Buysexyhalloweencostumes: personal finance and budgeting

If you die owing money, that means you won the game of life. But some folks harbor a silly fantasy of actually clawing their way out of the imploded Chilean mines of debt they've created for themselves. They put themselves on a budget, hope for job security and the eventual reinstatement of raises and map out exactly when they might taste the financial freedom all too few get to taste.

Personal Finance blogger Girl with the Red Balloon, who is chipping away at more than $16,000 of student loan debt on a $24,000 salary says she'll be out of debt June 1, 2013. She uses the far-off date as encouragement to stay focused on her frugality.

How much debt are you in, and if you plan on getting out of it one day, when do you hope that will be?

Debt Free Date [Girl with the Red Balloon]

How much debt are you in, and if you plan on getting out of it one day, when do you hope that will be?

Debt Free Date [Girl with the Red Balloon]

eric seiger

Facebook Wins Another News Feed Patent

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"I want her to be happy," Patrick Lovato tells Us.

eric seiger

How much debt are you in, and if you plan on getting out of it one day, when do you hope that will be?

Debt Free Date [Girl with the Red Balloon]

How much debt are you in, and if you plan on getting out of it one day, when do you hope that will be?

Debt Free Date [Girl with the Red Balloon]

eric seiger

Facebook Wins Another News Feed Patent

Australian News Site Issues Apology and Correction For Inaccurate ...

News - Dad: How Demi Lovato Is Holding Up - Celebrity News ...

"I want her to be happy," Patrick Lovato tells Us.

eric seiger

eric seiger

eric seiger

Facebook Wins Another News Feed Patent

Australian News Site Issues Apology and Correction For Inaccurate ...

News - Dad: How Demi Lovato Is Holding Up - Celebrity News ...

"I want her to be happy," Patrick Lovato tells Us.

eric seiger

How much debt are you in, and if you plan on getting out of it one day, when do you hope that will be?

Debt Free Date [Girl with the Red Balloon]

How much debt are you in, and if you plan on getting out of it one day, when do you hope that will be?

Debt Free Date [Girl with the Red Balloon]

eric seiger

Facebook Wins Another News Feed Patent

Australian News Site Issues Apology and Correction For Inaccurate ...

News - Dad: How Demi Lovato Is Holding Up - Celebrity News ...

"I want her to be happy," Patrick Lovato tells Us.

eric seiger

Facebook Wins Another News Feed Patent

Australian News Site Issues Apology and Correction For Inaccurate ...

News - Dad: How Demi Lovato Is Holding Up - Celebrity News ...

"I want her to be happy," Patrick Lovato tells Us.

eric seiger

Facebook Wins Another News Feed Patent

Australian News Site Issues Apology and Correction For Inaccurate ...

News - Dad: How Demi Lovato Is Holding Up - Celebrity News ...

"I want her to be happy," Patrick Lovato tells Us.

eric seiger

Facebook Wins Another News Feed Patent

Australian News Site Issues Apology and Correction For Inaccurate ...

News - Dad: How Demi Lovato Is Holding Up - Celebrity News ...

"I want her to be happy," Patrick Lovato tells Us.

eric seiger eric seiger
eric seiger

eric seiger
eric seiger

Facebook Wins Another News Feed Patent

Australian News Site Issues Apology and Correction For Inaccurate ...

News - Dad: How Demi Lovato Is Holding Up - Celebrity News ...

"I want her to be happy," Patrick Lovato tells Us.

big seminar 14

Union budget is the 'Brahmastra' of the Central Government to regulate its revenue income through various means and channelise these resources to different sectors for meeting revenue expenditures as well as capital expenditure. The Governments are said to be representing the aspirations of the people and the nation as a whole. Certain provisions in the budget do stimulate the required change but some others do not meet the expectations. This article is like an open-heart surgery of the Union budget to examine its different facets and implementing a new economic indicator in place of the traditional ones.

Central Government represents the whole Country and being the regulator of whole economy, Government enjoys a number of responsibilities towards countrymen. They are,

(i ) Social responsibility

(ii ) Economic responsibility

(iii ) Political responsibility

(iv ) National Security

(v ) International relations

Social responsibility:

Government has

(i ) To remove the discrimination among different groups of society

(ii ) To maintain law and order

(iii ) To provide basic necessities like education, healthcare for poor.

Economic Responsibility:

Government has

(i ) To provide micro credit facilities for the uplift of poor masses.

(ii ) To undertake land reforms

(iii ) To provide Infrastructure facilities for the Industrial growth.

End result of economic responsibility should be to increase purchasing power of general mass without any discrimination.

Political responsibility:

This means Accountability towards general public. Under political responsibility Government has to ensure that benefit should reach up to the level for which it is made.

National Security:

Government has to maintain armed forces and Para military forces for the purpose of National Security and even for internal Security.

International relations:

With the opening of global economy, the responsibility of central government towards international relation has considerably changed and, therefore, a separate budgetary allocation is needed.

To discharge above said responsibilities, Government needs a huge sum and the Government through various means, which is implemented through Union Budget, raises this sum. Thus,

Ø Union Budget is a Government's Course of action for forthcoming financial year stating sources of revenue to Government and expenditure plan of Government to carry on above said responsibilities.

