9. INDIA: UNION BUDGET 2005-2006

9

UNION BUDGET 2005-2006

      Finance Minister of India Mr. P.Chidambaram presented the Union budget for 2005-2006 on 28 February 2005.

     The receipts and expenditure are given below.

   Total Receipts = Re.3,63,200 crore, Total Expenditure = Re.5,14.344 crore and Fiscal Deficit (Borrowings) = Re.1,51,144 crore. 

     As usual, the budget was silent about the money in the Provident Fund (PF) and in the financial institutions.

    There was no proposal for any large scale investments.

    An outstanding future of the budget was the commitment to construct 60 lakh houses in one year.   The allotment for mid-day meal scheme was increased from Re. 1490 crore in 2004-2005 to Re.3142 crore..

   The above two measures have a touch of humanity, as these commitments seek to eliminate the problem of shelter and malnutrition of children.

 Another salient future of the budget was the 0.1% Cash Transaction Tax (CTT) for cash withdrawals exceeding Re.10,000/- per day from banks.

       The present writer requested the Government to impose transaction tax on 21-12-2001 through letter No.4. Later, the importance of this tax was mentioned in several letters.

     Surprisingly, The New Indian Express welcomed budget proposals. An editorial said that the budget proposals were “new and will take budget making in India to new heights”.

    The Business Line opposed budget proposals. Thus, Mr.S.Gurumurthy, in a lengthy article in The Hindu on 2 March 2005, said that the budget was framed to deceive even the intelligent.

       Seminars were conducted in colleges to discuss the importance & consequences of transaction tax.

    Addressing a meeting organized by the Madras Chamber of Commerce and Industry on the implications of the budget, on 2 April 2005, Mr. Yashwant Sinha, former Union Finance Minister, described the Cash Transaction Tax (CTT) as a “mad tax”. He wanted to completely eradicate the CTT. He said that CTT had no relevance to India at all.

     Thus the CTT was withdrawn in the budget for 2006-2007.

  The Government did not construct houses as promised in the budget. What happened to the allotted money was not revealed.