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Monday, July 06, 2009
Rakesh Jhunjhunwala - market expectations not met!
The finance minister focused more on the “Aam aadmi” by increasing the personal income tax exemption limit by Rs 15,000 from Rs 2.25 lakh to Rs 2.40 lakh for senior citizens, by Rs 10,000 from Rs 1.80 lakh to Rs 1.90 lakh for women tax payers and by similar amount from Rs 1.50 lakh to Rs 1.60 lakh for all other categories of individual taxpayers. Further, he removed the surcharge of 10% on personal income tax.
However, Mukherjee left corporate tax unchanged. The budget proposed increase in the minimum alternate tax to 15% from 10% of book profit while allowing to carry forward tax credit
on MAT to 10 years from 7 years.
On securities transaction tax, where the market had expected some changes, the finance minister disappointed again by saying only new pension system trust would be exempt from STT.
On the other hand, he scrapped the fringe benefit tax and commodities transaction tax.
Big time investor Rakesh Jhunjunwala said the budget had failed to meet market expectations. “With the new government, there were expectations of some policy pronouncements,” Jhunjhunwala said to ET NOW.
Abolition of FBT was indeed positive news, as Rs 8,000 crore would directly go to India Inc but he felt the disinvestment target of Rs 1,100 crore is very low.
Mukherjee said the government would encourage divestment of PSUs but maintain 51% stake. He said the government would divest stake in RITES, Cochin Shipyard, TCIL, and that it sought to raised Rs 1120 crore from divestment proceeds.
“Reforms have led to the progress of the country, but what steps were taken in this budget? Market not disappointed with the tax proposals at all,” Jhunjunwala said, adding that the budget should have given incentive to infrastructure sector.
“The kind of fillip the market was expecting is missing,” he said.
via Economic Times
India Budget Reactions 2009
Mr. B Prasanna, MD & CEO, ICICI Securities Primary Dealership Ltd
The positives from the budget are its target on spending schemes designed to target inclusive growth and the continued emphasis on targeting growth at 9%. The substantial increase in expenditure over the interim budget spells good news for domestic consumption and growth. However, the bond markets would have to grapple with a higher than expected gross borrowing programme of Rs 4,50,000 Cr. There is an expectation that all the extra borrowing will be front ended and completed in the remaining 3 months of the first half when the liquidity is good. This increased borrowing may exert upward pressure in yields on a week on week basis. The budget also seems to be silent both on capital market reforms and on a road map for bigger divestments.
Mr. Kaushal Sampat, Chief Operating Officer - Dun & Bradstreet - India
The Union Budget 2009 -10 is largely positive, and seems to be an 'aspirational' budget in terms of what it seeks to achieve over a long term horizon. The short term proposals, which are focused on economic revival are welcome. Of course, these measures would have been even more welcome if a specific road map for containing the fiscal deficit had been laid out for the medium term. Having said that, the government does not have too much room to maneuver and perhaps, living with a high fiscal deficit may be inevitable for the time being. As economic revival sets in, and the high fiscal deficit becomes a potential bottleneck, monetary policy may have to be appropriately adjusted to take care of the issues pertaining to fund availability - which in itself may not have too much room. Hence, over the medium term, concerns remain over the fiscal deficit.
Mr. Gaurav Dua - Head Research , Sharekhan ltd.
The Union Budget has fallen short of high market expectations. The street has reacted negatively to issues such as high projected fiscal deficit of 6.8% (and more importantly there is no roadmap of bring it down), no mention of reforms in petroleum and insurance sectors, and absence of focus on aggressively pushing ahead the divestment program. On the positive side, the Finance Minister announced specific measures to enhance investment in infrastructure and boost domestic consumption through lower tax burden (higher standard deduction, withdrawal of surcharge and education cess). Overall, the focus continues to remain on stimulating economic growth in spite of further deterioration on fiscal front.
Mr. Kapil Wadhawan, VC & MD, DHFL (Dewan Housing Finance Corporation Limited)
The budget announced by FM for FY 2009-10 clearly focuses on improving rural housing and developing infrastructure in urban and rural India. The allocation of Rs.2,000 crore for Rural Housing Fund (RHF) through National Housing Bank (NHB) to boost the resource base of NHB for refinance operations in rural housing sector is a significant announcement and will help organizations like DHFL, which primarily focuses on the lower and middle income segment in the semi-urban and rural areas. With an acute shortage of over 25 million units, the PPP for affordable housing is a welcome step. The government should provide incentives and subsidies to developers to encourage them to focus on low cost / affordable housing.
Mr. Jai Mavani - Head, Infrastructure & Government Practice, KPMG In India
Enabling IIFCL to undertake take-out financing transactions, given the asset-liability mismatch of some Indian banks should certainly help infuse additional liquidity. Additional allocations to National Highway Authority of India (NHAI) and Jawaharlal Nehru National Urban Renewal Mission (JNURM) will also help. To surmise, there are definitely seeds sown and one should hope to see the green shoots soon. From the industry's perspective, the budget was certainly found lacking in certain areas.
Mr. Uday Ved- Head of Tax, KPMG in India
The FM stressed on the expectations from the new Government and the aim was to provide stability, continuity and prosperity. The FM has laid a very challenging goal of getting back to a growth rate of 9% and 12 million new jobs a year. The Governments has a clear focus on increasing spending in the infrastructure space. Forming of a SPV ('IIFCL') will indirectly make available funds for infrastructure sector. For inclusive growth of economy government has given emphasis on development of social infrastructure (education and health), rural and agricultural growth.
Mr. Gautam Adani, Chairman, Adani Group
"The gradual ramp up of investment in infrastructure in excess of to 9% of GDP by 2014 indicates clear focus on infrastructure, flexibility to IIFCL and increased expenditure on NHAI are welcome steps. The exports too are getting push; this will help the domestic economy. With abolition of FBT and Surcharge on IT, more money will be available in individual hands in these challenging times; this will catalyze savings, investments and spending; which in turn will help the economy. An appropriate budget."
Mr. Pranav Ansal, Vice Chairman, & Managing Director, Ansal API
The hike in infrastructure spending will be a huge boost for the real estate industry as the two are directly related for the most part. Any increase in the spending on infrastructure results in an increase in value of real estate development. This also bodes well for the future as with increased and improved infrastructure, the potential of India as being a significant destination for investment improves significantly.
Mr. Anil Agrawal, Whole Time Director, Sanwaria Agro Oils Ltd.
The budget lacks long-term policies and objectives. It has got some good announcements like abolishment of FBT, CTT, and surcharge from personal income tax whereas some discouraging announcements like increase in MAT tax and non touching of corporate tax rate and dividend distribution tax. Thus the budget is basically status-quo statement and there is nothing in budget for edible oil industries and edible oil seeds in particular. Reintroduction of import duty on edible oils was badly needed which is not taken care. In overall the budget lacking directions and it is revenue neutral to greater extent.
Mr. Bikram Dasgupta, Chairman and CEO, Globsyn Group
The budget has been balanced and has opened doors for education and made sufficient efforts for bringing in much needed reforms in the society. Increasing over all budget allocation for higher education is indeed a welcome move and clubbed with tax benefit under Section 80E for education loan will also further give a boost to the sector and bring education closer to many deserving youngsters. Move to set up central university in each state and redefining the investment for higher education by setting up of more IITs and IIMs are indeed steps in the right direction. In case of the Information Technology sector, extension to the STPI scheme is welcome as also defining the software product as a service. However much is left for the SME sector of Software Industry to give it a further fillip in order to march the growing requirements of the economy.
Mr. Sanjay Pai, Chief Financial Officer, Plethico Pharmaceuticals Ltd.
Overall: very pragmatic budget, considering the fact that, Indian consumers have been (in various patches) been deprived of spending money either in terms of layoffs, salary cuts, high tax for individuals etc. The other highlights which were interesting:
Abolishing of FBT. It was a tax which was yielding peanuts to the department, but was costing the employees (FBT on ESOP's) and was a arduous task for accountants. Besides, it is painstaking even for the department to go after small ticket items. Hence it was a win win. Surcharge of 10% and the cess etc. on the surcharge. This will leave some money in the Individuals pockets.
Marginal increase in Tax exemption for Senior citizen, women and others. 150% tax deduction for R&D - good for various Companies - especially Pharma. Co's. 10A/10B extended for one more year. MAT increased from 10% to 15% was I think a counter balancing measure, but it should be fine.
Mr. Saurav Arora, Sr. Vice president - Jaypee Capital
It was widely expected that the government would take a positive stance towards CTT. It has finally been abolished, which in turn would lead to growth of Indian Commodity Exchanges and development of the market. New and existing exchanges would benefit from the same. We would expect more market participants to enter the market and foresee this as a very good step for the commodity futures market, making it efficient for the natural hedgers to hedge cost effectively.
Mr. Sanjay Kaul, MD & CEO, National Collateral Management Services Limited.
"The budget proposal to offer 25 kg rice / wheat @Rs 3 /kg, per BPL family per month is commendable. Also, the interest subsidy scheme for farmers is a justifiable reward for continuing in a business, the fortunes of which are dependent on the vagaries of nature. The other sector which has deservedly received the Finance Minister's attention is the Infrastructure sector. The promotion of infrastructure finance by banks and institutions to the tune of Rs 1,00,000 crore through take-out financing support by IIFCL is also a step in the right direction, given the massive requirement for infrastructure in the country. In this context, the investment linked incentives for setting up and operating cold chain warehousing is welcome; however, had the same incentive also been extended to regular warehousing, it would have been a huge plus for the storage industry with beneficial effects on the economy of the country, given the potential to reduce loss due to deterioration of food grains owing to poor storage practices. On the taxation proposals, the abolition of CTT is welcome considering that the commodities markets are still in the nascent stages of development and CTT was detrimental to the growth and development of the markets".
