Budget India 2010-11

On 6th July,2009 when Finance Minister Pranab Mukherjee finished his 2009-10 budget presentation, the stock market had tanked by more than 5%. Even though, given the economic context it was a good budget as reported in my earlier blog of July 8th, 2009. However, this time around when he presented the budget today, the market went up by 1.3%. The general pre-budget opinion was a mixture of caution with fear. People were expecting that the Finance Minister would roll back all the excise duty cuts he made during pre- election as part of the economic stimulus package. But Pranab Mukherjee turned the tables on them by coming with another balanced budget.

He has promised to bring the fiscal deficit from 6.8% of GDP in 2009-10 to 5.5% in 2010-11 and has made a road map to bring it to 4% in the third year. Also, he has promised to implement the direct tax code(DTC) and goods and service tax(GST) by 1/4/2011. He has provided more money to the poor thro' National rural employment guarantee scheme(NREGA).

He has managed to increase the 10% i/tax slab from Rs.3 lakhs to 5 lakhs and similar enhancement for 20% tax slab from Rs.5 to 8 lakhs. This would really help the salaried class. However, he has made no changes in the base exemption limit of Rs.1.6 lakh. With inflation going thro' the roof, one would have expected relief in this as the value of the money has been eroded. The other surprising proposal was to roll back the duty on crude and petroleum products. Also he has enhanced the excise duty on petroleum produts by Re.1. This would increase the petrol rate by Rs.2.7 and Diesel by Rs.2.55. this will have a ripple effect and spiralling inflation. This brought uproar from the opposition who staged a walkout.

My first impression of the budget is the Finance Minister has by and large kept his earlier promise and has looked at the future pragmatically taking India to the 9% GDP growth era. Well done. i would give 7 out of 10 marks.