Pointing out that despite high economic growth, there were several disturbing trends during 2004, when the UPA government came to power, Chidambaram said that the economy had to face excess liquidity overhang which spilled into 2004-05,along with an inflationary build up because of oil prices increases, deficit in southwest monsoon and a decline in business confidence. The tsunami disaster was an additional burden.

As of now inflation had been reined in at 5.01 per cent, which was one per cent less than what it was in the corresponding period last year. Gross budgetary support for the plan period during 2005/06 has been fixed at Rs1,72,500 crore, an increase of 16.9 per cent over the current year's figure. Support for the central plan in the new financial year will be Rs1,10,385 crore which, Chidamabram said, represented an unprecedented increase of over 25 per cent.

Highlights of the budgetary proposals:

To raise plan expenditure by 25.6 per cent

Gross Budgetary Support up 16.9 per cent

• Expert committee to be set up for EET system
  
• Income tax exemption at Rs1 lakh
  
• Exemption for women at Rs1.25 lakh
  
• Exemption for senior citizens Rs1.5 lakh
  

  New tax slabs:	Rs1-1.5 lakh	10 per cent
  	Rs1.5-2.5 lakh	20 per cent
  Above	Rs 2.5 lakh	30 per cent

  
  Surcharge of 10 per cent raised to Rs.10 lakh of taxable income.
• More taxes on perks Deductions under medical insurance premiums to continue
  
• To levy fringe benefits tax of 30 per cent
  
• Tax of 0.1 per cent on cash withdrawal of Rs10,000 per day
  
• Initial depreciation rate increased to 20 per cent
  
• Depreciation rate to be 15 per cent for plant and machinery
  
• Corporate tax rate for domestic companies at 30 per cent + Surcharge of 10 per cent
  
• Special transaction tax (STT) to be increased to 0.02 per cent from 0.015 per cent for day traders
  
• Fertiliser subsidy could be cut if natural gas is used
  
• To continue subsidies but in recast form
  
• Foodgrain procurement to be made more cost-effective
  
• Customs duty on industrial raw materials cut to 10 per cent
  
• Customs duty on coking coal cut from 15 per cent to 5 per cent
  
• To allow banking companies to issue preference shares
  
• New Banking bill to be introduced in Budget session
  
• Credit linking target increased to 2.5 lakh SHGs
  
• 12th Finance commission to cost the centre Rs26,000 crore
  
• Revenue deficit 2.7 per cent; Fiscal deficit 4.3 per cent
  
• Plan expenditure of Rs1,72,500 crore Non-plan expenditure Rs3,70,847 crore
  
• Targets $15,000 crore of exports by FY'09
  
• Will ensure development schemes don't continue without checks
  
• Fertiliser subsidy could be cut if natural gas is used
  
• Defence allocation increased to Rs83,000 crore
  
• Rs34,375 crore on capital expenditure for defence
  
• Entire production, distribution chain to be covered soon
  
• VAT to be introduced from 1st April 2005
  
• To make Mumbai regional 'hub for finance'
  
• May allow trading of asset backed debt
  
• To clear legal validity of OTC derivative contracts
  
• Stamp duty exemption for corporatisation of stock exchanges
  
• FIIs to give collateral on derivatives trade
  
• To amend Banking Regulation Act
  
• To remove cap/floor for SLR for banks
  
• Seeks overseas investment in mining, trade, pensions
  
• Trade policy to be further liberalised
  
• Forex to be used for infrastructure projects
  
• SMEs in Pharma, IT to get equity support
  
• Companies allowed to re-negotiate debt
  
• Financial package to to be worked out by NABARD
  
• Capital subsidy allocation for SSI's up to Rs173 crore
  
• To extend insurance scheme for 2 million handloom weavers
  
• Lower interest costs for Sugar industries
  
• To launch manufacturing competitiveness plan for SMEs
  
• 10 per cent capital subsidies scheme for textile sector
  
• To ask PSU banks to increase borrowers by 5 million in FY'06
  
• New fund for strategic agriculture research Rs50 crore allocated
  
• Rs450 crore provided for Highway development in North East
  
• Micro-finance development fund increased to Rs200 crore
  
• Services sector to get stable tax policy
  
• National Agriculture Insurance scheme to continue
  
• Rs6,253 cr for devpt of SC/ST Special scheme for SC/ST students
  
• Loans for rural areas to increase by 30 per cent
  
• Rs1,08,500 cr to be disbursed as loans
  
• Comparative advantages in tea have eroded
  
• Price stabilisation fund for commodities not effective
  
• To provide telephone connections to 66,820 villages
  
• Rs14,040 cr equity support and Rs3,554 crore as loans for PSEs
  
• National Horticulture Mission to get Rs630 crore
  
• 60 lakh additional houses for rural poor
  
• Electricity to 1.25 lakh villages
  
• Addl 1 crore hectare to be brought under irrigation
  
• Rs4,200 crore state plan for Jammu and Kashmir Rs14379 crore allocation for J&K
  
• 2000 Rajiv Gandhi fellowships on pattern of UGC fellowships
  
• Double nutrition norms: Centre to share half of state's burden
  
• Mid-day meal allocation up to Rs3,010 crore vs Rs1,675 crore
  
• Baramull-Udhampur railway project designated project of national importance
  
• Special grants for Bihar over Rs7900 crore granted to Bihar
  
• New backward regions grant fund to get Rs5000 crore
  
• Outlay on drinking water increased to Rs4,750 crore
  
• 170 backward districts and backward regions-to be funded Rs5000 crore yearly
  
• Separate statement on 'gender' sensitivity: Central assistance for teaching Urdu
  
• ICDS allocation up 47 per cent to Rs3,142cr: Pledges 'inclusive economic growth'
  
• New Prarambikh Shiksha fund to be allocated Rs7,156 crore
  
• Sectors getting jobs will get highest govt. priority
  
• Textile job potential seen 12 million in 5 years
  
• National Rural Health mission to start in FY'06
  
• Education allocation at Rs18,337 crore in in FY'06
  
• Food-for-work programme announced in 250 districts
  
• Allocation for health and family welfare at Rs10,280 crore
  
• 70 lakh extra jobs in IT by 2009
• Fertilizer subsidy in FY'06 at Rs16,254 crore
  
• Subsidy for rural development at Rs18,334 crore; allocation to increase to Rs10,280 crore
  
• Food-for-work programme successful programme announced in 250 districts
  
• One crore to be employed in irrigation schemes
  
• Non-food credit up 21.5 per cent
  
• To raise plan expenditure by 25.6 per cent in FY' 06
  
• FM: UPA committed to greatest good to greatest number
  
• Rs10,216 cr for tsunami relief and rehabilitation
• Growth rate to be 6.9 per cent
  
• Industrial growth up 8.9 per cent