Current Feed Content from 27 Aug 08 23:23
Sensex falls 1.4pct as budget fails to cheer
Fri, 29 Feb 2008 20:29:00 +0000
Enlarge Photo The Bombay Stock Exchange (BSE) building is seen in this file photo. REUTERS/Punit Paranjpe Fri, Feb 29 05:14 PM
Indian shares fell 1.4 percent on Friday to their lowest close this week, after the national budget budget failed to cheer investors already shaken by turbulent global markets.
The government promised higher spending for ailing farms and pledged funds for rural revival in the 2008/09 budget, but a $15 billion scheme to waive loans and plans to raise the tax on short-term capital gains weighed on the markets.
The benchmark 30-share BSE index ended down 1.38 percent, or 245.76 points, at 17, 578.72 in choppy trade after falling as much as 3.2 percent at one stage. Twenty-one components closed in the red.
"The budget lacks teeth because there are no major reform
initiatives on the plate, which were put up in the earlier years, " said Jigar Shah, head of research at KIM ENG Securities' Indian unit.
The budget raised short-term capital gains tax, when an investment is sold for profit before one year, to 15 percent from 10 percent. The move could affect day traders, or people who look for quick gains.
However, duty cuts on automobiles could help some sectors to
recover, analysts said.
"I feel the markets are headed up, " said R. Rajagopal, chief
investment officer at DBS Cholamandalam Asset Management. "It will be a function of money flow and when the valuations are quite attractive."
For the week, the index was up 1.3 percent. But it slipped 0.4 percent in February, extending losses to 13.4 percent this year and is 17 percent below a record high of 21, 206.77 hit on Jan. 10.
Reliance Industries, India's most-valuable firm and top petrochemicals maker, fell 3.1 percent to 2, 458.25 rupees, after the government imposed a 5 percent import duty on naphtha, used to make polymers.
Larsen & Toubro, India's top engineering firm, fell 3.2 percent to 3, 523.05 rupees, as the government did not announce any "big bang" infrastructure project, a trader said.
Infosys Technologies fell 3.3 percent to 1, 546.85 rupees after it said its taxes would go up to 22 percent in 2010/11 from about 15 percent as a 10-year tax holiday is expected to end in March 2009.
These three stocks together account for more than 28 percent of the main index.
Banks shares initially fell sharply after the finance minister proposed to waive $15 billion of loans to farmers, but then pared losses when it became evident the government would pick up most of the bill.
ICICI Bank closed 1.1 percent lower at 1, 090.95 rupees, recovering from a low of 1, 050, while the BSE bank index ended 0.4 percent up, reversing a loss of 3.8 percent.
In the broader market, 1, 628 losers outpaced 1, 064 gainers on
volume of 352.8 million shares.
The 50-share NSE index fell 1.17 percent to 5, 223.50.
Elsewhere in the region, Karachi's 100-share index slid almost 1 percent to 14, 934.30, while Colombo's All-share index fell 0.36 percent to 2, 530.86.
STOCKS THAT MOVED
* IFCI Ltd rose 6.9 percent to 66.90 rupees after the budget allocated 4.33 billion rupees to restructure the state-run lender its liabilities.
* Consumer goods makers rose on proposals to do away with excise duty on packaged foods such as tea and coffee, from 16 percent now. Hindustan Unilever Ltd rose 3.3 percent to 227.35 rupees, also helped by a proposal to halve the tax on water purification systems to 8 percent.
* Shares in vehicle makers who are stepping up their presence in the defence sector rose after the finance minister proposed a 10 percent increase in defence spending for 2008/09.
Shares in Mahindra & Mahindra Ltd, the top utility vehicle and tractor maker, were up 1.9 percent at 692.80 rupees, while Ashok Leyland Ltd gained 4.2 percent. Tata Power, which also supplies equipment to the armed forces, rose 1.2 percent to 1, 401.10 rupees.
TOP THREE BY VOLUME
* Nagarjuna Fertilisers & Chemicals on 35.9 million shares
* Reliance Petroleum 19.3 million shares
* IFCI Ltd on 17.2 million shares
(Additional reporting by Hiral Vora)
vishbmCement players see demand boost from rural spends
Fri, 29 Feb 2008 20:27:00 +0000
Enlarge Photo A child is seen standing inside cement rings in Hyderabad in this May 30, 2007... Fri, Feb 29 05:24 PM
The Indian cement industry has welcomed the overall thrust on the rural economy in this year's budget but was disappointed as most of their industry-specific demands were not met.
Finance Minister Palaniappan Chidambaram, in his annual budget for 2008/09, proposed extending crop insurance schemes and boosting tea, cashew, coconut and pepper sectors, while 200 billion rupees was set aside for irrigation.
Spending on a rural job guarantee scheme is also to rise 60 billion rupees to 160 billion rupees.
The extra funds for the rural economy will lead to increased spending power among the people and, as the economy grows, cement demand also increases, said Hari Mohan Bangur, managing director, Shree Cement Ltd.
"We expected some rebates on taxes as cement is one of the heavily taxed items but that did not come in the budget, " he said.
The minister has proposed an excise duty of 400 rupees per tonne or 14 percent ad-valorem duty on bulk cement and 450 rupees per tonne on cement clinkers.
"Bulk cement does not constitute more than 2 percent of the overall demand and so the impact will be negligible, " Bangur said.
"There was a valid case to bring down the excise duty to 6 percent to give a boost to infrastructure development, " said Vinod Juneja, deputy managing director, Binani Group, founders of Binani Cement Ltd.
