations of the automotive industry.

"The industry did not expect any hike in excise duty and imposition of some duty on petroleum products. The automotive industry is one of the growth drivers of the economy and as such continuation of the stimulus package for some more time would have helped the industry to regain the growth momentum."

Rajiv Ranjan Mishra, managing director of CLP India, said the increase in Minimum Alternate Tax rates is negative for the establishment of new generation facilities.

Kaushal Sampat, the chief operating officer of Dun & Bradstree India, said: "Although the excise duty rates have been hiked, they still remain at the pre-crisis level and help the process of economic recovery. Though there are no Big Bang announcements, it's tone is 'pro-reformist' and it is a positive budget."

R. Ramakrishnan, executive director-Bajaj Electricals Ltd, said: "I feel the fiscal stimulus should have been retained at least in 2010-11. India had the opportunity to become the fastest growing economy in the world. This may get somewhat impacted. The lowering of excise duty on LED's to 4 percent from 8 percent and the focus on non-conventional energy are welcome."

Kalyan Bhattacharya, President & CEO, Birla Power Solutions Ltd, said: "When expectations were big for a leap in strengthening the manufacturing sector, Budget 2010-11 is more like a small step."

Sandesh Kirkire, the chief executive officer of Kotak Asset Management Company Ltd, said the gradual withdrawal of stimulus indicated by the 2 percent rise in excise should protect the growth uptrend. "This rise in excise would marginally get balanced with the higher surplus in the hands of the consumers due to the raising of tax slabs."

Moon B. Shin, managing director, LG Electronics Indian Ltd., described the budget as a progressive one. He said: "With an impetus on high GDP growth, and laying down a roadmap for fiscal consolidation the government is putting down things in perspective when it comes to allocation of funds."

Sudip Bandyopadhyay, group president, Spice Finance, said the net additional tax revenue generation of Rs.20,500 crore should definitely improve government finances and reduce the need for borrowing. "Overall the budget will prove to be a great catalyst for propelling India to the next level of growth," he said.

Ajay Srinivasan, chief executive-Financial Services, Aditya Birla Group, said: "The opening up the banking sector to Non Banking Financial Companies (NBFCs) and the private sector is a significant step towards further strengthening and broadening the banking sector to bring it closer to the commoners."

Kapil Dev Singh, country manager of IDC India, a top IT intelligence and advisory firm, said: "The expectation of India achieving 10 percent growth in the near future points to the domestic market consumption being the key driver."

A thumbs up to income tax relief, but fuel hike worrying

New Delhi, Feb 26 (IANS) The relief in income tax, cheaper mobile phones and readymade garments, even costlier cigarettes, proposed in the general budget was welcomed by all, but the rise in petrol and diesel prices has come as a major dampener.

The budget has brought cheer to the middle class tax-payers who have been given substantial relief by widening of the income tax slabs.

Finance Minister Pranab Mukherjee in his budget proposed the following slabs for individual tax payers: No tax for annual income of up to Rs.160,000, a rate of 10 percent tax for up to Rs.500,000, then 20 percent for up to Rs.800,000, and finally 30 percent on anything beyond Rs. 800,000 a year.

In the earlier income tax slab, there was a 10 percent tax liability on income between Rs.1.6 lakh-3 lakh, 20 percent tax on income between Rs.3-5 lakh and 30 percent tax on income above Rs.5 lakh.

"For young people like us who earn less than Rs.500,000 annually, the reduction of income tax to 10 percent is a big relief. It means more money," 22-year-old communication executive Mohnish Malhotra told IANS.

However, Malhotra was unhappy at the rise in the price of fuel. "Inflation is making life difficult for people like us who live alone in metros because food and essential commodity prices have shot up," he said.

For young Sagar Dash, a bank executive from Orissa who is planning to tie the knot this year, "the income tax concessions are a welcome step."

He said: "Widening of the slab will help employees like us who earn an average salary. We are paying a substantial amount in income tax and the new tax slab will help us save a few thousand rupees more every year."

His girlfriend, who works in a Delhi-based multinational firm, echoed his views. "Income tax is the brightest spark in today's budget," the 30-year-old executive told IANS.

Mukherjee said: "The proposal to raise the tax slabs will benefit 60 percent of all tax payers."

The budget has proposed to make cheaper micro-wave ovens, pre-packaged imported goods, mobile phones, watches, readymade garments, toys, long pepper and replaceable household water filters.

But the increase in petrol-diesel prices has left people worried. After the budget, air fares are set to rise by more than 10 percent and the prices of cars are also expected to go up.

For Veena Aggarwal, a housewife, the increase in diesel and petrol prices means a subsequent hike in the prices of a lot of other things as well.