Mr. Dinesh Thakkar, CMD - Angel Broking
EFFECT ON EQUITY MARKET: "The Budget proved to be a 'low-on-deliverance' affair and this was magnified on account of the huge expectations that the market had built from it. Amongst the many shortfalls in the Budget, it was silent on the timeline for tackling the Fiscal Deficit position of the country, and the Reforms process announcements expected from it which would have aided in handling the fiscal situation of the government. As far as the various tax reforms were concerned, no significant changes in the same goes well in line with our expectation as the government would need to focus on spending. We believe a silver lining in the Budget was the increase in outlay for Planned Expenditure, which is necessary to push India into a higher growth trajectory. Overall, while the Budget did not stand true to all of market expectations, we expect that the government's efforts will continue outside the Budget also and will help improve Corporate India's earnings going forward. Thus, we expect the stock market to reflect this improvement in earnings and would advise investors to stay long on the India story."
EFFECT ON COMMODITY MARKETS: Commodities Transaction Tax (CTT) to be Abolished. "A very positive sign for Indian commodities market. Being in the nascent stage of development, abolition of CTT will reduce transaction costs in commodities trading, thereby the burden will come down and participation in these markets shall increase.CTT was to be introduced in the last budget and was causing concern in the growth of the Indian commodities market. This news of abolition of CTT has brought in great relief".
Mr. R Chandrasekaran, President and Managing Director, Global Delivery, Cognizant
The extension of the sunset clause on STPI by a year is welcome. While this will benefit the entire industry, it will specifically benefit the small and medium sized companies in the industry that needed this critical impetus for growth. This is also important in this turbulent global economic environment, in the context of emerging locations such as China, Philippines or Vietnam continuing to offer attractive tax incentives. A substantially higher outlay for institutions of higher learning such as IITs and NITs should increase the R&D throughput and innovation quotient in a material way. At a time when industries are undergoing structural changes globally, it is innovation that can catalyze the next phase of growth. The support provided by way of subsidy for poor students pursuing higher education should provide the required impetus for enhancing the overall employable talent pool. The modernization of employment exchange under the PPP (private-public partnership) mode will help align skills with available employment opportunities at the national level and on a real time basis. The abolition of fringe benefit tax is also welcome since the administrative hassle involved in FBT compliance was very high. The clarity on transfer pricing assessments and the setting up of an independent dispute settlement mechanism is something that the industry sought. That the Finance Minister has announced an industry-specific safe-harbour provision will be notified, will help in resolving assessment issues relating to transfer pricing."
Mr. Ashank Desai's (Founder - Mastek)
I feel that the budget announced today is directionally positive for the IT sector in building long term growth and overall potential at a global level. We had issues at various levels of taxation but most of them have been addressed. The government is also looking to invest in the infrastructure and education sectors, thus removing the constraints for their growth in the medium and long term. The government is investing in e-governance projects to make government services effective, thus giving boost to the Indian IT market which is a very good strategy. We are confident that the government is looking positively towards the IT industry for making global impact as well as building knowledge economy in the country. The budget points towards the government's intention in that direction.
Mr. Partha Iyengar - VP distinguished analyst and regional research director, Gartner, India.
The budget overall was a disappointment in the context of the huge expectations everyone had in terms of the bold brave strokes that Mr. Mukherjee was expected to (or everyone was hoping he would) paint for the direction of the Indian economy. Instead it has turned out to be a sober, minimalist, practical budget with some tweaks and correction of anomalies (e.g. dropping the FBT tax) rather than any major path-breaking steps. From an IT perspective, the two main areas of expectations related to an aggressive stance on education and infrastructure reform. While there were some steps on the infrastructure side, very little to no attention was made on the critical education front, specifically revamping of primary education. Some allocation and 'tinkering' with the IITs is not what India needs now, but unfortunately that is all we have gotten in this budget. The 1 year extension of the tax holiday was a good move in that it provides some short-term relief, but also clearly puts the writing on the wall that this is not a scheme that is going to be continued beyond this 1 year extension, thus allowing IT companies to plan accordingly for the medium to long term. Some of the bold measures expected were also as it relates to aggressive disinvestment, FDI reform, specific pronouncements on increase in focus on governance and transparency of money being spent. None of these had any mention, other than an oblique reference to PSU disinvestment. Overall, a fairly ho-hum budget. Maybe there is more to be read in Mr. Mukherjee's preamble that talked of the budget not being the 'be all and end all' of policy statements, and this might have been the first concrete step in that direction.
Mr. Narayan S.A., Managing Director, Kotak Securities.
The Finance Minister has rightly focused on sustaining the GDP growth in the current year and has even set a target of returning to the 9% growth rate at the earliest, which is encouraging. To achieve this target, he has committed significant investments in the physical and social infrastructure. These investments will allow the economy to restrict any further impact of an uncertain global economy. The FM has also put more money in the hands of the consumers by withdrawing the sur-charge on personal income tax. These committed investments have led to an increase in the target of fiscal deficit. However, we expect the same to be addressed in the next fiscal. Moreover, the fiscal deficit figure can surprise positively, if the disinvestment process picks up steam in the current fiscal or if the economic growth leads to a growth in taxes as compared to the budgeted flat receipts. As far as the markets are concerned, the recent out-performance over other emerging markets and the over-bought status of the markets has led to the correction. The increase in the rate of MAT may also have an impact on profits of select companies. We see this fall in markets as a short term phenomenon and focus will now shift to more fundamental factors like earnings growth and the near term phenomenon of monsoon. Abolishment of FBT will be profit accretive for corporates. In the case of employees ESOPs it is neutral as the benefit of abolishing FBT is introduced by taxing the gain as perquisite.
Mr. Vipul Jain - CEO & Managing Director, Kale Consultants Ltd.
The finance minister has given a balanced approach to the budget. Initiatives towards abolishing FBT and increase in tax exemption for salaried employees is commendable. The 1 year extension of the STPI scheme is appreciated, but a longer extension would have definitely helped the industry. Increase in MAT is also not a favourable move. The honorable minister had a good chance to boost the corporate sector in face of the economic conditions, but the focus seems to be on driving demand by giving incentives to the rural sector.
Mr. H. Tripathi, CEO & MD of Infrasoft Technologies Ltd.
As I had commented pre-budget, we were not expecting much change; neither sops nor pains from the Union Budget released today. However, on a very positive note, removal of FBT is very encouraging as it will reduce accounting hassles and unforeseeable losses. Removal of FBT also covers ESOPs. FBT had made ESOPs unattractive to companies. With removal of FBT, ESOP scheme will become simple to operate. In present circumstances where 'the fair market price' for stocks would be lower for most organizations, you may suddenly see an increase in ESOP issues; which is good for enhancing people participation in businesses. Removal of surcharge on personal income is also a very positive development as it will leave a little more money in the hands of employees. Considering most companies are increment shy presently, it will help individuals to have more cash at hand. Extension of STPI scheme for tax exemption by one more year is welcome but does not provide any long term vision. Mid-sized companies will once again be unable to plan their investments in new premises & people into SEZs. Realistically, the problem only gets postponed by another 9 months considering one quarter of the current financial year is over. The new budget has to be seen in the light of the fact that the new government is only 45 days old and they have not put negative measures in large doses in the budget. The government's positive intent is clearly seen.
Mr. S Gopalakrishnan, CEO and Managing Director of Infosys Technologies Ltd.
"The Finance Minister has talked about the creation of twelve million jobs, reaching a growth rate of 9% and investment in infrastructure at the rate 9% of GDP. From a taxation perspective, increasing the income tax slabs, removal of the surcharge on personal income taxes and FBT stands out. For the IT industry, extension of 10A/10B exemptions by 1 more year is a move that is more emotional than of actual benefit since most STPs would have come out of the tax holidays. The government's focus on IT investment for enhanced governance is encouraging. The move to increase investment in higher education, especially in the IITs and NITs, will greatly benefit the industry in the medium and long term. On the whole, directionally it is a good budget given the current economic situation. However, I would have liked to see a clear road map on how the FM would bring down the deficit from 6.8% to perhaps 3%. The second thing I would have liked to hear about is how he intends to enhance foreign direct investment. "
Mr. Girish Trivedi, Deputy Director,ICT Practice, Frost & Sullivan, South Asia & Middle East Impact
Positive - launch of unique ID, higher financial inclusion will mean better opportunities for IT (upgrading the rural exchange, allocation and dependence on IT for successfully implementing NREG, infrastructure development etc). Reduction on duty cuts on LCD is positive step. More IITs and NITs will lead to enhancing better skill sets which is very positive. MAT implementation might create some burden, need to read fine print. We still need to assess if increase in consultancy service tax rate includes IT consulting services as well, if yes might be an additional burden on most of the large IT companies who have started taking lot of consulting work along with their IT projects. No announcements of 3G and revenues that can be generated as a result of auctions etc. it also means that the overall 3G launch might take a bit more than expected. Extension of tax holiday for STP scheme which was expected is positive, however a longer term view should have given a better impetus to the industry which is suffering due to low opportunities in traditional US/ European market. Duty on set -top box might be good for local manufacturing companies, but since most of these boxes are imported, the costs will get passed on to the users. There was an announcement on tax reforms, and making income tax filing easier over 3/4 years online, this will be positive for IT sector.