Following is the different items of budget and its format:

1.Revenue Receipts

2. Tax Revenue (Net to Center)

3. Non-tax Revenue

4. Capital Receipt (5+6+7)

5.Recovery of Loans

6. Other Receipts

7. Borrowings and other liabilities

8.Total Receipts (1+4)

9.Non-plan Expenditure

10. On Revenue Account of which

11. Interest Payment

12. On Capital Account

13. Plan Expenditure

14. On Revenue Account

15. On Capital Account

16.Total Expenditure (9+13)

17.Revenue Expenditure (10+11+14)

18.Capital Expenditure (12+15)

19. Budgetary Deficit (16 - 8)

20.Revenue Deficit (17-1)

21.Fiscal Deficit (16-(1+5+6))

22.Primary Deficit (21-11)

From the above definition, it is clear that there are two main objectives of Union budget,

(1) To administer the revenue income and to provide expenditure plan.

(2) To stimulate economic growth, which will help the Government in discharging above said responsibilities.

Thus, the job of finance minister is to make available finances and to plan for expenditure taking into account the overall economic growth.

Ø Economic growth is a very wide term, Here, I would like to clarify that an individual perceives the budget and economic growth on the basis of his/her own knowledge, skill and thinking process. Needless to say I also have my own opinion.

Over all economic growth is measured in terms of % growth in GDP for the given period (GDP - Gross Domestic Product is the monetary value of all the goods and services produced in the economy during financial year).

There is a huge disparity in the distribution of income and wealth that is why 20% population contribute 80% of GDP and 80% population contribute only 20% of GDP and the true economic growth will happen when every one will contribute to GDP significantly and therefore social sector reforms must be given top priority.

Again since 60% of population is dependent on agriculture sector and belong to rural sector and in fact this is the sector, which need social reform and therefore must be given priority in the union Budget to stimulate economic growth.

For the purpose of this Article, I have form the opinion that in case government ensures the political and economic responsibility an individual itself will ensure social responsibility provided he/she has given adequate purchasing power without any discrimination.

Needless to say productive investment is the only solution to provide purchasing power to general mass and to stimulate economic growth consequently to protect social interest.

Here the important point is more and more investment should be there but it must be productive in nature either from public sector, private sector, external sector or joint sector, no matter e.g. investment in plot is not regarded as productive investment whereas investment in business is productive investment as it will generate employment and hence will increase purchasing power.

Now see how productive investment is linked with economic growth.

Productive investment (Pvt. Sector, Public Sector, external sector, joint sector)

Employment

Purchasing power

Demand of good and services

Supply

Economic Growth (GDP)

Productive Investment:

The different aspects of productive investment can be categorized in following manner-

Requirement for productive investment:

Productive investment require two things,

(i ) Essentials i.e. Infrastructure facilities like transport, power, Information technology and sound financial system for smooth funding. Better Infrastructure not only provides environment for productive investment but also reduces cost of production in terms of utilities cost (fuel and energy), Freight charges etc., and also Increases productivity.

(ii )Necessities means availability of Input factors i.e. material, labour, and financing facility.

§ Measures to stimulate productive investment:

The important measures are:

(i ) Infrastructure facilities: Adequate level of infrastructure facilities should be made available to motivate investment.

(ii )Pricing/Profit margin: Reasonable level of profit margin should be there to continue investment. Pricing is linked with Cost of production, higher the cost of production, higher will be the price for given level of profit.

(iii ) Cost of fund i.e. real interest rate: To stimulate productive investment real interest rate should be kept low. Financial Sector reform should result in lower real interest rate.

§ Area for productive investment:

For the purpose of investment the whole economy is divided into three sectors viz.

1) Industrial Sector - manufacturing, trading and core sector

2) Service Sector - hospitality, entertainment, journalism, telecommunication, banking, insurance, tourism etc.

3) Agriculture Sector - food processing, farming, dairy etc.

During the previous years (2005 - 06), the overall growth rate (measured in terms of GDP Growth rate) was between 7 to 8 %. The sector wise growth rate was as follows-

Industrial Sector - 7 to 8%

Agriculture Sector - 3 to 4 %

Service Sector - 11 to 12 %

The slowdown in growth rate of Industrial Sector and Agriculture sector was mainly due to lack of respective Infrastructure.

§ Limitations before the Central Government towards productive Investment

ü In a federal System more than 70% investment is done through State Governments and, therefore, Union government has little to do with so called productive investment.

ü Political setup in democratic environment: This plays significant role in decision-making process especially when political setup is based on collation government where parties with different ideology agree to run government and consequently to take decision. Such political setup restrict finance minister to take hard decisions to boost overall economic growth e.g. cut in subsidy or to go for more and more disinvestments of profit making PSUs to cut expenditure and hence to curb fiscal deficit is not possible because in present collation government at central 'LEFT' parties are supporting the government and such decisions are against their ideology.

§ Problems before Central Government towards productive Investments

ü Despite all the limitations before central government, the major problem before the central government towards public spending is huge fiscal deficit (Fiscal deficit measures total external borrowings to implement expenditure plan) - See Appendix 1. Unfortunately the huge fiscal deficit is almost because of Interest payment obligation (See Appendix 2).

ü In other words if there is no interest payment there will be no fiscal deficit means our resources are almost sufficient to meet our expenditure plan.

ü Again huge Interest payment is non-productive expenditure leaving limited resources before the central government to implement capital projects or Infrastructure projects. This is the reason why most of the government project proposals are lying pending since long period because revenue expenditure like interest payment, salary & wages, subsidies etc. can not be postponed resulting into delay in implementation of capital projects.

ü Here it may be pointed out that the problem is not with the fiscal deficit, problem is with the cause of fiscal deficit, which is huge interest payment obligation. In case fiscal deficit is due to huge capital expenditure then there is no problem, as it will stimulate economic activity, which will lead to economic growth. The normal impact of fiscal deficit in this case will result in the form of increase in inflation rate because of increase in demand of input factors.