"With firm competition from southeast Asia, China and west Asia, both the industry and the government must work hand-in-hand to tackle the issue, " Juneja said adding the government should have reviewed the policy of zero import duty on cement.
vishbmComments from RBI after 08/09 budget
Fri, 29 Feb 2008 20:23:00 +0000
Enlarge Photo Reserve Bank of India's Deputy Governor Rakesh Mohan speaks during a banking conference in Mumbai... Fri, Feb 29 06:41 PM
Following are excerpts from a news briefing by Reserve Bank of India Deputy Governor Rakesh Mohan on Friday after the 2008/09 federal budget announcement.
---------------------------------------------------------------
ON BUDGET:
"I think it is a very balanced budget in terms of growth and stability. The government has said that inflation control is a top priority and that is music to my ears."
ON LOAN WAIVER PLAN TO FARMERS:
"I think we have to await the details on how the scheme will actually be administered which we don't have yet. I am sure that the finance minister will keep in mind the need to maintain the continuing financial health of the banks just as they have done in the past. In the interest of financial stability and economic stability and the continuing growth of the credit system, they will work on those needs while formulating the scheme."
ON CASE FOR A STATUTORY LIQUIDITY RATIO CUT:
"The projected gross and net borrowing plan is very much in line with our projections from a monetary point of view. To the central government market borrowing plan you also need to add the states' borrowing plan and that has gone up and also there is lower accretion to small savings fund."
ON GROWTH AND CREDIT SLOWDOWN:
"We have nothing to add to what we had said in our Jan. 29 policy review. The (growth) figure was around 8.5 percent and that is not distinctly different from the Central Statistics Organisation and the finance minister.
"It's not a sharp slowdown in growth and not very different from our projections and it is absolutely consistent to our projections. Loan growth to industry and infrastructure, which is what really matters, are higher than what it has been for the last five years."
ON CAPITAL FLOWS:
"The whole issue of capital flows is that they are very volatile. It may be very low in one month and they are high in another month and I don't think one can relax at all on the experience of one or two months. The whole point of macro management and monetary policy management are to manage the volatile part of these flows."
ON CURRENT ACCOUNT:
"The current account deficit is very comfortable and is less than 1.5 percent and more towards 1 percent and the inflows are clearly more than that."
ON INFLATION:
"You have to look at macro aggregates. There are no monetisation of deficits. The fiscal deficits are very low and the consistent reduction of deficit mean the government is borrowing less from the markets and there is more and more available for the financial system and there are more funds to devote to the private sector."
ON LIQUIDITY:
"It is basically business as usual in terms of liquidity instruments. Clearly there is no liquidity shortage as of now. Yes, the advance tax outflows will be there towards the end of March. We have enough liquidity instruments and they are exactly meant to manage frictional liquidity. We have enough tools to manage liquidity. We had some difficulty last year in March. I don't expect that this year."
vishbmBudget focuses on farms, gears up for vote
Fri, 29 Feb 2008 20:21:00 +0000
Enlarge Photo Farmers smile at a gathering held after the announcement of the Union budget, outside the... Fri, Feb 29 06:49 PM
India's government promised higher spending for ailing farms and funds for rural revival in its budget on Friday, but it stuck to fiscal goals and pledged to keep inflation under control ahead of elections due in 2009.
Finance Minister Palaniappan Chidambaram, presenting the fifth and last full budget of the left-leaning administration, proposed $15 billion to write off debt owed by small farmers to banks in a move analysts said was aimed at the ballot box.
He pledged higher spending on health and education to spread the benefits of an economic boom beyond the cities to rural voters and proposed raising the income tax threshold. Duties on small cars and two-wheelers will be cut to boost manufacturing.
He left corporate tax rates unchanged but said he was raising a tax on short-term capital gains, aimed at share transactions, to 15 percent from 10 percent, helping send the stock market down 1.4 percent on the day.
"The emphasis on social sectors like health, education and the rural economy do suggest that the budget is leaning towards some populist measures, " Yes Bank chief economist Shubhada Rao said, although she noted excise cuts would help dampen inflation.
The rupee slipped against the dollar after the budget but the benchmark bond yield eased 5 basis points on the day to 7.55 percent after the finance minister said he expected to better his fiscal targets for the current financial year.
Chidambaram said the government's aim was to boost employment and abolish poverty and inequality in the country of 1.1 billion people, where some 260 million struggle on less than $1 a day.
Television channels showed farmers celebrating the loan write-off, but the government's communist allies said many were indebted to private money lenders and would not benefit.
SPENDING
Total spending was budgeted at 7.51 trillion rupees ($188.5 billion) for the fiscal year starting April 1, up 6 percent, including a 10 percent increase in defence spending. Revenue is forecast to rise almost 15 percent.
Among the help for farmers, Chidambaram proposed extending crop insurance schemes and boosting tea, cashew, coconut and pepper sectors, while 200 billion rupees was set aside for irrigation. Spending on a rural job guarantee scheme is to rise 60 billion rupees to 160 billion rupees.
Gross market borrowing for 2008/09 was put at 1.45 trillion rupees, lower than a market forecast of 1.65 trillion.
Chidambaram said the federal fiscal deficit would fall to 3.1 percent of gross domestic product in 2007/08, beating a target of 3.3 percent. The deficit target for 2008/09 would be 2.5 percent, below a 3 percent target enshrined in law, but he said that left headroom in case more borrowing was needed.
He did not specify provisions for higher government workers' salaries. A pay commission will submit a wage review soon and international rating agency Standard & Poor's, which puts India on the lowest investment grade, warned it could impact ratings.
"The challenges to India's ratings in the future comes from the implementation of the sixth pay commission, slower growth and potential expenditure overruns, " S&P director Sani Hamid said.
The government said it would need another year to meet a legal goal of eliminating the revenue deficit, the gap between tax revenues and current spending, due in the coming fiscal year.
GROWTH AND INFLATION
While he was confident India would grow by 8.8 percent in the fiscal year ending on March 31, Chidambaram said turbulent financial markets and high commodity prices posed risks.
The communist-backed government is concerned that inflation hits the poor first, and Chidambaram said containing price pressures was a cornerstone of its policies.
