A very positive, comprehensive, inclusive budget for 2010

Finance Minister of India has unleashed the Indian Union Budget for 2010. The budget looks quite promising. As per the budget, the masses are going to be taxed lesser for their incomes in 2010. The personal tax breaks are prudently categorized as:

Incomes <= INR 160,000: No tax
INR 160,000 < Incomes < = INR 500,000: 10%
INR 500,000 < Incomes <= INR 800,000: 20%
INR 800,000 < Incomes: 30%

Additionally, investing up to INR 20,000 in infrastructure bonds will be tax-exempt, and this exempt is going to be over and above the exempt of INR 100,000 as per Section 80C.

It is hoped that almost 60 percent of tax-payers would benefit from this tax-relief program, which will definitely increase their purchasing power, which, in turn, will positively impact the businesses operating in the country. This is the strategy of taking the economy even more toward the domestic-consumption-driven growth-path – a very, very good strategy of being self-reliant, and highly proven strategy in this Great Recession.

The budget looks forward to compensate for these relaxations to the common people through marginally increasing excise-duties in certain sectors, such as tobacco products, high-end SUVs, luxury cars, petrol and diesel, just to name a few.

Moreover, the Minimum Alternative Tax (MAT), which was actually introduced to tax companies like Reliance, is raised to 18 percent, from the current 15 percent.

The fiscal deficit for 2010 is budgeted at 6.8 percent of the GDP, but has been guided to 5.5 percent of the GDP for the next fiscal year, to 4.8 percent of the GDP for 2012, and to 4.1 percent of the GDP for 2013. Overall this phased fiscal-deficit-reduction strategy looks pretty good, keeping in mind the current financial situations around the world.

So far, the government has raised USD 7 billion by divesting stakes in the public-sector enterprises, and there will be many more such moves in the coming days to fund the planned fiscal-deficits. Moreover, the government will issue more banking licenses for the private-banking sector, and will also auction telecoms 3G-licenses for raising funds to finance the fiscal-deficits.

Overall, the Indian Union Budget for 2010 appears to be a very positive, comprehensive, inclusive budget. Good job!