The Hindu Business Line : A ‘sensitive’ Budget

Budget 2008 focuses on ensuring equitable and sustainable growth of the economy. India lives in its villages and Budget 2008 unequivocally acknowledges this.

The agrarian population has been going through a tumultuous phase, and to alleviate their hardship, the Budget has announced a number of measures to improve agricultural growth and self sufficiency; complete waiver of debt for small and marginal farmers, OTS for other farmers, improvement in agriculture credit, thrust on schemes like National Rural Employment Guarantee, Mid-day meal scheme and National Rural Health Mission.

It is heartening to note that the gross capital investment in agriculture vis-À-vis GDP is being tracked and adequate measures are being initiated. Women SHGs (self help groups) will now find it easier to obtain bank facilities coupled with credit guarantee insurance.

With a long-term outlook, core sectors like education, healthcare and hospitality have been identified as thrust areas.

A number of institutions for higher education will be set up. New hospitals get a five-year tax holiday and health benefits for BPL families have been announced. The textile industry, which provides employment to a large number of people, benefits by continuation of the TUF scheme.

Minimal tinkering

Our country’s maturity is evident from the fact that the Government does not have to tinker with tax rates.

Customs rates have been retained and excise duty has been cut probably to bridge the gap with the Service Tax rate, thereby enabling eventual transition to Unified Goods and Services Tax.

Certain sectors, such as pharmaceuticals (for instance, life-saving drugs), small cars and two- and three-wheelers, will attract lower duty, benefiting the middle-income population.

The threshold for service tax has been raised, benefiting small and medium service providers. The CST has been reduced in keeping with the time schedule for its total abolition.

In direct taxes, the increase in IT exemption threshold will bring great relief to the tax payers, who have been rewarded on account of buoyancy in tax collections; more resources have been left in the hands of the public which will increase consumption and thereby accelerate growth in the economy.

Steps have been taken to streamline FBT and the cash withdrawal tax is being withdrawn, having served its purpose of enlarging the tax net.

Overall, this is a very sensitive Budget taking into account the conditions of the farmers, taxpayers and society as a whole; it lays emphasis on sustainable growth coupled with welfare measures.

(The author is a member, All-India Congress Committee.)

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