Finance minister P. Chidambaram will kick off his formal pre-budget deliberations today, ahead of what will be the fifth general budget of the Congress-led United Progressive Alliance (UPA) government and his seventh as the Union finance minister.
The Union Budget that will be presented by Finance Minister Palaniappan Chidambaram in late February may well be the last budget of the UPA government headed by Manmohan Singh. With this realisation, the government is expected to go populist with a vengeance and announce a slew of schemes that would be aimed at establishing the pro-aam admi credentials of the Congress-led coalition government.
Budget 2008-09 offers an opportunity for reduction in tax rates due to vastly improved tax collections. The finance minister has tried to play down expectations of a tax cut on the ground that it is to be ascertained how much compliance has really improved. Evidence suggests a robust increase in government direct tax collections in recent years. This fiscal too, direct tax collections are much higher than budgeted targets. The latest quarterly data shows that Central government income tax receipts rose by 42 per cent in July-September 2007 over the corresponding period last year. Corporate tax collections have increased by 34 per cent in the same period.