Thus, it becomes prime objective to correct fiscal deficit.

Ø Problems with private Spending in Infrastructure projects:

Following is the characteristics of Infrastructure projects:

1) Less profitability (Return On Investment)

2) High Capital Investment

3) High gestation period.

Because of above characteristics, private spending in Infrastructure projects are very poor and therefore huge public spending in this sector is the only solution because Government is the ultimate regulator of economy

Ø Problems with private spending in Agriculture sector:

Like Infrastructure projects, Agriculture sector is also not attractive for private spending because of following reasons.

1) Low pricing (i.e. Minimum support price) minimum support price of agriculture produce is determined by central government, which is very low.

2) Problem of Storage of Surplus food grains.

3) Restriction on free trade of Agriculture produce.

Because of the above reasons huge public spending is required to create infrastructure for Agriculture produce.

Ø Measures taken by central Government in Union Budget (2006-07)

Taking into account the above said responsibility towards countrymen, limitations and problems before the central government and problems related with private spending in Infrastructure sector and Agriculture sector and to stimulate productive investment in order to ensure economic growth, the central government has taken following measures in its Union Budget 2006-07: - (source: website: http://indiabudget.nic.in)

Ø Measures towards financial sector reform:

§ Banking, Insurance and Pensions: Net capital support to banking sector standing at Rs.22,808 crore, to be restructured to facilitate increased access of banks to additional resources for lending to the productive sectors; Bill on insurance to be introduced in 2006-07.

§ Capital Market:limit on FII investment in Government securities to be increased from $ 1.75 billion to $ 2 billion and the limit on FII investment in corporate debt from $ 0.5 billion to $ 1.5 billion; ceiling on aggregate investment by mutual funds in overseas instruments to be raised from $ 1 billion to $ 2 billion with removal of requirement of 10 percent reciprocal share holding; limited number of qualified Indian mutual funds to be allowed to invest, cumulatively up to $ 1 billion, in overseas exchange traded funds; an investor protection fund to be setup under the supervision of SEBI; RBI's anonymous electronic order matching trading module (NDS-OM) on its Negotiated Dealing System to be extended to qualified mutual funds, provident funds and pension funds; steps to be taken to create a single, unified exchange-traded market for corporate bonds.

Conclusion:

The measures taken against financial sector reforms have focused on capital market and are helpful for long-term investors. Consolidation of banking, insurance and mutual fund will further fuel the equity market and may attract large external capital inflow.

Ø Measures against taxation:

Taxation is very crucial part of union budget. In fact constitutional requirement of presenting budget every year is more or less submitting tax proposals for the forthcoming financial year because of following reasons;

1. Tax (direct or indirect) is the major source of revenue to meet expenditure.

2. Tax proposals proposed against sectors determine the growth prospects of concern sector up to great extent.

3. Tax proposals are designed keeping into mind public interest. The philosophy is to promote underprivileged and to protect interest of under developed.

Indirect Taxes:

A levy imposed by the government on spending on goods and services is referred as indirect tax.

Customs

§ Peak rate for non-agricultural products reduced from 15 per cent to 12.5 per cent; duty on alloy steel and primary and secondary non- ferrous metals reduced from 10 per cent to 7.5 per cent; this will also be the rate of duty for ferro alloys; on steel melting scrap raised to 5 per cent and brought on part on par with primary steel;

§ Duty on mineral products reduced to 5 per cent, with a few exceptions.

§ Duty on ores and concentrates reduced from 5 per cent to 2 per cent.

§ Duty on refractories and on a number of materials for manufacture of refractories reduced to 7.5 per cent.

§ Duty to be reduced on basic inorganic chemicals from 15 per cent to 10 per cent; on basic cyclic and acyclic hydrocarbons and their derivatives to 5 per cent; on catalysts from 10 per cent to 7.5 per cent.

§ Duty to be reduced on major bulk plastics like PVC, LDPE and PP from 10 per cent to 5 per cent; on naptha for plastics to nil; on styrene, EDC and VCM which are raw materials for plastics to 2 per cent.

§ Reduction of customs duty on 10 anti-AIDS and 14 anti-cancer drugs to 5 per cent; on certain life saving drugs, kits and equipment from 15 percent to 5 per cent; these drugs also exempt from excise duty and CVD.

§ Duty on packaging machines to be reduced from 15 per cent to 5 per cent.

§ Concessional project rate of 10 per cent to be extended to pipeline projects for transportation of natural gas, crude petroleum and petroleum products.

§ CVD of 4 per cent to be imposed on all imports with a few exceptions; full credit to be allowed to manufacturers of excisable goods.

§ Customs duty on vanaspati to be increased to 80 per cent.

§ Rates on clearances by EOUs to the Domestic Tariff Area (DTA) adjusted at 50 per cent of basic customs duty plus excise duty on like goods.

§ Reduction of: excise duty on all man-made fibre yarn and filament yarn from 16 per cent to 8 per cent; import duty on all man-made fibres and yarns from 15 per cent to 10 per cent; import duty on raw materials such as DMT, PTA and MEG from 15 per cent to 10 per cent; import duty on paraxylene to 2 per cent.

Excise

§ With the intention to converge all rates at the CENVAT rate at 16 percent; duty on aerated drinks and small cars to be reduced to 16 per cent.