Mr. Manoj Agarwal, Managing Director, Adhunik Metaliks Ltd said
"It's a growth budget with emphasis on generating consumption and investment by increasing money in the hands of individuals. The Finance minister has made a bold statement of getting the GDP growth rate back to 9 %, which in itself will provide impetus by way of large spending in infrastructure projects".
Mr. Jai Hiremath, President of Indian Chemical Council
"The budget was a little disappointment as it did nothing for the chemicals industry. However, there weren't any negative surprises either. Removal of FBT and extension of EOU benefits were some minor positives, while increase in MAT rate was the key negative. Overall, the budget was a non-event as far as the chemicals industry is considered."
Mr. P.K. Ghose, Executive Director and CFO, Tata Chemicals
"The India budget 2009 can be termed "a fiscal stimulus budget" as there has been a major hike in total expenditure by 36%. After many years, capital expenditure is expected to grow by 33%. The focus on infrastructure is expected to boost demand for cement and steel. The elimination of surcharge on income tax, abolition of Fringe Benefit Tax and extension of the sunset clauses u/s 10 and 10A are big positives. On the Fertiliser subsidy front, the move towards a nutrient based subsidy regime is a welcome move, as it will free the MRP and fix the subsidy. I feel that since this budget was prepared in the backdrop of the international financial meltdown it has tempered huge expectations."
Mr. Saurabh Nanavati, Chief Executive Officer, Religare Mutual Fund
"The market had huge expectations from the budget. Therefore post the 17% rise in one day post the election results, the markets are now correcting in line with the operating fundamentals. Think through this - a) In tough times, people need cash money in their hands to decide on the area they want to spend on - the FM has reduced tax surcharge and given money in their hands. b) The core sectors from a long term India story perspective are the rural / agri sectors and the infrastructure areas. The budget has again been very generous in these areas. What the FM has lacked is better Selling / Marketing skills in presenting the budget which is unfortunately what the market is focused on. This is a good, stable budget - nothing reformist - but in the right direction of reducing complexities and taking incremental steps towards taking the country's GDP back to 8%+ levels. Let's empathize with the FM's tough position of balancing growth and fiscal discipline. Its time for the industry to get back to work, improve productivity and implementing at the ground level. That will result in sustainable growth, not a budget speech."
Dr. Naushad FORBES, Chairman, CII Western Region
"We welcome the reaffirmation of the Government's intention to implement GST by April 2010. We further welcome the abolition of Fringe Benefit tax and Commodities Transaction Tax. However there is a big lacuna in the impetus provided by the Government in boosting industrial investment. There is a missed opportunity of setting out the new government's overall 5 -year reform agenda in areas like education, power sector reforms, etc."
Dr. Rahul Mirchandani, Executive Director, Aries Agro Ltd on the Budget said:
"The budget has made great moves on infrastructure development, including cold storages and warehousing, and irrigation development which will both be positive for agriculture. There is also a good focus on knowledge creation with R&D expenses being incentivized for industry, however there is no focus at all on incentivizing knowledge spread using tax breaks on extension services by private companies. A lot more could have been done on funding agricultural universities and research institutions and also the primary and secondary basic education. Education seems to have taken a back seat in these budget proposals, though infrastructure has been made a primary focus. The nutrient based subsidy regime is great for the sector, however a proper delivery mechanism to ensure that the farmers are made subsidy payments in time and efficiently would be critical to ensure success in the long term."
Mr. Anand Ladsariya, Chairman, CHEMEXCIL (Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council)
BUDGET ON EXPORT SECTOR - "For export sector, budget is reasonably satisfactory. Interest rate subvention has been extended upto 31 March 2010. Allocation for Market Development Assistance has been increased substantially by 148%. Export Promotion Councils as well as FIEO have been exempted from Service Tax. Exporters have been exempted from Service Tax for foreign agent's commission, freight as earlier getting refund of these service taxes was very difficult. Further, exemption under Section 10A / 10B has been extended by one year. A fund for exporters liquidity and credit has been created which will be very useful. We were expecting revival of Section 80 HHC as well as resolving the income tax problem with regard to taxation of DEPB. Unfortunately this has not been resolved."
Mr. Dilip Bhatia, Director, Kotak Commodity Services ltd.
Primary Focus ·Agricultural, infrastructure and social engineering have been major highlights of this budget. ·The Budget fails to pay attention to commodity markets in general with an exception of CTT. ·The budget did not give any clarity on FRCA and making warehouse receipts negotiable. ·The government is geared to make GST applicable from April 2010. Increased Focus on Agriculture, Irrigation, Fertilizer and Warehousing ·The target agricultural credit flow increased Rs.325000 crore from Rs.287000 crore. ·Interest subvention to farmers for short term crop loans to be continued at the rate of 7%. Additional interest subvention of 1% announced for those farmers who repay loans on time. ·The Acceleration Irrigation Benefit Programme to get additional 1000 over interim budget allocation. ·To ensure balanced application of fertilizers, the Government intends to move towards a nutrient based subsidy regime instead of the current product pricing regime. ·Investment linked tax incentives to cover businesses of setting up and operating 'cold chain', warehousing facilities for storing agricultural produce. Impact: Positive. It would facilitate the growth of the agriculture sector, the back bone of the Indian economy. The growth of agriculture would help in enhancing production of grains, cereals and oilseeds and thereby help in consolidating commodity business in the long term.
Mr. Surjeet Singh, Chief Financial Officer, Patni
"Overall, the Budget is a growth budget and stimulates consumption of investment. The target of 9% GDP growth is indeed an encouraging sign and the Finance Ministry has made some bold attempts at tax reforms. For the IT Services sector in particular, the removal of FBT and the reforms in indirect taxes is seen as a major plus, allowing for stock based compensation to be more effective. In a knowledge sector such as ours, this calls for better attraction and retention of talent across all levels, and inspires innovation and entrepreneurship. The extension of 10A and STPI is seen as another positive move by the Ministry, and although the expectations that the industry had, were for an extension beyond 1 year, in light of the overall incentives laid down, I find the budget to be promising. That said, the 5% increase in MAT to 15% is a slight disappointment and will lead to higher cash output in the short term. We are also awaiting greater clarity on the service tax on IT services exports, and expect further policy announcements in public sector disinvestment and infrastructure reforms in the days to come."
Taxes on Commodity - ·Commodities Transaction Tax (CTT) abolished from current year. Impact: Neutral. Although the tax was imposed, it was not notified. But the removal of tax could improve sentiments. Other Highlights ·Gold: Customs on gold bars increased to Rs.200 per 10gm from Rs.100 per 10 gm. ·Silver: Customs on silver bars increased to Rs.1000 per 1 kg from Rs.500 per 1 kg. ·Branded Jewellery has been fully exempted from the custom duty. ·Petro-diesel blended with bio-diesel will be exempt from duty.
Impact: Neutral. There shall be an appreciation in prices of gold and silver to the extent of the gain in customs. Otherwise there shall not be any change in demand for the metal. The removal of duties on petro-diesel blend has more to do with India's commitment towards arresting climate change. We do not feel it will have a direct impact on commodities.
Conclusion: The budget in general is disappointing for the commodity markets. We do not feel the budget would impact commodities in general. Hence we term it as neutral.
via another Group
Budget Speech - 2009-2010
Madam Speaker,
I rise to present the Budget for 2009-10.
2. Just 140 days back, I had the privilege to present the Interim Budget for 2009-10. It is a rare honour that I have been called upon to present the regular budget after the new Government assumed office.
3. The Congress-led UPA Government has come back to power with a renewed mandate. As Prime Minister, Dr. Manmohan Singh, said recently “It is a mandate for continuity, stability and prosperity. It is a mandate for inclusive growth and equitable development.” It is a mandate that we accept with humility and a firm resolve to do all that we can for the welfare of this nation.
4. I am deeply conscious of the faith reposed by the people in our government and the responsibilities that come with it. I am sensitive to the great challenge of rising expectations of a young
5. In the Interim Budget for 2009-10, I had stated that the new Government would need to anchor its policies for 2009-10, in a medium term perspective that would have to:
(a) sustain a growth rate of at least 9 per cent per annum over an extended period of time;
(b) strengthen the mechanisms for inclusive growth for creating about 12 million new work opportunities per year;
(c) reduce the proportion of people living below poverty line to less than half from current levels by 2014;
(d) ensure that Indian agriculture continues to grow at an annual rate of 4 per cent;
(e) increase the investment in infrastructure to more than 9 per cent of
(f) support Indian industry to meet the challenge of global competition and sustain the growth momentum in exports;
(g) strengthen and improve the economic regulatory framework in the country;
(h) expand the range and reach of social safety nets by providing direct assistance to vulnerable sections;
(i) strengthen the delivery mechanism for primary health care facilities with a view to improve the preventive and curative health care in the country;
(j) create a competitive, progressive and well regulated education system of global standards that meets the aspiration of all segments of the society; and
(k) move towards providing energy security by pursuing an Integrated Energy Policy.
6. The Government recognizes the challenges that this task entails, particularly at a time when the world is still struggling with an unprecedented financial crisis and an economic slowdown that has also affected
7. The first challenge is to lead the economy back to the high
8. The second challenge is to deepen and broaden the agenda for inclusive development; and to ensure that no individual, community or region is denied the opportunity to participate in and benefit from the development process.
9. The third challenge is to re-energize government and improve delivery mechanisms. Our institutions must provide high quality public services, security and the rule of law to all citizens with transparency and accountability.
