The Hindu : Karnataka / Mangalore News : Union Budget evokes mixed reactions

Online edition of India's National Newspaper
Friday, Jul 09, 2004

Karnataka

Karnataka - Mangalore

Union Budget evokes mixed reactions

By Our Staff Correspondent

MANGALORE, JULY 8. The Union Budget for 2004-05 has evoked mixed reactions from the people.

The two per cent cess on all taxes has come as a shock to the middleclass, while the exemption from income tax for those who earn less than Rs. 1 lakh a year has been described as populist.

V.S. Acharya, Senior Vice-President of the Bharatiya Janata Party (BJP) State unit and a member of the National Executive Committee, told The Hindu that the Finance Minister had announced an additional outlay of Rs. 10,000 crore for the rural sector hoping that the 2 per cent cess on all taxes would help raise the amount.

However, it would yield only about Rs. 7,000 crore and it was for the Finance Ministry to make good the balance, he said.

Though the Budget promised progress in the areas of health, education, and infrastructure, it would be impossible to achieve it in the next three years as there were many loopholes in the system, Dr. Acharya said.

As a result of this, the Government's objective to achieve progress in rural areas would remain a pipedream, he added.

Mr. Chidambaram had made a populist move by announcing two per cent cess on all taxes, which would hurt the common man.

The proposal to impose service tax on many services and commodities had come as a blow to the manufacturing sector, he said.

Summarising the Budget in the light of the Common Minimum Programme, Dr. Acharya said that it lacked clarity and could not be implemented as a time-bound programme.

Inflation

The two per cent cess on all taxes would trigger inflation, J.L. Shenoy of Mangalore said. This, combined with the increase in the service tax, would push up inflation.

R.D. Kini, president of the Kanara Chamber of Commerce and Industry, said that though the Budget appeared to be good, there were a few grey areas left untouched by the Finance Minister.

He said that the Budget had only paid "lip service" to small-scale industries.

Welcomed

Our Udupi Correspondent writes:

The Union Budget seems to have elated some and disappointed many in the city. While the Udupi Chamber of Commerce and Industry has welcomed it, the Udupi division of the Insurance Employees' Union has criticised it.

In a press release issued here, the general secretary of the union criticised the proposal mooted by Mr. Chidambaram to increase foreign equity in Life Insurance Corporation to 49 per cent. The move indicated that the Congress-led United Progressive Alliance Government at the Centre had succumbed to pressure from international finance companies, he said and added that it would only encourage private players in the insurance sector to underwrite more business.

The union also opposed the move to bring LIC premium under service tax. This would only put additional burden on the common man, the union said. It also opposed the move to withdraw the Varishta Pension Bima Yojana, a pension plan introduced by the previous Government during the previous Budget to cater to the needs of senior citizens. Both these proposals should be withdrawn, it said.

The union would hold protest demonstrations against some proposals in the Budget on July 9, the union said.

In a separate press release, Sridhar Shenva, president of the chamber, said Mr. Chidambaram had presented a pro-people Budget as it gave priority to the agricultural sector. It also gave importance to drinking water supply, education, housing, and road development, he said. The proposals to make education compulsory till eighth standard and provide midday meal tio schoolchildren were a welcome step, he added.

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