Budget, as we all know, is considered as the most fundamental and effective financial management tool available to anyone. A government’s take on its annual budget strategy is seen with high regard, since, that decides the fate of a nation’s financial future.
Before analyzing the 2010-11 Union Budget, it is prerequisite for any educated person to comprehend the very concept of the word “budget” in order to be thoroughly in sync with this major yearly activity.
Budget signifies money plan, i.e. when one needs to organize and control his financial resources, set and realize goals, and decide in advance the finance sector functionality. Not to forget to remember what a crucial role does a budget play in anyone’s life.
In common parlance, a budget is an action plan of the government which presents a list of all the revenues and expenses. It is the financial plan to manage spending and savings of money.
Overall, the basic idea behind budgeting is to save money upfront for both known and unknown expenses.
The annual budget report for the financial year 2010-11 was finally brought forth by the Indian Finance Minister Pranab Mukherjee before millions of Indians on the 26th of February, 2010. With enormous expectations in the air, Mr. Mukherjee ensured all for an awesome budget year ahead wonderfully capable of meeting their unexpected prospects. The report eventually produced mixed reactions from all sections of the society.
Here’s a look at some of the major salient pointers:
The major pointer in the annual budget focused on improving the investment climate and strengthening the infrastructure. The unprecedented increase in the price rate of petrol, diesel and crude oil by 5 percent was the most major setback for the common Indian man.
With no possible let up in the food prices, the middle class will have to as well wait for quite sometime before they could actually purchase luxury items as the surcharge on these acquisitions have increased up to 22 percent.
The next prominent feature was the relaxation in the Income Tax sector. This is supposedly expecting to benefit a large section of the society through broadened tax slabs, removed surcharge and increased exemption limit. According to the new tax slab, there will be no tax charged on a person whose income is up to 1.6 lakhs. However, as per the rule, 10 percent tax will be levied on income ranging from 1.6 to 5 lakhs; 20 percent tax on income ranging from 5 to 8 lakhs; and 30 percent tax on income above 8 lakhs.
Budget report even pointed out the GST road map, i.e. Goods and Services Tax and the implementation of direct tax code from April 2011. Besides charging tax on every commodity, the Finance Minister has exempted surcharge on companies by 7.5 percent. There is infact an additional exemption of Rs 20,000 for long term investment in infra bonds.
Deep concerns were expressed by Mr. Mukherjee on the escalating food prices which were indeed an alarming matter. However, to his fellow Indians, he pledged to leave no stone unturned in bringing down the inflation rate within the next few months…of course, ensuring them a better food security management.
Budget 2010-11 also identified areas where the government has decided to invest in a number of schemes. A 1,000 crore investments in the National Pension scheme for the unorganized sector; employment of 2,000 youth in the central parliamentary forces; and a mammoth 31,300 crore allocation hike on primary education - all ranked high on the agenda’s priority list.
Simultaneously, a 46 percent allocation for infrastructure development has also been considered. As per the new budget plan, a good amount has been allocated to the Ministry of Social Justice and Empowerment, Ministry of Minorities Affairs, Unique Identification Authority of India and Defense.
The phenomenal steps taken for this year’s annual budget only concludes the fact that the entire nation is yearning for remarkable transformations as in tax rates, cheaper consumables and easy availability of credit. With the world recovering post recession era, the Finance Minister did not forget to express his optimistic hope stressing that soon the economy will reach a 10 percent growth which is the need of the hour.