Union budget of India

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The Union Budget of India, referred to as the Annual Financial Statement[1] in Article 112 of the Constitution
of India, is the annual budget of the Republic of India, presented each year on the last working day of February
by the Finance Minister of India in Parliament. The budget has to be passed by the House before it can come
into effect on April 1, the start of India's financial year. Former Finance Minister Morarji Desai presented the
budget eight times, the most by any.[2]

Contents
 [hide]

1 Chronology

o 1.1 Pre-

liberalisation

o 1.2 Post-

liberalisation

2 Time of Budget

Announcement

3 See also

4 References

5 External links

[edit]Chronology

[edit]Pre-liberalisation

Dr. Manmohan Singh, the current Prime Minister of India, was instrumental in liberalising the Indian economy.

The first Union budget of independent India was presented by R. K. Shanmukham Chetty on November 26,
1947.[2]

The Union budgets for the fiscal years 1959-60 to 1963-64, inclusive of the interim budget for 1962-63, were
presented by Morarji Desai.[2] On February 29 in 1964 and 1968, he became the only finance minister to
present the Union budget on his birthday.[3] Desai presented budgets that included five annual budgets, an
interim budget during his first stint and one interim budget and three final budgets in his second tenure when he
was both the Finance Minister and Deputy Prime Minister of India.[2]
After Desai's resignation, Indira Gandhi, the then Prime Minister of India, took over the Ministry of Finance to
become the only woman to hold the post of the finance minister. [2]

Pranab Mukherjee, the first Rajya Sabha member to hold the Finance portfolio, presented the annual budgets
for 1982-83, 1983-84 and 1984-85.[2]

Rajiv Gandhi presented the budget for 1987-88 after V P Singh quit his government, and in the process
became only the third Prime Minister to present a budget after his mother and grandfather. [2]

N. D. Tiwary presented the budget for 1988-89, S B Chavan for 1989-90, while Madhu Dandawate presented
the Union budget for 1990-91.[2]

Dr. Manmohan Singh became the Finance Minister but presented the interim budget for 1991-92 as elections
were forced.[2]

Due to political developments, early elections were held in May 1991 following which the Indian National
Congress returned to political power and Manmohan Singh, the Finance Minister, presented the budget for
1991-92.[2]

[edit]Post-liberalisation

Manmohan Singh, in his next annual budgets from 1992-93, opened the economy [4], encouraged foreign
investments and reduced peak import duty from 300 plus percent to 50 percent. [2]

After elections in 1996, a non-Congress ministry assumed office. Hence the final budget for 1996-97 was
presented by P. Chidambaram, who then belonged to Tamil Maanila Congress.[2]

Following a constitutional crisis when the I. K. Gujral Ministry was on its way out, a special session of
Parliament was convened just to pass Chidambaram's 1997-98 budget. This budget was passed without a
debate.[2]

After the general elections in March 1998 that led to the Bharatiya Janata Party forming the Central
Government, Yashwant Sinha, the then Finance Minister in this government, presented the interim and final
budgets for 1998-99.[2]

After general elections in 1999, Sinha again became the finance minister and presented four annual budgets
from 1999-2000 to 2002-2003.[2] Due to elections in May 2004, an interim budget was presented by Jaswant
Singh.[2]

[edit]Time of Budget Announcement

Until the year 2000, the Union Budget was announced at 5 pm on the last working day of the month of
February. This practice was inherited from the Colonial Era, when the British Parliament would pass the budget
in the noon followed by India in the evening of the day.
It was Mr.Yashwant Sinha, the then Finance Minister of India in the government of Atal Bihari Vajpayee, who
changed the ritual by announcing the 2001 Union Budget at 11 am. [5]

