With a little relief to government employees, farmers, movie-goers in town areas and real-estate industry, Madhya Pradesh Finance Minister Raghavji today flayed the central government on various fronts like the goods and services tax (GST) while presenting his eighth budget in a row. The minister today raised the budgetary expenditure size by 28 per cent that has reached Rs 65,845 crore for the year 2011-12 to close the budget with a deficit of Rs 78 crore.
The finance minister continued with power subsidy for farmers and more allocation to the Chief Minister Shivraj Singh Chouhan’s favourite social schemes like ‘Ladli Laxmi Yojana’. However against the State Economic Survey 2011 recommendation to make more investment in irrigation, Raghavji allocated a meagre amount of Rs 3,605 crore to add another 145,000 hectare area under irrigation.
The power sector however will receive 65 per cent more funds to compensate farmers for cheaper power, feeder separation and strengthening of transmission and sub-transmission system. “With an investment of Rs 36,482 crore we will have 5,000 Mw of power by 2013,” Raghavji informed.
“State government employees will get another dearness allowance installment of 10 per cent, with this their wages will be at par with that offered by the Centre,” Raghavji said in the Assembly, adding, “This will make our pension and wages size at Rs 22,212 crore.” He however refused to disclose about the arrears but said the additional dearness allowance installment will put a burden of Rs 1,400 crore on exchequer.
He also raised compensation to contractual teachers in all categories by Rs 1,000 each thus the new wages will be Rs 5,500, Rs 4,500 and Rs 3,500. Those part-time employees like peon, clerks and safai workers, who draw minimum salary will get enhanced wages by a minimum of Rs 700 to Rs 2,000 per month.
To ensure 25 per cent seats for poor students in school under Right to Education Act, the finance minister has made budgetary provisions of Rs 799 crore. The male students will also be provided bicycles, free of cost, in the high school classes. Earlier, the facility was given to only girl students.
He raised allocation to create more drinking water facility in rural areas by making Rs 1,244 crore plan that will also include maintenance of hand-pumps in rural areas. The agriculture sector has been allocated an outlay of Rs 5,075 crore which is 32 per cent more than the previous year to fulfill promises to offer farm loans at one per cent made by the state chief minister Shivraj Singh Chouhan to the state farmers.
“We will continue with our power subsidy of Rs 1,455 crore to offer cheaper power to state farmers, we have also made arrangements for Rs 700 crore to compensate the frost-hit farm sector,” Raghavji said.
Health and education also received a handsome allocation of Rs 2,639 crore and Rs 10,043 crore, respectively. “The state has a plan to open a new Medical University in Jabalpur by 2011-12 and a fully equipped lab to test swine flu, bird flue and other virus diseases in Gandhi Medical College Bhopal,” the minister said at the Assembly.
To improve urban infrastructure the state has allocated Rs 25 crore to create better roads in Burhanpur and Gwalior and another Rs 30 crore for Bhopal. The local administrative bodies has been allocated Rs 2,707 crore. “The Municipal bodies will get cash awards of Rs 50 lakh, Rs 30 lakh and Rs 20 lakh while Nagar Panchayat will get Rs 25 lakh, Rs 15 lakh and Rs 10 lakh in the first, second and third prize categories, respectively. The labour security scheme has also been allocated Rs 40 crore.”
State opposes GST; taxes on advertisement; VAT slashed
Making reservations against the Centre for the proposed GST, Raghavji cast the tax net wider by bringing entertainment through any device under tax regime in his 2011-12 budget proposals. Moreover, all advertisements through cable, mobile or telemarketing except for those in print media, radio and television, will attract tax at 10 per cent. Further, industries that will acquire land for commercial or industrial use will have to pay a minimum Rs 5 lakh per acre premium on government allocated land.
The state finance minister also proposed to rate the floor rate of value added tax (VAT) on items defined in schedule-II under five per cent category from the existing four per cent. Most of the household items come under schedule-II category. “We will make amendments to the VAT act if the Central government changes it to Central Sales Tax Act,” Raghavji said.
However, he has reduced VAT from 13 per cent to five per cent on snacks served in restaurants, foods and snacks served by caterers, cutlery made of plastics and paper, CFL bulbs bearing price tags of Rs 150 and foot-valve used in irrigation water-pumps.
VAT on natural gas has also been slashed from 13 per cent to five per cent. The manufacturing units that will claim input tax rebate will be given immediate refunds. Raghavji also exempted certain commodities like tea imported in the state for blending, crude edible oil for refining, coated hot rolled coils, colour coated and galvanized coils if they are used for intra-state sales or export from entry tax. However, he has increased entry tax from two per cent to three per cent on coal used for urban infrastructure development. Also, entry tax is proposed to be increased from two per cent to five per cent on iron and steel if it is imported from other state for interstate sales.
Bottling fee on beer per bulk liter has also been increased provided it is consumed in the state. Now per bulk liter beer under this category will attract Rs 10 against existing Rs 6 per bulk liter. The import fee on per bulk litre has also been increased from Rs 11 to Rs 15. Interestingly, obtaining a gun license will no more be a freebie.
All entertainment under tax net
Though a case is pending in Supreme Court, the state government today imposed entertainment tax on all kinds of entertainment. According to the proposals for Budget 2011-12 all entertainment include entertainment via mobile, like downloading of videogames, ring tones or any other entertainment through any technology will be leviable at 20 per cent.
“The word ‘Cinema’ has been replaced by ‘Entertainment’ in the Entertainment Tax Act 1936 during the previous government 2003. When we levy taxes on cinema, why should other entertainment means be exempted. It covers all entertainment even street play provided the annual turnover does not exceed Rs 5 lakh,” a senior government official told Business Standard.
State government has also levied tax on Direct to Home (DTH) services but a case is pending in Supreme Court between state government and a private DTH service provider. At present, Madhya Pradesh government levy tax at 20 per cent from all cinemas. “Today’s budgetary proposals have exempted cinemas which are facing tough competition particularly in the sub-urban areas where ticket rates are not more than Rs 30. We have exempted them from entertainment tax,” Raghavji said.
The state government for the first time slashed stamp duty for the weaker sections from 7.5 per cent to five per cent on all transactions of housing sector made by government agencies like Housing Board or Bhopal Development Authority.