"The common man is already reeling under the high prices of vegetables and essential commodities. An increase in petrol-diesel prices will mean a hike in prices of vegetables and pulse as well," she told IANS.

For youth and students, the budget spelt happiness as mobile phones are set to become cheaper.

"For college students like me, it's a great gift from the government. Youngsters like to buy new mobiles every few months and this step would definitely benefit us," said 20-year-old college student Vidushi Bhatia.

The increase in tax on cigarettes, cigars and chewing tobacco was also hailed by many.

"Finally, it seems that the government is serious about tackling the ill affects of smoking and tobacco. It will definitely discourage a lot of people from smoking and consuming tobacco," said Manju Gupta, a teacher.

Budget cut for apex court, poll panel

New Delhi, Feb 26 (IANS) Both the Supreme Court and the Election Commission of India have received much lesser budget allocations for the financial year 2010-11 as against the current fiscal.

As per the budget, the apex court will get Rs.85 crore in the coming fiscal, nearly Rs.14 crore less. In the revised 2009-10 budget, it was given a sum of Rs.98.83 crore.

Similarly, the Election Commission of India was allocated Rs.19.46 crore, over Rs.six crore less than 2009-10.

According to the budget documents, both the institutions will get these amounts under the non-plan outlay heading.

Health budget up by Rs.2,700 cr, focus on rural, public health

New Delhi, Feb 26 (IANS) India's health budget has gone up by Rs.2,700 crore to Rs.22,300 crore (Rs.223 billion/$4.82 billion) with special focus on rural and public health.

Presenting the 2010-11 budget to parliament, Finance Minister Pranab Mukherjee said: "I propose to increase the plan allocation for the Ministry of Health and Family Welfare from Rs.19,534 crore to Rs.22,300 crore for 2010-11."

Over Rs.139 billion have been earmarked for the United Progressive Alliance (UPA)-government's flagship programme the National Rural Health Mission (NRHM), launched in 2005, to improve availability and access to quality healthcare for people living in remote areas.

The main focus is on 18 states that have weak public health infrastructure - Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Jammu and Kashmir, Manipur, Mizoram, Meghalaya, Madhya Pradesh, Nagaland, Orissa, Rajasthan, Sikkim, Tripura, Uttarakhand and Uttar Pradesh.

The amount was for carrying out various schemes under the NRHM and has gone up from Rs.120.96 crore.

Mukherjee also announced that an annual health survey would be carried out to prepare the district health profile of the rural populace.

"The findings of the survey should be of immense benefit to major public health initiatives, particularly the National Rural Health Mission (NRHM), which has successfully addressed the gaps in the delivery of critical health services in rural areas," he said.

Equal focus has also been given to public health with the government allocating money for the AIDS control and mental health programmes and the prevention of diabetes and cardiovascular diseases.

Of the total budget, about Rs.3,181 crore have been earmarked for various schemes to benefit the health of the people - up from Rs.1,928 in 2009-10.

While India's AIDS control programmes saw an increased allotment of Rs.403 crore - up from Rs.888.15 crore to Rs.1,291 crore this fiscal - the National Mental Health Programme saw a rise of Rs.103 crore, up from Rs.50 crore - an increase of Rs.53 crore.

Also, the national programme for the prevention and control of diabetes, cardiovascular diseases and stroke got Rs.90 crore - an increase of Rs.73 crore from the previous budget.

As the country faces a shortfall of trained doctors, nurses and paramedics, the government has earmarked Rs.323 crore for creating more trained human resource in the health sector.

According to a Planning Commission report, India faces a shortage of about 600,000 doctors, one million nurses, 200,000 dental surgeons and a large number of paramedical staff.

However, top hospitals and medical colleges like the All India Institute of Medical Sciences (AIIMS) in Delhi and the Post Graduate Institute (PGI) in Chandigarh have got substantially less money in the coming fiscal as against the current financial year.

As per the 2010-11 budget allocation, the AIIMS will get Rs.800 crore in 2010-11 as against Rs.886.5 crore in 2009-10, while the PGI Chandigarh has been allocated Rs.82 crore less in the new budget. In 2009-10, the medical college got an allocation of Rs.392 crore.

Eye on reforms, budget allocates Rs. 42,036 crore for education

New Delhi, Feb 26 (IANS) India Friday allocated Rs.42,036 crore (Rs.420 billion/$ 9.1 billion) for both the school and higher education sectors in 2010-11, an increase of over Rs.5,600 crore from the previous fiscal - a move that aims to reform education by bringing equality in the sector.

"I propose to increase the plan allocation for school education from Rs.26,800 crore in 2009-10 to Rs.31,036 crore in 2010-11," Finance Minister Pranab Mukherjee said in his budget speech in the Lok Sabha.