Overview of the Economy
10. Madam Speaker, at the time of the presentation of the Interim Budget, I had given a detailed analysis of the economic situation. Without repeating myself, I would like to highlight that the development course charted by the UPA Government in the last five years has been possible due to a step up in the growth rate of the economy and improved revenue buoyancy. The principal growth driver in this period has been private investment, which has been predominantly funded by domestic resources. During the year 2008-09, there has been a dip in the growth rate of GDP from an average of over 9 per cent in the previous three fiscal years to 6.7 per cent. It has affected the pace of job creation in certain sectors of the economy and the investment sentiments of the business community. It has also resulted in considerably lower revenue growth for the government. Another feature of the year 2008-09 was a sharp rise in the wholesale price index to nearly 13% in August 2008 and an equally sharp fall close to 0% in March 2009. While a detailed analysis of the developments has been presented in the Economic Survey-2008-09, tabled in both houses of Parliament last Thursday, I draw your attention to a few aspects.
11. The structure of
12. This growing integration of the Indian economy with the rest of the world has brought new opportunities and also new challenges. It has made the task of sustaining high growth more complex. Over the past month, we have critically evaluated Government’s efforts at both short term economic recovery as well as medium term economic growth. The economic recovery and growth is a cooperative effort of the Central and State Governments. That is why, for the first time, I held a meeting with Finance Ministers of States as part of the preparations for this Budget. I intend to make this an annual feature.
TOWARDS ECONOMIC REVIVAL
Short-term measures
13. To counter the negative fallout of the global slowdown on the Indian economy, the Government responded by providing three focused fiscal stimulus packages in the form of tax relief to boost demand and increased expenditure on public projects to create employment and public assets. The RBI took a number of monetary easing and liquidity enhancing measures to facilitate flow of funds from the financial system to meet the needs of productive sectors.
14. This fiscal accommodation led to an increase in fiscal deficit from 2.7 per cent in 2007-08 to 6.2 per cent of
15. These measures were effective in arresting the fall in growth rate of
16. Madam Speaker, what I unfold now are only the ‘First steps’. It will be my endeavour to make the process of budget formulation more participatory and a continuous exercise.
Infrastructure Development
17. To stimulate public investment in infrastructure, we had set up the India Infrastructure Finance Company Limited (IIFCL) as a special purpose vehicle for providing long term financial assistance to infrastructure projects. We will ensure that IIFCL is given greater flexibility to aggressively fulfil its mandate.
18. ‘Takeout financing’ is an accepted international practice of releasing long term funds for financing infrastructure projects. It can be used to effectively address the asset liability mismatch of commercial banks arising out of financing infrastructure projects and also to free up capital for financing new projects. IIFCL would, in consultation with banks, evolve a ‘takeout financing’ scheme which could facilitate incremental lending to the infrastructure sector.
19. Government has had some success in attracting private investment in a wide range of infrastructure sectors such as telecommunications, power generation, airports, ports, roads and even in railways through public private partnerships (
20. The investment in infrastructure for the growth of economy is critical. I have urged my colleagues in the Central and State Governments to remove policy, regulatory and institutional bottlenecks for speedy implementation of infrastructure projects. I, on my part, will ensure that sufficient funds are made available for this sector.
Highway and Railways
21. The allocation during the current year to National Highways Authority of India (NHAI) for the National Highways Development Programme (NHDP) is being stepped up by 23 per cent over the 2008-09 (BE). I have also increased the allocation for the Railways from Rs.10,800 crore made in the Interim Budget for 2009-10 to Rs.15,800 crore.
Urban Infrastructure
22. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) has been an important instrument for refocusing the attention of the State governments on the importance of urban infrastructure. In recognition of the role of JNNURM, the allocation for this scheme is being stepped up by 87 per cent to Rs.12,887 crore in the current budget. To improve the lot of the urban poor, I propose to enhance the allocation for housing and provision of basic amenities to urban poor to Rs.3,973 crore in the current year’s budget. This includes the provision for Rajiv Awas Yojana (RAY), a new scheme announced in the address of the President of India. This scheme, the parameters of which are being worked out, is intended to make the country slum free in the five year period.
Brihan Mumbai Storm Water Drainage Project (BRIMSTOWA)
23. To address the problem of flooding in Mumbai, Brihan Mumbai Storm Water Drainage Project (BRIMSTOWA) was initiated in 2007. The entire estimated cost of the project at Rs.1,200 crore is being funded through Central assistance. A sum of Rs.500 crore has been released for this project upto
2008-09. I have enhanced the provision for this project from Rs.200 crore in Interim BE to Rs.500 crore to expedite the completion of the project.
Power
24. The Accelerated Power Development and Reform Programme (APDRP) is an important scheme for reducing the gap between power demand and supply. I propose to increase the allocation for this scheme to Rs.2,080 crore, a steep increase of 160 per cent above the allocation in the BE of 2008-09.
Gas
25. With the recent find of natural gas in the KG Basin on the Eastern offshore of the country, the indigenous production of Natural Gas is set to double with natural gas emerging as an important source of energy. LNG infrastructure in the country is also being expanded. Government proposes to develop a blueprint for long distance gas highways leading to a National Gas Grid. This would facilitate transportation of gas across the length and breadth of the country.
26. The Assam Gas Cracker Project sanctioned in April 2006 is being executed at a cost of Rs.5,461 crore. The capital subsidy of Rs.2,138 crore for the project is to be provided by the Central Government. The outlay for this project is being stepped up suitably.
Agricultural Development
I now turn to Agricultural development.
27. Agriculture has been the mainstay of our economy with 60 per cent of our population deriving their sustenance from it. In the recent past, the sector has recorded a growth of about 4 per cent per annum with substantial increase in plan allocations and capital formation in the sector. Agriculture credit flow was Rs.2,87,000 crore in 2008-09. The target for agriculture credit flow for the year 2009-10 is being set at Rs.3,25,000 crore. To achieve this, I propose to continue the interest subvention scheme for short term crop loans to farmers for loans upto Rs.3 lakh per farmer at the interest rate of 7 per cent per annum. I am also happy to announce that, for this year, the Government shall pay an additional subvention of 1 per cent as an incentive to those farmers who repay their short term crop loans on schedule. Thus, the interest rate for these farmers will come down to 6 per cent per annum. For this, I am making an additional Budget provision of Rs.411 crore over Interim BE.
Debt Relief for farmers
28. The one-time bank loan waiver of nearly Rs.71,000 crore to cover an estimated 40 million farmers was one of the major highlights of the last Budget. Under the Agricultural Debt Waiver and Debt Relief Scheme (2008), farmers having more than two hectares of land were given time upto
29. It is learnt that in some regions of
Accelerated Irrigation Benefit Programme
30. I propose to provide an additional Rs.1,000 crore over Interim BE for the Accelerated Irrigation Benefit Programme (AIBP), marking an increase of 75 per cent over the allocation in 2008-09(BE). The allocation for the Rashtriya Krishi Vikas Yojna (RKVY) is also being stepped up by 30 per cent over Budget Estimates of 2008-09.
Restoring Export Growth
31. Our exporters by virtue of their close links to the external sector have borne the brunt of the global economic crisis. It is, therefore, appropriate that we continue to provide all possible assistance to our exporters to help them overcome the short term disadvantages. More specifically:
(a) An adjustment assistance scheme to provide enhanced Export Credit and Guarantee Corporation (ECGC) cover at 95 per cent to badly hit sectors had been initiated in December 2008 to mitigate the difficulties faced by the exporters. In view of the continuing contraction in exports, I propose to extend the benefits of this scheme up to March 2010.
(b) The Market Development Assistance Scheme provides support to exporters in developing new markets. With many traditional markets still under financial stress, greater effort is required to identify and develop new markets. I propose to enhance the allocation for this scheme by 148% over BE 2008-09 to Rs.124 crore.
(c) With a view to insulating the employment - oriented export sectors from the global meltdown, Government had provided an interest subvention of 2 per cent on pre-shipment credit for seven such sectors. These sectors are textiles including handlooms, handicrafts, carpets, leather, gems and jewellery, marine products and small and medium exporters. I propose to extend the interest subvention beyond the current deadline of
(d) Micro, Small and Medium Enterprises (MSMEs) have been affected by the slowdown in exports and the indirect effect of the global crisis on domestic demand. To support this sector, I propose to facilitate the flow of credit at reasonable rates, by providing a special fund out of Rural Infrastructure Development Fund (RIDF) to Small Industries Development Bank (SIDBI). This fund of Rs.4,000 crore will incentivise Banks and State Finance Corporations (SFCs) to lend to Micro and Small Enterprises (MSEs) by refinancing 50 per cent of incremental lending to MSEs during the current financial year.
(e) In February, 2009 the Print Media was given a stimulus package comprising waiver of 15% agency commission on DAVP advertisements and a 10% increase in the DAVP rates to be paid as a ‘special relief’ subject to documentary proof of loss of revenue in non-governmental advertisements. Since Print Media is still passing through difficult times, I have decided to extend the stimulus package for another six months from
Medium-term sustainability
32. The short term fiscal stimulus has to be balanced against long term prudence and fiscal sustainability objectives. To quote Kautilya, “In the interest of the prosperity of the country, a King shall be diligent in foreseeing the possibility of calamities, try to avert them before they arise, overcome those which happen, remove all obstructions to economic activity and prevent loss of revenue to the state”. I intend to take Kautilya’s advice and return to the FRBM target for fiscal deficit at the earliest and as soon as the negative effects of the global crisis on the Indian economy have been overcome. On the medium term fiscal perspective, I await the recommendations of the 13th Finance Commission.
