The Union Budget 2009-10, to be presented on 6th July, may spell out long-term policy guidance to uplift the common man’s standard of living and achieve inclusive growth. President Pratibha Patil’s address on June 4th, 2009 indicated that the central government may expand the scope and size of its flagship programmes targeted at the common man.
In this article, Personal Money has analyzed how the key issues highlighted in the President’s address may impact the coming Union Budget and what could be the possible impact on people like you and me.
Key Points form the President Pratibha Patil’s address to both houses of parliament
Enlarge The Scope Of NREGA
- National Rural Employment Guarantee Act (NREGA), which helped the Congress mobilise grassroots workers and supporters, may be expanded beyond unskilled manual work, thereby allowing lower middle class skilled workers direct benefits of this programme. Terming NREGA an effective social protection measure and the largest programme in the world for rural reconstruction, Ms Patil said that the government would enhance the scope of the programme. She has also indicated a better convergence of NREGA with other programmes and talked about improving land productivity.
Funds for Social Causes
- The address has confirmed that the new government will pursue social agenda rigorously and more fund may be allocated to three key ministries—rural development, health and education.
Emphasis On Health & Education
- Two other flagship programmes—National Rural Health Mission and Sarva Shiksha Abhiyan—are likely to get a fillip during the next five years, indicated Ms Patil’s speech. And, the forthcoming Budget may also announce the major changes in the nature and size of these programmes.
Cover For Poor
- Ms Patil said that the government would expand the national health insurance programme (Rashtriya Swasthya Bima Yojana) to cover all families below the poverty line in the next five years in addition to reviving vaccine producing institutes in the public sector to support the immunisation programme.
Right to Free and Compulsory Education and Female Literacy
- Also, the government may announce access to quality education a right to individuals as Ms Patil mentioned about the enactment of the Right to Free and Compulsory Education Bill which is now under consideration of Parliament. She also said that the government would recast the National Literacy Mission as a National Mission for Female Literacy to make every woman literate in the next five years. In the backdrop of mere 54% female literacy in India against 75% of male, the trust on female literacy may become a force multiplier for social development programmes, she further said
Houses For All
- On urban space effort to create a slum-free India in five years through the Rajiv Awas Yojana.
Authorization to liquidate Government’s stake in PSUs
- Even on urban space, President said that the government would make an effort to create a slum free India in five years through the Rajiv Awas Yojana.
Analysis of and Impact of the President Pratibha Patil’s address to both houses of parliament
The President had laid out a populist foundation for the Budget 2009-10. It provides an indication that a substantial fund outlay for social sector might be on cards. This has a deep impact on the widening Fiscal deficit. Although, the President’s address provides a key source of funding by way of liquidation of Government’s Equity in Public sector Units (PSUs), however, how, when and which PSUs the Government will liquidate is yet to become clear. The current market environment is not conducive for government to take this step.
Further, the revenue collection by way of Direct Taxes last year is less than expected. This again is exerting pressure on the Fiscal Deficit.
So, what could this mean to you and me :
- The personal income tax rates may remain unchanged
- Government may impose additional cess or increase the percentage of cess that are already lavied.
- Not much relief expected from Indirect Taxes, either.
- Service Tax net may be further expanded and possibilities of reducing the service tax rate is there. This will reduce the impact on Common Man and yet keep the impact on Government Revenue Neutral.
- Due to the Global Financial Crisis and its impact on Indian Economy, Industry is expecting a stimulus package from the Budget 2009-10. Finance Minister has already committed to provide the much needed boost to the Economy. But which sectors will get the boost and to what extent will be clear only on July 6th, when the Union Budget will be presented in the Parliament.