• Highlights (in brief)
• News Coverage
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Key budget highlights are:

• Economic growth estimated at 6.90% in 2004/05.
• Inflation has been reined in
• A 102.16 billion rupee assistance package for victims of the Dec. 26 tsunami
• All engines of economy running at nearly full speed
• Textile to create 1.2 Cr jobs by 2010
• Non-food credit up by 21.2%
• Buoyant investments in 05-06
• Credit to agriculture at Rs 1,08,500 cr
• Rs 18,337 Cr allocation to education
• Customs duty on crude oil cut to 5%
• Total allocation to health & family welfare will be hiked to 10,280 Crs
• 58.2 laks farmers added to the portfolio of PSU banks
• Budget to provide for extra funding of 250 billion rupees in 05/06 for social sectors
• CMP mandated growth rate between 7% & 8%
• A stable tax policy for services sector
• Rs 8000 Crs allocated to build rural infrastructure
• Govt set aside Rs 6253 Crs for backward classes of society
• Customs duty on crude oil cut to 5%
• IT sector expected to offer 70 lack jobs by year 2009
• Additional 1 Cr hectare to be brought under irrigation
• Centre to assist in recruitment of urdu language teachers
• Equity support Rs 14,040 cr to be provided to central public sector enterprises including railways
• All ministers to spend 10% extra on north eastern schemes
• Agriculture policy to focus on crop diversification
• Scheme for tea replanting
• A stable tax policy for services sector
• Funds to agriculture sector to be increased by 30%
• All departments to present gender budgets
• Sanitation Scheme allocation hiked to Rs 18837 Crs
• Capital subsidy of 10% for textile processing sector
• Govt to spend Rs 9308 Crs for schemes in North East in FY 06
• Allocation for Sarvashikha Abhiyan raised to Rs 7156 Crs
• GDP growth seen at 6.9% for 04-05 Vs 8.5% year ago
• Highest govt priority for the sectors generating jobs
• Rs 450 Crs for highway development in North East
• To continue the special economic package for Bihar
• 6 AIIMS like medical institutions to start in different parts of the country
• National rural health mission to be started in FY 06
• 60 lakh additional houses for the poor1st April, 2005
• Food-for-work plan announced in November now in 250 districts
• 66280 villages to be provide telephone connections Assistance in restructuring the sugar factories
• Govt to support IRDA move to promote micro insurance
• Farm credit disbursement likely to be Rs 1.085 trillion in FY05
• FM says to look at more FDI in pensions, mining
• Govt aims to further liberalise trade policy
• Stable environment for biotechnology and pharmaceutical sectors
• New scheme to promote small, medium manufacturing
• RBI to open window for ECBs for micro-finance firms, to promote micro-finance firms in a big way
• To invest Rs 30,000 Cr in textiles in 05-06 Vs Rs 20,000 Cr
• Special plan assistance to J&K. State Plan hiked from Rs 3,008 cr to Rs 4,200 cr
• 2,000 fellowships will be awarded under Rajiv Gandhi National Scholarship scheme for Scheduled Castes and
• Scheduled Tribes for pursuing courses like M. Phil and Ph. D To set up task force for reforming the co-op banks
• To remove CRR for supporting RBI's monetary policy
• SPV tofinanceinfrastructureinroads, airports, ports
• Forex funds to be used for infrastructure development
• Agriculture diversification to cover fruits, vegetables, poultry, diary, pulses and oilseeds
• FM urges ministers to take pragmatic view of FDI
• National urban renewal to cover 7 cities
• Sugar units operational in FY 03 to get aid for recast
• To extend insurance scheme for 20 lakh handloom weavers
• Package for co-op banks to wipe out accumulated losses
• Govt asks PSU banks to increase borrowers by 50 lakh in FY06
• Exports to rise $15000 Cr by FY09
• 2-year moratorium on new financial aid to sugar units
• Govt to allow FDI in mining, Trade & Pension after consultation
• Introduction of gold trade exchange fund by MFs
• Panel to make Mumbai a regional finance hub
• Pilot project to improve water bodies to be taken up at a cost of Rs 100 Cr.
• Permit firms to submit appropriate collateral in derivative market
• Rs 180 cr fund will be set up for flood control and erosion in Eastern parts of UP, Bihar, West Bengal, Orissa and North-East on account of floods in Bramaputra and Ganga Defense spending raised to 830 billion rupees, up by 7.8% over the previous year
• To introduce legislation for pension funds sector
