Budget Synopsis

For Private Circulation

Budget Synopsis:

Mr. Finance Minister delivered a non event but a realistic budget for FY 2012-13. The goodies did dole out for Infrastructure, Power and Capital Markets. Below is the broad outline of the Budget 2012-13.

Performance this year was disappointing but as compared to peers India was better Middle East crisis, debt worries in EU have intensified Global crisis hit Indian growth Tight monetary policy hit consumption and growth International crude oil prices may cross $ 115 per barrel. This will impact the Fuel Subsidy Bill Food and fertiliser subsidy largest expenditure. Fiscal deficit rose due to subsidy. Decided to fully provide for food subsidy in the budget FRBM implementation back on track Aadhar-enabled payment of select government schemes in 50 districts Rs 30,000 cr divestment target in FY 13 To bring down subsidy to 1.7 % of GDP in the next 3 years To roll out computerized scheme for fertilizer subsidy transfer The Nandan Nilekani panel recommendation on direct transfer of subsidy accepted: FM FY13 subsidy to be under 2% of GDP Find ways to expedite implementation of decision, prompt delivery and good governance with transparency, while curbing black money and corruption Remove bottlenecks in agriculture, energy, transport, coal, power and national highways Ensure rapid rise in private investment Frame policies that trigger domestic demand recovery Direct cash subsity to LPG, Kerosene Efforts to arrive at broadbased consensus with state governments on allowing FDI in multibrand retail up to 51 per cent Direct transfer of subsidy for kerosene initiated Direct Tax Code (DTC) Bill to be enacted at the earliest GST to be operational by August 2012 To introduce Rajiv Gandhi Equity Scheme for retail investors Tax incentive for new investors, These make sense when you consider that the share of household savings delpoyed in capital markets has come down sharply. Changes in IPO norms to increase participation in small towns Plan outlay for agriculture raised by 18% to Rs 20208 crore in FY 13 Rs 300 crore for intensified irrigation program Retail stocks rally as Budget commits to multi-brand FDI Telecom towers made eligible for viability gap funding Agriculture credit target raised to Rs 5.75 lakh crore in FY13 Agriculture allocation increased to Rs 5,75,000 crore. To allocate Rs 10,000 cr for NABARD to refinance RRBs. To allocate Rs 10,000 crore for NABARD for refinancing RRBs Government to set up Rs 5,000 crore venture fund for MSME sector To allow ECB borrowing to part-finance power projects. Agriculture credit target to be raised by Rs 1,00,000 crore to Rs 5,75,000 crore. Kisan credit cards can now be used for ATM machines. Change in IPO guidleines to promote small town participation Will allow external commercial borrowing for power, housing road construction companies To make 8,800 km of highways in FY13; outlay raised Plan outlay raised 18% to Rs 20,208 cr for agriculture

Irrigation, dams to be eligible for special funding Telecom towers made eligible for viability gap funding Fuel supply constraints have hit power supplies nationally Current account deficit 3.6 percent in 2011-12; this put pressure on exchange rate. Advance Pricing Agreements in DTC to be in Finance Bill Corporate market reforms to be initiated. Allocation for national highways up 14 per cent. 8,800 km of highways to be developed under National Highway Development Project in 2012-13. Encourage small and medium artisans. Powerloom mega clusters to be set up. Foreign loans for low-cost housing projects. Foreign loan cap raised for airlines. To allow ECB funding to finance working capital needs of airlines for 1 year External commercial borrowings to the extent of $ 1 billion to be allowed for aviation sector for next year. Addressing malnutrition, black money and corruption in public life among five priorities in the year ahead. Budget to provide Rs 15,888 crore for recapitalisation of PSU banks, regional rural banks. Government examining new ways of providing subsidies for LPG, kerosene. Tax exemption on individual share investment below Rs 10 lakh. Govt to create Financial Holding company to meet financial needs of PSU banks. Income Tax deduction of 50 per cent on investments of up to Rs 50,000 in savings scheme named after Rajiv Gandhi. 3-year lock-in period exemption under Rajiv Gandhi scheme. Increase in investments in infrastructure through PPP. Coal India advised to sign FSA with power plants Infrastructure investment in 12th Plan to go up to Rs 50 lakh crore; half of it to come from private sector. To allow qualified FII into domestic corporate bonds Rs 15890 crore for recapitalisation of PSU banks Extend RRB capitalisation for 2 years Propose Central KYC depository Full exemption from basic customs duty on natural gas, LNG, uranium for generation of electricity for two years. Automated shuttle looms exempted from customs duty. Full exemption on imported equipments for road construction projects. Customs duty on import of parts of aircraft, tyres and testing equipment fully exempted. Full exemption from basic customs duty for equipment for road and highway construction. AC, fridge and most urban services to cost more. Titanium dioxide customs duty cut to 7.5% from 10%. Govt may table white paper on black money Tax exemption of up to Rs 5,000 for health insurance for annual preventive health checkup. No change in peak custom duty. Rs 1000 cr for National Skill Development Fund in FY13. Gross taxes estimated at 10.6 per cent of GDP. Pranab proposes to bring white paper on black money in the current Parliament session. Gross taxes estimated at 10.6% of GDP. Exemption of customs duty of 5% on equipment for fertiliser plants. Service tax rates hiked from 10 per cent to 12 per cent. Introduction of compulsory reporting of assets held abroad. Securities Transaction Tax (STT) reduced from 0.125 per cent to 0.1 per cent. Withholding tax on external commercial borrowings reduced from 20 percent to five percent for power, airlines, roads, bridges, affordable houses and fertiliser sectors. Government services, public transport exempted from service tax. Common 1-page return for excise and service tax. Propose common tax code for service tax and excise Govt services, public transport exempt from service tax. Service tax net widened; to include most sectors Negative list to include pre-school and high school education, entertainment services. Sale of residential property exempted from capital gains if invested in equity or equipment of an SME. All services to be taxed except those in negative list. No advance tax for senior citizens. Health insurance deduction upto Rs 5000 for preventive health checkup. FY13 market borrowing at Rs 4.79 lakh cr. The new tax rates: From Rs 2 lakh to Rs 5 lakh at 10%, Rs 5 lakh to Rs 10 lakh at 20%, And beyond Rs 10 lakh at 30%.