33. To bring the fiscal deficit under control, we have to initiate institutional reform measures during the current year itself. This is essential for maintaining a stable balance of payments, moderate interest rates and steady flow of external capital for corporate investment. These measures have to encompass all aspects of the budget such as subsidies, taxes, expenditure and disinvestment.
Fertilizer subsidy
34. In the context of the nation’s food security, the declining response of agricultural productivity to increased fertilizer usage in the country is a matter of concern. To ensure balanced application of fertilizers, the Government intends to move towards a nutrient based subsidy regime instead of the current product pricing regime. It will lead to availability of innovative fertilizer products in the market at reasonable prices. This unshackling of the fertilizer manufacturing sector is expected to attract fresh investments in this sector. In due course it is also intended to move to a system of direct transfer of subsidy to the farmers.
Petroleum and Diesel pricing policy
35. Madam Speaker, Honourable Members are aware that global prices of oil and petroleum products had shot up to unprecedented levels in 2008-09. Most oil importing countries, including our neighbours, adjusted their domestic prices to reflect these global changes. Though prices have declined since then, they are already about double of the lows reached in the wake of the global financial crisis. It is important to recognise that, with almost three-quarters of our oil consumption met through imports, domestic prices of petrol and diesel have to be broadly in sync with global prices of these items. Government will set up an expert group to advise on a viable and sustainable system of pricing petroleum products. Details will be announced by my colleague, the Minister of Petroleum and Natural Gas.
Taxation
36. It is time that we complete the process that was started in 1991 for building a trust based, simple, neutral, tax system with almost no exemptions and low rates designed to promote voluntary compliance. The Income Tax Return Forms should be simple and user-friendly. I have asked the Department to work on SARAL-II forms for early introduction. We need a tax system which generates revenues on a sustained basis without use of coercive tax collection methods at the end of each year to meet targets. It is my intention to make a modest start in this direction in the current year and ensure that the process is completed in the next four years. At the end of this process, I hope the Finance Minister can credibly say that our tax collectors are like honey bees collecting nectar from the flowers without disturbing them, but spreading their pollen so that all flowers can thrive and bear fruit.
People’s ownership of PSUs
37. The Public Sector Undertakings are the wealth of the nation, and part of this wealth should rest in the hands of the people. While retaining at least 51 per cent Government equity in our enterprises, I propose to encourage people’s participation in our disinvestment programme. Here, I must state clearly that public sector enterprises such as banks and insurance companies will remain in the public sector and will be given all support, including capital infusion, to grow and remain competitive.
Financial sector
38. The financial sector is the life blood of any economy. Our Government’s approach to the banking and financial sector has been to ensure robust oversight and regulation while expanding financial access and deepening markets. The merit of this balanced approach has been borne out in the recent experience, as the turbulence in the world financial markets has left the Indian banking and financial sector relatively unaffected. Never before has Indira Gandhi’s bold decision to nationalise our banking system exactly 40 years ago - on 14th of July, 1969 - appeared as wise and visionary as it has over the past few months. Her approach continues to be our inspiration even as we introduce competition and new technology in this sector.
39. The average public float in Indian listed companies is less than 15 per cent. Deep non-manipulable markets require larger and diversified public shareholdings. This requirement should be uniformly applied to the private sector as well as listed public sector companies. I propose to raise, in a phased manner, the threshold for non-promoter public shareholding for all listed companies.
40. For a country like ours, with significant sections of unbanked population and regions, financial inclusion is vital for sustaining long term equitable development. As part of the financial inclusion drive, scheduled commercial banks have been opening ‘no frills’ accounts either with ‘nil’ or very low minimum balances. So far, these banks have opened 3.3 crore such accounts. The RBI has announced a further relaxation in its Branch Authorisation Policy. Scheduled Commercial Banks are now allowed to set up off-site ATMs without prior approval, subject to reporting.
41. Despite the expansion of banking network in the country, there are still some areas that remain under-banked or unbanked. A sub-committee of State Level Bankers Committee (
42. The Government has established Competition Commission of India, an autonomous regulatory body to promote and sustain competition in markets, protect interests of consumers and to prevent practices having adverse effect on competition. An Appellate body headed by a retired judge of the Supreme Court has also been constituted.
43. The benefits of competition should now come to more sectors and their users and consumers. Now is the time for us to work on these aspects to eliminate supply bottlenecks, enhance productivity, reduce costs and improve quality of goods and services supplied to consumers.
Investment environment
44. Private sector investment has been affected by the global macro economic conditions. Our Government is committed to creating a facilitating environment in which a competitive private sector can thrive and play its rightful role in nation’s economic development.
TOWARDS INCLUSIVE DEVELOPMENT
45. Madam Speaker, the UPA government has gone for a paradigm shift for making the development process more inclusive. It involves creating entitlements backed by legal guarantee to provide basic amenities and opportunities for livelihood to vulnerable sections. ‘Aam Admi’ is now the focus of all our programmes and schemes.
National Rural Employment Guarantee Scheme (NREGS)
46. (i) It is widely acknowledged that the National Rural Employment Guarantee Act, (NREGA) first implemented in February 2006, has been a magnificent success. During 2008-09, NREGA provided employment opportunities for more than 4.47 crore households as against 3.39 crore households covered in 2007-08. We are committed to providing a real wage of Rs.100 a day as an entitlement under the NREGA. To increase the productivity of assets and resources under NREGA, convergence with other schemes relating to agriculture, forests, water resources, land resources and rural roads is being initiated. In the first stage, a total of 115 pilot districts have been selected for such convergence. Details of these measures and convergence guidelines will be announced by my colleague, the Minister of Rural Development. I propose an allocation of Rs.39,100 crore for the year 2009-10 for NREGA which marks an increase of 144% over 2008-09 Budget Estimates.
National Food Security Act (NFSA)
(ii) I am happy to announce that the work on National Food Security Act has begun in right earnest. This will ensure that every family living below the poverty line in rural or urban areas will be entitled by law to 25 kilos of rice or wheat per month at Rs.3 a kilo. The Government proposes to put the draft Food Security Bill on the website of the Department of Food and Public Distribution for public debate and consultations very soon.
Bharat Nirman
(iii) Bharat Nirman with its six schemes is an important initiative for bridging the gap between the rural and urban areas and improving the quality of life of people, particularly the poor, in the rural areas. I propose to step up the allocations for Bharat Nirman by 45 per cent in 2009-10 over the BE of 2008-09. The Pradhan Mantri Gram Sadak Yojana (PMGSY) is one of the most successful programmes under Bharat Nirman. I propose to step up the allocation for this programme by 59% over BE 2008-09 to Rs.12,000 crore. I also propose to allocate Rs.7,000 crore to Rajiv Gandhi Grameen Viduytikaran Yojana (RGGVY) which represents a 27 per cent increase over 2008-09 (BE).
(iv) The allocation for the Indira Awaas Yojana ( IAY) is proposed to be increased by 63 per cent to Rs.8,800 crore in Budget Estimates 2009-10. To broaden the pace of rural housing, I propose to allocate, from the shortfall in the priority sector lending of commercial banks, a sum of Rs.2,000 crore for Rural Housing Fund in the National Housing Bank (NHB). This will boost the resource base of NHB for their refinance operations in rural housing sector.
Pradhan Mantri Adarsh Gram Yojana (PMAGY)
(v) There are about 44,000 villages in which the population of Scheduled castes is above 50 per cent. A new scheme called Pradhan Mantri Adarsh Gram Yojana (PMAGY) is being launched this year on a pilot basis, for the integrated development of 1000 such villages. I propose an allocation of Rs.100 crore for this scheme. Each village would be able to avail gap funding of Rs.10 lakh over and above the allocations under Rural Development and Poverty Alleviation Schemes. On successful implementation of the pilot phase, the Yojana would be extended in coming years.
Empowerment of Weaker Sections
47. The Swarna Jayanti Gram Swarozgar Yojna (SGSY) is being restructured as the National Rural Livelihood Mission to make it universal in application, focused in approach and time bound for poverty eradication by 2014-15. Stress will be laid on the formation of women Self Help Groups (SHGs). Apart from providing capital subsidy at an enhanced rate, it is also proposed to provide interest subsidy to poor households for loans upto Rs. one lakh from banks.
48. The Women’s Self Help Group movement is bringing about a profound transformation in rural areas. There are today over 22 lakh such groups linked with banks. Our objective is to enrol at least 50% of all rural women in
49. The Rashtriya Mahila Kosh has been working towards the facilitation of credit support or micro finance to poor women and has developed a number of innovative schemes for their benefit. In recognition of its role as an instrument of socio-economic change and development, the corpus of the Kosh, which at present is Rs.100 crore, would be raised to Rs.500 crore, over the next few years.
Female literacy
50. The low level of female literacy continues to be a matter of grave concern. It has, therefore, been decided to launch a National Mission for Female Literacy, with focus on minorities, SC, ST and other marginalised groups. The aim will be to reduce by half, the current level of female illiteracy, in three years.
Integrated Child Development Services
51. Government is committed to universalisation of the Integrated Child Development Services (ICDS) Scheme in the country. By March 2012, all services under ICDS would be extended, with quality, to every child under the age of six.
