Union Budget 2008- 09,An Overview

The Finance Minister Mr. P. Chidambaram unveiled the much-awaited Union Budget for financial year 2008-09 in the parliament on February 29, 2008. India for 12 successive quarters till December 2007 has registered a growth of over 8%. In the first half of 2007-08, the economy saw a growth of 9.1%. India primarily being an agrarian economy saw a disappointing growth in agriculture at 2.6% in the first half of 2007-08. The Eleventh Plan has started on a positive note registering robust growth as the first year of the plan saw a GDP growth for the current fiscal at 8.7%. The drivers of growth continue to be services and manufacturing, which are estimated to grow at 10.7% and 9.4%, respectively. The Gross Budgetary Support is expected to increase by Rs. 38,286 crore over the allocation in 2007-08 at Rs. 2,43,386 crore. Foreign direct investment and foreign institutional investment between April-December 2007-08 stood at USD 12.7 billion and USD 18 billion respectively. Tax to GDP ratio is set to increase from 9.2% in 2003-04 to 12.5% in 2007-08. There was no change seen in the peak rate of customs duty.

The budget was one of the best budgets ever seen by individual taxpayers. The special feature of this budget has obviously been the hike in basic exemption limit to Rs. 1,50,000. For women the exemption limit has increased to Rs. 1,80,000 and for senior citizens to Rs. 2,25,000. The new slab rates will bring in a lot of saving for the individual taxpayers. On the other hand, the corporates did not have much to look up to in this year’s budget. The finance minister kept both corporate tax and surcharge rates unchanged.

In the eleventh five year plan, the government has taken some concrete steps towards illiteracy, education, rural development including agriculture, infrastructure, health, employment, drinking water facility and sanitation. Major concern that the government would be facing in the coming year is inflation. A rise in the disposable income of the citizens due to reduction in the tax slab and cut in the excise duty of various items might lead to a rise in the disposable income. This would cause the demand to rise further leading to inflation. The finance minister said that the Indian government will have to collaborate with the Reserve Bank of India in order to combat the inflationary pressures to be faced in the near future.

2 Trackbacks

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