Taxes unchanged, PC pledges 10% growth

Starting out optimistically, finance minister P Chidambaram while presenting the Budget, on Tuesday said the government was determined to take the country to 10% growth this year. Riding on tighter fiscal discipline whence both revenue and fiscal deficits were lowered, the Finance Minister kept the income and corporate taxes unchanged.

While service tax was raised to 12%, the controversial FBT was brought down.

Boding well for the market economy, PC said last year had been the best of years and the worst of years, PC said that if nothing else, FY06 was going to be at least as good the last year.

But the UPA government did not forget its rural development thrust and allocated Rs 14,300 crore for rural employment generation while Rs 944 cr was allocated under Irrigation and Bharat Nirman Programme and Rs 1,100 crore was set for rural electrification programme.

Socialist links were not forgottten as Rs 24.225 cr was set aside for education and Rs 2,900 crore was set aside for promoting SC/ST section of population.

On Monday, the government maintained its better-than-expected economic growth forecast of 8.1 percent for the fiscal year ending March in the annual pre-budget economic survey.


The news buoyed the market and raised expectations that Finance Minister Palaniappan Chidambaram will call for greater foreign direct investment (FDI) in India's economy.

The Indian government is expected to further open up the economy through the FDI route. Overseas investors would like to see a focus on infrastructure, power and the retail sector.

Other than boosting the agri economy, retail and textile sectors could be the other two focus areas. The agricultural sector accounts for almost a quarter of the economy and employs the vast majority of its one-billion-plus population and the government this year launched a massive jobs programme to help poor farm labourers.

However, the market may not welcome a too pro-agriculture policy or a greater emphasis on improving the lot of the poor by levying new taxes on the corporates and the salaried people.