Is the Budget good for you?
July 08, 2009 18:02 IST
Union Finance Minister Pranab Mukherjee marginally raised the Income Tax exemption limit, abolished Fringe Benefit Tax and Commodity Transaction Tax and announced some schemes to benefit the aam aadmi.
The reaction to the Budget was varied: the Opposition blasted the Budget, the industry captains hailed it, and the Sensex plunged by 870 points on Monday.
What exactly does the Budget hold for the common man? Will you benefit from the Budget proposals? Or do you really don't care? How does it affect you?
In an hour-long chat on rediff.com on Wednesday, COO of Dun & Bradstreet, India Kaushal Sampat offered some tips. Here is the transcript:
Kaushal Sampat says, i am here to answer your questions. cheers, kaushal
Madhu asked, how is budget 2009 is benefit for farmers?
Kaushal Sampat answers, at 2009-07-08 14:27:43The strong focus of the budget on the irrigation sector reiterates the Government's commitment to boost the overall agricultural growth in India. Moreover, the substantial increase in the target for farm credit to Rs. 3,250 bn coupled with increase allocation for Krishi Vikas Yojana and an allocation for agriculture R&D are some of the key measures intended to promote growth in the agriculture sector. The proposal to move towards a nutrient based subsidy regime for fertilizers is commendable and is expected to result in availability of innovative fertilizer products at reasonable prices. The extension of period for repayment of overdues under the Debt Waiver augurs well for debt-ridden farmers. The additional subvention of 1% on short-term crop loans is expected to encourage farmers to repay their crop loans on schedule.
anup asked, do u think it wl increase ?
Kaushal Sampat answers, The market may have some short term concerns because it expected some major policy announcements. Else, the direction of the Budget is positive. Short term focus on economic revival is absolutely appropriate. I personally believe that this Budget is positive for the Economy and the market will soon recognize this.
akash asked, hi kaushal any benefits for IT industry
Kaushal Sampat answers, Excise and CVD exemption on packged software is expected to boost sales and check. The Indian IT industry is expected to be indirectly benefited from various government projects like modernisation of the employment exchanges and Unique Identification Authority of India's plans of setting up of online databases with identity and biometric details of Indian residents. Implementations of these programs will lead to a wide usage of Internet besides providing a huge business opportunity within India (especially in times of economic slowdown) to both IT software as well as IT hardware industry. Budget announcements have also proposed the setting up of an alternative dispute resolution mechanism within the Income Tex Department to effectively address tax issues faced by foreign companies in a short span of time. This move will boost foreign investment in the sector/country. Budget announcements have also earmarked an amount of Rs 9 bn for "Mission in Education through ICT" and Rs 21.13 bn for IITs and NITs. These moves will assist in the creation of quality talent pool that is in line with global IT standards and will ease the industry's "knowledge-pool" scarcity.
rajesh asked, sir i wants know budget effect on print media or newspaper industry
Kaushal Sampat answers, In the Budget, the print media stimulus package has been extended by six months till December 31, 2009. This move will help the industry mitigate the risk arising out of the global crisis and is expected to provide a boost to the sector. However, I would say that the Budget is broadly neutral for this sector.
rp asked, how banking and housing finance will be effected with this budget?
Kaushal Sampat answers, The overall impact of the budget on the banking and finance sector was positive, though not up to the expectations of the industry. The budget specified that public sector banks would remain in the public sector. The government reiterated its commitment towards providing capital support to banks to retain growth and competitiveness. Observing that the industry has made significant strides towards financial inclusion in the past few years, the budget made ambitious plans with respect to financial inclusion in the next three years. The addition to the Debt Waiver and Debt Relief Scheme continued, with the increase in the time allowance to repay 75% of the debt. The scheme also influenced the introduction of an interest subvention for farmers repaying loans on time. Most of the announcements made in the budget were aimed at increasing the credit flow to needy sectors, and not at directly facilitating the banking industry. The abolition of the Commodities Transaction Tax will be beneficial for the traders trading on commodity exchanges.
Raveendra asked, I want to know how this budget will be useful to middle class people
Kaushal Sampat answers, I think the FM has tried to put more money in the pockets of tax payers by eliminating the surcharge. Of course, it would have been wonderful if the Standard Deduction had been taken up substantially, but I don't think he had room to do that in the current fiscal scenario. You have to view the FM's measures from the prism that he wants to try and stimulate demand in the economy. Also, there are lots of measures for rural India - both middle class and lower class. I think its important to keep our rural brethren in mind while trying to evaluate the FM's Budget.
bnp asked, As FM focused on the recession? because lots of people are losing jobs? Does this budget give any hope to these people?
Kaushal Sampat answers, If anything, the FM has focussed almost completely on the current economic environment. The Budget clearly breaks down into three parts short, medium and long term. The short term proposals, which are focused on economic revival, are slightly above our expectations, and are welcome for the support they'd provide to an economy which is expected to get back on the revival path soon. This, along with the impetus on infrastructure spending, should help the country fight job losses in the economy, especially in manufacturing sector.
gita asked, POWER SECTOR: WHAT IS FUTURE OF POWER SECTOR COMPANIES IN NEXT 5YRE. ON AN AVERAGE WHAT RETURN WE CAN EXPECT IN YRS
Kaushal Sampat answers, The Union Budget has been positive for the Power sector and the companies in this sector should benefit. The increased allocation under the APDRP and RGGVY schemes are major positives for the sector. This could help in strengthening the distribution sector as also rural electrification. Power companies using naphtha as feedstock would benefit from the reduction in excise duty on naphtha. The power sector would also gain from the decision to allow IIFCL to refinance 60% of commercial bank loans for PPP projects in critical projects and the extension of tax benefits under section 80-IA by 1-year.