§ 8 per cent duty to be imposed on packaged software sold over the counter; customized software and software packages downloaded from the Internet to be exempt; DVD Drives, Flash Drives and Combo Drives to be fully exempt from excise duty.

§ Condensed milk, ice cream, preparations of meat, fish and poultry, pectins, pasta and yeast to be fully exempt; duty on ready-to-eat packaged foods and instant food mixes, like dosa and idli mixes, to be reduced from 16 per cent to 8 per cent.

§ Vegetable tanning extracts, namely, quebracho and chestnut to be exempt from duty; duty on footwear with a retail sale price between Rs.250 and Rs.750 to be reduced from 16 per cent to 8 per cent.

§ concessional rate of 8 per cent to be extended to all LPG stoves.

§ Duty on compact fluorescent lamps to be reduced from 16 per cent to 8 per cent.

§ Glassware to attract duty of 16 per cent on par with ceramicware and plasticware.

§ Excise duty on specified printing, writing and packing paper to be reduced from 16 per cent to 12 per cent.

§ Cess under the Oil Industries Development Act to be increased from Rs.1,800 per metric tonne to Rs.2,500 per MT.

§ Re-imposition of excise duty at 12 per cent on computers to enable domestic manufacturers to take CENVAT credit as well as to face competition from imports; price not to be impacted as duty to be eligible for full input tax credit,

§ Duty of 16 per cent to be levied on set top boxes with reduction in customs duty from 15 per cent to nil.

§ Increase in excise duty on cigarettes by about 5 per cent.

§ Excise and customs tariff exemptions that are end-use based or have outlived their utility or need certification or give rise to disputes being rescinded; exemption for the SSI sector will remain.

Service tax

§ New services to be covered including ATM operations, maintenance and management; registrars, share transfer agents and bankers to an issue; sale of space or time, other than in the print media, for advertisements; sponsorship of events, other than sports events, by companies; international air travel excluding economy class passengers; container services on rail, excluding the railway freight charges; business support services; auctioneering; recovery agents; ship management services; travel on cruise ships; and public relations management services.

§ Coverage of certain services now subject to service tax to be expanded.

§ Leasing and hire purchase to be treated on par with loan transactions, interest and installment of principal amount to be abated in calculating value of the service.

§ Proposal to set April 1, 2010 as the date for introducing national level Goods and Service Tax (GST); service tax rate increased from 10 per cent to 12 per cent as another step towards converge between service tax rate and the CENVAT rate; net impact likely to be very small in view of credit available for service tax or excise duty payable.

VAT and CST:

§ In order to moderate the price, LPG (domestic) included in the list of 'declared goods' under the CST Act.

Direct taxes:

A levy imposed by the government on income, wealth and capital gains of persons and businesses.

Income tax or corporate tax

§ No change in rates of personal income tax or corporate tax - this will lead to fiscal consistency and will help long term investors and hence stable growth in capital market.

§ Increase of securities transaction tax (STT) by 25% across the board - again this will have insignificant impact over long-term investors as they do not update their portfolio frequently and hence not very much against of capital market.

§ Fixed deposits having maturity period more than five year with scheduled banks and pension funds U/S 80 CCC have been included under section 80 C of the income tax act with tax deduction limit up to Rs. 1,00,000.

§ Like open-ended equity oriented mutual fund schemes dividend distribution tax on close-ended equity oriented mutual fund schemes have been scrapped.

§ Capital gains rules changed - the tax break allowed under section 54 EC for capital gains invested in companies engaged in infrastructure has been restricted to two institutions - viz: NHAI and REC, from a previous list that included NABARD, SIDBI, NHB, which are banks, route of zero coupon bonds to raise

§ Primary Agricultural Credit Societies and Primary Cooperative Agricultural and Rural Development Banks to continue to be exempt from tax under section 80P of the Income Tax Act; all other cooperative banks excluded from the scope of that section.

§ Anonymous or pseudonymous donations to wholly charitable institutions to be taxed at the highest marginal rate; such donations to partly religious and partly charitable institutions/trusts to be taxed only if the donation is specifically for an educational or medical purpose; such donations to wholly religious institutions and religious trusts not to be covered by the new provision.

§ Constituency allowances of Members of State Legislatures to be treated at par with constituency allowance received by Members of Parliament.

§ Permanent Account Number (PAN) is the critical element in capturing incomes and expenditures; scrutiny of Annual Information Returns (AIR) on high- value transactions reveals that 60 per cent of the transactions are without quoting PAN; hence proposal to take power to- issue PAN suo motu in certain cases and to direct persons to apply for PAN in certain cases; in due course, more transactions to be notified for which quoting of PAN to be mandatory, a few more transactions to be prescribed to be reported in AIRs.

§ Banking Cash Transaction Tax (BCTT) to continue for some more time until the AIR system is able to capture all significant financial transactions.

§ Fringe Benefit Tax (FBT) introduced last year as a revenue raising measure; justified on the principles of horizontal equity and vertical equity; on review, following changes being proposed -

o Value the benefit in the form of 'tour and travel' at 5 per cent instead of 20 per cent;

o Value benefit in the form of 'hospitality' and 'use of hotel boarding and lodging facilities', in case of airline companies and shipping industry, at 5 percent instead of 20 percent;

o Exclude expenses on free samples of medicines and of medical equipment distributed to doctors;

o Exclude expenses incurred on brand ambassador and celebrity endorsement; and

o Prescribe a threshold of Rs.100,000 under section 115WB(1)(c) so that only a contribution by an employer to an approved superannuation fund in excess of Rs.100,000 per year per employee to attract FBT. Under section 80C there is already exemption up to Rs.100,000 for contribution by an employee to an approved superannuation fund.

