Last week India Budget 2004 was presented by Hon’ble Finance Minister P.Chidambaram in the parliament. The budget had promised to improve the reach of Education, making education compulsory for atleast 8 years for every child and guarantees 100 days of minimum employment for one person in every family. Though it is unclear how the government is going to ensure these to happen, the focus on these two important items is laudable. It has announced VAT will finally be implemented from 1st of April 2005, this will pave way to avoid double taxation in many areas. A huge investment announcement for a Desalination plant in Chennai for solving the metropolis water problem is also a welcome move.
Last year, the central government has made record collections in Service Tax, riding on that the budget has increased the tax from 8% to 10%. Though the planned expenses on that by government for education is good, the increase is going to hurt small and medium size service providers. Apart from this, I would have loved to see a mention in the budget for Vajpayees’ favourite Golden Quadrilateral road project, which will link all the metropolis in the country and save country tons of foreign exchange in Oil savings.
Impact of Union Budgets’ in India
Though in India, Union Government Taxes control majority of prices and peoples life, the impact of a budget has been reducing. The reason being in the last few years, the Income Tax has been more or less left unchanged at 30%, Oil prices has been decentralized and not controlled by Govt., but my major Oil companies and most of the indirect taxes have been coming down. These have been possible because of liberalization and globalization which has brought in a stability in tax rates. You can view the webcast of the budget speech and the complete budget of 2004 and previous years, in the India Budget site.