"Management of the supply side of food articles will be the most crucial task in the ensuing year, " he said, adding the country was determined to be self-sufficient in food grains.
Data on Friday showed annual wholesale price inflation in mid-February jumped to an eight-month high of 4.89 percent.
Deputy central bank governor Rakesh Mohan said the government's emphasis on inflation control was "music to my ears".
High interest rates last year have slowed consumption, and data showed annual growth in the $1 trillion economy eased to 8.4 percent in the December quarter from 8.9 percent in September.
India, the world's fastest growing major economy after China, clocked 9.6 percent in 2006/07, its fastest pace in 18 years.
Chidambaram pledged reforms in coal and power, and said financial sector reforms would continue, including developing a market for exchange-traded currency and interest rate futures.
High capital inflows last year complicated monetary policy by pushing the rupee up against the dollar, and Chidambaram said in the long term the economy must be able to absorb more capital.
"In the short term it is our responsibility to manage the flows more actively, " he said.
vishbmRupee slips on equity worries, oil payments
Fri, 29 Feb 2008 20:19:00 +0000
Enlarge Photo A man uses an electronic machine to check a Rs 500 note at a money... Fri, Feb 29 06:56 PM
The Indian rupee came under pressure on Friday on worries about a slowdown in capital inflows, after the government proposed an increase in short-term capital gains tax and sent stock prices lower.
The partially convertible rupee ended at 40.01/02 per dollar, losing ground from the previous finish of 39.87/88. It hit a five-month low of 40.25 last week.
"Sentiment has been hit because of the tax hike, and foreigners may start pulling some money out, or at least not put much more in for the time being, " said the chief dealer with a foreign bank.
India announced its 2008/09 budget on Friday, with inflation management and reviving the flagging farm sector at its forefront, to keep growth on track in the run up to national elections due by 2009.
The government proposed to increase the short-term capital gains tax to 15 percent from 10 percent, pushing the India's benchmark share index down 1.4 percent to its lowest close this week.
The rupee came under further pressure after an oil company was seen buying dollars, most likely to make overseas month-end payments, dealers said.
Oil was trading at $102 per barrel, not far from a record peak of $103.05 hit earlier in the session, with supply disruptions and a weak dollar spurring investors to buy commodities.
Oil is India's largest import, and higher crude prices usually mean downward pressure on the rupee as a larger import bill would widen the trade deficit.
vishbmBUDGET - Excerpts of Finance Minister comments
Fri, 29 Feb 2008 20:16:00 +0000
Enlarge Photo Finance Minister Palaniappan Chidambaram speaks during a news conference in New Delhi February 29, 2008.... Fri, Feb 29 07:03 PM
Following are excerpts of Finance Minister Palaniappan Chidambaram's media conference after he presented the budget for 2008/09 (April-March) on Friday.
ON GROWTH
"The India story is intact. Let there be no apprehension on that ground ... the growth story is intact but it is not inclusive. There are people who are not participating in the growth story."
"As long as investments take place, I am very confident that we can maintain the current growth rate despite some dampening effect as a result of global developments. The downsides are of course crude oil prices, commodity prices and food prices ... The government and the RBI together will watch the situation very closely to see that inflationary pressures do not build up."
ON LOAN WAIVER
"The 600 billion rupees is money from the banking system in the hands of the farmers. It may or may not come back to the banking system, part of it may come back.
Therefore we have to provide liquidity to the banking system. We would provide liquidity to the banking system over the period they would have recovered the money, which is about 3 years. So in a period of 3 years we will provide the liquidity to the banking system equivalent to the amount that is being written off."
"You have to stand up and be counted. Are you for farmers or are you against the farmer ... If you are for the farmer, the story of distress and difficulties in the last few years leads only to one inexorable conclusion, that the time has come to write off the debts of small and marginal farmers."
"Debt waiver only means I have to provide equivalent liquidity to the banking system ... You will find the answers when we announce the plan."
ON INVESTMENT, CONSUMPTION
"All analysis shows there is no decline in the investment boom. There is some decline in consumption, especially in some sectors. My speech has identified those sectors and we have taken fiscal steps to give a stimulus to those sectors. It is consumption which drives production and it is production which drives investment."
CORPORATE SECTOR
"We have not imposed any new burdens on them. On the contrary, we have made sure that demand increases. Cut in customs duties, general cut in excise duties to 14 percent from 16 percent, specific cuts, deeper cuts on pharmaceutical sector, buses, chassis, small cars ... all this means demand will rise."
ON PAY COMMISSION
"We don't know the size of that envelope, but I have said that we have some headroom if it becomes necessary. Once the pay commission comes, we can look at the resource side to meet the pay commission."
vishbmMaruti Suzuki lowers car prices after tax cut
Fri, 29 Feb 2008 20:13:00 +0000after tax cut
Enlarge Photo File photo of a billboard advertisement of Maruti Suzuki's Wagon R in Chennai, August 6, ... Fri, Feb 29 07:39 PM
India's top car maker Maruti Suzuki Ltd said on Friday it had cut prices of some models following a government proposal to trim tax on small cars.
The finance minister, in the budget for the fiscal year 2008/09, cut excise duties on small cars, as well as buses and chassis, to 12 percent from 16 percent.
He also cut duty on hybrid cars to 14 percent from 24 percent and on two- and three-wheelers to 16 percent from 24 percent.
Maruti said it would reduce prices of all its small car models, ranging from 6, 500 rupees ($163) on the mini 800 to 18, 030 rupees on the Swift diesel model.
Tata Motors Ltd, the top bus and truck maker, said it will cut prices of its small cars and commercial vehicles, and announce the new prices "in the next few days."
Hyundai Motor India Ltd, a unit of Hyundai Motor, said it will cut the price of its Santro model by up to 13, 278 rupees and the price of its i10 model by up to 16, 324 rupees.
