Looking calm and composed as he presented the Budget for 2011-12 — his sixth — the Finance Minister, Mr Pranab Mukherjee, today served up a menu to suit all palates. It was a steady-as-she goes effort that left almost everyone better off than before and no one really much worse off.

The major surprise came in the perfect half-volley that he bowled to the FIIs — he doubled the amount they can invest in Indian corporate bonds. Earlier they could invest $20 billion, of which $5 billion was in bonds issued by infrastructure companies; now they can invest $40 billion, of which a whopping $25 billion is for infrastructure bonds issued by infrastructure companies.

It will be recalled that the Prime Minister, when he met the editors of the electronic media, had spoken about the need to boost the corporate bond market which is considered crucial for encouraging private investment in infrastructure.

Real gift

But the Finance Minister's real gift was reserved for those above 80. He said income up to Rs 5,00,000 would be exempt from tax. He also lowered the age for senior citizen entitlement to 60 from 65. Mr Mukherjee said he was altering the threshold limits for individual taxpayers and that they can now hope to save around Rs 2,000 in tax.

He also allowed foreign investors to invest in Indian mutual funds. Until now only FIIs and others registered with SEBI could do so.

The stock market responded positively and ended a sedate 122 points up after having bounded upwards by over 450 points at one stage.

Persisting with the infrastructure-for-growth mode, Mr Mukherjee also announced a large number of tax breaks for augmenting long-term, low-cost funds from abroad. This is to be done through dedicated debt funds.

He also announced a Rs 40,000-crore disinvestment programme which will provide some more avenues for investment; and handed out Rs 5,000 crore to small and medium enterprises that have been finding hard to access credit.

Tinker, tinker

For the rest, he removed excise duty exemptions, brought SEZ developers into the Minimum Alternate Tax fold, made some minor changes in the tax rates that will leave individuals better off and some firms slightly. He reduced the corporate surcharge from 7.5 per cent to 5 per cent, increased the MAT to 18.5 per cent from 18 per cent.

There was some good news for Indian firms with subsidiaries abroad. They will now be able to repatriate dividends under a 15 per cent tax rate, rather than the 30 per cent rate. The surcharge and cess will continue.

The fiscal balance was the usual North Block rope trick as he claimed to bring down the fiscal deficit to 4.6 per cent while garnering only Rs 11,000 crore of revenue and spending over Rs 41,000 crore additionally.

For art

In what many consider a strange move, Mr Mukherjee held out a carrot to art connoisseurs: he expanded the Customs duty exemption to works of art and antiquities imports meant for exhibition or display in private art galleries, provided they are open to the general public.

The only bad news was on the service tax side. Domestic air travel by business class will become a bit more expensive because of the standard 10 per cent levy.

Negative for IT sector

The Finance Minister has delivered a blow to export-oriented IT services industry, particularly small and medium companies, as tax benefits under the STP scheme have not been extended beyond March 2011. The other big negative is on account of imposition of MAT on SEZ units. Nasscom — which had so far been pushing for continuation of sops under the STP scheme for one more year (till DTC is implemented) — has expressed disappointment on the “double negatives”.

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