Prima facie, the Union budget for the fiscal 2011 fails to address macroeconomic problems like risks from high crude oil prices and rising current account deficit though it offer partial relief to the common man overburdened with spiraling food and oil prices.
Amidst high oil prices, increasing inflationary pressure and scandals galore, Pranab Mukherjee, India’s Finance Minster presented today the Union budget for the financial year 2011-12 in the Lok Sabha. While India Inc has welcomed the budget saying that it is a growth-oriented one, industry captains are of the view that Finance Minister should have given more stress to the health sector and the demand for treatment of healthcare as infrastructure has been overlooked.
The FM duly recognized that the principle concern before the government is high food prices, especially cereals. He highlighted three challenges which will continue to engage the Indian policy-planners for the next few years. These include, sustaining GDP growth rate of 9%, making development more inclusive and strengthening transparency and public accountability.
It is time that Indian policy makers should embark on to renovate the struggling agriculture sector so as to control rising food prices, as the economy fighting with the highest inflation than any leading Asian economy. Critics warn that India need to invest far more in agriculture to boost productivity and enlarge storage facilities to help reduce the spiraling prices of fruit and vegetables.
Highlights of the Budget
Positives
- Current surcharge of 7.5% on domestic companies proposed to be reduced to 5%
- Higher exemption limit of Rs 5,00,000 for very senior citizens, who are 80 years or above
- Allocation to Sarva Shiksha Abhiyan increased by 40% to Rs 21,000 crore
- Excise duty to be reduced from 10% to 5% on parts of specified machinery
- Surcharge for companies cut to 5%, from 7.5%
- Senior Citizen Age Limit reduced from 65 years to 60 years for Income Tax purposes. Citizens over 80 years to have exemption limit of Rs 5 lakh
- Special incentives for hybrid vehicle makers if manufacturing done in India to be positive for auto companies
- Crude palm used in sports exempted from customs duty to be positive for palm oil companies
- Duty reduced on hybrid & electric cars along with batteries imported for such vehicles
- Basic customs duty on agricultural machinery reduced to 4.5% from 5%
- MFs allowed to raise money from foreign investors
- Tax exemption limit for senior citizens raised to Rs 2.5 lakh from 2.4 lakh
Disappointments
- Central Excise Duty enhanced from 4% to 5%
- AC restaurants serving liquor to come under service tax net
- Health Check-Ups in Private hospitals to become expensive
- Air travel to cost more
- Tax on life insurance service providers could be negative for insurance companies
- Travel, Healthcare to become expensive due to increased service tax
- New service tax on hospitality
- Branded clothes may cost more
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