Student Loans to Weaker Sections
52. To enable students from economically weaker sections to access higher education, it is proposed to introduce a scheme to provide them full interest subsidy during the period of moratorium. It will cover loans taken by such students from scheduled banks to pursue any of the approved courses of study, in technical and professional streams, from recognised institutions in
Welfare of Minorities
53. The Plan outlay of Ministry of Minority Affairs has been enhanced from Rs.1,000 crore in BE 2008-09 to Rs.1,740 crore in 2009-10, registering an increase of 74%. This includes Rs.990 crore for Multi-Sectoral Development Programme for Minorities in selected minority concentration districts, Grants-in-aid to Maulana Azad Education Foundation which is almost doubled, and provisions for National Minorities Development and Finance Corporation and Pre-Matric and Post-Matric Scholarships for Minorities. Allocations have also been made for the new schemes of National Fellowship for Students from the Minority Community and Grants-in-aid to Central Wakf Council for computerization of records of State Wakf Boards.
54. Aligarh Muslim University has decided to establish its campuses at Murshidabad in
Welfare of workers in the unorganised sector
55. The unorganised or informal sector of our economy accounts for 92% of the employment and absorbs bulk of the annual increase in our labour force. The Unorganised Workers Social Security Bill, 2007 has now been passed by both Houses of Parliament. I have already initiated action to ensure that social security schemes for occupations like weavers, fishermen and women, toddy tappers, leather and handicraft workers, plantation labour, construction labour, mine workers, bidi workers, and rikshaw pullers are implemented at the earliest. Necessary financial allocations will be made for these schemes.
Employment Exchanges
56. I propose to launch a new project for modernisation of the Employment Exchanges in public private partnership so that a job seeker can register on-line from anywhere and approach any employment exchange. Under the project, a national web portal with common software will be developed. This will contain all the data regarding availability of skilled persons on the one hand and requirements of skilled persons by the industry on the other. It will help youth get placed and enable industry to procure required skills on real time basis.
Handlooms
57. In the last Budget two mega handloom clusters at
Health
58. The National Rural Health
59. Rashtriya Swasthya Bima Yojana (RSBY) was operationalised last year. The initial response has been very good. More than 46 lakh BPL families in eighteen States and UTs have been issued biometric smart cards. This scheme empowers poor families by giving them freedom of choice for using health care services from an extensive list of hospitals including private hospitals. Government proposes to bring all BPL families under this scheme. An amount of Rs.350 crore, marking 40% increase over the previous allocation, is being provided in 2009-10 Budget Estimates.
Environment and Climate Change
60. The National Action Plan on Climate Change unveiled last year, outlines our strategy to adapt to Climate Change and enhance the ecological sustainability of our development path. Following this, eight national missions representing a multi-pronged, long term and integrated approach are being launched. I propose to provide necessary funds for these missions.
61. Our government has already set up a ‘National Ganga River Basin Authority’ (NGRBA). I propose increasing the budgetary outlay for the
62. I propose to make a special one-time grant of Rs.100 crore to the Indian Council of Forestry Research and Education, Dehradun in recognition of its excellence in the field of research, education and extension. I also propose an allocation of Rs.15 crore each for the Botanical Survey of India and Zoological Survey of India. An additional amount of Rs.15 crore is being allocated to Geological Survey of India.
TOWARDS BUILDING ACCOUNTABLE INSTITUTIONS
Improving delivery of public services
63. As substantial resources, both public and private, are mobilized to fuel the growth of the economy and make it more inclusive in character, efficiency of delivery must become the focus of government programmes. The enactment of the Right to Information Act at the Centre and in many states has been an important and successful step in this direction, ushering in greater transparency and accountability in the public decision-making process.
64. The setting up of the Unique Identification Authority of India (UIDAI) is a major step in improving governance with regard to delivery of public services. This project is very close to my heart. I am happy to note that this project also marks the beginning of an era where the top private sector talent in
National Security
65. For modernisation of Police force in the States, an additional amount of Rs.430 crore is being proposed, over and above the provisions in the Interim Budget. The Government has also sanctioned special risk/hardship allowances to the personnel of Para Military Forces at par with Defence forces. Provisions for payment of these allowances are also being proposed in the Budget.
66. For strengthening Border Management, an additional amount of Rs.2,284 crore, over and above the provision in the Interim Budget, is being provided for construction of fences, roads, flood-lights on the international borders.
67. Significant augmentation in the strength of para-military forces is being done. This calls for more investment in creating the necessary infrastructure, particularly in the area of housing. The Government, therefore, proposes to launch a massive programme of housing to create 1 lakh dwelling units for Central Para-Military Forces personnel. This will not only contribute to the morale of the forces, but will also enable leveraging of government’s annual budgetary resources and create an innovative financing model.
One Rank One Pension for Ex-Servicemen (OROP)
68. Our country owes a deep debt of gratitude to our valiant ex-Servicemen. The Committee headed by the Cabinet Secretary on OROP has submitted its report and the recommendations of the Committee have been accepted. On the basis of these recommendations, the Government has decided to substantially improve the pension of pre 1.1.2006 defence pensioners below officer rank (PBOR) and bring pre 10.10.1997 pensioners on par with post 10.10.1997 pensioners. Both these decisions will be implemented from
Education
69. The demographic advantage
70. Union Territory of Chandigarh is the capital of
Commonwealth Games 2010
71. The Commonwealth Games present the country with an opportunity to showcase our potential as an emerging Asian Power. I propose to substantially enhance the allocations for the Commonwealth Games from Rs.2,112 crore in the Interim Budget to Rs.3,472 crore in the Budget for 2009-10.
72. Madam Speaker, the Government is committed to ensure that Sri Lankan Tamils enjoy their rights and legitimate aspirations within the territorial sovereignty and framework of
73. As Honourable Members are aware, Cyclone Aila struck the coast of
BUDGET ESTIMATES 2009-10
Madam Speaker, now I turn to the Budget Estimates for 2009-10.
74. The Budget Estimates 2009-10 provide for a total expenditure of Rs.10,20,838 crore consisting of Rs.6,95,689 crore towards Non Plan and Rs.3,25,149 crore towards Plan expenditure. The increase in Non Plan expenditure over BE 2008-09 is 37% whereas the increase in Plan expenditure is 34%. The total increase in expenditure in 2009-10 over BE 2008-09 is 36%.
75. The increase in Non Plan expenditure is mainly on account of the implementation of the Sixth Central Pay Commission recommendations, increased food subsidy and higher interest payment arising out of the larger fiscal deficit in 2008-09. Interest payments are estimated at Rs.2,25,511 crore constituting about 36% of Non Plan revenue expenditure in BE 2009-10. The total provision for subsidies are up from Rs.71,431 crore in BE 2008-09 to Rs.1,11,276 crore in BE 2009-10. The outlay on Defence has gone up from Rs.1,05,600 crore in BE 2008-09 to Rs.1,41,703 crore in BE 2009-10.
76. Honourable Members may recall that while presenting the Interim Budget 2009-10, I had stated that the Plan expenditure for 2009-10 may have to be increased further as a part of counter-cyclical measures to minimise the impact of global recession and economic slowdown. Against the backdrop of limited fiscal space because of reduction in CENVAT and Service Tax rates, Government have taken a conscious and bold decision to enhance the Gross Budgetary Support (GBS) for the Annual Plan 2009-10 by Rs.40,000 crore over Interim Budget 2009-10. Bulk of this enhanced GBS is directed towards public investment in infrastructure with special emphasis on rural infrastructure, raising growth potential and leading to income generation. Besides, the State Governments will be permitted to borrow additional 0.5% of their GSDP by relaxing the fiscal deficit target under FRBM from 3.5% to 4% of their GSDP. This will enable the State Governments to raise additional open market loans of about Rs.21,000 crore in the current year. In other words, the total additionality in Plan expenditure by Centre and the States put together would be Rs.61,000 crore over Interim Budget. I do believe that this fiscal expansion will go a long way in reversing the impact of economic slowdown and accelerate our growth revival in the medium term.
77. Madam Speaker, given the possibility of the economic downturn persisting in the current year, the gross tax receipts are budgeted at Rs.6,41,079 crore in BE 2009-10, compared to Rs.6,87,715 crore in BE 2008-09. The non tax revenue receipts are, however, likely to be better and are estimated at Rs.1,40,279 crore in BE 2009-10 compared to Rs.95,785 crore in BE 2008-09. The revenue deficit as a percentage of GDP is projected at 4.8% compared to 1% in BE 2008-09 and 4.6% as per provisional accounts of 2008-09. The fiscal deficit as a percentage of
78. Madam Speaker, before I turn to my tax proposals, I cannot resist the temptation of re-visiting Kautilya. He said and I quote, “Just as one plucks fruits from a garden as they ripen, so shall a King have revenue collected as it becomes due. Just as one does not collect unripe fruits, he shall avoid taking wealth that is not due because that will make the people angry and spoil the very sources of revenue.”
PART - B
TAX PROPOSALS
79. Madam Speaker, I shall now present my tax proposals.
80. As the House is aware, the thrust of reforms over the last few years, including the previous term of this Government, has been to improve the efficiency and equity of our tax system. This is sought to be achieved by eliminating distortions in the tax structure, introducing moderate levels of taxation and expanding the base. These policy changes have been accompanied by requisite re-engineering of key business processes coupled with automation, both for direct and indirect taxes. On the direct tax side, a recent initiative for further improving efficiency is the setting up of a Centralized Processing Centre (CPC) at Bengaluru where all electronically filed returns, and paper returns filed in entire Karnataka, will be processed.
