Budget 2007-08
Shubhashis Gangopadhyay
India Development Foundation
(March 7, 2007)
Prepared for the joint discussion with ICRIER, NCAER and NIPFP; Jacaranda Hall, IHC
The Document
• Annual book-keeping
• Policy statement
• Tax implications
• Sops, exemptions and largesse
The Basics
• Receipts and expenditure
• Revenue deficit is down (2.0 to 1.5)
• Fiscal deficit is down (3.7 to 3.3)
• Capital versus revenue expenditure
Fiscal Management
Fiscal Management
Prcentage
10
8
6
4
2
0
2006-07
RD-GDP Ratio
2004-05
2002-03
2000-01
1998-99
1996-97
1994-95
1992-93
1990-91
FD-GDP Ratio
Showing Restraint
Managing Accounts
Percentage
20
15
10
5
0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Tax-GDP
Expenditure-GDP
16
14
12
10
8
6
4
2
0
Percentage
Managing Cash Flow
Measured Reductions
20 07-0 8
20 06-0 7
20 05-0 6
20 04-0 5
20 03-0 4
20 02-0 3
20 01-0 2
20 00-0 1
CapExp/GDP
RevExp/GDP
Macro versus Micro
• Overall deficit targets are being met
• Composition of expenditure a bit suspect
Setting
• Start of the plan period
• Continuity towards long term goals
• CMP
• Inflation and elections
CPI for Agriculture
Explaining the Price Rise for Agricultural Labourers
(April-October 2006)
8.00
7.00
Percent
6.00
5.00
4.00
3.00
2.00
1.00
0.00
Kerala
Karnataka
States
CPIal price rise
Andhra P.
Is NREG the Culprit?
8
1000
900
800
700
600
500
400
300
200
100
0
7
Percent
6
5
4
3
2
1
0
Kerala
Karnataka
Andhra P.
States
WPI price rise
CPIal price rise
NREG disbursement (Rs. Crores)
Rs. Crores
Explaining the Price Rise for Agricultural Labourers
(April-October 2006)
Keeping Above the Water
Percentage Growth
Growth of Real Wages
14
12
10
8
6
4
2
0
Oct
Nov
Dec
Jan
Feb
CPIAL
Mar
Apr
May
Jun
Wage (Agricultural)
Jul
Aug
Sep
Inference
• NREG disbursement raises local food prices
• But rural wages have been increasing
Real wage rise small but positive
• Agriculture is highly fragmented
Differing prices in adjoining states
Focus on Health
Expenditure on Health
100
Percentage
80
60
40
20
0
-20
2003-04
2004-05
2005-06
Total
2006-07
AYUSH
2007-08
HIV/AIDS
• NACP III to begin in 2007 -2008
• Budget allotted for 2007-2008 is 969 crores
• Steps by the government to destabilize HIV/AIDS by
keeping the prevalence to < 1per cent in the population
• Focus on high risk groups in all states
• Access to condoms
• Universal screening of blood and safe blood
• Hospitals to prevent mother to child transmission of
HIV/AIDS
• To follow protocol for paediatric dosage developed by
Indian doctors
ICDS
• Budget increased from INR 4087 crore to
INR 7061 crore for 2007-2008
• 173 new ICDS projects
1,07274 anganwaadi centres
25,961 mini anganwaadi centres
• Government committed to cover all
habitations and settlements by ICDS during
the 11th plan
National Rural Health Mission (2005-12)
• Decentralisation of health planning and management –
Village Health Plan/District health plan – all districts will
be ready with District health plans by March 2007
• Integration with programmes on health determinants
(nutrition,sanitation etc.)
