Decoding the Union Budget 2010-2011: Direct Taxes

The Union Budget for fiscal year 2010-11 has already been presented. In all, it has tried to maintain the key spending as they were with a prime focus on bringing down the FISCAL DEFICIT of a whopping 6.8% of GDP to 5.5% of GDP(for the next fiscal) as said by FM Pranab Mukherjee.
3 main challenges to continue as a key focus:
1. Achieving 9% GDP growth rate & above
2. Inclusive growth
3. Strengthening food security.
Hereby I present a detailed analysis of important changes in our TAX STRUCTURE:

CHANGES IN DIRECT TAXES:
Income tax-
- No tax upto Rs. 1.6L for all, upto Rs. 1.9L for women, upto Rs. 2.4L for senior citizens.
- 10% tax limit Rs. 1.6L to Rs. 5L for all, Rs. 1.9L to Rs. 5L for women, Rs. 2.4L to Rs. 5L for senior citizens.
- 20% tax limit Rs. 5L to Rs. 8L for all including women & senior citizens.
- 30% tax limit on income of Rs. 8L & above for all including women & senior citizens.
Finance Minister estimated that about 60% of tax payers to be benefited. Experts say this slab would save about 4-6% of tax outgo of the "aam aadmi".
Corporate tax:
- Reduced to 7.5% from 10%
MAT(Minimum Alternative Tax) increased from 15% to 18%.
The Corporate sector seems to be quite disheartened as the reduction in Corporate tax is being overpowered by the increase in MAT!

Emergence fo a 2nd Green Revolution in India- Part 1.

The two decades of 1970-1990 saw a robust, miraculous and a much needed change in the Agricultural sector of India. It was the period of GREEN REVOLUTION. Dynamically transforming the agro-production, cultivation’s productivity and food grains availability, the first Green Revolution was an outcome of Hybrid wheat varieties, Electricity infrastructure for farms and the revolutionary Land Reforms.
With the Economic reforms coming in 1991 popularly called the L.P.G. Reforms, our Industrial and Service sector in India started gaining momentum. The so-called dominance of Agro-Industry was now being overtaken by Manufacturing and later by Manufacturing and Service sectors both. With this, in the last decade our agro-sector has seen highest growth rate of only 2%. Population expansion has occurred dramatically from just 30 crores in 1950s to more than 1 billion today. With population expansion, the demand for food also increases resulting in heavy utilization of natural resources. As A.P.J. Abdul Kalam points out, “India’s population wastes food and other natural resources at a rate higher than it takes Mother Nature to replenish these wastes into resources. Thus burden occurs on the limited available cultivable land. Very clearly speaking, there is now no more cultivable fertile land available in our nation.
Thus comes the urgent need to give birth to a 2nd Green Revolution in India. Following factors will be adversely affecting our Food Security:
1. Global Climate change: will especially affect certain temperature-sensitive crops.
2. Drought is the crucial most factor that may affect in coming years.
3. Water availability is another factor that will affect due to changing global temperature.
4. Soil Erosion is an important factor as it depletes our “already-scarce” cultivable land resources.

Emergence of a 2nd Green Revolution in India- Part 2.

India needs to expand its Food crop production by atleast between 50%-100% by 2050(as compared to current levels) to meet the food demands of such a vast population. Very frankly speaking India does not have any further cultivable land left. More advanced and rapid measures are required. Expanding our cultivable land’s productivity is essential. As Abdul Kalam suggests, “targeting rural drylands is a better option.” States of Gujarat, Maharashtra, Rajasthan, etc. have good amount of dryland which can be cultivated to increase food production.
Technology has always been a boon in such crisis. Imbibing Imaging tools and Bio-chemical studies technology is required, add to it Computer technology that can help to analyze plants at cellular levels and determine its needs. This will help us to understand our Bio-diversity better and allocate resources accordingly. Cross-disciplinary approach is needed for a 2nd Green Revolution. Integration of Mathematics, Physics, Chemistry, Crop sciences (such as genetics, pathology, etc.) alongwith social sciences especially Economics will revolutionize Food cop production and management in India.
India’s economy is evolving in a giant, it being the 4th Largest Economy in the world in terms of GDP is a proof for its evolution as a giant. In such a transformational growth, it becomes crucially essential for India to deal with food demands of future as it can dampen all our future hopes of growth, can’t it? Today, our Government is taking all the necessary steps as mentioned above. The problem lies not in production but in Distribution of food grains. Efficiency in PDS is a way of achieving success here. Recent proposal by Manmohan Singh’s government of introducing a scheme for Government officers whereby they would be fined from their salaries for inefficiency and delays is a step towards success. Let us hope our Knowledge society brings more and more alternatives for addressing this problem.

Year 2050- Emergence of a Trilateral World Economy?

