Indian budget 2011-some highlights
Indian budget 2011-some highlights
Budget what it is:
Union Budget is the single-most important event in India's economic and financial world. One of the most important aspects of every financial plan is Budgeting. Irrespective of the fact whether you own a large scale business group or a medium sized enterprise or even a small scale business, you need to know where your money is going if you want to handle your finances effectively. Even the common man wants to know about the annual budget of the country. It makes them aware of price hike, reduce or rebates announced by the Government that can affect their regular lives for examples price of petrol, cars, sugar, and other commodities.
Why special significance for the budget:
We could expect a good budget this time since government would want to improve its tarnished image due to 2G Spectrum Scam - Over 1 lakh crore, Commonwealth Games Scam - Worth 8,000 crore, ISRO scam - Worth 2 lakh crore,S-band scam - Worth 2 lakh crore.
The two basic elements of any budget are the sources and uses. In the case of the government, revenues from levies of taxes.. Government expenses include spending on current goods and services,
Budgets have an economic, political and technical basis. Unlike a pure economic budget, they are not entirely designed to allocate scarce resources for the best economic use. They also have a political basis wherein different interests push and pull in an attempt to obtain benefits and avoid burdens. The technical element is the forecast of the likely levels of revenues and expenses.
Some of the highlights of the budget:
Only on food inflation has the Finance Minister announced new initiatives and investments to increase the supply of specific food items such as edible oil, vegetables, pulses, and milk. He confesses his inability to increase supplies and consequent price rise.
The raising of the exemption limit for personal income tax from Rs.1,60,000 to Rs.1,80,000 has brought some cheer.
The lowering of the surcharge on corporate tax from 7.5 per cent to 5 per cent has boosted market sentiment, as have customs and excise duty concessions to specific industries.
The budget has provided for significantly larger outlays on education, health, women and children, affordable housing, the Scheduled Castes and the Scheduled Tribes, and minorities. This is a welfare measure.
If last year there was a bonanza from 3G spectrum auctions that provided headroom for higher spending, the Finance Minister has proposed to raise Rs. 40,000 crores through disinvestment in public sector units in 2011-12
Persistent high prices of crude oil will leave the government with three difficult choices: increasing the retail prices of petrol and diesel, reducing the duties on petroleum products, and forgoing revenue or subsidizing the under-recoveries of the oil marketing companies.
Clearly the measures taken to alleviate food price inflation have certainly not been taken negatively by the markets. Where the markets have responded positively is the revenue and budget deficit projections and the budget deficit projections at federal level have obviously come in lower than what was forecast by various analysts.
RBI issue, which is obviously interest rates in India will have to go up further and if they do not go up further, that inflation forecast by the government of 5% for the next year obviously, people will start to challenge that inflation forecast particularly when we are running at over 8% for inflation at the moment.
Wheat, rice, pulses, cooking oil and sugar can be imported duty-free even now. Prices of these staples are the best traders can offer today, given international prices. The Budget can do no more.Many African countries are offering lands at very low rates as less as $ 1 per acre. There is need to tap by encouraging agricultural entrepreneurs.
The Budget matters equally little to milk prices. Milk is expensive mostly because state-run cooperatives don't procure it efficiently
There is a gap of Rs 50,000 crore when the government buys each kg of wheat for Rs 15, rice for Rs 20, and sells them for between Rs 2 and Rs 8.
Take grain storage capacity, over which everyone, is worried.
This Budget might tinker with schemes created by previous Budgets to make building go downs more attractive for companies.
Irrigation is another Budget favorite. But despite the crores poured into it, 60% farmland remains rain-fed. That's because no Budget solves the problem of last mile connectivity how to help a farmer bear the cost of laying a pipe from water source to field. That is the only way his soil can produce more food.
Inflation has eaten 12 paisa out of each rupee.
The political crisis in Egypt and North Africa shows a government that can't ensure two square meals for its people won't survive.
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