Business Today

Things Fall Apart

     Print Edition: March 3, 2013

A glance at the UPA's Budgets since it came to power in 2004 shows an upbeat start and grand plans, which eventually turned into unfulfi lled promises and desperate efforts to collect more taxes.

2004/05 (FM: P. CHIDAMBARAM)

>> Emphasised the United Progressive Alliance's common minimum programme, committed the government to fiscal reform
>> Proposed that an economic think-tank should prepare a blueprint to streamline subsidies
>> Spelt out the constituencies the UPA aimed to please through focused spending and incentives - rural India, the socially disadvantaged and religious minorities
>> Introduced a new tax, the Securities Transaction Tax, on stock market transactions to replace long-term capital gains tax

PHOTO: Shekhar Ghosh

2005/06: (FM: P. CHIDAMBARAM)

>> Introduced the National Rural Employment Guarantee Scheme
>> Introduced two more taxes: Fringe Benefits Tax and Banking Cash Transaction Tax
>> Hinted at backtracking on fixed fiscal targets
>> Proposed a pension bill. (This has yet to get parliamentary approval)
>> Outlined a plan to turn Mumbai into an international finance centre such as London and Tokyo

PHOTO: Shekhar Ghosh

2006/07 (FM: P. CHIDAMBARAM)

>> Estimated GDP to have grown at 8.1 per cent in 2005/06 (The actual figure, released within months, showed GDP grew at 9.5 per cent)
>> Increased tax rates selectively on companies and securities transactions
>> Budget showed revenue surge with economic boom boosting direct tax collections.
>> Service tax rate increased from 10 to 12 per cent
>> Reiterated priorities: education, health, nutrition and the employment guarantee scheme

2007/08 (FM: P. CHIDAMBARAM)

>> Extent of oil subsidies partially concealed by taking them off the balance sheet
>> Promised to meet all fiscal targets as economic boom brought high revenue growth
>> Increased education cess to fund massive education programme
>> With Commonwealth Games scheduled in Delhi for 2010, announced tax breaks to build hotels
>> Proposed setting up an independent debt management office to manage government borrowings.

PHOTO: Shekhar Ghosh

2008/09 (FM: P. CHIDAMBARAM)

>> With general elections coming, a `65,000 crore farm loans waiver announced
>> Implementation of the Fiscal Responsibility and Budget Management Act deferred on account of social expenditure
>> Median central excise duty lowered from 14 per cent to 12 per cent

(Budget presented in the wake of 12 successive quarters of above eight per cent growth. But the global downturn is about to strike, and will confound all budgetary expectations)

PHOTO: Vikram Sharma


>> Delivered against the backdrop of three stimulus packages, adding up to 3.5 per cent of GDP, announced in the previous year to bolster the economy following the downturn. Public finances in a mess as a result. Fiscal deficit for 2008/09 at 7.8 per cent
>> Warned oil subsidies needed to be streamlined
>> Fringe Benefits Tax and Commodities Transaction Tax abolished
>> Shows huge increases in consumption - oriented spending

PHOTO: Rachit Goswami


>> Warned governance weaknesses were holding back economic growth
>> Called for a review of the stimulus as the economy had begun to recover. Began partial rollback by increasing median excise duty to 10 per cent from eight per cent
>> Ended the practice of keeping a part of the deficit off the balance sheet. Said subsidies would all be paid in cash and accounted for in the Budget
>> Said Direct Tax Code could be implemented from 2011/12


>> Recognised India's changing food habits. Funds set aside for schemes to boost production of vegetables and protein-based food
>> Economic growth for 2011/12 projected at nine per cent (It turned out to be 6.5 per cent)
>> Exemptions in excise duty reduced to streamline it for GST

PHOTO: A Prabhakar Rao


>> Promise to bring down subsidies to less than two per cent of GDP
>> Rollback of fiscal stimulus continued, service tax and excise duty raised
>> Announced there would be amendments to tax laws with retrospective effect, foreign investors alarmed

(Budget presented amid pronounced slowdown. With a revenue shortfall and rising subsidies, fiscal deficit of 2011/12 touched 5.8 per cent of GDP)

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