NEW DELHI: Promising more money in the hands of households by hiking the income tax exemption limit and lowering tax surcharge for corporates, Finance Minister Pranab Mukherjee Monday presented the general budget for the next fiscal with a fair dose of reforms and steps to curb inflation, check corruption and push growth.
Seemingly aware of the elections due soon in five states and of general negative perception on issues such as graft and lack of reforms, the finance minister also proposed higher outlays for health, infrastructure education and farming, as also new subsidy schemes that will give money directly to users of fertilisers and kerosene.
In his 110-minute speech in the Lok Sabha, the lower house of parliament, he proposed to enhance the income tax exemption limit to Rs.1.8 lakh (Rs.180,000 or $4,000) for the next financial year, from Rs.1.6 lakh now, even as credit flow to farmers was sought to be substantially enhanced.
At the same time, he said, while the minimum alternate tax levied on the book profit of the corporate sector will be increased to 18.5 percent from 18 percent, the surcharge will be lowered to 5 percent from 7.5 percent. He also kept the customs duty unchanged.
The finance minister also said he was proposing a very senior category of income tax payers, above the age of 80, for whom the tax exemption will be up to Rs.5 lakh. The qualifying age limit for senior citizens was being lowered to 60 years from 65 years.
He set the tone for his sixth budget by stating that India had bounced back after the global financial crisis with broadbased growth, even as inflation remained a matter of concern, especially food prices — though it had dipped from over 20 percent to around 7 percent now.
This apart, he said the foreign direct investment policy was being revamped, which may result in the entry of multinational firms in the country’s $300 billion retail trade industry, apart from liberalising the norms governing pension and insurance funds.
"We are reaching an end to a remarkable year with high growth and many challenges. Our growth in 2010-11 has been swift and broad-based. Economy is back to pre-crisis growth trajectory," Mukherjee said in his opening remarks.
"In the medium term, our three priorities of maintaining high growth trajectory, making development more inclusive and improving our institutions remain relevant," the minister added in the largely speech.
This is the sixth such exercise for the 75-year-old politician. He tabled three budgets between 1982 and 1984. The one unveiled Monday was the third successive for the United Progressive Alliance (UPA) government.
Expectations were high from both households and the corporate sector as this budget is being presented against the backdrop of high inflation, fluctuating industrial growth, erratic exports and a general perception that the reform process has retarded.
"I do not foresee resources being a major constraint, at least in the medium term," Mukherjee said, referring to the money needed to address the larger agenda of growth, social programmes and infrastructure development.
He said the farm sector had shown a rebound with 5.4 percent growth, industry was regaining its earlier momentum and services continued to grow at double digits. He added that fiscal consolidation too was impressive.(IANS)