81. These tax reform initiatives have produced impressive results. The Centre’s Tax-
82. In the course of preparation of this budget, I have had the opportunity to interact with large number of stakeholders and receive valuable inputs. Most suggestions were for structural changes in the tax system. Tax reform, like all reforms, is a process and not an event. Therefore, I propose to pursue structural changes in direct taxes by releasing the new Direct Taxes Code within the next 45 days and in indirect taxes by accelerating the process for the smooth introduction of the Goods and Services Tax (GST) with effect from
83. The Direct Taxes Code, along with a Discussion Paper, will be released to the public for debate. Based on the inputs received, the Government will finalise the Direct Taxes Code Bill for introduction in this House sometime during the Winter Session.
84. To further enhance efficiency in tax administration, I intend to merge the two Authorities for Advance Rulings on Direct and Indirect Taxes by amending the relevant Acts. This will enable the Authority for Advance Rulings set up under Section 245-O of the Income Tax Act, 1961 to also function as the Authority for Advance Rulings for Indirect Taxes.
85. I have been informed that the Empowered Committee of State Finance Ministers has made considerable progress in preparing the roadmap and the design of the GST. Officials from the Central Government have also been associated in this exercise. I am glad to inform the House that, through their collaborative efforts, they have reached an agreement on the basic structure in keeping with the principles of fiscal federalism enshrined in the Constitution. I compliment the Empowered Committee of State Finance Ministers for their untiring efforts. The broad contour of the GST Model is that it will be a dual GST comprising of a Central GST and a State GST. The Centre and the States will each legislate, levy and administer the Central GST and State GST, respectively. I will reinforce the Central Government’s catalytic role to facilitate the introduction of GST by
DIRECT TAXES
86. I shall now deal with direct taxes.
87. Madam Speaker, there have been demands by the corporate sector for reduction in tax rates. However, tax rates are determined by the size of the tax base; if the tax base is higher, the tax rates can be lower. The Income Tax Act is riddled with a plethora of tax exemptions which substantially erode the tax base. The extent of this erosion is presented to this House in the form of a Revenue Foregone Statement. The growth in the direct tax revenue foregone is relatively higher than the growth in the direct tax revenues. Accordingly, I do not propose to make any change in the Corporate Tax rates.
88. With a view to providing interim relief to small and marginal taxpayers and senior citizens, I propose to increase the personal income tax exemption limit by Rs.15,000 from Rs.2.25 lakh to Rs.2.40 lakh for senior citizens. Similarly I also propose to raise the exemption limit by Rs.10,000 from Rs.1.80 lakh to Rs.1.90 lakh for women tax payers and by Rs.10,000 from Rs.1.50 lakh to Rs.1.60 lakh for all other categories of individual taxpayers. Further, I also propose to increase the deduction under section 80-DD in respect of maintenance, including medical treatment, of a dependent who is a person with severe disability to Rs.1 lakh from the present limit of Rs.75,000.
89. In the past, surcharges on direct taxes have generally been levied to meet the revenue needs arising from natural calamities. The Government has set up the National Calamity Contingency Fund to build up resources to meet emergency situations. As a corollary, surcharge on direct taxes should be removed. However, this has to be balanced with the revenue needs of the Government. Therefore, in the first instance, I propose to phase out the surcharge on various direct taxes by eliminating the surcharge of 10 per cent on personal income tax.
90. Deduction in respect of export profits is available under sections 10A and 10B of the Income-tax Act. The deduction under these sections would not be available beyond the financial year 2009-2010. In order to tide over the slowdown in exports, I propose to extend the sun-set clauses for these tax holidays by one more year i.e. for the financial year 2010-11.
91. The Finance Act, 2005 introduced the Fringe Benefit Tax on the value of certain fringe benefits provided by employers to their employees. This tax has been perceived as imposing considerable compliance burden. Empathising with these sentiments, I propose to abolish the Fringe Benefit Tax.
92. The competitive ability of an economy rests on its progress in the area of Research and Development (R&D). In order to incentivise the corporate sector to undertake R&D work, I propose to extend the scope of the current provision of weighted deduction of 150% on expenditure incurred on in-house R&D to all manufacturing businesses except for a small negative list.
93. Under the present scheme of the Income Tax Act, tax exemptions are largely profit-linked. Such incentives are inherently inefficient and liable to misuse. Therefore, it is proposed to incentivise businesses by providing investment-linked tax exemptions. To begin with, I propose to extend investment- linked tax incentives to the businesses of setting up and operating ‘cold chain’, warehousing facilities for storing agricultural produce and the business of laying and operating cross country natural gas or crude or petroleum oil pipeline network for distribution on common carrier principle. Under this method, all capital expenditure, other than expenditure on land, goodwill and financial instruments will be fully allowable as deduction.
94. Minimum Alternate Tax (MAT) was introduced to address inequity in taxation of corporate taxpayers. In the quest for greater equity, I propose to increase the rate of MAT to 15 per cent of book profits from the present rate of 10 per cent. However, to grant relief to corporate taxpayers, I also propose to extend the period allowed to carry forward the tax credit under MAT from seven years to ten years.
95. The New Pension System (NPS) is an important milestone in the development of a sustainable, efficient, voluntary and defined contribution pension system in
96. In order to further improve the investment climate in the country, we need to facilitate the resolution of tax disputes faced by foreign companies within a reasonable time frame. This is particularly relevant for such companies in the Information Technology (IT) sector. I, therefore, propose to create an alternative dispute resolution mechanism within the Income Tax Department for the resolution of transfer pricing disputes. To reduce the impact of judgemental errors in determining transfer price in international transactions, it is proposed to empower the Central Board of Direct Taxes (CBDT) to formulate ‘safe harbour’ rules.
97. The Finance Act, 2008 introduced the Commodity Transaction Tax (CTT) to be levied on taxable commodities transactions entered in a recognized association. The Prime Minister’s Economic Advisory Council has recommended abolition of the CTT. I, therefore, propose to abolish the Commodity Transaction Tax.
98. The House will agree that it is desirable to bring about transparency in the funding of political parties in the country. With a view to reforming the system of funding of political parties, I propose to provide that donations to electoral trusts shall be allowed as a 100 per cent deduction in the computation of the income of the donor. For this purpose, Electoral Trusts will be such trusts as are set up as pass-through vehicles for routing the donations to political parties and are approved by CBDT.
99. Section 80E of the Income-tax Act provides for a deduction in respect of interest on loans taken for pursuing higher education in specified fields of study. I propose to extend the scope of this provision to cover all fields of study, including vocational studies, pursued after completion of schooling.
100. Anonymous donations to charitable institutions are presently liable to tax so as to prevent unaccounted money being routed to such entities in the garb of anonymous donations. However, some organisations are facing genuine problems in complying with the procedural requirements. In order to mitigate the practical difficulties being faced by such charitable organisations, I propose to grant relief to such organisations by not taxing anonymous donations received to the extent of 5 per cent of their total income or a sum of Rs.1 lakh, whichever is higher.
101. To facilitate the business operations of all small taxpayers and reduce their compliance burden, I propose to expand the scope of presumptive taxation to all small businesses with a turnover upto Rs.40 lakh. All such taxpayers will have the option to declare their income from business at the rate of 8 per cent of their turnover and simultaneously enjoy exemption from the compliance burden of maintaining books of accounts. As a procedural simplification, I also propose to allow them to pay their entire tax liability from business at the time of filing their return by exempting them from paying advance tax. This new scheme will come into effect from the financial year 2010-11.
102. Madam Speaker, in the context of the geo-political environment, it is necessary for us to create our own facilities for energy security. Accordingly, I propose to extend the tax holiday under section 80-IB(9) of the Income Tax Act, which was hitherto available in respect of profits arising from the commercial production or refining of mineral oil, also to natural gas. This tax benefit will be available to undertakings in respect of profits derived from the commercial production of mineral oil and natural gas from oil and gas blocks which are awarded under the New Exploration Licensing Policy-VIII round of bidding. Further, I also propose to retrospectively amend the provisions of the said section to provide that “undertaking” for the purposes of section 80-IB(9) will mean all blocks awarded in any single contract.
103. Under the present provisions of section 2 (15) of the Income Tax Act, “charitable purpose” includes relief of the poor, education, medical relief, and the “advancement of any other object of general public utility”. However, the “advancement of any other object of general public utility” cannot involve the carrying on of any activity in the nature of trade, commerce or business. I propose to provide the same tax treatment to trusts engaged in preserving and improving our environment (including watersheds, forests and wildlife) and preserving our monuments or places or objects of artistic or historic interest, as is available to trusts engaged in providing relief of the poor, education and medical relief.
INDIRECT TAXES
104. Madam Speaker, I turn to my main proposals on indirect taxes.
105. I will first take up customs duties.
106. Although our domestic industry has weathered the impact of the global financial crisis and the resultant slowdown with resilience, it is yet to fully find its feet. Manufacturing growth, which had turned negative in October 2008 on a year-on-year basis and remained in that zone till March this year, appears to be barely turning the corner. However, the global scenario remains worrisome and it is my view that the paramount need is to provide industry with a stable framework. My proposals on indirect taxes seek to achieve this by maintaining the overall rate structure for customs and central excise duties as well as service tax. I must hasten to add that I have not hesitated to act where distortions provide a compelling reason or where relief would provide a healing touch.
107. Full exemption from basic customs duty was provided to Set Top Boxes in 2006 to enable their free import for the smooth introduction of the Conditional Access System (CAS). Now that production capacity has come up in the country, I propose to impose a nominal basic customs duty of 5 per cent on such Set Top Boxes to encourage domestic value addition.
