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India’s Budget 2006
Analysing a budget document is far more complex than making one. This is particularly true of the budget presented by Finance minister P. Chidambaram. Finer print is too fine to decode it effectively and quickly. Only time will tell what impact this budget would have on the Indian economy.

Chidambaram has reasons to pat his back because the document has a flair of an election-eve budget, although the elections are too far away. There were not many bytes available from either economists or the corporates, save the opposition leaders whose rhetoric against the budget is quite understandable. Left Front, however, limited its criticism of the budget to certain set issues that emanate from their communist ideology. But even they did not have much to shout about from the roof top. Their issues of concern remained limited to accusing UPA government of pampering the rich and deceiving the poor, ignoring the farmers and giving a big boon to the MNCs and the big corporate houses. The budget is certainly a shade different from the usual budgets that Indians have been used to. Tax exemptions galore coupled with higher allocations to various sectors in general and the government’s flagship schemes. Mr. Chidambaram has stressed that the reforms are on track and so are the social welfare schemes. Allocation for education has been increased by 31.5% and for health by 22%. Neither of them is adequate to meet the pressing demands.

There are no changes in personal income tax while interest on 5-year bank deposits is sought to be included under deductions in section 80C. Even the 1 by 6 scheme to expand the tax net has been done away with. There is change in corporate tax rates but MAT has been raised to 10%. Fringe benefit Tax, that had become a major issue with the corporate sector with some going to the courts against it, has been modified with 180 items proposed to be de-reserved from the small scale sector. Understandably, Mr Chidambaram has sought to tax cigarettes, international air travel of business class and above and and a few other sundry items.

The budget has failed to meet the dire needs of the education and health sectors adequately. Even the defence has been let down. Allocation to defence has been raised merely by Rs. 6000 crore from Rs. 83,000 crore. and this paltry sum was touted by the finance minister for modernization of India’s armed forces.

The budget has hardly any scheme to alleviate poverty. The finance minister is vastly depending on sectors like textile and IT to open up employment opportunities. That is how he has justified tax concessions to such sectors. Revenue deficit has been estimated at Rs. 84,727 crore which is 2.1% of the GDP while the fiscal deficit has been estimated at Rs. 148,686 crore, which is 3.8% of the GDP. On the Capital Market side, Mr. Chidambaram has proposed to increase the limit on FII investment in Government securities from $1.75 billion to $2 billion and the limit on FII investment in corporate debt from $0.5 billion to $1.5 billion. There is also a proposal to raise the ceiling on aggregate investment by mutual funds in overseas instruments from $1billion to $2 billion and to remove the requirement of 10% reciprocal share holding. The budget also proposes to alow a limited number of qualified Indian mutual fund to invest, cumulatively up to $1 billion, in overseas exchange rated funds and to set up an investor protection fund under the aegis of SEBI. although, the finance minister has failed to address himself directly to the plight of the rural people, yet an effort has been made to reach out to them through schemes that have already been in operation. Whether or not these schemes alleviate the lot of the rural poor, remains to be seen. The one credit that Mr. Chidambaram does deserve is that he has sought to push the growth and at the same time contain the deficit.
(Courtesy BE’s Madhu Raina)


Growth of IT Sector
The total value of IT Software & Services and IY Enabled Services, both exports and domestic market, has shown a phenomenal rise during the past three years.
According to official statistics, the total value of IT sector was 59,500 crore in 2002-03, which rose to Rs. 74,490 crore in 2003-04 and Rs. 97,800 crore in 2004-05. The rise in value of IT sector is estimated at Rs 127,860 crore during 2005-06. The growth rate during 2005-06 is expected to be of the order of 30-32%, according to National Association of Software and Services Companies.


END VIOLENCE AND BUILD NEW PEACEFUL DIALOGUE, LONDON MEP URGES MUSLIM COMMUNITIES
Robert Evans MEP called for an end to violent protests over a Danish newspaper’s publication of cartoons of the Prophet Mohammed, saying freedom of speech and mutual respect go hand-in-hand.
Mr Evans, a leading member of the European Parliament’s South Asia delegation, called for a new agenda for relations between the EU and the Muslim world.
“What we have witnessed is not a clash between religions or civilisations, but ignorant acts creating humiliation and insult. And this has been used by extremists to inflame hatred and violence,” Mr Evans said.
The London Euro MP stressed that “Europe stands for the opposite of xenophobia and intolerance,” and added: “Let’s not allow the extremists to continue to steer the agenda. Let’s put this behind us so that these cartoons can no longer be used by the extremists to inflame hatred.”
Mr Evans said while freedom of speech could not be compromised, it must and should be used in a responsible manner.
“The publication of these cartoons was disrespectful and showed a total lack of knowledge of Islam.
“Respect for other people and their religion is a fundamental part of the human rights on which the Europe Union and the United Nations are based. Freedom of speech and mutual respect must go hand in hand.”
He said the message from the European Parliament was clear: all forces must unite to build a new, stronger dialogue with the Islamic world based on unconditional respect for all people and religions.
“Let us now focus on building a stronger dialogue, permanent, open, critical and constructive,” Mr Evans said.


MODI WINS HANDS DOWN
A leading Gujarati newspaper, in association with six other leading publications conducted a nationwide survey amongst Gujaratis living throughout Bharat to find out the Personality of the Year 2005. As usual, there was no shortage of candidates and how could it be with a population of well over one billion?

Morever beside politics, people of Bharat are sports mad; and the Indian film industry, popularly known as Bollywood, produces more films than the rest of the world put together, in eight major languages. No wonder, film and television stars dominate the lives of most Indians.

As expected, the leading candidates were the Congress President Sonia Gandhi, TV and film industry superstars Amitabh Bachan, Aishwaria Rai and sport personalities, the diminutive but charming tennis star Sania Mirza who has taken the fashion world by storm, leading cricketers Irfan Pathan, Rahul Dravid and the newcomer wicketkeeper batsman Mahendra Dhoni who recently broke a one day batting world record for a wicketkeeper by scoring 182 runs against Sri Lanka.

In the end, it was a three way contest, between Narendra Modi, Amitabh and Sania Mirza. Modi won a thundering 49% of the vote; Amitabh came second with 21% and Sania a very close third.
Modi’s win was mainly due to his popularity in Gujarat, as he lost to Amitabh in Mumbai and to other personalities in various states. Modi also topped the chart for the second year running as the best Chief Minister and Gujarat as the best run state, in a poll conducted by the newspapers published in English, under the title Mood of the National Poll.

Modi is the first person to win this honour for two year running. This success is in spite of the vicious propaganda against Modi in most papers, especially English media and TV channels mostly controlled by foreigners backed by Middle East petro dollars.

In a separate contest to find out the sports personality of the year, again it was a three way contest, between Indian Cricket captain Rahul Dravid, known as the Wall, for his solid batting, Sania and Irfan Pathan. Rahul won it with ease, Sania coming second. So overall, Sania could be described as the most appreciated all round personality of the year 2005.


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