It said it will reduce the price of its Getz Prime model by up to 19, 419 rupees.
(Reporting by Rina Chandran)
vishbmIndian Budget 2008 Moments
Fri, 29 Feb 2008 19:55:00 +0000- Union Finance Minister P. Chidambaram on taxes ANI-06:00 PM
- FM ON BUDGET ESTIMATES ANI-06:00 PM
- Indian FM Chidambaram presents the Union Budget ANI-03:45 PM
- Interesting facts about the annual Budget ANI-03:45 PM
- FM projects 8.7pc growth this fiscal in Eco Survey ANI-03:02 PM
vishbm- Union Finance Minister P. Chidambaram on taxes ANI-06:00 PM
User Reactions to India Budget 2008
Fri, 29 Feb 2008 16:20:00 +0000
Yes, you can say it a good budget Mr. Finance Minister but the point is you have already taken so much by way of raising interest rates/ prices etc. that raising the limit of income tax etc.will not make any impact or very little impact. Sorry, no vote for you or your party. By - jpsingh 2008-02-29 17:58:16 Though the budget has given a fair relief to the low and middle class people , it also touches to the back borne of india ie farmers. but i wonder how the government could generate such a huge amound of 60, 000 crores practically for the relief to them. we have to wait and see this drama By - SHAJAHAN 2008-02-29 17:56:00 At last Finance Minister shown some mercy on salary people. But basic slab should be atleast Rs.2.00 lacs By - siva sankara prasad 2008-02-29 17:52:12 Hats off to FM Chidhambaram By - Don Thottakath 2008-02-29 17:50:39 Hello!!!!!!! Mr. Chitambaram...Thank YOU 4presenting the budget in your budget every one getting free of load mainly farmers & employeers thank you sir, really very happy it will more help in next elections ... By - Pradeep Reddy S N 2008-02-29 17:50:19 Thanks to FM chidhambaram sir for presenting another budget only to felicitate the people of hiher income group. Please reember there are 12 crore unemployed youth having no job.your budget gives no relief to the pain. By - Kabi Ghosh By - Kabi Ghosh 2008-02-29 17:48:06 This is the most useless Budget in the last five Budgets.If you can wave 50, 000 plus crs to the Farmers why not give relief to Salaried people. Why not have higher tax for Corporates. This is a clear Election focussed Budget.FM should be ashamed of such Budget. By - chandra shekar 2008-02-29 17:47:18 Dear Sir, Its good!!! But i think this is all for getting vote of poor farmers & Innocent people. Rathnakar P, B lore. By - Rathnakar P 2008-02-29 17:45:07 Dear Sir, Thanking You sir, for saving us i.e., employees who going to pay tax of their income. By giving exemption upto 1.5 lakh. We people going to save the money by exemption. Thanking You Sir, By - Raj 2008-02-29 17:44:10 Thank you Mr Finance Minister. You have done a balanced and well rounded job. The special attention to agri is laudable. Increase in taxable limit, reduction in CST & Excise are a major boost to manufacturing. A real parting kick. YesSukumar By - Sukumar 2008-02-29 17:35:30 Its awesome budget.Loan waiver of loan for farmers is a very good and very needed step which fin. minister has taken.I really respect him.Changing of tax slabs is also welcome step, this will save usefull money for salaried pepole.Overall its very good budget. By - Jeetendra 2008-02-29 17:35:25 Respected Sir This is my reaction this type of budget very wrong our indian culture because of is most of the poor people and one thing in will tell yours first of all reduce the population how to reduce and give more employement of the indian people sir first of all you think it how to reduce the population this is my first question one second you think all the indian peoples are fired your financial budget in every year By - Dhanendran 2008-02-29 17:34:24 Budget sholud be proper according to various types of community lives and survive for bread and butter so think and come up with the BUDGET By - Nisar Khot 2008-02-29 17:34:06 Loan Waiver for formers loan is so sad because low level (one who below poverty level and just above the poverty level) formers not going to benefit in these scheme. Jamindhars only going to benefit in this waiver off. By - Habeb 2008-02-29 17:33:19 I think this is worst budget as it is clear that after six pay commission even 4th class employee will also have salary in taxable slab.Budget is only in favour of businessmen and industrialists. Income tax slabs should be increased. By - NISHI SINHA 2008-02-29 17:33:17 Totally election oriented budget.The revised slabs for tax exemption will be of no use after the pay revision of the employees.we cannot become happy only on the basis of money allocated for various purposes, what is more important is its implementation. By - sweta adil 2008-02-29 17:33:12 COntinued.... but how much FM can convert all this into vote is very difficult to say. About 75% of the population has nothing to do with this financial jugglery. Most of the people of this class they do not live, they survive. For them there is no education, no sanitation, no drinking water, no medical only sufferings and there endurance is being tested everytime. The FM and PM can not understand the living of an ordinary family where monthly income is not even Rs.1000/- p.m. Can they imagine how they can go and buy wheat at 20/- per kg, rice at 18/- per kg, oil at 50/- per kg pulses at 50/- kg., salt?? at 10/- per kg. These people are devasteted due to the economic policy of the country which is purely for rich and richer people. India is not represented by few lacs of rich industrialists and new generation IT techies. Just go around the city and look for have nots. Count them if you can. There lives in India. Will they turn up to vote in next general election to this government. Probably not. Every year huge amount of money is siphones out in there name in the name of n number of social schemes. If we really have to make India prosper we have to make this class prosper. Either way we creating a society with huge gaps and inviting anarchy, clashes and struggle. WAke up India By - Nitin Deshpande 2008-02-29 17:32:16 Thanks to FM chidhambaram sir for Rs 4000/-saving/annum to all salaried people By - vali 2008-02-29 17:23:26 Dear Sir, Thanking you, This time you concentrated in all sectors, especially in health, farmers and education Thank you sir by Ramesh By - NRamesh 2008-02-29 17:22:40 Waiver of loans to agriculturists is not a solution to the problems of the farmers: We are not addressing the real problem which is economics of farming The price of agricultural goods should be based on cost plus reasonable profit, as is in most other sectors. Unfortunately such periodic whole sale waiver may give a sensation of frustration to the borrowers who have been regular in repayment of their loans By - Appaji Apte 2008-02-29 17:21:53vishbmIndia direct taxes to grow 20 pct in FY09 - Chidambaram
Fri, 29 Feb 2008 16:11:00 +0000
Enlarge Photo Tax payers line up to submit their income tax returns in New Delhi in this... Fri, Feb 29 09:14 PM
India expects income tax receipts to grow by 16.9 percent at 1.38 trillion rupees in 2008/09, despite increased exemption limits for individuals, the finance ministry said on Friday.