• Recruitment of ASHAs (Accredited Social Health
Activists) – 320,000 recruited and 200,000 undergone
orientation training
• Mainstreaming of AYUSH (Ayurveda,Yoga and
Naturopathy, Unani, Siddha and Homeopathy) into the
public health system – budget increased by 26 percent
• Integration of vertical health and family welfare
programmes and funds (e.g. Polio – allocated 1290 crores)
Medical Equipment and Drugs
• General rate of import duty on medical equipment reduced
to 7.5 per cent (equipment are taxed at 12.5 per cent at
present with a concessional duty of 5 per cent on specified
equipment)
• Duty on 15 specified machinery in pharmaceutical and
biotechnology sector reduced from 7.5 percent to 5 percent
• Duty on most chemicals and plastics reduced from 12.5
percent to 7.5 percent
Clinical Trials
• Exempted from service tax
Advantages:
Disadvantages:
Expenditure on Education
Growth in Education
60
50
40
30
20
10
0
2002-03
2003-04
2004-05
Elementary
2005-06
2006-07
Secondary+
2007-08
Primary Education Focus
• SSA allocation increased by 35%
• Mid-day meal scheme to cover upper
primary
• Teacher training boost
– allocation almost tripled to Rs. 450 crores
– 200,000 teachers to be added
• Classrooms to increase – by 500,000
School Education
Problem – dropout rate high
• Critical class – 8th to 9th class
• Solution – Scholarships from 9-12
– 100,000 means-cum-merit scholarship
– Rs. 6000/- a year
– Rs. 750 crores in 2007-08
Secondary Education
• Allocation increase
– INR 1837 crore to INR 3794 crore
• Scholarships
– Through a fund with SBI
Education and R&D
• Promoting Ph.D.s – for some sections
• Research institutions – customs duty
exempt
• Corporate in-house R&D – 150% deduction
continued
Vocational training
• Vocational education mission
– INR 50 crore
– Based on PPP concept
• ITIs – 1396 centres of excellence
– 300 more ITIs to be covered
– Academic and financial autonomy
– 2nd shift allowed
Physically Challenged
• Subsidy for regular employment
• Employer contribution to PF reimbursed
SME
• Increase in outstanding credit from INR
135,200 crore to INR 173,460 crore at end
Dec 2006
• Government to encourage banks to lend to
SME’s
• Proposal to allow credit rating of SMEs to
fix interest rates by bank
• Exemption limit for SSI raised from INR 1
crore to INR 1.5 crore
Food Processing
• Customs duty on food processing
machinery reduced from 7.5% to 5%
• Exemption on crude and refined edible oil
from additional CV duty of 4% and
reduction on duty on crude and refined
sunflower oil by 15 percentage points
• Biscuit below INR 50 per Kg and all food
mixes fully exempted
Urban Development
• Increase in allocation for SJSRY from INR
250 crore to INR 344 crore
• Promoting world class financial centre in
Mumbai
• Five year tax holiday for luxury hotels in
NCT regions like Gurgaon, Faridabad and
Ghaziabad
Indirect taxes
Reform continued
• Move toward general sales tax:
– central sales tax reduced – 4% to 3%
– states to be compensated – revenue loss
• Peak customs duty to ASEAN levels:
reduced - 12.5% to 10%
Reducing customs duty
Controlling inflation
• Chemicals and plastics – 12.5% to 7.5%
• Steel seconds – 20% to 10%
• Coking coal – duty exempt
• Polyester yarn and fibres – 10% to 7.5%
• Diamonds – 5% to 3%
• Dredgers – duty exempt
• Food processing machinery – 7.5% to 5%
• Medical equipment – 12.5% to 7.5%
• R & D – 5% duty extended to all research institutions
• Pharmaceuticals and biotechnology specified machinery –
7.5% to 5%
Reducing excise duty
• Ad valorem duty on petrol and diesel – 8%
to 6%
• Other reductions
–
–
–
–
Job-creating sectors
Food processing
Cement
Umbrellas, footwear, plywood
• Biodiesel, water carrying pipes - exempt
Service tax
• Service tax extended to a no. of services
• Exemptions
– Technology business incubators
– Clinical trials for new drugs
Direct taxes
Personal income tax (lower)
•
Standard exemption increased - all assessees,
senior citizens, women
•
Deduction for medical insurance premia
increased
Direct taxes
•
Corporate income tax
•
•
•
•
Infrastructure companies exempt – gas pipeline and
distribution; sea navigation channel
In-house R&D – 150% deduction continued until
2012
Hotels (2,3,4 star) in the NCR region – 5-year tax
holiday
CESS on education – secondary and higher –
2% - what for? (could it be scholarships in
private educational institutions?)
www.idfresearch.org
THANK YOU
Descargar

CII Northern Region Social Development Sub