India Budget – 2008 Impact – 1st March 2008
*Union Budget 2008-09: Impact on IT/ITES/BPO sector
*Union Budget 2008-09: Social sector
*Union Budget 2008-09: Impact on banking sector
*Union Budget 2008-09: Impact on power sector
*Union Budget 2008-09: Impact on financial services sector
*Budget inclusive and balanced one: CII
*'Populist' PC does a poll vault
*Budget to stimulate investment, growth: Chidambaram
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Union Budget 2008-09: Impact on IT/ITES/BPO sector
IT/ITES sector will benefit largely because of increase spending on education, which will result in large talent pool of professionals. This spending on education will also help in reducing the supply side constraints that is currently faced by the leading companies in hiring quality professionals.
The service tax on customised software is a negative for technology companies but it will be passed on to the clients. (Full story)
Union Budget 2008-09: Social sector
Increase in provision for Bharat Nirman by 31.6 per cent from Rs 18,696 crore to Rs 24,603 crore.
Increase in provision for education by 34.2 per cent to Rs 32,352 crore.
Increase in provision for health and family welfare by 21.9 per cent to Rs 15,291 crore.
National Means-cum-Merit Scholarship scheme to be introduced to arrest drop- out ratio; selection through a national test from among students who have passed class VIII; each student to be given Rs 6,000 per year; 1,00,000 scholarships to be awarded every year.
Corpus fund of Rs 750 crore to be created this year. (Full story)
Union Budget 2008-09: Impact on banking sector
PSU banks are expected to face pressure on their net interest margins until the subsidy for waiver of agricultural loans and one time settlement of loans is released from the government.
The cost of adding more rural households in their rural branches may increase the operating cost for the PSU banks.
Including Indira Awas Yojana (IAY) houses under the differential rate of interest scheme at an interest rate of 4 per cent will increase the proportion of sub-PLR lending for the PSU banks. (Full story)
Union Budget 2008-09: Impact on power sector
Aggressiveness in allotting UMPPs to prospective bidders expected to speed up the generation capacity.
Setting up of a national fund for T&D reforms to provide a more focused approach.
Coal distribution policy and appointment of a coal regulator to bring regularity to the process of coal production and pricing. (Full story)
Union Budget 2008-09: Impact on financial services sector
No relief to the infrastructure financing sector in terms of tax rates.
Infrastructure financing companies to benefit under the public private partnerships proposed under various infrastructure schemes. The corpus for the Rural Infrastructure Development Fund will facilitate such PPP projects in the rural segments as well.
Companies that finance rural electrification will benefit from the additional subsidy offered to RGGVY. (Full story)
Budget inclusive and balanced one: CII
Puducherry: The Confederation of Indian Industry (CII) Puducherry, has described the union budget as `an inclusive and balanced` one
In a press release here today, CII chairman C Chinnasamy said that the budget has focussed on growth in crucial sectors like Agriculture, education, health and defence. The increased allocation of funds for these sectors and announcement of new schemes and projects would boost the economy, he said.
The hike in exemption limit in Income tax and also cut in excise duties imposed on cars would improve the lifestyle of the people, he said.
Vice Chairman of CII (Puducherry) Sriram Subramany however pointed out that the industry\'s expectation on some reduction in corporate tax in the budget had been belied.
He said all export companies also anticipated concessions in view of the rupee appreciation and global recession. This had not come true.
Subramanya said waiver of loans from farmers to the extent of Rs 60,000 crore was most welcome and also necessary. The raising of exemption limit for Income Tax assessees was also a step in the right direction as it would help the urban middle class people across the country, he said.
Budget to stimulate investment, growth: Chidambaram
New Delhi: Finance Minister P Chidambaram on Feb 29 said the Union Budget for 2008-09 would stimulate investment and consequently growth, while pointing out that he had done the best through the budgetary exercise by providing credit facilities to the farm sector. Credit is only one element of the story in the farm sector. I provided more credit. Budget can only address credit side and the farm sector has not done too bad this year, he said in his post-Budget comments. The Finance Minister had announced debt waiver and relief worth Rs 60,000 crore to small and marginal farmers in the Budget, the last full financial statement before the general elections in 2009. This Budget will stimulate investment and growth and that growth will create wealth. The economy is growing by eight per cent, people have become more tax compliant and they are willing to pay taxes, he said on the buoyancy in government's revenues.
'Populist' PC does a poll vault
New Delhi: The Finance Minister, making a populist move, raised the income tax exemption up to Rs 1.5 lakh for men and upto Rs 1.8 lakh for women. Senior citizens would now get tax upto Rs 2.25 lakh. However, there would be no change in the corporate tax.There would be no change in the STT rates, but short-term capital gain would now attract 15 per cent up from 10 per cent.
The Finance Minister said that there would be no change in peak customs duty; however, he reduced the excise duty to 14 per cent from 16 per cent.Customs duty on life saving drugs would now be 5 per cent and convergence products duty would be reduced to 5 per cent.The excise on small cars has also been reduced to 12 per cent from 16 per cent and that on two and three wheeler also by the same amount. Anti-aids drug would be exempted from excise duty.
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