UNION BUDGET 2010-11

 Opposition walkout during budget first in history

 BJP lambasts Govt for fuel price hike
 Net gain from indirect taxes Rs 46500 Crs
 Direct tax relief to result in loss of Rs 26000 Crs
 Net revenue from tax proposals Rs 20500 Crs
 Pranab has exercised modernation, says PM
 Section 80c investment limit hiked by Rs 20000
 Excise duty on solar panels waived
 Accreditted news agencies exempted from service tax
 Sensex shoots up 391 pts after tax slabs announced
 Online news agencies to attract service tax
 Service Tax rates unchanged
 Account auditing for all income above Rs 15 lacs
 More services to be brought under tax net
 Rationalisation of customs duty on gaming software
 Toys exempted from excise duty, to become cheaper
 Jewellery to be more expensive
 Monorail granted project import status
 CDs to be cheaper
 Excise duty on CFL halved to 4%
 Customs duty on Gold and Platinum hiked
 Refrigerators to be costlier
 Televisions to be costlier
 Mobile phones to become cheaper
 Peak customs duty unchanged at 10%
 Cement to be costlier
 Air conditioners to be costlier
 Oppostion walkout in Lok Sabha
 Uproar in Parliament over hike in fuel prices
 Excise on all non smoking tobacco raised
 7.5% duty on petrol and diesel restored
 5% duty on crude petroleum restored
 Fuel prices likely to go up
 Excise duty on petrol and diesel raised to Rs 1/litre
 Cigarettes to be costlier
 Excise on large cars,SUVs, MUV raised to 22%
 Partial rollback in Excise Duty from 10% to 8%
 Excise on large cars,SUVs, MUV raised to 22%
 Presumptive tax limit raised to Rs 60 lacs
 Investment linked deduction benefit for 2 Star hotels
 Deduction of Rs 20000 on investment in infra bonds
 Weighted deduction on R&D raised to 200% from 150%
 No tax on Income up to Rs 1.6 lacs
 Current surcharge on companies reduced to 7.5%
 Minimum Alternate tax hiked to 18%
 30% tax on income above Rs 8 lacs
 20% tax on income between Rs 5 lacs to 8 lacs
 10% tax on income between Rs 1.6 lacs to 5 lacs
 IT tax slabs broadened
 IT dept to notify Saral 2 form for individual tax payers
 IT exemption limit enhanced, surcharge withdrawn
 FY11 net market borrowings pegged at Rs 3.45 lac Crs
 20 Kms of highway to be constructed everyday
 FY10 budget deficit seen at 6.9% of GDP
 FY12 fiscal deficit target at 4.8%
 FY13 fiscal deficit target at 4.1%
 More than 50% increase in funds for minority welfare
 Fiscal deficit target of 5.5% in FY11
 15% rise in planned expenditure
 Govt to set up National Mission for delivery of justice
 Gross tax receipts Rs 7.46 lac Crs
 Rs 950 cr more for Railways
 Defence capex raised to Rs 60000 Crs
 Allocation to defence raised to Rs 1.47 lac Crs
 Pvt sector to meet food grain storage deficit
 Rs 100 Cr woman farmer fund scheme
 Rs 1900 Crs allocated for UID project
 Skill development programme for textile sector
 Home loans up to Rs 20 lacs to get intrest subvention of 1% up to March 11
 Government to contribute Rs 1000 per month for pension security
 Rs 5400 Crs allocated for urban development
 Rs 66100 Crs allocated for rural development
 Rs 2400 Crs allocated for MSMEs
 Social Security Fund to have corpus of over Rs 1000 Crs
 National Social Security fund for unorganised workers
 Intrest subvention for housing loans up to 1 lacs
 Rs 10,000 Crs allocated for Indira Awas Yojna
 Rs 1200 Crs assistance for drought in Bundelkhand
 Rs 48000 Crs for Bharat Nirman
 NREGA scheme allocation raised to Rs 41000 Crs
 Allocation to health Rs 22,300 Crs
 25% of plan allocation for rural infrastructure
 Social sector spending seen at Rs 1.38 lakh Crs
 Allocation for school education up from Rs 26800 Crs to Rs 31036 Crs
 Allocation to power sector at Rs 5130 Crs
 Rs 200 Crs for Tamilnadu textile sector
 One time grant for Tirupur exports
 Draft food security Bill ready
 Clean energy fund to be established
 Allotment for renewable energy hiked by 61%
 Coal regulatory authority to be set up
 Road development hiked to Rs 19894 Crs
 Rs 1.73 lakh Crs, which is 46% of total plan outlay, reserved for infrastructure
development
 2% loan subsidy to farmers
 Farm credit targets to be increased to Rs 3.75 lakh Crs
 Farm loan payments to be extended for six months
 Interest subvention of 2% to be extended for handicrafts and SMEs
 Rs 300 Crs for agricultural impetus
 Additional Rs 1,65,000 Crs for bank re-capitalisation
 Intrest subvention for exports to extended for one year
 RBI may give banking licenses to Pvt cos and NBFCs
 FDI policy to be made more user-friendly
 Indian Rupee to get unique identity and symbol
 To discuss Kirit Parikh report in due course
 Fertiliser subsidy to be reduced
 Divestment target of Rs 25,000 Crs
