Sunday, February 28, 2010

Union Budget 2010 - In the layman Language

Union Budget 2010 was one of the most expected from Pranab's office as this will become the boost for the country after a world's big economic dip. When the dollor and euro struggled to make it up, Rupee managed to come out of the grave yard like a Phoenix. So this year's finance report is expected to turn as a health drink to the country's economy.

PM(Gold medalist from Harward University in Finance) and home minister(MBA in Finance & prof of finance) being a big dawns of the economic affairs joined hands with Aluwalia and Pranab to present a nice budget this year.

In the outline if we see this budget it will look as of the budget is against the middle class people.

Ofcourse it is!!! The hike in the petroleum price - which will affect the price of all materials.
The hike in the import tax for the gold and platinium - which will make the middle class to remember it only in the chemistry table.

But if we see these hike which affect the common people from the ruler's point of view will fetch lot of capital income. For example from Reliance refineries itself Govt will gain 5500 crores as tax. We should keep in mind that Reliance is the second biggest refinery after the govt owned one's. There are few more small petroleum refineries in the country.

In another point of view, people will start walking or use public transport for going to market.

The import tax for the gold will indirectly increase the government share of buying gold rather than the gold council. Last year Reserve Bank of India brought about 108 tons of gold which remains the highest comparing any of the world's reserve bank.

I think no one will comment on the hike in tobacco products.

When viewing these hikes in long term aspect, it will help in a while.

Coming to the benefits of the Budget, first is the change in the IT norms. As per the FM's statement it will benefit 60% of the tax payers and this will also motivate non tax payers also to file the returns which in turn increase the govt's income.

The increase in the savings limit from 1 lak to 1.2 lak of which the 20000 as a investment in the infrastructure bonds will help the infrastructure development and also this will pave way for the govt bonds to become popular. people will develop the habit of investing.

The concession given for housing loans, early payment of agri loans, fund sanction for the rural development, tax exception for the contribution for CGHS, etc are the main highlights of the budget.

Fund allocation to the health sector still didnt satisfy WHO norms. Military's contribution remains high this time also showing the threat to the country.

At this point of time, people should know where to invest their money. My point of view is, invest in some
tax saver mutual fund plans,
Dont forget the life insurance(go for term insurance rather than ULIP)
Take a separate medical insurance rather than clumping it with other plans(Life is important, don't expect offers)
If you cannot offer a big amount as premium every year go for Govt bond(preferably central govt infrastructure bonds)
If that also seems to big go for postal certificates like NSC, NSS...
Unless you are not a pensioner don't opt for term deposit in banks, which is no way useful for youngsters.
When market looks to come under Bull's hand try investing in good company's share.

thats all about this year's overview on Union Budget and recommendation on investment. There may be some change in the budget before it passes in both the houses which may alter the overall view.

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