2011-12 Budget analysis,

1. 03/03/2011 10:35:14 PM Ghnahsym IILM Gurgaon 1 BUDGET ANALYSIS: 2011-2012

2. PRESENTED BY : Prashant Mishra Rakesh Iyer Tina Sayre Srinivas Mittapelli -YMT COLLEGE OF MANAGEMENT 2

3. What is budget ? The budget is a document that states expenditure and income of the Government for the current financial year and which reflects the direction of Government policies and priorities. 3

4. HIGHLIGHTS OF BUDGET FY2011 FISCAL Fiscal Deficit kept at 4.6% of GDP for 2011-12. Targets for fiscal deficit pegged at 4.1% for 2012-13 and 3.5% for 2013-14 respectively. The Gross Tax Receipts estimated at Rs. 9,32,440 cr in FY12. The Non Tax Revenue Receipts estimated at Rs. 1,25,435 cr. Central Government debt estimated at 44.2% of GDP for 2011- 12 as against 52.5% recommended by the 13th Finance Commission.

5. 5 AGRICULTURE Allocation of Rs. 300cr per scheme To improve rice based cropping system in this region, allocation of Rs 400 Cr has been made Allocation under Rashtriya Krishi Vikas Yojana (RKVY) increased from Rs 6,755 Cr to Rs. 7,860 Cr. Credit flow for farmers raised from Rs. 3,75,000 Cr to Rs. 4,75,000 Cr in 2011-12. Interest subvention proposed to be enhanced from 2% to 3% for providing short-term crop loans to farmers who repay their crop loan on time. Rs. 10,000 Cr to be contributed to NABARD’s Short-term Rural Credit fund for2011

6. 03/03/2011 10:35:16 PM 6 Ghnahsym IILM Gurgaon DIVESTMENTRs. 40000 Cr to be raised through disinvestment in 2011-12

7. 7 INFRASTRUCTURE DEVELOPMENT Rs 2,14,000 Cr provided for infrastructure development which accounts for over 48.5% of the total plan allocation. Under take out financing scheme, seven projects sanctioned with debt of Rs. 1,500 Cr. Another Rs. 5,000 Cr will be sanctioned during 2011-12. To boost infrastructure development, tax free bonds of Rs. 30,000 Cr proposed to be issued by Government undertakings during 2011-12.

8. 8 ENVIRONMENT AND CLIMATE Special allocation of Rs. 200 Cr proposed to be provided for clean-up of some more important lakes and rivers other than Ganga. Rs 200 Cr proposed to be allocated for Green India Mission from National Clean Energy Fund.

9. INVESTMENT ENVIRONMENT Discussions underway to further liberalise the FDI policy. Rs. 6,000 Cr be provided during 2011-12 to enable public sector banks to maintain a minimum of Tier ICRAR of 8%. Rs. 500 Cr to be provided to enable Regional Rural Banks to maintain a CRAR of at least 9% as on March 31,2012. “India Microfinance Equity Fund” of Rs. 100 Cr to be created with SIDBI. Government considering putting in place appropriate regulatory framework to protect the interest of small borrowers. 9

10. EDUCATION Allocation for education increased by 24% to Rs. 38,484 in 2011-12 from Rs. 31036 in 2010-11, allocation for Sarva Shiksha Abhiyan increased to Rs 21,000 Cr which is 40% higher than Budget for 2010-11. 10

11. URBAN DEVELOPMENT AND HOUSING Existing scheme of interest subvention of 1% on housing loan further liberalized, existing housing loan limit enhanced to 25 lakh for dwelling units under priority sector lending, Provision under Rural Housing Fund enhanced to Rs 3,000 Cr, Mortgage Risk Guarantee Fund to be created under Rajiv Awas Yojana to benefit economically weaker sections Micro, Small & Medium Enterprises: Rs 5,000 Cr to be provided to SIDBI for refinancing incremental lending by banks to these enterprises. Rs 3,000 Cr to be provided to NABARD to provide support to handloom weaver co-operative societies. 11

12. 12 TAX PROPOSALS DIRECT TAXES Exemption limit for the general category of individual taxpayers enhanced from Rs. 1,60,000 to Rs 1,80,000 giving uniform tax relief of Rs. 2,000.

13. Rate of Minimum Alternative Tax proposed to be increased from 18% to 18.5% of book profits Lower rate of 15% tax on dividends received by an Indian company from its foreign subsidiary. 13

14. INDIRECT TAXES Excise Duty Central Excise Duty retained at 10%. Reduction in number of exemptions in Central Excise rate structure. Nominal Central Excise Duty of 1% imposed on 130 additional items in the purview of excise duty. Lower rate of Central Excise Duty enhanced from 4% to 5%. Optional levy on branded garments or made up proposed to be converted into a mandatory levy at unified rate of 10 %. 14

15. Service Tax Standard rate of Service Tax retained at 10% Hotel accommodation in excess of Rs. 1,000 per day and service provided by air All individual and sole proprietor tax payers with a turn over upto Rs. 60 lakh freed from the formalities of audit. 15

16. Proposals relating to Service Tax estimated to result in net revenue gain of Rs 4,000crore. Proposals relating to Direct Taxes estimated to result in a revenue loss of Rs 11,500crore and those related to Indirect Taxes estimated to result in net revenue gain of Rs. 11,300crore resulting in a net loss of Rs 200crore from the taxes. 16

17. For Overall Primary sector Secondary sector Tertiary sector For Common Man Food Clothing Shelter Education 17