108. The electronic hardware industry has a strong potential for creating employment especially in the SME sector. I intend to reduce the basic customs duty on LCD panels from 10 per cent to 5 per cent to support indigenous production of LCD televisions.
109. Full exemption from
110. For reasons that are apparent, industry sectors having an export-orientation have been adversely impacted by the demand compression in global markets. Presently, exporters of leather products, textile garments, footwear as well as sports goods are permitted to import raw materials, consumables etc. upto 3 per cent of the fob value of their exports free of duty. I propose to add a few more items to these lists. Full exemption from basic customs duty is being provided to rough corals for encouraging value-addition and export.
111. It is imperative that the contribution of new and renewable energy sources of power is enhanced if we have to successfully combat the phenomena of global warming and climate change. I am reducing the basic customs duty on permanent magnets - a critical component for Wind Operated Electricity Generators - from 7.5 per cent to 5 per cent.
112. On influenza vaccine and nine specified life saving drugs used for the treatment of breast cancer, hepatitis-B, rheumatic arthritis etc. and on bulk drugs used for the manufacture of such drugs, I propose to reduce the customs duty from 10 per cent to 5 per cent. They will also be totally exempt from excise duty and countervailing duty.
113. Customs duty will also be reduced from 7.5 per cent to 5 per cent on two specified life saving devices used in treatment of heart conditions. These devices will be fully exempt from excise duty and
114. Gold bars currently attract customs duty at the specific rate of Rs.100 per ten grams while other forms of gold (excluding jewellery) are chargeable to a duty of Rs.250 per ten grams. These rates were fixed in 2004 and have not been reviewed even as the price of gold has increased manifold. I propose to partially restore the incidence by increasing these rates to Rs.200 per ten grams and Rs.500 per ten grams respectively. Along the same lines, the customs duty on silver (excluding jewellery) will be increased from Rs.500 per kg to Rs.1,000 per kg. These revised rates would also apply to gold and silver, including ornaments that are not studded, when imported by a bona fide passenger as baggage.
115. I will now come to central excise duties.
116. Hon’ble Members are aware that the Government announced a series of fiscal stimulus packages, one of the key elements of which was the sharp reduction in the ad valorem rates of Central Excise duty for non-petroleum products by 4 percentage points across the board on 7th of December 2008 and by another 2 percentage points in the mean CENVAT rate on the 24th of February, 2009.
117. One of the consequences of these cuts was that pure cotton textiles came to be fully exempted from excise duty. We have received representations that full exemption prevents manufacturers from availing of export rebate of the duty paid from CENVAT credit. I propose to rectify this situation by restoring the erstwhile optional rate of 4 per cent for cotton textiles beyond the fibre stage.
118. Ever since the revamp of the excise duty structure on textiles by my distinguished predecessor in the 2004 budget, a differential in rates has been maintained between the cotton sector and the manmade sector. In keeping with the integrity of the earlier structure, I propose to restore the rate of 8 per cent Central Excise duty on manmade fibre and yarn on a mandatory basis and on stages beyond fibre and yarn at that rate on optional basis. These changes, together with duty changes on intermediates, would imply that the duty on all types of manmade fibre and yarn and their intermediates would be the same, easing the problem of credit accumulation.
119. Wool waste and cotton waste are chargeable to basic customs duty of 15 per cent. These are used in the manufacture of cheaper varieties of textile articles such as blankets and rugs. As a measure of relief to this sector, I propose to reduce the basic customs duty on these items to 10 per cent.
120. With the Government’s proclaimed objective of introducing a Goods and Services Tax (GST) both at the national and State level, some more steps in that direction are necessary. One measure that would facilitate the process is the further convergence of central excise duty rates to a mean rate - currently 8 per cent. I have reviewed the list of items currently attracting the rate of 4 per cent, the only rate below the mean rate. There is a case for enhancing the rate on many items appearing in this list to 8 per cent, which I propose to do, with the following major exceptions:
• food items; and
• drugs, pharmaceuticals and medical equipment.
Some of the other items on which I propose to retain the rate of 4 per cent are:
• paper, paperboard & their articles;
• items of mass consumption such as pressure cookers, cheaper electric bulbs, low-priced footwear, water filters/purifiers, CFL etc.;
• power driven pumps for handling water; and
• paraxylene.
The details are available in the relevant notifications.
121. Bio-diesel, obtained from vegetable oils and used for blending with petro-diesel, is currently exempt from excise duty. I now propose to fully exempt petro-diesel blended with bio-diesel from excise duty.
122. In order to encourage the use of this environment friendly fuel and augment its availability in the country, I also propose to reduce basic customs duty on bio-diesel from 7.5 per cent to 2.5 per cent - at par with petro-diesel. With these proposals I hope to see a smile on the faces of the green brigade!
123. My other proposals on central excise duties seek to address distortions that the manufacturing industry has been complaining about.
124. The IT industry has pointed out that it is facing difficulties in the assessment of software which involves transfer of the right to use after the levy of service tax on IT software service. To resolve the matter, I propose to exempt the value attributable to the transfer of the right to use packaged software from excise duty and CVD.
125. The construction industry has represented that they are facing difficulties on account of withdrawal of exemption on goods manufactured at site. I propose to restore full exemption to such goods, including pre-fabricated concrete slabs or blocks, when used for further construction at site.
126. A specific component was added to the ad valorem duty of 24 per cent applicable to large cars and utility vehicles in June last year. In the case of vehicles of engine capacity below 2000 cc, this component was Rs.15,000/- per unit while for vehicles of higher engine capacity it was Rs.20,000/- per unit. These rates are now being unified at the lower level of Rs.15,000/- per unit.
127. Petrol driven trucks provide a useful means of transport within cities and across short distances. These are chargeable to excise duty of 20 per cent. I propose to reduce excise duty on these trucks to 8 per cent to equate the duty with similar vehicles run on diesel.
128. Madam Speaker, I fear that my proposals relating to gold and silver on the customs side would somewhat dent my popularity with women. I propose to salvage this by fully exempting branded jewellery from excise duty.
129. I now turn to my proposals on service tax.
130. It is an international practice to zero-rate exports. To achieve this objective, a scheme was announced in 2007, granting refund of service tax paid on certain taxable services used after the clearance of export goods from the factory. For some time now, the exporting community has been expressing dissatisfaction over the difficulties faced in obtaining such refunds. Several procedural simplifications attempted in the past have also not yielded satisfactory results. The solution seems to lie in placing greater trust on the claims filed by the exporters. Keeping this in view, I propose to make the following changes in the scheme:
• Services received by exporters from goods transport agents and commission agents, where the liability to pay service tax is ab initio on the exporter, would be exempted from service tax. Thus, there would be no need for the exporter to first pay the tax and later claim refund.
• For other services received by exporters, the exemption would be operated through the existing refund mechanism based on self-certification of the documents where such refund is below 0.25 per cent of fob value, and certification of documents by a Chartered Accountant for value of refund exceeding the above limit.
131. The Export Promotion Councils and the Federation of Indian Export Organizations (FIEO) provide a valuable service in augmenting our export effort. I propose to exempt them from the levy of service tax on the membership and other fees collected by them till
132. In the goods transport sector, service tax is currently levied on transport of goods by road, by air, through pipelines and in containers. However, goods carried by Indian railways or those carried as coastal cargo or through inland waterways are not charged to service tax. In order to provide a level playing field in the goods transport sector, I propose to extend the levy of service tax to these modes of goods transport. The new levy is not likely to impact the prices of essential commodities or goods for mass consumption, as suitable exemptions would be provided.
133. As the Hon’ble Members are aware, services provided by chartered accountants, cost accountants, and company secretaries as well as by engineering and management consultants are presently charged to service tax. Although there is a school of thought that legal consultants do not provide any service to their client, I hold my distinguished predecessor in high esteem and disagree! As such, I propose to extend service tax on advice, consultancy or technical assistance provided in the field of law. This tax would not be applicable in case the service provider or the service receiver is an individual.
134. Vehicles having ‘Stage Carriage Permits’ and run by State undertakings are exempted from service tax. However, transportation of passengers undertaken by private enterprises in vehicles having ‘Contract Carriage Permits’ is, subjected to service tax. In order to bring parity in tax treatment, I propose to exempt such transportation also from the levy of service tax.
135. In July, 2008 goods transport agents (GTA) went on strike with several demands. One of the demands that was accepted by the government was to exempt certain services, such as packing, cargo handling and warehousing, provided to GTAs en route, from service tax. For this purpose an exemption notification was issued. It was also demanded by goods transport agents that the proceedings already initiated against such service providers should be dropped. The Government has accepted this genuine demand. Therefore, I propose to make certain legislative changes required to fulfill this promise.
136. Copies of notifications giving effect to the changes in customs, central excise and service tax will be laid on the Table of the House in due course.
137. My tax proposals on direct taxes are revenue neutral. On indirect taxes, they are estimated to yield a net gain of Rs.2,000 crore for a full year.
CONCLUSION
138. As we begin this five year journey, the road ahead will not be easy. We will have to manage uncertainties and there will be as many problems as there would be solutions. Mahatma Gandhi said and I quote, “Democracy is the art and science of mobilizing the entire physical, economic and spiritual resources of various sections of the people in the service of the common good of all.” This is precisely what we will have to do. With strong hearts, enlightened minds and willing hands, we will have to overcome all odds and remove all obstacles to create a brave new
139. Madam Speaker, with these words I commend the budget to the House.
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