 No change in corporate tax rates. Information on black money stashed abroad has started flowing in, prosecution to be executed in some cases, says
Pranab. 40 crore Aadhar enrollment in year beginning April 2012. Net tax receipts of the Centre in 2011-12 stands at Rs 7,71,071 crore. Exemption up to Rs 2 lakh for individuals Rs 193,407 crore provision made for defence services in 2012-13. To allot Rs 24,000 crore for rural road plan in FY13. Rs 3,915 crore to be spent on National Rural Livelihood Mission. Maternal and child nutrition scheme to be launched in 200 districts. Agri credit target for FY13 at Rs 5.75 lakh cr, up Rs 1 lakh cr To introduce new law for micro finance institutions Defence outlay at Rs 1.95 lakh crore Allocated Rs 25,555 cr for Right to Education in FY13; cuts interest rates on loans to women self help groups Govt aims to trim subsidy burden Efforts on for consensus on 51% FDI in multi-brand retail 7 medical colleges to be upgraded to All India Institutes. Rs 200 crore for Research Rewards for agricultural researchers for breakthroughs. Mahatma Gandhi rural employment scheme has been positive. ECB for Rupee-debt of power co positive for all power cos Interest subvention of 7 per cent to women self groups for loans up to Rs 3 lakh, additional 3 per cent for those making timely repayment. Allocated Rs 25,555 cr for Right to Education in FY13; cuts interest rates on loans to women self help groups FY13 National Social Assistance Scheme outlay at Rs 8447 crore Rs 1,000 crore to be provided for National Skill Development Corporation in 2012-13 Integrated Child Development Scheme to be strengthened and restructured with allocation of Rs.15,850 crore. Allocation of Rs.200 crore for research on climate change. Rs 20,822 crore earmarked for National Rural Health Mission against Rs 18,115 crore this year. Rs 20,000 crore to be spent on rural infrastructure development, including Rs 5,000 crore for creating warehousing facilities. National Backward Region Grant scheme outlay raised by 22 per cent to Rs 12,040 crore. Rural development fund of 20000 crores NRHM allocation hiked to 20820 crores Customs duty on refined gold doubled; will cost more. Gold to be more expensive. Cigarettes, gold, diamonds, imported cycles to cost more. ustoms duty on bicycles and parts increased. Most luxury items, eating out, air travel, leisure activities to cost more. Exemption of customs duty of 5% on equipment for fertiliser plants. Service tax rates hiked from 10 per cent to 12 per cent. Introduction of compulsory reporting of assets held abroad. Standard excise duty rate raised from 10 per cent to 12 per cent. Import of aircraft parts exempt from basic customs duty. Service tax to yield additional revenue of Rs 18,650 crore. Excise duty on large cars raised from 22 per cent to 24 per cent. Solar power lamps, LED bulbs to become cheaper. Duty on CFLs reduced. Excise duty on handmade and semi-mechanised matches reduced from 10 to 6 per cent. Bicycles to get expensive, duty raised to 30% from 10%. Iodised salt, match-boxes, soya products to become cheaper. Customs duty on standard gold raised from 2% to 4%. Service tax to yield additional revenue of Rs 18,650 crore. Excise duty on large cars raised from 22 per cent to 24 per cent. Most luxury items, eating out, air travel, leisure activities to cost more. Exemption of customs duty of 5% on equipment for fertiliser plants. Import of equipment for fertilizer plants fully exempted from customs duty for three years. Standard excise duty rate raised from 10 per cent to 12 per cent. Import of aircraft parts exempt from basic customs duty.

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