The Global Economy, for the next 40 years is to be carried by the B.R.I.C. countries and Mexico alone. But on a deeper look, we find a stunning fact, an Emergence of a World economy governed majorly by 3 economic mammoths- namely China, United States and India. An article: "The G-20 in 2050" published in the November Bulletin in the Carnegie Endowment for International Peace states that China, U.S. and India will emerge as the three largest Economies of the world.

The fact that this statement has a great amount of truth can be obtained in recent growth-rates of China at 9% per year. It has been estimated that, given present trends as they are, China will emerge as the largest economy in the World by 2032 and grow 20% larger than the U.S. economy till 2050. India will become the 3rd largest Economy in the world by 2050.

Asia is all set to emerge as the carrier of the Global Economic system. Today, 5% of the World Population i.e. the U.S. population accounts for $10 Trillion of global consumption and Asia with 45% of World Population accounts for $7 Trillion of Global consumption. By 2020 Asia will account for $21 Trillion of Global consumption 140% of the U.S. consumption at that time(which will be consuming $15 Trillion).

So, soil is being sown for a fertile 3-sided economy. These three nations would have a profound effect on the Global commercial setup. This surely doesn't mean that other nations would have a lesser role. In terms of Per-Capita Income, Asian countries will continue to be way behind of the developed world. Lets hope to have an Asia that is ahead even in terms of Per-Capita, maybe the beginning has begun.

Economic Boom- the only key to remove Malnourishment?

As per World Health Organization, today hunger is the gravest danger to the World health. Malnutrition is indeed a very big contributor to child mortality. As per World Bank's estimates in 1998, India is the 2nd most malnourished nation with 47% after Bangladesh. In India some major causes are lack of proper delivery system of the P.D.S.(Public Distribution System), lack of hygiene and sanitation facilities to majority of population, status of women, etc.
The World Bank has clearly stated that India, despite being the 2nd fastest growing economy in the world, after China, is still "one of the most malnourished nation in the world". India's N.F.H.S.(National Family Health Survey) said that India has 46% of its children(below 3 years old) underweight and 38% stunted. Malnourishment is highest among the scheduled tribes and castes with 54% of them being malnourished. As per U.N. one of the key cause of undernourishment in India is Low Birth Weight(LBW) and 30% of the children are born under this category.
The I.C.D.S.(Integrated Child Development Scheme) has razor-sharp difference in intentions and implementation. Even the mid-day meal schemes that have been introduced maybe efficient in educational terms, but fails at the nutrition front, as said by the World Bank. India, right now aims at an easy 6-6.5% growth rate, being the 4th largest economy in the world in terms of GDP, is still not healthy at the SOCIAL INFRASTRUCTURE front.
In rural India or say the Bharat, it is really worrying to find that even one member of a family falling ill is enough to sink the poor families in a vicious circle of debt and further poverty. Thus our Economy's growth is not at all reflecting a positive RURAL UPLIFTMENT especially at the health front. Our Government though really working hard for nation's growth must always remember those 3 golden words: HEALTH IS WEALTH.

Union Budget 2009: Major Direct Tax Reforms

The important and noteworthy changes in the Direct Tax structure are as below:
On an in-depth analysis of the Direct Tax reforms made by Mr. Mukeshbhai(Direct Tax consultant and expert), the current 2009 Budget reforms consists of "Ironical contradictions and missed opportunities".
Let us first know some essential points here. Firstly, out of the total expenditure being made by the Government, 30% is Plan Expenditure and rest 70% is Non-Plan Expenditure! An expectation of a 20-20 inning was expected by the nation, but it seems, 50-50 hasn't vanished away till now! Following are the points I have deciphered on this topic:
1). Taxation is a KEY to make an "aam aadmi" happy, an Income Tax exemption limit is such that it makes out to be a saving of Rs. 1000/year for general citizens an Rs. 1545 for Senior citizens. Come on Pranabda, an increament of Rs. 4/litre of Petrol will make them spend many a 1000 bucks in a year!

2). Fringe benifit Tax has been removed, a good move indeed.

3). As per CBDT(Central Board for Dirct Taxes), Wealth Tax collection was Rs. 400 crores last fiscal(125 of total Direct Tax revenue). Do we really need to undertake so complex processes to collect a tax of just 300-400 crores?

4). A lack of REAL-TIME relief is there. Educational sector could have been given a relief by reducing the interst rates on students' loan.

5). MAT(Minimum Alternative Tax), mainly formed to make the once-popularly known "Zero Tax Companies", has been increased to 15%. Is it justified? See, it was first started at 7.5%, then increased to 10% and now a jump to 15%!

Thus, majorly these are the areas I felt I shall share it with my readers. Growth was a goal, these reforms are somewhere obstructing that goal. Let us hope, the road map made here in the Union Budget, turn out to be better in terms of efficiency and relief. Some points further, I would lik to share are that the Surcharge has been removed, L.L.P.(Limited Liability Partnership) has newer reforms good enough for now atleast. And lastly, it should now be noted that you may not have a "PEN" but you certainly must have a "PAN"(card). Lets hope for a brighter future. Do share your views.