Union Budget 2009-10: ScoreCard

As the government gets into its first serious policymaking exercise, it has a large reforms agenda staring at it. Most of these reforms are not really a part of the budget and can be done independently. However, the budget does provide direction on what the government proposes to do. Here is a checklist:

A road map for moving towards a goods and services tax (GST), which is expected to roll out
from April 1, 2010. The budget reaffirmed the Centre���s commitment to the scheduled rollout, despite some resistance from states. DONE

Increase in foreign direct investment limit in insurance to 49% from the current 26%. There is no mention of this in the budget though the government could amend the insurance law any time. NOT DONE

A medium term strategy for restoring fiscal health of the economy The medium term fiscal policy lists a fiscal deficit target of 4% of GDP, relying on growth and tax buoyancy. The budget does not say how this will be achieved, leaving the task to a framework to be worked out by the 13th Finance Commission. PARTLY DONE

Disinvestment in public sector undertakings. The budget belies all expectation on this count. There is no mention in the speech and the amount expected to be raised is a meagre Rs 1,120 crore. NOT DONE

Bigger agenda for inclusive growth & social equity. Sharp step up in allocation to NREGS. Greater thrust to Bharat Nirman. Bill to ensure food security to be moved soon, full interest subsidy on education loans to weaker sections, increase in allocation to rural health schemes and schemes for inclusion of women. DONE

Reform of the direct tax regime. The government has promised a detailed look though a new direct tax code. FBT has been abolished and the commodities transactions tax has been withdrawn as well. The surcharge on personal income tax is also abolished. In order to make tax filing simple and user-friendly, the budget has proposed a Saral-II form for early introduction. PARTLY DONE

Reform in subsidy regime as part of larger fiscal prudence goal and to ensure that subsidies reach only the truly needy and the poor. The budget mentions the need for managing subsidies but does not present a detailed plan. However, in respect of fertiliser subsidy, the budget proposes to move to a nutrient-based subsidy regime. It also proposes to move in due course to a better direct subsidy transfer to farmers. NOT DONE

Reforming corporate debt market. This has been high on the government���s agenda. Despite the fact that several committees have looked into it and submitted reports, the budget has nothing on it. NOT DONE

Measures to facilitate infrastructure financing. IIFCL will evolve a takeout financing scheme to make long-term funds available and provide 60% refinance for PPP projects. IIFCL and banks are in a position to support projects worth Rs 1 lakh crore. DONE

Review of the interest rates on small savings schemes. The high, state-prescribed interest rates on small savings push up bank deposit and lending rates. Budget did not cut rates. NOT DONE

Reforms in the STT/capital gains tax regime. The budget was expected to withdraw the securities transactions tax and bring back the long-term capital gains tax. There is no change as of now. However, in an important reform measure for the market, there is a proposal to have a uniform floor for shares held by the public in listed companies. NOT DONE