2008 Indian Financial Budget : Popular all the way to the (vote) banking system

The Budget for 2008 has finally arrived. What was supposed to have been just an event has turned out to be a good surprise for many of us. All outstanding agricultural loans until 31, Dec. 2007 will be waived . Here we are talking about something to the tune of 60,000 Crores as agricultural debts. Totally an Aam Admi budget to the core . This is a great move that needs to be lauded as it take grit and lot of visionary thinking to do this measure . A point to mention is some years back Agriculture constituted 36% of our GDP and for the last two years has taken a lot of beating partly because of failed monsoon and other factors. This much needed relief will prove to be a great booster to get the sector up and moving. The banks will be reimbursed the debt waiver over a period of 3 years

It has been a popular perception in any democracy is that the government is to feed somebody then it has to steal from some section of the society. So when there was an exemption of Agri loans discussed then perception was that the middle class will face the brunt. Exceptionally this was not the case in this budget as the FM has another great sop for the Salaried individual. On personal IT space the limit has been raised from 1.1 laks to 1.5 lakhs , and 1.8 lakhs for women and 2.25 lakhs for the senior citizen . This was a total popular measure and a great bonanza for the Middle class income group.

Apart from these major areas of focus some of the sops announced were

  • Hospitals to get 5 yrs Tax Holiday
  • Duty on Project imports reduced by 2.5%
  • GDP growth during the period were 8.8% and will continue to maintain the same
  • FII and FDI inflows continue to be strong
  • GST to be imposed from 1 st April 2008
  • Excise has been reduced to 12 % from 16 %. That means the small cars will cost cheaper by more than 7000 – 10000 . Small cars, hatchback models like Hyundai Santro, Getz, Hyundai i10, Chevrolet Spark, Chevrolet uva, and Maruti  Estilo and Wagon R will cost cheaper . This is a Corporate Friendly budget.
  • Banking Cash transaction Tax has been withdrawn
  • Anti AIDS drugs will be totally exempted from Tax.
  • Education sector gets 20% more allocations
  • Capital Gains tax has been increased to 15 %
  • Tourism sector also gets tax sop.
  • Tigers conservation to get 50 Crores.
  • Defence sector gets 10% more allocations as well
  • Govt to keep a strong check on the rising product prices.

The banking space seems to have taken the budget in a very positive note.This reflected well on the Sensex and the Nifty. Over all the budget is positive for the economy as there is no warning signals that i find and the same seems to be the way the market has responded as well. Most of us were talking about an AAm Admi buget and Mr Chidambaram ensured that it will be totally that way. This might swing the vote bank in a major way in most of the states in the months to come.

One of the disappointments from this budget for me was the lack of any kind sop to spurn entrepreneurship. I remember an interesting viewpoint from Mohandas of Infosys on the same issue . The government has to provide some sort of sop for entrepreneurs like access to technology or any resources that will help in creating a startup friendly environment. This can either be in the form of collocated offices that will access to good IT infrastructure at subsidized cost. To keep the industry alive we need to incubate new ideas and new business models. This was one are that the FM hasnt addressed in this budget. Still entrepreneurship is fed by money from friends and family. When will the govt look into this ?

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One thought on “2008 Indian Financial Budget : Popular all the way to the (vote) banking system

  1. I am worried about allocation to education and particular regarding higher education (HE), as in many states government is allowing privatization instead allocating more funds to allocation. Although some state governments are doing well for HE, but center gov. has to made some positive steps so as all the states are on similar (positively) grounds regarding HE. Although the article was’t regarding HE but i am quite concerned regarding the same.

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