Modernizing Tax Administration:

The Departments of Income Tax and Customs and Central Excise to undergo Business Process Reengineering (BPR); nationwide networks to connect 745 income tax offices in 510 cities and 550 customs and central excise offices in 245 cities, creating national databases; national data centres, data warehousing facilities and disaster recovery sites being set up; jurisdiction-free filing of returns, online tracking of status of accounts and refunds of income tax to be possible; introduction of a risk management system and Electronic Data Interchange (EDI) in the Customs Department to reduce dwell time for cargo; E-payments of customs and excise duties to be possible; both Departments to have fully computerized networks by end 2006.

Conclusion:

§ The tax proposals submitted by finance minister is in line with its philosophy stated above i.e.to promote underprivileged and to protect interest of under developed in addition to rationalizing fiscal discrimination across the sector and to generate maximum revenue in order to control fiscal deficit.

§ No change in personal and corporate tax will bring stability and consistency among investors and again will help long-term investors.

Ø Measures to develop infrastructure for industry

§ Telecommunication:To reach 250 million connections by December,2007, provision of Rs.1,500 crore for Universal Services Obligation Fund in 2006-07; more than 50 million rural connections to be rolled out in three years.

§ Power:Five ultra mega power projects of 4,000 MW each to be awarded before December 31, 2006; to create an enabling and empowered framework to carry out reforms an Empowered Committee of Chief Ministers and Power Ministers to be setup; Tenth Plan target of 3,075 MW of installed capacity for non-conventional energy sources exceeded by December 31, 2005 with installation of 3,650 MW capacity; Rs.597 crore provided for non-conventional energy resources; Rajiv Gandhi Grameen Vidyutikaran Yojana:10,000 villages in 2005-06 and 40,000 more villages in 2006-07 to be electrified.

§ Coal: Reserves of 20 billion tonnes to be de-blocked for power projects; definition of captive consumption to be amended to allow mining by producers with firm supply contracts with steel, cement and power companies; capacity of Central Mines Planning and Development Institute Limited to drill in order to prove reserves to be expanded.

§ Petroleum: Under NELP VI, 55 blocks and area of 355,000 sq kms offered; investment of Rs.22,000 crore expected in the refinery sector, in the next few years.

§ Road Transport:Budget support for NHDP enhanced from Rs.9,320 crore to Rs.9,945 crore in 2006-07; special accelerated road development programme for the North Eastern region at an estimated cost of Rs.4,618 crore approved with allocation of Rs.550 crore in 2006-07; 1,000 kms of access-controlled Expressways to be developed on the Design, Build, Finance and Operate (DBFO) model.

§ Maritime Development:National Maritime Development Programme (NMDP) approved; work is in progress in 101 projects covering, inland waterways, shipping and ports including deepening of channels in Kandla, JNPT and Paradip ; plan allocation for Department of Shipping increased by 37 per cent to Rs.735 crore; study to identify a suitable location for a new deep draft port in West Bengal to be carried out ;National Institute of Port Management, Chennai, renamed as National Maritime Academy, to be upgraded into a Central University with regional campuses at Mumbai, Kolkata and Visakhapatnam.

§ India Infrastructure Finance Company Limited incorporated; in principle approval granted for to three roads projects in Gujarat.

Conclusion:

The revival of basic infrastructure required for industrial development is not possible without private participation as government is running with problem of huge fiscal deficit leaving limited resources for public spending. In this budget government has taken a number of initiative to attract joint venture and has taken a number of provisions to revive different sectors of infrastructure.

Ø Measures for development of Rural Sector (rural sector reforms):

§ Bharat Nirman: In the first year of implementation, 2005-06: Rs.944.18 crore released so far as grant under AIBP, target of 600,000 hectares of irrigation potential expected to be created this year; against target of 56,270 habitations, 47,546 habitations covered until January, 2006 under Accelerated Rural Water Supply Project; 5,337 habitations connected under rural roads programme by September, 2005, and Rs.3,749 crore released so far; 870,000 rural houses constructed, sum of Rs.2,260 crore released till January, 2006; Rs.1,100 crore released for rural electrification, target of covering 10,366 villages expected to be achieved;17,182 villages provided with a telephone till December,2005.

Against Rs.12,160 crore in the current year, Rs.18,696 crore to be provided in 2006-07 for the programme, increase of 54 per cent.

§ Sarva Siksha Abhiyan:93 per cent of children in age group 6-14 years are in school, number of children not in school has come down to about one crore; outlay to increase from Rs.7,156 crore to Rs.10,041 crore in 2006-07; 500,000 additional class rooms to be constructed and 150,000 more teachers to be appointed; Rs.8,746 crore to be transferred to the Prarambhik Siksha Kosh from revenues through education cess.

§ Mid-day Meal Scheme: 12 crore children now covered; allocation to be enhanced from Rs.3,010 crore to Rs.4,813 crore.

§ Drinking Water and Sanitation:56,270 habitations and 140,000 schools to be covered in the current year; non-recurring assistance of Rs.213 crore to be provided in 2006-07 for setting up district - level water testing laboratories and field- level water testing kits; provision for Rajiv Gandhi National Drinking Water Mission to be increased from Rs.3,645 crore to Rs.4,680 crore and for Rural Sanitation Campaign from Rs.630 crore to Rs.720 crore.