This is an increase of 16 percent in school education expenditure in the coming fiscal.

"In addition, states will have access to Rs.3,675 crore for elementary education under the 13th Finance Commission grants for 2010-11," the minister added.

"The Right of Children to Free and Compulsory Education Act, 2009 creates a framework for legal entitlements for all children in the age group of 6 to 14 years to education of good quality, based on principles of equity and non-discrimination.

"In recent years, Sarva Shiksha Abhiyan (SSA) has made significant contribution in improving enrollment and infrastructure for elementary education. About 98 percent of habitations are now covered by primary schools," Mukherjee said.

The higher education sector, which is set to grow faster, got Rs. 1,400 crore more than in the 2009-10 fiscal. Mukherjee allocated Rs. 11,000 crore for the sector, around seven percent more than in 2009-10.

Of the total outlay, Mukherjee allocated Rs. 500 crore for subsidizing students loans.

To give students from economically weaker sections access to higher education, a scheme to provide full interest subsidy during the period of moratorium has been introduced to cover loans taken from scheduled banks to pursue approved courses of study in technical and professional streams from recognized institutions in India, the minister said in his budget speech.

The budget has set aside Rs. 400 crore for the new Indian Institutes of Technologies that have recently begun their operations. This is Rs. 100 crore more than what was allocated in 2009-10.

Of the Rs. 11,000 crore, the budget has allocated Rs.5,562 crore for general education, Rs.4,266 crore for technical education and Rs.1,078 crore for education improvement in the northeastern areas.

The education budget outlay got a mixed reaction from experts.

"The finance minister has presented a very balanced budget. While the focus has been on infrastructure development and rural development, school education has got its due importance," Devi Singh, director of the Indian Institute of Management-Lucknow, said.

"The increase in budgetary allocations for school education and the special grant from the centre for elementary education are very positive signs for the sector. The curtailment of fiscal deficit is a step in the right direction and we are happy that the finance minister is committed to creating policies to facilitate double digit GDP growth in the near future," Singh added.

However, Sanjiv Kataria, an technical education expert said: "If Education for All is the key to India's aspirations for human resource development, a 16 percent increase in allocation for school education to Rs.31,036 crore is grossly inadequate."

"Education needs to get the status of a 'meta resource' with adequate funding so as to positively impact overall literacy, skills development and employability," he added.

Opposition joins hands to slam 'anti-people' budget

New Delhi, Feb 26 (IANS) Opposition parties, including the Bharatiya Janata Party (BJP) and Left parties, united in slamming the government Friday over the "anti-people" union budget, especially the hike in duty on petrol and diesel, and even walked out of parliament during the budget speech.

In an unusual departure from the norm, opposition MPs Friday walked out of the Lok Sabha during Finance Minister Pranab Mukherjee's budget presentation, provoking the minister to stop in his tracks and shout impatiently that he be allowed to continue. Members of the BJP, the Janata Dal-United (JD-U), the Telugu Desam Party (TDP), Left parties, the Samajwadi Party (SP) and the Rashtriya Janata Dal (RJD) rose from their seats when Mukherjee spoke of the basic duty on crude oil being restored.

"This (budget) is a constitutional requirement," an angry Mukherjee told the opposition MPs, many of whom were standing up and drowning him out.

But they walked out nonetheless, leaving Mukherjee to finish the last 15 minutes of his speech without the opposition.

The only ones left were independents Jaswant Singh, Digvijay Singh and Inder Singh Namdhari as well as the Janata Dal-Secular (JD-S) and the Trinamool Congress-backed Socialist Unity Centre of India (SUCI).

The walkout marred a presentation that lasted an hour and 45 minutes.

Later, the opposition leaders jointly addressed reporters to slam the government over the hike in central duty on petrol and diesel.

"This is an anti-farmer, anti-poor, anti-people budget," Sushma Swaraj, BJP leader and Leader of Opposition in the Lok Sabha, told reporters.

Also present were SP leader Mulayam Singh Yadav and RJD chief Lalu Prasad. Both the SP and RJD provide outside support to the Congress-led United Progressive Alliance government.

Referring to Thursday's discussion in the two houses of parliament on price rise, Mulayam Singh said the hike in central tax on petrol and diesel had come within hours of the opposition members voicing their concern on the price situation. "The discussion (on price rise) took place only 12 hours back," he said.

RJD chief Lalu Prasad was equally critical of the government. "They (the government) have hiked the prices of petrol, fertiliser, cement... people are crushed under the rising prices of essential commodities."

Communist Party of India-Marxist (CPI-M) leader Basudeb Acharia said the opposition had never before staged a walk-out during the general budget. "This (walk-out) is unprecedented. The whole opposition was united. We will take the movement forward," he said.