 GST to be implemented from 2011
 Hope to implement Direct Tax Code from April 2011
 Calibrated exit strategy for fiscal stimulus
 Need to review stimulus, go back to fiscal prudence
 Significant private investment inflow expected to boost GDP
 Economy can achieve GDP growth of 10%
 India faces a challenge of reverting to double digit growth
 FY 2009-10 was a challenging year
 Need to improve food security and healthcare systems
 Indian economy in far better position than last year, says Pranab
 Pranab Mukherjee starts Budget speech
 Pranab Mukherjee arrives in Parliament
 Parliament to convene at 11 am
 All eyes on stimulus rollback
 Pranab Mukherjee reaches North Block
 Introduction
 We all agree that Indian economy has made great progress qualitatively since 1991.
Country has seen unprecedented growth in many sectors of the economy since
controlled liberalisation.
 We were successful in achieving targets in the first two plans that established the
backbone of our economy. Thank god; that our fore fathers adopted the economic
strategy of mixed economy which saved our country from economic disasters over
the period of time. This was the worse of all and we have been saved but for some
sectors.
 I dare say our performance from late sixties till early nineties have been quite dismal
on all counts. We had plan holidays, high tax and negative growth. We even had two
plan holy days in 70s. Still during closed economy days we had stability and
stagnation. We also had to fight many wars during this period.
 Now we must keep in mind that those who grew during closed economy: politicians,
industrialists, bankers, and social workers are still either running or shaping our
economy.
 The major change in our out look came in during early 90s when the economy was
first liberalised inviting foreign capital in to the country. This could be because the
country wanted to take advantage of the requirement of the developed economies to
reduce cost of their production significantly since they were showing signs of
saturation. Only way they could keep their people going to the departmental stores
was to make their products cheaper. India realised that China was providing the
platform by controlled opening of their economy. I think that is why India agreed to
open its economy and Foreign Direct Investment (FDI) and export increased.
 I feel that it would be incorrect to think that Indian economy improved not because
to liberalisation alone. In the mean time for the first time a strong non-congress
government came in to power. It was a government which had very little experience
of running a closed economy instead were people willing to do some thing new. They
kept the economy open and made massive investment in building road connecting
the four Metros to the country. It was a massive investment and risk never done
before in India in such a short time. This single act changed the fundamentals of the
economy for good. The multiplier effect of that investment made our development
inclusive and our economy for the first time felt its strength. The inflation was low
with high growth. The world recognised the strength of our economy where mixed
economy concept was successful with inclusive growth.
 Growth of new fragile software industry added value to the economy. This industry
was dependant on the growth of western economy. The contribution made by this
sector was a welcome change because it grew rapidly and became a big export
earner for the country. This earning, never seen before, with increasing FDI
increased our foreign exchange reserve to USD 281 billion from mere USD 5.8 Billion
in 1991. It was considered a significant achievement. The economy grew rapidly
because of foreign inflow of products, increase in export, inflow of foreign funds and
generation of capital due to internal investment made by the Indian government in
infrastructure.
 The mismatch
 Still even today there is a miss match between foreign exchange asset and liabilities
to the tune of USD 97 Billion. It naturally makes our economy venerable in terms of
the present crises. If the world economy does not improve in short time then we
may have a problem.
 Present Budget Analysis
 Now let us analyse the present budget in this light. We will assess if this budget will
help to improve:
 1. The employment climate. 
2. Reduce retail inflation.
 Improve employment
 We have witnessed major improvement in employment was in IT sector because it
was not there before and that helped us to show growth in our GDP to over 9% up to
2007 but since 2008 it declined to 5.36 %. The question: is our economy ready to