§ National Rural Health Mission: More than 200,000 Associated Social Health Activists (ASHA) to be fully functional and over 1,000 block level community health centres to provide round the clock services; allocation increased from Rs.6,553 to Rs.8,207 crore.

§ Integrated Child Development Services:Additional 188,168 centres created; Centre assisting the States to the extent of 50 per cent of the actual expenditure incurred for supplementary nutrition or 50 percent of the cost norms, whichever is less - cost estimated at Rs.1,500 crore and this assistance to increase to Rs.1,700 crore; total allocation for ICDS increased from Rs.3,315 crore to Rs.4,087 crore.

§ National Rural Employment Guarantee Scheme:Allocation of Rs.14,300 crore for rural employment in 2006-07 with Rs.11,300 crore under NREG Act and Rs.3000 crore under SGRY, more funds to be provided according to need.

§ Jawaharlal Nehru National Urban Renewal Mission:estimated outlay of Rs.6,250 crore for 2006-07 with grant of Rs.4,595 crore; Government to promote establishment of new towns, preferably focused on a specific industry, for example Information Technology, or a specific theme, for example education or health.

Conclusion:

Focus on Drinking Water, Sanitation, basic education, basic health care, childcare and employment will certainly lead to development of rural sector followed by improvement of standard of living and needless to say this will change the face of India on world map as our major population still belong to this sector and need to be focused.

Ø Measures to curb social discrimination (social sector reforms):

§ National Social Assistance Programme:Old age pension to destitutes above the age of 65 years to increase from Rs.75 per month to Rs.200 per month; Rs.1,430 crore provided for 2006-07; State Governments urged to make an equal contribution; a system to be established, within two years, for pension to be credited directly to the account of the beneficiary in a post office or a bank.

§ Women and Children: gender sensitivities of the budgetary allocations highlighted through an enlarged statement on gender budgeting to include schemes where 100 per cent of the allocation is for the benefit of women as well as schemes where at least 30 per cent of the allocation is targeted towards women; statement covers 24 demands for grants in 18 Ministries/Departments and five Union Territories and schemes with an outlay of Rs.28,737 crore; 32 Ministries and Departments have set up Gender Budgeting Cells.

§ Scheduled Castes and Scheduled Tribes: a statement on schemes for welfare and development of SCs and STs included in Budget; allocations for schemes benefiting only SCs and STs enhanced by 14.5 per cent to Rs.2,902 crore and for schemes with at least 20 per cent allocation for SCs and STs enhanced by 13.9 per cent to Rs.9,690 crore; equity contribution to the National SC Finance and Development Corporation increased to Rs.37 crore and to the National Safai Karamchari Finance and Development Corporation to Rs.80 crore.

§ Minorities: corpus of Maulana Azad Educational Foundation to be doubled to Rs.200 crore; Rs.16.47 crore to be contributed to strengthen equity base of National Minorities Development and Finance Corporation; Corporation to intensify efforts to reach to artisans and weavers in urban and peri- urban centres especially in districts with concentration of minorities; programme to focus on skill enhancement, credit and techno-managerial support; allocation to National Council for Promotion of Urdu Language increased from Rs.10 crore to Rs.13 crore; Government to finance 20,000 merit-cum-means based scholarships to encourage students to pursue higher studies.

§ Kasturba Gandhi Balika Vidyalaya Scheme: 1,000 new residential schools for girls from SC, ST, OBC and minority communities to be opened in 2006-07; Rs.128 crore provided and an additional sum of Rs.172 crore to be provided during the year; as a further incentive to the girl child who passes the VIII Standard Examination and enrols in a secondary school, a sum of Rs.3,000 to be deposited in her name, to be withdrawn by her on reaching 18 years of age.

Conclusion:

The social sector reforms proposed under budget is significant to improve social discrimination provided the benefit should reach up to the level it is made for. And for this center - state enforcing agency need to be transparent as social sector reform is primarily state subject and center alone can not enforce its policy.

Ø Measures to stimulate different sectors of economic growth viz. agriculture, manufacturing and service sector:

AGRICULTURE:

§ Irrigation:Outlay of Rs.4,500 crore under AIBP in 2005-06, grant component of Rs.1,680 crore; States expected to spend Rs.2,520 crore from their resources; outlay for 2006-07 increased to Rs.7,121 crore, with grant of Rs.2,350 crore; Command Area Development Programme to be revamped to allow participatory irrigation management through water users' associations ; 20,000 water bodies with a command area of 1.47 million hectares identified in the first phase for repair, renovation and restoration; estimated cost Rs.4,481 crore.

§ Credit:Farm credit increased to Rs.125,309 crore in 2004-05; expected to cross target of Rs.141,500 crore for 2005-06; to increase to Rs.175,000 crore in 2006-07 with addition of 50 lakh farmers; banks asked to open a separate window for self- help groups or joint liability groups of tenant farmers; a one time relief to be granted to farmers who have availed of crop loan from scheduled commercial banks, RRBs and PACS for Kharif and Rabi 2005-06, and amount equal to two percentage points of the borrower's interest liability on the principal amount up to Rs.100,000, to be credited to his/her bank account before March 31, 2006; Rs.1,700 crore provided for this purpose.

§ With effect from Kharif 2006-07 farmers to receive short-term credit at 7 per cent, with an upper limit of Rs.300,000 on the principal amount; subvention for this to be given to NABARD.

§ Sanctions under Rural Infrastructure Development Fund (RIDF XI) at Rs.7,301 crore as on January 31, 2006; corpus for RIDF XII to increase to Rs.10,000 crore; specified projects under PPP model to be allowed to access RIDF funds; separate window for rural roads with a corpus of Rs.4,000 crore during 2006-07.

