FM's Robin Hood Budget out to please Bharat; leaves India Inc. to bat alone

Finance Minister P Chidambaram's ballot box budget is clearly oriented at the common man; sops to the electorate include --- farm loan waiver, additional investments in agri and irrigation, enhanced social sector spending in areas such as education, women and child welfare etc, and finally the icing - hike in income exemption limit to Rs 1.5 lakh.

The markets were in for a big disappointment, as it did not get the STT (Securities Transaction Tax) rate cut. The FM did not touch DDT (Dividend Distribution Tax ) either. The markets also reacted badly to the farm loan waiver for small and marginal farmers with holding of 1-2 hectare. The BANKEX is down 2.11%. Another big blow was the proposed hike in short term capital gains from 10% to 15%. The budget also proposes to introduce a commodities transaction tax, like STT.

He has left corporate tax rates and the surcharge on corporate tax unchanged. Peak customs duty rates have been left unchanged; CENVAT is down from 16% to 14% on all goods. He has withdrawn the banking transaction tax, perhaps with an eye to the upcoming elections. PAN requirement has been extended to all financial markets.

Personal income tax exemption limit has been hiked to Rs 1.5 lakh, Rs 1.8 lakh for women, and Rs 2.25 lakh for senior citizens. Income tax slabs have also been changed. These include 30% tax for income above Rs 5 Lakh, and 10% for income in the range of Rs 1.5-3 lakh.

The FM said he is confident of maintaining GDP growth at 8.8%. The government has maintained GDP growth at 8% in 12 consecutive quarters. Keeping inflation under check is key to government policy. He estimates agriculture to grow at 2.6% in FY08. Current year fiscal deficit is at 3.1% as against Budget estimates of 3.3%.