In an election Budget that gives largesse to different sections, Finance Minister P Chidambaram announced on Friday a waiver of agricultural loans to the tune of Rs 60,000 crore (Rs 600 billion), raised the income tax exemption threshold to Rs 1,50,000 and slashed customs and excise duties on variety of goods.

Presenting his fifth and last full-fledged budget, he also withdrew the controversial banking cash transaction tax but introduced a commodities transaction tax on the lines of securities transaction tax on options and futures.

The central sales tax was reduced from three to two per cent.

Under the Income Tax proposals that will give a minimum relief of Rs 4,000 to all assessees, incomes between Rs 1,50,001 and Rs 3,00,000 will be 10 per cent, those between Rs 3,00,001 and Rs 5,00,000 will be 20 per cent and above Rs 5,00,001 will be 30 per cent.

Senior citizens will pay no tax up to Rs 2,25,000 and women up to Rs 1,80,000. There will be no change in the corporate income tax or the surcharge rate.

While Chidambaram's direct tax proposals are revenue neutral, those on the indirect taxes side are estimated to result in a loss of Rs 5,900 crore (Rs 59 billion).

Raising the defence budget by 10 per cent from Rs 95,000 crore (Rs 950 billion) to Rs 105,600 crore (Rs 1,056 billion) in the coming year, the estimates of Plan expenditure have been fixed at Rs 2,43,386 crore (Rs 2,433.86 billion) which will be Rs 32.4 per cent of the total expenditure.

Non-Plan expenditure has been estimated at Rs 5,07,498 crore (Rs 5,074.98 billion).

The revenue deficit for the current year will be 1.4 per cent against the budget estimates of 1.5 per cent and the fiscal deficit will be 3.1 per cent against an estimate of 3.3 per cent.

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