§ Agricultural Insurance:National Agricultural Insurance Scheme to continue.

§ Plantation Sector:A Special Purpose Tea Fund to be setup, expected contribution of Rs.100 crore in 2006-07.

§ Micro Finance:801,000 SHGs credit-linked in two years with credit of Rs.4,863 crore disbursed to these SHGs; another 385,000 SHGs to be credit- linked in 2006-07; NABARD to open a line of credit for financing farm production and investment activities through SHGs; Committee to be appointed on Financial Inclusion.

§ Horticulture and Fisheries:terminal markets to be setup on PPP model-Rs.150 crore earmarked for this in 2006-07 under National Horticulture Mission; Central Institute of Horticulture to be established in Nagaland; National Fisheries Development Board to be constituted.

MANUFACTURING

§ Employment:five industries with employment opportunities identified in manufacturing sector, these include textiles, food processing, petroleum, chemicals and petro-chemicals, leather and automobiles; in services, tourism and software can offer large number of jobs.

§ Textiles:allocation for Technology Upgradation Fund (TUF) enhanced from Rs.435 crore to Rs.535 crore; Rs.189 crore to be provided for Scheme for Integrated Textiles Parks (SITP), Jute Technology Mission to be launched; a National Jute Board to be established.

§ Handlooms:Cluster Development approach to continue with 100 clusters to be added at a cost of Rs.50 crore in 2006-07; yarn depots to be established; a 'handloom' mark to be launched; scheme to be introduced to provide interest subsidy on term loans ; provision for the handloom sector to be increased from Rs.195 crore to Rs.241 crore.

§ Food Processing Industry:food processing to be a priority sector for bank credit; NABARD to create a refinancing window with a corpus of Rs.1,000 crore, especially for agro-processing infrastructure and market development; National Institute of Food Technology Entrepreneurship and Management to be setup; Paddy Processing Research Centre, Thanjavur to be developed into a national- level institute.

§ Petroleum, Chemicals and Petro-chemicals:a Task Force setup to facilitate development of large PC&P Investment Regions; three such Investment Regions expected to be developed in 2006-07.

§ Information Technology: existing vehicle of viability gap funding and India Infrastructure Finance Company Limited to provide equity and/or viability gap funding to new ventures; window to be open for three years.

§ Small and Medium Enterprises:180 items identified for dereservation; to give impetus to lending by SIDBI, SMEs to be recognized in the services sector and small scale enterprises in services sector to be treated on par with small scale enterprises in manufacturing sector; corpus of Credit Guarantee Fund to be raised from Rs.1,132 crore to Rs.2,500 crore in five years; Credit Guarantee Trust for Small Industries to be advised to reduce guarantee fee from 2.5 per cent to 1.5 per cent for all loans; insurance cover to be extended to 30,000 borrowers; ten schemes drawn up under a five-year National Manufacturing Competitiveness Programme, including promotion of ICT, mini tool rooms, design clinics and marketing support for SMEs; implementation to be in the PPP model.

§ Cluster Development:Empowered Group of Ministers to be constituted to lay down policy and oversee implementation.

SERVICES SECTOR

§ Tourism:development of 15 tourist destinations and circuits to be taken up; 50 villages with core competency in handicrafts, handlooms and culture, close to existing destinations and circuits, to be identified and developed; 4 new institutes of hotel management to be established in Chhattisgarh, Haryana, Jharkhand and Uttaranchal; Plan allocation increased from Rs.786 crore to Rs.830 crore.

§ Foreign Trade:share in world exports to be doubled by 2008-09.

Conclusion:

§ The different measures taken by finance minister in connection with different sectors of economic growth stated above, is based on philosophy of "Govt.'s business is not to be in business." In other words now government will act as facilitator rather than producer by providing adequate infrastructure to attain economy of scale and to simplify procedural aspect followed by rationalization of tax system.

§ The special emphasis on Food Processing Industry reflects the vision of central government toward economic growth. In fact stimulating food processing industry will not only boost manufacturing sector and will generate employment but also will boost agriculture sector as it will provide necessary input material and thus will generate significant employment for rural sector thereby increasing growth rate of agriculture sector.

§ Presently agriculture sector is showing poor performance because of lack of proper irrigation, unorganized micro credit financing and ill-fated government agencies involved in micro credit financing and also lack of security. In this budget finance minister has taken a lot of measures to deal these problems by strengthening NABARD, insurance and policy on irrigation.

§ In manufacturing sector the emphasis is on those sub-sectors, which need to be revived through public spending, as there is little chance for private spending and need to be protected. The examples of these sub-sectors are Textiles, Handlooms, Small and Medium Enterprises etc.

§ In service sector the major emphasis is on to Tourism and Foreign Trade. The idea is to improve current account deficit, which is of prime concern. It is heartening to note that private sector contributes effectively to boost all most all the sub-sector of service industry and government need to regulate only smoothly.

Ø Measures to curb fiscal deficit:

Measures to correct the fiscal deficit are as follows - (Principle adopted is, "increase revenue and cut down expenditure").

Revenue Side

§ Broadening of tax base: Few more services are added for taxation.

§ To administer the tax collection effectively especially the outstanding tax revenue.

§ Increasing service tax rate to 12% from existing 10%.

§ Increasing indirect taxes and rates for certain items

§ Less borrowing to finance capital expenditure in order to reduce interest payment obligation

Expenditure Side

§ Continuing disinvestments process - Privatization of public sector units. This decision will lead to

(a) Cut down in revenue expenditure, as employees are now private sector employees.