Finance Minister Palaniappan Chidambaram said in his budget speech he would raise the exemption limits so that each tax-payer will get a minimum tax relief of 4, 000 rupees.
Budget documents show corporate tax receipts is set to grow 21.6 percent to 2.26 trillion rupees, though the government has decided not to revise rates for 2008/09.
Total direct tax receipts are expected to grow 20 percent to 3.65 trillion rupees.
"My proposals on direct taxes are revenue neutral, " Chidambaram said in parliament.
Customs duty collections is to grow by 18 percent to 1.19 trillion rupees in the next fiscal year, while excise duty receipts is estimated to grow 7.8 percent to 1.38 trillion rupees.
Service taxes are expected to grow 27.4 percent to 644.6 billion rupees in the next fiscal.
Chidambaram said the government expects a revenue loss of 59 billion rupees due to excise and customs duty cuts on a host of items.
Gross tax collections are pegged at 6.88 trillion rupees in the next fiscal compared to a revised estimate of 5.85 trillion in 2007/08.
vishbmEducation allocation makes a whopping jump to Rs 38, 702 cr
Fri, 29 Feb 2008 16:06:00 +0000Fri, Feb 29 05:44 PM
With 11th Five Year plan giving special focus on education, government on Friday earmarked a whopping over Rs 38, 702 crore to the sector in the Union Budget 2008-09, showing a massive increase of over Rs 9, 000 crore.
A sum of Rs 27, 850 crore has been provided for school education as compared to last year's revised estimate of Rs 23, 191.35 crore.
Of this, elementary education has been given Rs 19, 777.50 crore this year as against Rs 18, 439.61 crore the previous year. Of this, a bulk of Rs 13, 100 crore would be provided to flagship programme Sarva Shiksha Abhiyan (SSA) to universalise education in the country.
The Mid-day Meal Scheme which would receive Rs 8, 000 crore would be extended to all children upto upper primary level (from class I to VIII) in all areas across the country.
Allocation for the secondary education has been doubled with Rs 5, 139.70 crore in 2008-09 as against Rs 2, 465.18 crore last year.
With government proposing to set up high quality model schools, a sum of Rs 582.80 crore has been earmarked for this purpose during the year. Prime Minister Manmohan Singh in his Independence Day address last year had announced setting up of 6, 000 new High Quality schools - one in every block of the country.
Higher education has received a special attention in the budget with an allocation of Rs 10, 852.87 crore as against Rs 6, 397.36 crore in the revised estimate last year.
Of this, the University and Higher Education sector has received Rs 5, 234.76 crore this year as against Rs 3, 699.43 crore last year.
A major chunk of Rs 5, 104.90 crore would go to University Grants Commission (UGC) this year which included a provision of Rs 875 crore towards implementation of the Oversight Commission recommendations for meeting the requirement for enhanced number of students in Central Universities.
Rs 45.45 crore has been allocated for Area Intensive and Madrasa Modernisation Programme this year as compared to Rs 44.50 crore last year.
vishbmBudget will spur sustainable, inclusive growth
Fri, 29 Feb 2008 16:02:00 +0000Fri, Feb 29 08:14 PM
The budget 2008-09 has taken the necessary steps to boost consumer demand and revive manufacturing in the light of emerging global slowdown and inflationary pressures. The strategy to revise upwards the slabs for personal income tax, reduce excise on key items and reduce Cenvat from 16 percent to 14 percent will help bolster flagging consumer demand, and consequently favourably impact the consumer durables segment.
Additionally, the finance minister has taken critical initiatives to turn India into a knowledge economy and a global skills resource centre. This is in alignment with the Confederation of Indian Industry's (CII's) theme of 'Building People, Building India'.
The emphasis on establishing new institutions of higher education, including 16 new universities and several institutes of excellence, as well as giving scholarships under the new INSPIRE scheme will help foster interest in science and technology and boost innovation and creativity. CII had called for transforming India from a labour arbitrage economy to an economy that leverages its strengths both in labour and knowledge. Knowledge arbitrage is more sustainable in the long run that labour arbitrage, believes CII.
The budget will also help India to build skills through a skill development mission. A non-profit corporation to assist this has been announced in the budget with a proposed corpus of Rs. 15, 000 crore (Rs.150 billion), of which the government will make a beginning by contributing Rs.1000 crore. As only 3 percent of rural workers and 5 percent of urban workers have received any kind of training, this will help leverage India's demographic advantage.
Increased allocation to the National Rural Health Mission, provision for health insurance of unorganized sector workers below the poverty line and extension of life insurance to women members of self-help groups will add to the country's human resource capacity. Further, showing the expenditure in all schemes for SC/ST, women and children separately indicates the stress placed on these vulnerable sections of society.
CII had also recommended keeping the peak customs duties for non-agricultural goods at the 10 percent level as appreciation of the rupee had already increased imports. The reduction of excise duties on pharma products and certain types of vehicles is a welcome move. Extending service tax to four more sectors will help add to government revenues.