Santosh asked, I had recently invested money in Stock for the first time. It seems all my stock are standing at lower price right now. What should i do? Kindly suggest.
Kaushal Sampat answers, I think you should wait patiently. The stock market is more like a test match than a T-20 match. You will make money if you stay on the crease for a long while! I would strongly recommend that you look at a Systematic Investment Plan (SIP) because if you invest consistenly over time, it smooths out the peaks and troughs in the market.
asp74 asked, hi, what this budget will give me , as I am working in Highway Sector.
Kaushal Sampat answers, The measures announced for Roads and Highways include: The allocation of Bharat Nirman Scheme to be increased by 45% during FY10 over Budget Estimates in FY09. The allocation under Pradhan Mantri Gram Sadak Yojana (PMGSY) increased by 59% to Rs 12,000 crore from the Budget Estimates in FY09. The allocation to National Highways Authority of India (NHAI) for the National Highway Development Programme (NHDP) increased by 23 % in FY10 from the Budget Estimates in FY09. An additional amount of Rs 2,284 crore proposed over Interim Budget Estimates for FY10 for construction of fences, roads, flood lights on the international borders. I think that the overall impact of the Budget for the Road and Highway sector is Positive. The roads and Highways segment would benefit from the increased allocation in Bharat Nirman, Pradhan Mantri Gram Sadak Yojana and NHAI. However, no new projects have been announced in the roads and highways segment. Nonetheless, the emphasis to ensure flow of funds to the infrastructure sector by encouraging public investment, giving greater flexibility to IIFCL, the special purpose vehicle for providing long term financial assistance to infrastructure projects, evolving a takeout financing' scheme which could facilitate incremental lending to the infrastructure sector in going to provide a boost to this sector in the medium to long term.
rajneesh asked, Are metros not completely ignored?
Kaushal Sampat answers, The Budget does address the needs of Metros through the following measures: Urban Infrastructure The allocation for the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) proposed to be stepped up by 87% to Rs 128.87 bn. The allocation for housing and provision of basic amenities to urban poor enhanced to Rs 39.73 bn. This includes the provision for Rajiv Awas Yojana (RAY), a new scheme announced intended to make the country slum free in the five year period. Brihan Mumbai Storm Water Drainage Project (BRIMSTOWA) The allocation for the Brihan Mumbai Storm Water Drainage Project (BRIMSTOWA) enhanced from Rs 2 bn in Interim BE to Rs 5 bn to expedite the completion of the project. The greater allocation for the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and the introduction of Rajiv Awas Yojana (RAY) intended to make the country slum free in the 5 year period are likely to play a pivotal role in urban infrastructure development.
chandra shekhar asked, Major sectors which will benefit from budjet 2009?
Kaushal Sampat answers, The sectors that will benefit from the Budget 2009 are: 1. Agriculture 2. Social Sector 3. Infrastructure 4. Micro and SMEs 5. Oil & Gas 6. Power 7. Pharmaceuticals & Healthcare 8. Leather 9. Banking & Finance 10. IT
Teddy asked, Why they still discriminate against males but making them pay more taxes than females? Is this what they called Gender equality in India?
Kaushal Sampat answers, As a male, I can empathise with your question. However, from a purely economic perspective, this measure has always been intended to enhance the participation of women in the formal work-force as this harnesses the economic potential of nearly half our population. I am willing to live with a bit of discrimination in the interest of the Nation!
Amir asked, Our FM has taken maximum fiscal deficit comparing to recent past to stimulate the growth of India. Would this risk taking be worth worthy?
Kaushal Sampat answers, This is a great question. I honestly think that focussing on the short term measures (even at the risk of pushing up the fisc) is a risk that is worth taking. We really do not have too much of a choice but to push for growth at this point in time. The Government and RBI will have to carefully calibrate monetary policy to go hand-in-hand with the economic stimulus so as to prevent crowding out of the private sector. I believe this is a calculated risk and barring unforeseen circumstances, it should work out in favour of the FM.
what.. asked, industry sources have given a thumbs down. but isnt this a fair budget considering the present liquidity scenario and that a growing economy has to focus on its core sectors to generate employment and retain the confidence of the public at large ?
Kaushal Sampat answers, I agree with your assessment completely - this is a fair budget, under the given circumstances. The FM has to stimulate the economy, and that's what he has chosen to do through his Budgetary measures.
laxhmi asked, why should share market decrease in this budget
Kaushal Sampat answers, I think the stock market had built up unrealistic expectations from the Budget. When those expectations were not met, the market started declining. In my mind, the Budget is appropriate for the circumstances - focussed on economic stimulus and demand generation. This is bound to be recognized by the stock market soon enough.
GAURAV asked, Why Surcharge thrown out ? Disgusting division between middle and HIgher income Group
Kaushal Sampat answers, I think the idea is to put money in the hands of consumers so that it can be spent. The focus is to drive demand. This is in keeping with the famous Laffer curve.
Kaushal Sampat says, It has been wonderful chatting with you today. Thanks for your time and have a great day ahead! Cheers. Kaushal