• Allocates 93.2 billion rupees to fund highways including 14 billion for high density highways programme
• Spending on primary education increased to 7156 Crs
• To restructure subsidy scheme cautiously
• VAT to eliminate cascading effect of Sales Tax
• Rs 100 Cr grant to make IISc world class university
• Uniform stamp duty for all issuers of commercial paper
• To set up high level panel on corp bonds, securitised debt
• Excise duty on cars unchanged
• To cut customs duty on leather to 5% from the existing 20%
• Import duty on metals reduced to 10%
• Rs 1.50 laks exemption lever for senior citizens
• Reduce duty on refrigerated vans to 10%
• Peak customs duty on capital goods between 10% - 5%. Customs duty on capital goods for IT manufacturing removed
• STT on delivery trade hiked to 2.02%
• RBI will prepare a roadmap for banking sector reforms and the Government will introduce a comprehensive amendment to the Banking Regulation Act.
• For Domestic companies, corporate income tax will be 30% plus surcharge of 10%, effective tax rate of 33%
• No change in taxes for foreign companies
• Direct taxes to yield an additional Rs 6000 Crs
• Allocation for Indira Awaas Yojana has been increased from Rs 2200 Cr to Rs 2750 Cr to build an additional 15 lakh houses
• IT exemption on housing loans to stay
• National urban renewal mission paln for 7 mega cities, Rs 5500 cr outlay for national urban renewal mission
• Mumbai metro, harbour link under National Urban Renewal plan
• No proposal for any customs duty on LPG, Kerosene
• Customs duty on diesel cut to 10%
• Fiscal deficit at 4.5 percent of GDP in 04/05.
• Sweeping changes in personal income taxes
• To pay 20% income tax if income is between Rs 1.5 -2.5 lakh
• To pay 10% income tax if income is between Rs 1- 1.5 lakh
• To pay 0.1% tax on cash withdrawal of Rs 10000 from banks on a single day
• Rual electrification scheme to cover 12.5 million villages. Rs 1100 Crs for rural electrification scheme FY 06
• To fund investments in infrastructure sector
• 10% capital subsidy for processing sector
• Rs 1200 cr fund for remote telephone services
• Twelfth Finance Commission’s recommendations would cost the exchequer Rs 26,000 Crs in 05-06
• Total 2005/06 spending at 5.14 trillion rupees. Tax receipts for 2005/05 at 2.73 trillion rupees
• Government to borrow a gross amount of 1.25 trillion rupees from the bond market in 2005/06.
• Also to raise 150.19 billion rupees under the market stabilisation scheme No targets set for state asset sales in 05-06
• To levy 10% surcharge on tobacoo products
• Removes excise duty of one rupee per kg on edible oil and 1.25 rupees on Vanaspati oil
• No customs duty on aerated drinks
• Rural RRBs and co-ops to extend agricultural credit by 30%
• RBI to allow NGOs raise funds abroad
• A massive tea plantation and rejuvenation scheme will be taken up by the Govt
• The budget to lay stress on development of six areas - irrigation, roads, water supply, rural electrification, housing and rural connectivity
  

News coverage (Soruce: Reuters)

India's communist-backed coalition government unveiled a budget on Monday aimed at combatting poverty in Asia's fourth-largest economy alongside initiatives to extend the tax net as part of fiscal reforms.

But, in a programme that proposed ploughing funds into India's rural infrastructure, Finance Minister Palaniappan Chidambaram warned that the government would have to slow its efforts to rein in the bloated fiscal deficit.

"India is not a poor country. Yet a significant number of our people are poor," he told parliament.

"The whole purpose of democratic government is to eliminate poverty and to give to every citizen the opportunity to be educated, to learn a skill and to be gainfully employed."

"About 260 million Indians live below the poverty line and around two-thirds of India's population of more than a billion are dependent on agriculture. The Congress-led coalition was voted into power unexpectedly last May after promising to improve their lot.

Chidambaram effectively suspended attempts to drive down the government's fiscal deficit, which he said would hit 4.5 percent of gross domestic product (GDP) in the year to March 2005, a tenth of a point higher than targeted in last July's budget. A fiscal discipline law passed last year stipulates the deficit must fall by 0.3 percentage point of GDP each year but Chidambaram said