The loan waiver aimed at removing agricultural indebtedness is welcome as long as it does not hurt the public sector banks. The benefit to farmers is very well deserved and necessary; however, alternative avenues to deliver the same benefits could have been explored. Loan waivers send the wrong signals to people paying their loan instalments on time. Also the burden of the loan waiver has not been fully clarified.
For infrastructure, the budget has included capital market reforms such as implementing some of the recommendations of the R. H. Patil Ccommittee relating to development of tradable bond, currency, convertibles and derivatives markets. Steps to streamline stamp duty are also in the right direction and hopefully will be implemented soon. Announcements for the power sector regarding reforms and reduction of transmission and distribution losses through a dedicated fund is very positive.
For industry, increased outlay for the TUFS scheme will help the textile sector that is reeling under rupee appreciation. Gems and jewellery sector would benefit from the exemption from custom duty on few specified items. The reduction in the custom duty to nil on the steel melting scrap and the aluminum scrap is good news for the sector.
Most important, the Budget has managed to adhere to the fiscal deficit targets. This sends a clear signal to all stakeholders that the government is serious on fiscal rectitude and will help promote investment, both from domestic and foreign sources. Overall the budget keeps to the promise of delivering inclusive and sustainable growth in a balanced manner.
(Lt. Gen. S.S. Mehta (retd.) is director general of the Confederation of Indian Industry - CII. He can be reached at s.s.mehta@ciionline.org)
vishbmChidambaram enhances funds for the marginalized
Fri, 29 Feb 2008 16:00:00 +0000Fri, Feb 29 08:21 PM
New Delhi, Feb 29 (IANS) Finance Minister P. Chidambaram Friday enhanced the budgetary allocation for Scheduled Castes (SC), Scheduled Tribes (ST) and Other Backward Classes (OBCs) substantially.
Braving disruption from opposition MPs, Chidamabaram announced Rs.24.59 billion for the Ministry of Social Justice and Empowerment (SJ&E), which deals with the welfare of the marginalized sections of society, compared to Rs.22.60 billion allocated in 2007-08.
The budget allocates Rs.10 billion for minorities for the coming fiscal against the Rs.5 billion allocated to the Ministry for Minority Affairs for the current fiscal ending March 31, 2008.
The Ministry for Tribal Affairs has got Rs.21.21 billion against 17.19 billion allocated in 2007-08.
Minorities, SCs and STs account for over 40 percent of the country's population, and used to be traditional voters of the Congress before the emergence of regional leaders like Lalu Prasad in Bihar, Mulayam Singh Yadav and Mayawati in Uttar Pradesh, who weaned them away from the Congress fold.
Though the OBCs account for around 42 percent, as per the findings of National Sample Survey Organisation (NSSO), the Ministry of SJ&E has been given only Rs.1.85 billion to be spent on their welfare in 2008-09 against Rs.1.56 billion in 2007-08.
Chidambaram in his budget speech announced scholarships worth Rs.8.04 billion for SC students in pre- and post-matriculation classes and Rs.1.95 billion for ST students. The government will spend Rs.1.64 billion giving scholarships to OBC students in pre- and post-matriculation classes.
Rs.1 billion will be disbursed as scholarships among the minority students in post-matriculation classes in 2008-09.
'I propose to allocate a sum of Rs.750 million in 2008-09 to the Rajiv Gandhi National Fellowship Programme, ' Chidambaram said, adding that the scheme supports SC and ST students pursuing M. Phil and PhD courses.
'I have provided Rs.39.66 billion for schemes benefiting SCs and STs exclusively, and Rs.189.83 billion for schemes where at least 20 percent of the benefits are earmarked for SCs and STs, ' Chidambaram said in his speech.
vishbmBudget will further fuel India's growth: Chidambaram
Fri, 29 Feb 2008 15:58:00 +0000Fri, Feb 29 08:35 PM
New Delhi, Feb 29 (ANI): Union Finance Minister P Chidambaram today said that there is an investment boom in the economy and that the budget aimed at further fuelling the country's growth story.
Chidambaram told reporters here that the Finance Ministry has tried to live up to the expectations of the 'target' sectors like health, education, deprived, social security, women, children and farmers.
He also said that these measures are likely to spark off a new investment boom in the country.
"India is now among the most attractive investment destinations in the world. FDI, FII flows are very large. Remittances by overseas Indians are very large, tourist arrivals have increased, the service sector earnings are growing at a very rapid rate and therefore the Indian economy is witnessing an investment boom and all analysis shows that there is no decline in investment boom, " said Chidambaram.
The budget, being termed as a 'populist' and 'vote-bank' oriented budget was welcomed by industry.
"The thrust of the budget is actually growth-oriented, in the sense that you have a very positive growth momentum in the economy and I think given the fundamental growth momentum in the economy, based on performance of various sectors in the growth, momentum is definitely being sustained by the policy initiatives and the proposals in the budget, " said Vishwaveerhuja, Managing Director, Bank of America
He added that the economic momentum is actually all set to further increase the 'prosperity' in the economy.
Though the cuts in the customs and excise duties are being lauded, the status quo regarding the corporate tax structure is something that has not gone down well with the industry. (ANI)
vishbmBudget fails to address Maoist menace: Raman Singh
Fri, 29 Feb 2008 15:55:00 +0000Fri, Feb 29 07:45 PM
Raipur, Feb 29 (IANS) Chhattisgarh Chief Minister Raman Singh flayed the union budget presented Friday, saying there was no provision for a joint action-plan to deal with the Maoist problem, which Prime Minister Manmohan Singh had identified as the biggest internal security threat.
'The union government has failed to address the problem by making no provision to deal with the Maoist problem even as several states reel under the threat of the red army, ' Singh, who heads one of the worst Maoist insurgency-hit states, told reporters.