(b) One part of proceeds is used to repay debt leading to cut down in interest payment.

It is important to note that dividend loss due to privatization can be compensated through savings in interest payment by retiring debts.

§ Substantial cut down of Non-plan expenditure.

Drawbacks of the Union Budge 2006-2007:

Following are the important drawbacks:

§ Industry was expecting that the budget will rationalize issues related to depreciation to benefit industry as depreciation policy significantly affects tax liability consequently profit margin, capital reserves etc. but this issue has been left out.

§ Presently, financial sector is suffering from huge non-performing assets (NPAs) with Banks and Financial institutions, which affect tax revenue. In the present budget effective system for recovery of huge NPAs is ignored although, it is a serious problem and must be taken into consideration.

§ Focus on Implementation of initiatives taken in budget is missing.

Message Behind Budget 2006-07 Speech

§ To continue reform process through continuity and consolidation (say fiscal consolidation e.g. Adoption of uniform tax structure for Direct and indirect taxes like custom duty, excise duty etc).

§ To establish better partnership in continuing the reform process and to stimulate public-private spending in infrastructure.

§ To stimulate economic growth through development of food and Agriculture sector, comprising about 600 million people who are largely out of the economic mainstream. The message is once given the opportunity to improve quality of life, earnings i.e. purchasing power and human rights to this strength of 600 million people then they can transform India and therefore across the budget there are provisions for agriculture, irrigation, rural infrastructure.

Conclusion:

Taking into account the above said problems and measures taken by central government to stimulate economic growth it may be observed that government should focus on implementation of infrastructure projects in addition to strong measures taken in connection to curb fiscal deficit and therefore it is recommended that the foreign investment should be encouraged for joint venture in building infrastructure to strengthen the spending in infrastructure projects as Government is already running in huge fiscal deficit leaving very limited financial resources. This will provide favorable environment for industrial growth leading to overall economic growth, which in turn will generate employment and hence will increase purchasing power of general mass.

In totality following things have been observed:

(1) Central government has taken a number of measures against social sector reforms but since agriculture / rural sector is primarily state subject, In other words central government is not enforcing agency for social sector reforms, therefore my submission is, the focus of central government should be more on supervision of fund instead of more and more allocation of fund. The present budget has not taken any measure in this regard and therefore can be observed as political in nature as it is planned keeping into mind the coming election i.e. to increase vote bank base.

(2) Govt. is taking away itself from developmental activities i.e. spending in industrial sector except for few sub-sectors leaving all the investments with private sector, external sector or joint sector. On the basis of this tendency we can say now in absolute term central Govt. is adopting the philosophy of "Govt.'s business is not to be in business."

(3) The most unfortunate part of this year's budget is that still Govt. has no concrete plan for allocation of disinvestments proceeds, which is projected in between 3000 to 4000 crore rupees every year. It should be planned to use against repayment of external debt in order to reduce interest payment obligation and to revive non-profit making but potential public sector units along with creation of social and industrial infrastructure.

(4) The best part of this year's budget is that first time it has recognized human resource potential as opportunity to fuel economic growth. In fact it is the human resource, which employ all the tangible resources and therefore should be given adequate emphasis to develop their knowledge and skill instead of treating population as a huge drag. This year's budget has made significant budgetary allocation for this purpose.

In last I would like to say that except for measures related to taxation which is subject to level of affordability, is certain up to a great extent, almost all other measures taken in budget is subject to availability of resources in the forthcoming financial year and therefore my submission is - "The budget is all about taxing the patience".

References

§ No reference except for facts i.e. budgetary measures.

§ Source of budgetary measures is website: http://indiabudget.nic.in

Appendix 1

Budget at a glance:

Budget Estimates* (Rs. in crore)

03-0404-0505-0606-07

BEBEBEBE

1.Revenue Receipts253935309322351200403465

2. Tax Revenue (Net to Center)

184169

233906

273466

327205

3. Non-tax Revenue

69766

75416

77734

76260

4. Capital Receipt

184860

168507

163144

160526

5.Recovery of Loans

18023

27100

12000

8000

6. Other Receipts

13200

4000

3840

7. Borrowings and other liabilities

153637

137407

151144

148686

8.Total Receipts (1+4)

438795

477829

514344

563991

9.Non-plan Expenditure

317821

332239

370847

391263

10. On Revenue Account of which

289384

293650

330530

344430

11. Interest Payment

123223

129500

133945

139823

12. On Capital Account

28437

38589

40317

46833

13. Plan Expenditure

120974

145590

143497

172728

14. On Revenue Account

76843

91843

115982

143762

15. On Capital Account

44131

53747

27515

28966

16.Total Expenditure (9+13)

438795

477829

514344

563991

17.Revenue Expenditure (10+11+14)

366227

385493

446512

488152

18.Capital Expenditure (12+15)

72568

92336

67832

75799

19.Revenue Deficit

(17-1)

112292

(4.1 % of GDP)

76171

(2.5)

95312

2.7

84727

2.1

20.Fiscal Deficit

(16-(1+5+6))

153637

(5.6 % of GDP)

137407

(4.4)

151144

4.3

148686

3.8

21.Primary Deficit

(20-11)

30414

(1.1 % of GDP)

7907

(0.3)

17199

0.5

8863

0.2

*Source: Economic Times newspaper

eric seiger

Buysexyhalloweencostumes

Friday, November 5, 2010

personal finance and budgeting

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