absorb this decline when our national mangers do not have any experience of
managing such violent downfall. Since the world economy is not stabilising as we had
expected the employment growth in this sector will also take its own time. On the
other, we have large number of educational institutions producing IT specialists
which this industry at present cannot absorb. This is the current dilemma and this
budget does not address this issue. In the present budget, I see, just plans but no
allocation in basic industries which ultimately would generate employment in short
run. I do not see Government coming up with any plan to make e-governance or
citizen card project operational in short time.
 Our agriculture production is reducing with no investment in infrastructure to make
products available to the market cheap where as population is increasing by 1.8%
 per year. Agriculture now accounts for just 18% of GDP. This is putting pressure on
our economy in this budget there was a mention of import of food items to ease
prices. This will further put pressure on retail prices where we see that inflation is
about 17% which is about the highest we have seen in ages.
 I find that allocation of funds on agriculture is just 10% of the total expenses.
Where, as if we see the expense side of the budget most of the expenses are not
going to generate any income or employment in the near future.
 The finance minister for last two years has been giving a wish list and balancing his
budget. To me it appears to be an accounting exercise hoping to get substantial cash
by selling shares and auctioning 3G licences which will just help him to reduce some
pressure and should the western economy stabilise and export go up he may well
just scrape through. 
I do not see major improvement to wards employment generation over next one
year.
 Reduce retail inflation
 Over last five years practically no investment has been done for developing the
infrastructure in the villages in India other than giving large sums of money which
went to increase inflation. Published data of Cement industry shows that capacity
utilisation in the year 2008-9 has been 85% as against 93% in 2007-8. I attach
significant importance to this data as it is related to infrastructure development.
Retail prices can only be reduced by implementing long term strategy which will
fundamentally help to improve production and reduce cost. There is no plan to
improve rural education and facilities. On the contrary I see efforts are being made
to urbanise the rural India causing huge pressure on consumption without significant
increase in production.
 I therefore, do not think this budget has any answer to that other than allocating
funds for import of food products from other countries by paying hard currency
where we are short.
 Conclusion
 India's GDP Statistics: 
GDP: $1.209 trillion (2008 Estimate) 
GDP Growth: 6.7% (2009) 
GDP per capita: $1016 
GDP by sector (2008 Estimate): 
Agriculture: 17.2% 
Industry: 29.1% 
Services: 53.7%
 I strongly feel that that there has to be a long term strategy for making an inclusive
growth. India can easily improve its economy by increasing purchasing power of its
population and evolve a method of inclusive consumption based on local industry.
 Then where to start? Start building roads and infrastructure for which we have the
technology and the raw material and this alone will generate employment in the
lower strata of the population and need for allocation for large amount of subsidies
and making non plan expenditure will be greatly reduced. We need to activate use of
IT at all levels of the government and give orders to our own local software
companies. I am sure their dependence on foreign companies will be greatly
reduced. As chain reaction, Indian companies will also need more and more of
indigenous software which will fit them more. This will start an organic reaction all
over. We should give attention to defence production with our own raw material.
Germany did it why we can not do the same way?
 This will help us to develop our own technologies and we will become more self
reliant like west. Our quality will improve and that may improve our export and make
our economy self generating.
By Dr. A.Chakravartty

Dr.Aloke Chakravartty is at present Director in Charge of Management Sciences of Techno

India Group,Calcutta in India. He has over 37 years of experiance of the industry and over 6
years of international consulting experiance. He has set up many projects small medium
and large. He was promted to write this article after seeing how the Indian economy is at
the cross road today.

Article Source: http://EzineArticles.com/?expert=Aloke_Chakravartty