Union Budget
Dr.N.Prabhudev
Vice Chancellor
Bangalore University
Lighter Side of the Budget
• God, grant me the capital to accept the things I
cannot change; the reserves to change the
things I can; and the Fed Auction when all that
blows up. Amen.
• The Obama administration will announce that
2010 will be renamed 2009, giving us another
year of leeway to recover from the crisis. The
move will make Obama’s poll ratings soar, as
everyone would love to turn back the clock on
their lives. “It’s just like daylight savings time,
but in reverse,” the president will say.
• Gulf News has told its journalists to avoid
using the words “bailout” and “default” when
writing about Dubai’s debt crisis… were also
urged to steer clear of the phrase “debt
crisis” and asked to “ensure the following
politically correct terminology is used” —
words such as “financial consolidation” and
“fiscal support” — when describing the
sheikdom’s economic problems didn’t get
bailouts, they got fiscal support. Or, better
yet, they simply experienced financial
consolidation. Sounds so much better than,
you know, bankruptcy.
• The Union Budget of India, referred to as the
Annual Financial Statement 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.
• The first Union budget of independent India was
presented by R. K. Shanmukham Chetty on November
26, 1947. 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.
Significance of the Budget
• The Union Budget defines the nation's financial
projections by the Union minister for finance for the
forthcoming financial year and a financial review of
the current fiscal year. However, Parliament finally
decides the Budget.
• The imposition of any central government taxes
and distribution of government expenditure from
public funds cannot be possible without an Act of
Parliament, which examines and reviews all
statements to ensure the proper dissemination of
government expenditures.
• Basically it is the Lok Sabha, the House of
the People, whose approval is mandatory for
the Budget to come into effect.
• Proposals for taxation and expenditures can
be initiated by the Council of Ministers,
specifically the minister of finance. However,
according to Article 112 of the Constitution of
India a statement of estimated receipts and
expenditure of the Government of India has
to be laid before Parliament in respect to
every financial year.
• The month of February is upon us. Everybody
looks forward to this month. But what is so
special about this month? Valentine's Day of
course --- and Budget. Budget is an annual
exercise undertaken by the government that
keeps everyone, whether rich or poor, on their
toes. Here are some interesting facts about
the budget that you may not be aware of:
• The term budget is derived from bowgette. The
term bowgette in turn was derived from the
Middle French word bougette. It is an
abbreviated form of bouge, denoting a leather
bag.
• C.D. Deshmukh was the first Governor of RBI
who also became the finance minister. He first
introduced the budget in Hindi in 1955-56.
• Morarji Desai holds the record for presenting
the highest number of budgets - 10, of these
8 were annual ones and 2 were interim ones.
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.
• In between his 2 stints, T.T. Krishnamachari
was again elected as the finance minister.
• He was responsible for introducing voluntary
disclosure scheme that would enable people
to disclose their hidden wealth. It was
supposed to be one time measure but has
become a permanent fixture today
• But when Dr. Manmohan Singh took over as
finance minister, the focus shifted to
liberalization and making India global
economic power. He started the process of
government disinvestment that is still
continuing even today.
Budget Review from a Layman’s Perspective
• Before handing over the podium to the experts for
their informed analysis of the budget, I would like to
provide a brief review of the positive aspects of this
budget from a layman’s perspective:
• By far the most attractive aspect in the Budget
2010 for individuals is the increase in the income
tax slab limits. Though the entry level slab for
income tax has not been changed from Rs 1.6 lakh,
there is a considerable jump in the other slabs. A
majority of income tax payers in the middle class
and upper middle class have a lot to cheer from the
Union Budget 2010.
• Many people tend to complain that the
documentation involved in the tax filing
process is lengthy and cumbersome. On the
paperwork front, there is some cheer as the
finance minister has said that a two page
SARAL-2 is ready and will simplify the process
of filing our returns.
• A renewed push has been given to the New
Pension Scheme in this Budget. Our finance
minister has proposed to give Rs 1,000 as a
starting incentive to all accounts of NPS
opening in the next three years. This is a
welcome measure, as the NPS is as of now
the key Contributory Social Security Scheme
in India.
• The finance minister has said that the
interest support of 1% for low-cost housing
loans will be extended for the next year too.
This is a boon for the builders of townships
and also the aam aadmi of India who could
not afford costly houses. This is a direct form
of supporting the recovery of the economy
itself.
• With a keen focus on the GST, the service
tax rates have been retained at 10%. Thus
prices in the service sector do not seem to
be facing any hike.
• Lastly, the finance minister has also given an
additional deduction of Rs 20,000 for any
investments in Infrastructure bonds. Meaning we
could even save up to 10 per cent of our income in
case we are in the lower end of any of the slabs by
putting our money into the development of
infrastructure of the country.
• There is a large focus given to developing
infrastructure in the country. Over 40% of the total
outlay has been given towards developing
infrastructure. This added with the deduction to
investments in infrastructure bonds will surely help
us see better infrastructure in the coming years.
• However, there are quite a few drawbacks
such as the increase in customs and excise
duties, increase in fuel prices all leading to
potential inflationary issues in the budget
which will no doubt be dealt with in detail by
the experts.
• THANK YOU!