New Delhi, Feb 29 : Union Finance Minister P Chidambaram on Friday said that the allocation for the defence sector would be raised by 10 per cent from Rs. 96,000 crore to Rs. 105,600 crore.
"The total plan expenditure will be Rs. 243, 386 crore and the non-plan expenditure is estimated at Rs. 507,498 crore," said Chidambaram while presenting the General Budget 2008-09.
Chidambaram said that the fiscal deficit for 2008-09 has been estimated at Rs. 133,287 crore, which is 2.5 per cent of gross domestic product (GDP).
Commenting on the much expected pay commission, the Finance Minister said that after the obligations on account of the Sixth Central Pay Commission become clear he would request "the Thirteenth Finance Commission to revisit the roadmap for fiscal adjustment."
Chidambaram also announced Rs. 60,000 crore debt relief package that will benefit four crore farmers, increase in spending on social sector schemes and relief to income-tax payers.
Under the debt waiver and relief package, small and marginal farmers (with holdings up to two hectare) will get a complete waiver of all loans overdue on December 31, 2007 and which remained unpaid until February 29, 2008.
For other farmers, there will be a one-time settlement (OTS) scheme. Under the OTS, a rebate of 25 per cent will be given against payment of the balance 75 per cent. Loans re-scheduled in 2004 and 2006 through special packages and those re-scheduled in the normal course will also be eligible for a waiver or an OTS. The debt relief scheme will be implemented by June 30 this year and the covered farmers will be entitled to fresh farm loans from banks in accordance with normal rules.
The total value of overdue loans being waived is estimated at Rs. 50,000 crore and the OTS relief at Rs.10,000 crore. The scheme is likely to benefit about three crore small and marginal farmers and one crore other farmers.
Expressing the hope that the target of agricultural credit for 2007-08 would be exceeded, the Finance Minister has set the target of Rs. 280,000 crore farm credit in 2008-09. Short-term crop loans will continue to be disbursed at interest rate of seven per cent per year.
More investment is flowing into the irrigation sector. Under the Accelerated Irrigation Benefit Programme, 24 major and medium irrigation projects and 753 minor projects will be completed. The outlay for this programme is being raised from Rs 11,000 crore last year to Rs. 20,000 in 2008-09, said Chidambaram.
The Rain-fed Area Development Programme will be implemented, with an allocation of Rs. 348 crore. The Government will establish the Irrigation and Water Resources Finance Corporation with an initial capital of Rs. 100 crore. This Corporation will mobilize resources for major and medium irrigation projects, he added.
Initiatives for rejuvenating the agricultural sector include setting up of 500 soil testing laboratories, introduction of crop insurance scheme for plantation crops and support to cooperative sector reforms.
Chidambaram said that the budget provides Rs. 32,667 crore for food subsidy under the public distribution system (PDS). As a new initiative for efficient delivery of food grains under the PDS, smart cards are being introduced in Haryana and Chandigarh, on pilot basis.
Chidambaram announced a new insurance scheme for workers in the unorganized sector, setting up of institutes of higher learning and 6000 high-quality model schools, and provision of Rs. 16,000 crore to cover all rural districts under National Rural Employment Guarantee Scheme (NREGS).
Under the Rashtriya Swasthya Bima Yojana every worker in the unorganized sector falling under the BPL category and his family will get health cover of Rs. 30,000. For the elderly a National Programme for the Elderly is to be started in 2008-09.
The budget provides for Rs. 1,000 crore for the Aam Admi Bima Yojana that provides insurance cover to poor households. This will cover one crore poor households in addition to the one crore likely to be covered by September 30 this year. Funds have also been enhanced for the Indira Gandhi National Old Age Pension Scheme. This Scheme has been expanded from November 19 last year to include all persons over 65 years falling under the BPL category.
Schemes benefiting SCs and STs exclusively have been provided Rs. 3,966 crore and for schemes where at least 20 per cent of the benefits are earmarked for SCs and STs, the budget provides Rs. 18,983 crore.
The Finance Minister has raised the income tax exemption limit from Rs. 1,10,000 to Rs. 1,50,000, thus giving every assessee a relief at minimum of Rs. 4,000. The tax rate will be 10 per cent for the income slab between Rs. 1,50,001 and Rs. 3,00,000 and 20 per cent between Rs. 3,00,001 and Rs. 5,00,000. For income of Rs. 5,00,001 and above the income tax rate will be 30 per cent.
The exemption limit for women assessees has been increased to Rs. 1,80,000 and in case of senior citizens to Rs. 2,25,000.
Chidambaram has not proposed any change in corporate income tax and in the rate of surcharge. A person paying medical insurance premium for his parents will be allowed an additional deduction of Rs. 15,000 under Section 80D. Justifying the changes in the slabs for personal income tax, he said that moderation will beget revenues and fairness will beget compliance.