Talking to reporters later, CPI-M leader Sitaram Yechury said the rise in price of petrol and diesel would be "disastrous for the aam admi (common man)."

"The net result is there is no relief even to the middle class. The budget is in the name of the aam admi, but it is against the aam admi," he said.

Communist Party of India (CPI) leader D. Raja said the walkout from the Lok Sabha was spontaneous and reflected the gravity of the problem faced by the people due to price rise. "The government did not give a convincing reply," he said.

Congress spokesperson Manish Tewari said the budget would consolidate the post-downturn recovery process, strengthen infrastructure and improve collection of revenue.

He said the opposition was just interested in "scoring political brownie points".

Talking to reporters at the BJP's official briefing, party leader Yashwant Sinha said Mukherjee had failed to address concerns of the aam aadmi.

"The increase in petroleum product prices will have a massive cascading effect on all prices. The tax burden imposed in this budget is unprecedented and will add fuel to fire on the price front," he said.

He said the allocation for agriculture was too meagre to make any difference on the ground. "The budget puts hardly any burden on the rich and the powerful while it deals a crushing blow to the aam admi," Sinha added.

Industry chambers hail budget, disappointed at MAT hike

New Delhi, Feb 26 (IANS) Industry organisations Friday hailed Finance Minister Pranab Mukherjee for his "fine balancing act" in presenting a development-oriented budget for 2010-11 but expressed disappointment at the hike in the Minimum Alternative Tax (MAT) and excise duties.

The industry has been demanding cut in MAT from the current 15 percent to 10 percent, while the government in the budget 2010-11 has increased it to 18 percent. MAT is a tax that has to be paid by the companies that are enjoying tax benefits or tax exemption under various schemes.

"By and large, the finance minister has provided a stable tax and policy framework for the Indian economy to move forward. However, the industry is disappointed that the finance minister has raised the MAT rate from 15 percent to 18 percent when industry was demanding a cut down to 10 percent," said Harsh Pati Singhania, president of Federation of Indian Chambers of Commerce and Industry (FICCI).

He said the impact of excise duty hike across the board coupled with increase in excise duty on petrol and diesel will add pressure on the price line in current circumstances.

However, he appreciated the need for some fiscal correction. On introduction of Goods and Services Tax (GST) and Direct Tax Code (DTC) from April 1 next year, Singhania said the time given for introducing it was too little.

Director general of Confederation of Indian Industry (CII) Chandrajit Banerjee said the finance minister has done a fine balancing act.

"It is visible in the budget proposals where, on the one hand, he has clearly set the roadmap for fiscal consolidation by setting the targets for fiscal deficit reduction over the next three years, raising resources for capital expenditure by setting disinvestment targets and partially rolling back the excise duty stimulus," he said.

"On the other hand, he has set the stage to address productivity issues in agriculture, putting more disposable income in the hand of aam aadmi, to ensure positive environment for growth," he added.

Another industry organisation, the Associated Chambers of Commerce and Industry of India (Assocham) said the finance minister has "performed the most balancing act under the given circumstances" by partially rolling out the stimulus package.

"The finance minister has performed the most balancing act under the given circumstances by partially rolling out the stimulus package and at the same time paid adequate attention for development of the social sector and more specifically so for the rural sector," said Assocham president Swati Piramal.

She also welcomed announcements for bringing in more and more services under the purview of service tax while not tinkering with its existing ceiling rate of 10 percent.

"The budget proposals will bring in more money in the hands of individuals as several good measures have been introduced in the Finance Bill in the form of tax reliefs to the general public," she said in a statement.

The Assocham also welcomed a deadline set for introduction of Goods and Service Taxes (indirect taxes) and Direct Tax Code.

"These would be major tax reforms which will not only provide tax relief to people and industry but also help the government realize higher tax collections," she added.

Budget 'much below peoples' expectations': PDP

Jammu, Feb 26 (IANS) Jammu and Kashmir's opposition Peoples Democratic Party (PDP) president Mehbooba Mufti Friday described the budget presented by Finance Minister Pranab Mukerjee as "much below expectations of the people".

In her reaction to the budget that has given income tax relief to the salaried class and middle class but raised the fuel prices, Mehbooba Mufti said the people had pinned "great expectations" on the budget and were expecting some relief on the price rise and availability of food grain in the market at cheap rates.

"But this has not happened."

She said that the proposed raise in petrol and diesel prices, would mean more hardships for the people of Jammu and Kashmir who get most of the things from other parts of the country.

"We are at the last corner of the country. The cost of ferrying goods would go up and that would impact the common people," she said, adding she hoped that the finance minister would review these proposals before voting on the budget in parliament.

Previous reports

Budget 2010-11: With growth back, India budgets income tax relief, higher excise