Sunday, January 10, 2010

Union Budget 2010-11 may be advanced to Feb 26

The Union budget for 2010-11 is likely to be presented on February 26, two days ahead of the usual date.
The new date has been mooted after it dawned on the government that February 28 — itself a Sunday — is sandwiched between Prophet Mohammad’s birthday (February 27), a government holiday, and Holi (March 1).
Finance minister Pranab Mukherjee announced the rethink while speaking at the All India Conference on Tax Deduction at Source. He added that that the economy was generally looking up and signs were good. This would be Mukherjee’s first full-fledged budget in his current term as finance minister, having presented a budget in July 2009 soon after the Congress-led United Progressive Alliance’s general election victory in May.
The budget exercise has already been initiated by government amid a debate on whether stimulus measures should continue. The main challenge of the budget will be to push for growth while containing inflation, which is feared to go beyond 6% by March 2010. Inflation in food prices, already at a high of over 18%, has also emerged as one of the government’s big worries.
Both Prime Minister Manmohan Singh and Mukherjee have expressed confidence that the economy would achieve a growth rate of 9%-10% in the near future. The finance minister said he is hoping for a growth rate of 8% in the current financial year compared to a recession-hit 6.7% growth rate achieved in 2008-09.
The budget will also address the issue of fiscal deficit, which has touched 6.7% in 2009-10 because of heavy government spending on the one hand and sops to stimulate the economy leading to revenue loss. Mukherjee in his last budget had indicated that deficit would be brought down to 5.5% in 2010-11.
With the economy in recovery mode, the revenue collection is likely to be expected lines. Mukherjee indicated that the direct tax collection may touch the new revised target of Rs 4 lakh crore as against the budget estimate of Rs 3.70 lakh crore. The direct tax collection has shown a growth rate of 8.50% in the first nine months of the current financial year.
Mukherjee, however, said the implementation of Goods and Services Tax is likely to miss the April 1, 2010 deadline as it will take the government another 7-8 months to bring in a legislation introducing it.

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