But the state's opposition Congress welcomed the budget, especially hailing the Rs.600-billion loan waiver announced for farmers.
'It has taken care of all sections of society but the farmers got the deserving benefits, ' the party said.
'The loan waiver for farmers has reflected how Congress president Sonia Gandhi and Prime Minister Manmohan Singh are concerned about the problems of farmers, ' Congress leader and former Chhattisgarh chief minister Ajit Jogi said in a statement.
The Chhattisgarh Chamber of Commerce and Industry (CCCI) also appreciated the budget.
The CCCI in a statement said it 'welcomes the budget proposals, mainly for focusing on health, education and irrigation sectors with allocation of increased funds, but infrastructure sector too should be taken care of with topmost priority'.
vishbmBank shares rise on farm debt write-off plan
Fri, 29 Feb 2008 15:52:00 +0000Fri, Feb 29 07:49 PM
India announced a scheme to waive 600 billion rupees ($15 billion) of bank loans to farmers on Friday, sending shares of state banks up on hopes they would be compensated and many bad debts would be wiped from their books.
Finance Minister Palaniappan Chidambaram unveiled the proposal in his 2008/09 budget but gave no details of how the scheme would work.
He said the write-off would apply to agricultural loans by state-run commercial, rural and cooperative banks taken out by March 31 last year and overdue at the end of 2007.
In a briefing after the budget, he said the government would provide liquidity to the banking system over a period of three years, the average maturity of the loans.
"Debt waiver only means I have to provide equivalent liquidity to the banking system, " he told the briefing when asked if the government would compensate banks for the write-offs.
"You will find the answers when we announce the plan."
The banking index of the Bombay Stock Exchange, recovered to close 0.4 percent higher after tumbling nearly 4 percent as investors initially feared that banks would take the hit. The benchmark index closed 1.4 percent lower.
State-run bank executives welcomed the plan.
"It was a long-felt need for the industry and something needed to be done as defaults were getting repetitive, " said C.P. Swarnkar, chairman and managing director of state-run Syndicate Bank.
M.S. Sundara Rajan, managing director of state-run Indian Bank, said it was a positive step.
"It also gives the opportunity to lend further, " he said.
Non-performing assets, or bad loans, in agriculture were 73.7 billion rupees, or 15.5 percent of total bad debts of 478.4 billion rupees in 2006/07, according a central bank report.
In 2006/07, bad loans in farming grew nearly 10 percent, while total bad loans contracted 2.8 percent, it said.
Chidambaram said the farmers covered under the scheme would be eligible for fresh loans after the waiver.
Loans rescheduled earlier will also be eligible for relief under the scheme, he said.
(Reporting by Rakesh Sharma, Himangshu Watts and Kaustav Roy)vishbmIndian Union Budget 2008 Videos
Fri, 29 Feb 2008 15:41:00 +0000vishbmSFM extends relief to farmers in the annual budget
Fri, 29 Feb 2008 15:39:00 +0000Fri, Feb 29 08:05 PM
New Delhi, 29 Feb (ANI): During the proceedings of the budget session, Finance Minister P. Chidambaram proposed waiving loans held by small farmers and pledged higher spending on health and education to spread the benefits of an economic boom beyond the cities to rural voters.
: Reacting to the measures announced by the finance minister, Indian Prime Minister, Manmohan Singh, said that the general perception across the nation about the farmers is that, they are a distressed lot, which is not good for the country.
vishbmBudget tax move pinches investors in Indian shares
Fri, 29 Feb 2008 15:36:00 +0000Fri, Feb 29 07:55 PM
Indian shares fell on Friday after the government raised short-term capital gains tax, but analysts said the move would only have a small impact on sentiment and would encourage long-term investors.
The increase in the tax rate to 15 percent from 10 percent on an investment sold before holding for a year was proposed by Finance Minister Palaniappan Chidambaram in his budget.
The move will pinch investors looking for quick gains, such as day traders and some foreign investors.
"People will feel the pinch. Short-term impact on the market sentiment is definitely negative, " said Jayesh Mehta, managing director, head of institutional client coverage and DSP Merrill Lynch.
"FIIs will definitely be affected, " he said, referring to foreign institutional investors.
Other analysts said the impact would be limited for foreign investors based in tax-friendly countries.
"Foreign funds operate in some kind of tax havens so the impact would not be that much, " said Jigar Shah, head of research at the Indian unit of KIM ENG Securities.
The benchmark 30-share BSE index ended down 1.4 percent at 17, 578.72 in choppy trade, after falling as much as 3.2 percent at one stage.
LONG-TERM FOCUS
Shah agreed with the finance minister's view that the higher tax would encourage investors to take a longer view of the market.
"It is a positive step for retail public as it help them cut their short-term trading and instead focus on long-term investments, " he said.
This would also help mutual funds as investors would be discouraged from selling out, said Arindam Ghosh, chief executive of Mirae Asset Global Investment Management (India).
"It may have some kind of impact on sentiment for traders but overall I think from a mutual fund perspective it's a good step because we always encourage long-term investments, " he said.
Foreign funds have flocked to Asia's third-largest economy, pumping in more than $17 billion last year and helping the stock market rise 47 percent, the fifth year of a bull run.
The benchmark index had risen nearly 73 percent in 2003, 13 percent in 2004, 42 percent in 2005 and 46.7 percent in 2006, attracting a slew of foreign funds.
Some stock market players said the capital gains tax increase was the biggest blow from the budget.
"There are no major negatives there other than the rise in short-term capital gains tax. This is a sensitive subject and will have some impact on the market sentiment, " said Sejal Doshi, CEO, Finquest Securities.
Vikas Khemani, co-head of institutional equities at Edelweiss Securities said the proposal could have been avoided.
