Budget Gyan: Some cult budgets from the archives

  • India Infoline News Service
  • 14 Jan , 2022
  • 2:13 PM
Budget 2020
All budgets are important, just that some budgets acquire cult status due to some specifically important announcements. Here is a selection of some of the cult budgets from the past.

A look back at some of the cult budgets over the years

• The first budget after India became a Republic was always supposed to be the first big cult budget. Presented by John Mathai, the 1950 budget was known for setting the base for the formation of the Planning Commission, under PC Mahalnobis.

• Under the Indira Gandhi led Congress government, finance minister Morarji Desai presented a rather path breaking budget in 1968. The Budget 1968 made the shift to self-assessment by manufacturers, rather than excise inspectors. That has remained the standard till date, including for GST.

• Cascading effect of excise duty was always a big challenge. Under the Rajiv Gandhi government, finance minister V P Singh presented a landmark budget in 1986. This budget ushered in the concept of value-added tax (MODVAT), which is the basis for manufacturers getting input credit. Even GST is based on this principle. Budget 1986 ushered in the computerization of government for the first time.

• Few can forget the Big-Bang reformist budget by Dr. Manmohan Singh in 1991. Dr. Singh dismantled the license regime, cut customs and excise rates to competitive levels and opened the doors to FDI and FII investments. This budget actually put India on the growth path, which has continued since.

• Services accounted for more than 50% of GDP but were not taxed. Union Budget 1994 changed that with introduction of 5% service tax. This was later progressively increased to 15% and subsumed into 18% GST in 2017. Thanks to service tax collections, India was able to cut excise and customs to make Indian manufacturing more competitive.

• Chidambaram’s dream Budget came in the year 1997. It was the first reformist budget by a coalition government. It introduced the Voluntary Disclosure of Income Scheme (VDIS), which collected Rs10,000 crore and also cut income tax rates and corporate tax rates sharply to improve compliance.

• Indian IT industry owes its big bang moment to Yashwant Sinha’s Budget 2000. The FM announced phasing out of perpetual tax incentives. It was painful but created self-sufficient billion dollar software behemoths in India.

• Big bank infrastructure allocation began with the 2003 Budget. A massive allocation of Rs.75,000 cr was made for the Golden Quadrilateral project to connect India with high quality national highways. This connectivity triggered the structural bull market rally.

• Budget 2004 was all about securitization transaction tax (STT) on capital markets and that has continued till date. STT made markets more transparent, resulting in an unprecedented surge in market volumes post the introduction of STT.

• Union Budget 2007 was meant for the common people with substantially higher income tax exemption limits and more tax breaks. This put more investable funds in the hands of people and was the last of the big tax savings budgets for people.

• Budget 2016 led the shift out of dividends by imposing additional dividend tax of 10% on dividends beyond Rs. 1 million. Since this was over and above DDT, this encouraged buybacks in a big way. Companies looked at non-cash reward methods for investors.

• Budget 2018 will be remembered for 2 things. Firstly, it introduced flat 10% LTCG tax on equities and equity mutual funds above Rs1 lakh per annum. There was no benefit of indexation and this was despite paying STT. Later in 2019, dividends were to become fully taxable in the hand of investors. But Budget 2018 also set the minimum selling price (MSP) at 150% of the cost of producing Kharif and Rabi crops for farmers. This was a big boost to farm incomes and pushed foodgrain production to record levels.

• Budgets 2020 and 2021 were presented in the shadow of COVID-19. Budget 2020 will be best remembered for its pathbreaking Product linked Incentives (PLI) scheme to promote domestic manufacturing. This has been a big boost to a slew of sectors including textiles and electronics. The Budget 2021 will be best remembered for extremely generous fiscal deficit targets of 9.5% and 6.8% respectively.

Over the years, there have been a lot of extremely interesting budgets presented by various finance ministers. That helps us understand how Indian economy has evolved over the years.

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Government saved Rs10,000 crore in interest costs during FY22: Union Finance Secretary

  • India Infoline News Service
  • 08 Jun , 2022
  • 2:54 PM
T V Somanathan, the Union Finance Secretary, said on June 7, 2022 that the Centre saved Rs10,000 crore on interest payments in FY22. This is an outcome of new accounting processes for central government agencies and centrally sponsored schemes (CSS) for state governments.
Somanathan, speaking at a gathering, stated that as of March 31, 2022, there remained an unspent balance of Rs1.2 trillion with state agencies from CSS. This means that for the time being, this sum will be deducted from the Centre's borrowing, and it might be deemed a short-term cost-cutting measure.
The Treasury Single Account (TSA) for central government agencies and autonomous entities and the Single Nodal Agency (SNA) for transferring CSS funding to states are the new accounting procedures in the Public Finance Management System.
"Due to the TSA and SNA, we saved Rs10,000 crore on interest payments in FY22." We have a Rs1.2 lakh crore unspent amount on the SNA. So that's a sum we won't have to release or borrow until it's depleted," Somanathan explained.
The finance secretary was addressing on the occasion of Union Finance Minister Nirmala Sitharaman's presentation of the SNA dashboard. Such steps, he added, will improve the Centre's fiscal deficit in a difficult year like FY23.
India's fertilizer subsidy cost for FY23 might reach approximately Rs2.5 trillion, up from Rs1.05 trillion in the Budget.
The current wave of excise tax cuts on petrol and diesel would cost the government roughly Rs85,000 crore this year, while recent import duty cuts on other commodities will cost the government between Rs10,000 and Rs15,000 crore.
Furthermore, the decision to pay a subsidy of Rs200 per gas cylinder (up to 12 cylinders) to nearly 90 million Pradhan Mantri Ujjwala Yojana beneficiaries will result in a loss of Rs6,100 crore per year.
Apart from the Rs1.10 trillion increase in fertilizer subsidies already announced, the Modi government's decision to prolong the PM Garib Kalyan Anna Yojana (PMGKAY) through September would bring the FY23 food subsidy spending to Rs2.87 trillion, up from Rs2.07 trillion in the Budget Estimate.
Sitharaman said at the ceremony that the SNA dashboard, which tracks financial transfers to states and their use, will make the government more transparent and guarantee that every dollar supplied by the Centre is well spent.
The dashboard would allow ministries and departments to track their transfers to states and their use by implementing agencies, as well as aid the government with financial management.
"Rs4.42 trillion passes through the CSS, which is a significant sum. You are now able to keep track of that money. It is a major step forward in terms of making government more open. That amount of money is also provided in a timely manner. What a better way to realize the worth of every rupee contributed!" According to Sitharaman.

Budget reaction: Real Estate Industry

  • India Infoline News Service
  • 03 Feb , 2022
  • 2:27 PM
The 2022 budget will boost the affordable segment in the housing real estate sector. Allowing allocation of 48000 crores, under PM housing plan and allocation of INR 60,000 crore to cover 3.8 crore households for tap water will boost the affordable housing segment immensely.

Also government’s focus on urban development will push employment in the urban cities and encourage upcoming talent. With more employment, the spending capacities of households will increase, which in turn will boost the overall economy and with this we expect to further improve the housing market,as the sector just needs positive sentiment.

The author of this article is Sakshee Katiyal, CEO of Home & Soul

The views and opinions expressed are not of IIFL Securities,


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  • 08 June, 2022 |
  • 9:08 AM

Speaking at a gathering, he stated that as of March 31, 2022, there remained an unspent balance of Rs1.2 trillion with state agencies from CSS. This means that for the time being, this sum will be deducted from the Centre's borrowing, and it might be deemed a short-term cost-cutting measure.

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