BUDGET DEFINATION A budget is generally a list of all planned expenses and revenues. It is a plan for saving and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods. In other terms, a budget is an organizational plan stated in monetary terms. CENTRAL BUDGET: The central government budget is defined by law as a set of financial relationships securing the funding of certain roles of the State during the financial year. The budget consists of expected revenues and estimated expenditure and is always prepared for the upcoming calendar year.
Who prepares the budget? The responsible authority is the Ministry of Finance, which works with the designated heading administrators, local authorities and State funds. The resulting draft law on the central government budget is submitted by the Ministry of Finance to the Government for approval; the Government then submits this bill to the Chamber of Deputies.Purpose of Budget:1) Provide a forecast of revenues and expenditures i.e. construct a model of how our business might perform financially speaking if certain strategies, events and plans are carried out.2) Enable the actual financial operation of the business to be measured against the forecast
Direct taxes These are the taxes that are levied on the income ofindividuals or organizations. Income tax, corporate tax,inheritance tax are some examples of direct taxation Income tax is the tax levied on individual income fromvarious sources like salaries, investments, interest etc. Indirect Taxes These are the taxes paid by the consumer when they buygoods and services. These include excise and custom duties.
Hospitality The budgetary impact on hospitality was not understood clearly by many until much later. Budget 2010-11 gives a tax deduction for new two-star hotels that are to be opened on or after April 1, 2010. The deduction under Section 35AD of the Income Tax Act will be up to 100 percent of the capital expenditure (other than investing in financial instruments, land, and goodwill ) incurred for the purpose of building and operating a new hotel of two-star or higher category.
Banking The budget impact on the banking sector has been manifold. Capitalization of public sector banks, Reserve Bank of India (RBI) to permit new private sector banks, conversion of some non-banking financial companies (NBFCs) into banks, debt wavier and debt relief scheme for farmers, and extension of deadline for repayment of loans by six more months from December 31, 2009 to June 30, 2010.
Infrastructure The increased budgetary allocation for roads and rural infrastructure will give additional opportunities for construction service providers and infrastructure developers. The budget has reiterated the plan of constructing 20 km of roads a day to improve the connectivity to rural areas. The budget has also tied up funding for these projects via tax deductions on investments in infrastructure bonds. This budgetary push should bring this sector back into focus in the stock markets. Overall, the budget is positive for construction service providers and neutral for infrastructure developers due to the increase in MAT to 18 percent.
Cement Industry The cement industry, especially asbestos cement manufacturers, could benefit from the rural housing impetus in the budget. Acceleration in urban housing and construction, and other infrastructure-related activity under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and National Rural Employment Guarantee Act (NREGA) will revive demand for various cement products, which is experiencing excellent demand from the rural markets.
Power Budget 2010-11 has met one of the key demands of the sector - extension of excise duty exemption on supplies made to mega power projects irrespective of type of bidding. Thermal power plants with a generation capacity of over 1,000 MW and hydel power plants with a capacity of more than 500 MW are defined as mega power projects.
Agriculture Rs. 400 crore provided to extend the green revolution to theeastern region of the country comprising Bihar, Chattisgarh,Jharkhand, Eastern UP, West Bengal and Orissa.Rs. 300 crore provided to organise 60,000 “pulses and oil seedvillages” in rain-fed areas during 2010-11 and provide anintegrated intervention for water harvesting, watershedmanagement and soil health, to enhance the productivity of thedry land farming areas.Credit support to farmersBanks have been consistently meeting the targets set foragriculture credit flow in the past few years. For the year 2010-11, the target has been set at Rs.3,75,000 crore.
Energy Plan allocation for power sector excluding RGGVY doubledfrom Rs.2230 crore in 2009-10 to Rs.5,130 crore in 2010-11. Plan outlay for the Ministry of New and Renewable Energyincreased by 61 percent from Rs.620 crore in 2009-10 toRs.1,000 crore in 2010-11.Solar, small hydro and micro power projects at a cost of aboutRs.500 crore to be set up in Ladakh region of Jammu andKashmir.
Education Plan allocation for school education increased by 16 per cent from Rs.26,800 crore in 2009-10 to Rs.31,036 crore in 2010-11 For higher studies government has provided less interest education loan i.e. 4% for girls and 6% for boys.
Social welfare Plan outlay for Women and Child Development stepped up by almost 50 per cent. “Saakshar Bharat” to further improve female literacy rate launched with a target of 7 crore non-literate adults which includes 6 crore women. Mahila Kisan Sashaktikaran Pariyojana to meet the specific needs of women farmers to be launched with a provision of Rs 100 crore as a sub-component of the National Rural Livelihood Mission.