"The increase is a bit negative for the capital markets and it could have been avoided as the tax collection figures have been buoyant in the past few years from the markets."
vishbmGrowth and inclusiveness, Budget provides right balance: CII
Fri, 29 Feb 2008 15:31:00 +0000Fri, Feb 29 08:35 PM
New Delhi, Feb 29 (ANI): Finance Minister P Chidambaran has presented a comprehensive, balanced and growth-oriented budget, said Sunil Mittal, President of Confederation of Indian Industries.
The Finance Minister has managed to address the triple challenge of growth inclusiveness and sustainability very astutely, Mittal said. The budget proposals would go along way in building people and building India, he added.
The beneficiaries of the budget vary from farmers to industry to the average salary earner. And all this without making the budget fiscally irresponsible, said the CII release.
However, CII hoped that the expected proposals of the Sixth Pay Commission have been kept in mind while balancing the budget, since any provision for that did not seem apparent from the Finance Minister's speech.
The cornerstone of the budget has to be the obvious fillip that it would provide to consumption in the country and thereby pump up a demand led growth cycle.
This would supplement the neutral stance that the RBI has just indicated in the last Monetary Policy Review, said the CII release. This is very important if the economy has to maintain its current growth trajectory and move to a double digit one, Mittal said.
Stepping up budgetary allocation by 20 per cent and focus on improved access to healthcare along with setting up of SC/ST/minorities Development Finance Corporation are measures that would help build people of India, Mittal said.
The announcement of the setting up a non profit organisation for skills and a start up contribution of 1000 Cr from the government will go a long way in developing the skill sets in the country.
In addition, CII strongly welcomes announcement by the Finance Minister for setting aside another Rs 750 crores for upgrading another 300 ITIs.
Welcoming the industry stimulus package, Mittal said that the reduction of Cenvat rate from 16 per cent to 14 per cent was suggested by CII, and was therefore delighted that the Finance Minister has heard the plea. (ANI)
vishbm
Enlarge Photo The Bombay Stock Exchange (BSE) building is seen in this file photo. REUTERS/Punit Paranjpe Fri, Feb 29 05:14 PM
Indian shares fell 1.4 percent on Friday to their lowest close this week, after the national budget budget failed to cheer investors already shaken by turbulent global markets.
The government promised higher spending for ailing farms and pledged funds for rural revival in the 2008/09 budget, but a $15 billion scheme to waive loans and plans to raise the tax on short-term capital gains weighed on the markets.
The benchmark 30-share BSE index ended down 1.38 percent, or 245.76 points, at 17, 578.72 in choppy trade after falling as much as 3.2 percent at one stage. Twenty-one components closed in the red.
"The budget lacks teeth because there are no major reform
initiatives on the plate, which were put up in the earlier years, " said Jigar Shah, head of research at KIM ENG Securities' Indian unit.
The budget raised short-term capital gains tax, when an investment is sold for profit before one year, to 15 percent from 10 percent. The move could affect day traders, or people who look for quick gains.
However, duty cuts on automobiles could help some sectors to
recover, analysts said.
"I feel the markets are headed up, " said R. Rajagopal, chief
investment officer at DBS Cholamandalam Asset Management. "It will be a function of money flow and when the valuations are quite attractive."
For the week, the index was up 1.3 percent. But it slipped 0.4 percent in February, extending losses to 13.4 percent this year and is 17 percent below a record high of 21, 206.77 hit on Jan. 10.
Reliance Industries, India's most-valuable firm and top petrochemicals maker, fell 3.1 percent to 2, 458.25 rupees, after the government imposed a 5 percent import duty on naphtha, used to make polymers.
Larsen & Toubro, India's top engineering firm, fell 3.2 percent to 3, 523.05 rupees, as the government did not announce any "big bang" infrastructure project, a trader said.
Infosys Technologies fell 3.3 percent to 1, 546.85 rupees after it said its taxes would go up to 22 percent in 2010/11 from about 15 percent as a 10-year tax holiday is expected to end in March 2009.
These three stocks together account for more than 28 percent of the main index.
Banks shares initially fell sharply after the finance minister proposed to waive $15 billion of loans to farmers, but then pared losses when it became evident the government would pick up most of the bill.
ICICI Bank closed 1.1 percent lower at 1, 090.95 rupees, recovering from a low of 1, 050, while the BSE bank index ended 0.4 percent up, reversing a loss of 3.8 percent.
In the broader market, 1, 628 losers outpaced 1, 064 gainers on
volume of 352.8 million shares.
The 50-share NSE index fell 1.17 percent to 5, 223.50.
Elsewhere in the region, Karachi's 100-share index slid almost 1 percent to 14, 934.30, while Colombo's All-share index fell 0.36 percent to 2, 530.86.
STOCKS THAT MOVED
* IFCI Ltd rose 6.9 percent to 66.90 rupees after the budget allocated 4.33 billion rupees to restructure the state-run lender its liabilities.
* Consumer goods makers rose on proposals to do away with excise duty on packaged foods such as tea and coffee, from 16 percent now. Hindustan Unilever Ltd rose 3.3 percent to 227.35 rupees, also helped by a proposal to halve the tax on water purification systems to 8 percent.
* Shares in vehicle makers who are stepping up their presence in the defence sector rose after the finance minister proposed a 10 percent increase in defence spending for 2008/09.
Shares in Mahindra & Mahindra Ltd, the top utility vehicle and tractor maker, were up 1.9 percent at 692.80 rupees, while Ashok Leyland Ltd gained 4.2 percent. Tata Power, which also supplies equipment to the armed forces, rose 1.2 percent to 1, 401.10 rupees.
TOP THREE BY VOLUME
* Nagarjuna Fertilisers & Chemicals on 35.9 million shares
* Reliance Petroleum 19.3 million shares
* IFCI Ltd on 17.2 million shares
(Additional reporting by Hiral Vora)
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