 Writing off farm loans worth Rs 60,000 crore, increasing Income Tax exemptions, slashing excise duties... Finance Minister Chidambaram's Budget 2008 is aimed at winning votes in an early poll. It's just a little over four hours since Palaniappan Chidambaram, 62, has presented his fifth consecutive Budget as the Finance Minister of the UPA government, and he's already been through multiple press interviews, including a full-blown press conference.
There are more reporters and editors queued up outside his first-floor office at North Block in New Delhi, and Chidambaram is pressed for time. "Short questions will get sweet answers," he says, but without a smile. It's easy to see why Chidambaram is feeling a bit hassled today.
His 108-minute Budget speech earlier in the day hasn't generated the sort of response—or even understanding—that he thinks is due to it.
The bellwether stock market index, Sensex (a rough and ready barometer of business sentiment) has dropped more than 245 points (it fell more than 500 points intraday, but recovered towards close), and industry is unhappy that it has been cold shouldered, minus a few concessions on the fringe benefit tax and dividend distribution tax. Reformist Aspects
| Least Reformist Aspects | Missed Opportunities | - Reconfiguration of slabs in personal income tax
- Allowing parent company to set off dividend received from its subsidiary
- Reduction in excise duty in various sectors
- Establishment of a non-profit corporation for the Skills Development Mission backed by Rs 1,000 crore GoI equity
- Establishment of the Irrigation and Water Resources Finance Corporation, risk capital fund in SIDBI
| - Rs 60,000 crore of loan waiver for small, marginal farmers & one-time settlement
- Imposition of commodities transaction tax
- Increase in short-term capital gains tax
- Changes in securities transaction tax
- No efforts to rein in government expenditure given the rising fiscal deficit
| - Abolish fringe benefit tax
- Removal of surcharge on corporate taxes
- Undertaken stronger measures for effective targeting of subsidies
- Could have taken more measures to address the labour-intensive export sectors such as leather
- Could have taken more proactive steps towards the improvement of infrastructure
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But this year, Chidambaram didn't really set out to write a Budget for corporate India.
His fifth consecutive Budget, which will be the last for this administration this time around, has been written with bigger political exigencies in mind: UPA and its allies have a general election to win next year, and that may be brought forward to later this year to cash in on the largesse the Budget has doled out to key constituencies, namely the farmers, who have been given Rs 60,000 crore in loan waivers, and the aam aadmi, who's been showered with excise duty cuts to make his two-wheeler and small cars cheaper, and higher income exemptions to retain more rupees in his wallet. Will Budget 2008 win UPA and its partners popular votes?
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"Total reduction of excise duties by 2% will give a welcome boost to the manufacturing sector. Also, the exemption of specified parts of set-top boxes from customs duties is commendable".
