Budget Review:: Zeebiz Bureau

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BUDGET REVIEW:

http://zeenews.india.com/business/budget-2012/budget-2012-highlights_43970.html
Zeebiz Bureau New Delhi: Budget identifies five objectives relating to growth recovery, private investment, supply bottlenecks, malnutrition and governance matters

GDP growth to be 7.6 per cent (+ 0.25 percent) during 2012-13

Amendment to the FRBM Act proposed as part of Finance Bill. New concepts of Effective Revenue Deficit and Medium Term Expenditure Framework introduced

Central subsidies to be kept under 2 per cent of GDP; to be further brought down to 1.75 per cent of GDP over the next 3 years.

Proposed: Mobile based fertilizer management system; LPG transparency portal; scaling up and rolling out of Aadhar enabled payment for government schemes in at least 50 districts.

Rs. 30,000 crore to be raised through disinvestment

Efforts to reach broadbased consensus on FDI in multi-brand retail

Rajiv Gandhi Equity Saving Scheme: to allow income tax deduction to retail investors on investing in equities

Rs. 15,888 crore to be provided for capitalization of public sector banks and financial institutions

A central Know Your Customer depository to be developed

Swabhimaan: remaining habitations to be covered; to be extended to more habitations; ultra small branches to be set up in Swabhimaan habitations

Investment in 12th Plan in infrastructure to go uptoRs. 50,00,000 crore; half of this is expected from private sector

Tax Free Bonds of Rs. 60,000 crore to be allowed for financial infrastructure projects

Allocation of Road Transport and Highways Ministry enhanced by 14 per cent to Rs. 25,360 crore

Financial package of Rs. 3,884 crore for waiver of loans to handloom weavers and their cooperative societies; mega handloom clusters in Andhra, Jharkhand; weaver service centres in Mizoram, Nagaland and Jharkhand ; powerloom mega cluster in Maharashtra; Rs. 500 crore pilot schemes for geo-textiles in North-Eastern region

Rs. 5,000 crore India Opportunities Venture Fund to help small enterprises

Allocation to agriculture enhanced; RKVY gets Rs. 9,217 crore; BGREI gets Rs. 1,000 crore; Rs.2242 crore project to improve dairy productivity; Rs. 500 crore for coastal aquaculture

Various other agricultural activities merged into 5 missions

Target for agricultural credit raised to Rs. 5,75,000 crore

Interest subvention for short-term crop loans to farmers at 7 per cent interest continues; additional 3 per cent for prompt paying farmers

Rs. 200 crore for awards to incentivise agricultural research

Provisions under rural housing fund increased to Rs. 4,000 crore from Rs. 3,000 crore

Interest subvention of 1 percent on housing loans uptoRs. 15 lakh extended for one more year

AIBP allocation raised by 13 per cent to Rs. 14,242 crore

National Mission on Food Processing to be started in cooperation with State Governments

Scheduled Caste Sub Plan allocation increases by 18 per cent to Rs. 37,113 crore; Tribal Sub Plan by 17.6 per cent to Rs. 21,710 crore

Multi-sectoralprogramme to address maternal and child malnutrition in 200 high burden districts

58 per cent rise in allocation to ICDS, at Rs. 15,850 crore

Rural drinking water and sanitation gets 27 per cent rise in allocation to Rs. 14,000 crore; PMGSY gets 20 per cent rise to Rs. 24,000 crore

Projects covering length of 8800 km to be awarded under NHDP against 7,300 km during 2011-12

RTE-SSA gets Rs. 25,555 crore allocation, showing an increase of 21 per cent; 6000 schools to be set up at block level as model schools in the 12th Plan; Credit Guarantee Fund to be set up for better flow of credit to students

National Urban Health Mission is being launched

34 per cent increase in allocation to National Rural Livelihood Mission, to Rs. 3915 crore

Rs. 1000 crore allocated for National Skill Development Fund

Bharat Livelihood Foundation to be established to support livelihood interventions particularly in tribal areas

Widow pension and disability pension raised from Rs. 200 to Rs. 300 per month

Grant on death of primary breadwinner of a BPL family in the age group 18-64 years doubled to Rs. 20,000

Defence services get Rs. 193407 crore; any further requirement to be met

4000 residential quarters to be constructed for Central Armed Police Forces

UID-Aadhar to get adequate funds for enrolment of 40 crore persons, in addition to the 20 crore persons already enrolled

White Paper on Black Money to be laid in the current session of Parliament

Tax proposals mark progress in the direction of movement towards DTC and GST

Income tax exemption limit raised from Rs.1,80,000 to Rs.2,00,000; upper limit of 20 per cent tax slab raised from Rs.8 lakh to Rs.10 lakh

Interest from savings bank accounts deductible upto Rs.10,000; deduction of upto Rs.5,000 for preventive health check-up

Senior citizens without business income exempt from advance tax

Investment linked deduction of capital expenditure enhanced for certain businesses; new sectors eligible for investment linked deduction

Turnover limit for compulsory tax audit for SMEs raised from Rs.60 lakh to Rs.1 crore

STT on cash delivery reduced by 25 per cent to 0.1%

General Anti Avoidance Rule being introduced to counter aggressive tax avoidance

A number of measures proposed to deter generation and use of unaccounted money

All services to attract service tax except those in the negative list

Central Excise and Service Tax being harmonized

Standard rate of excise duty raised from 10 per cent to 12 per cent; service tax rates raised from 10 per cent to 12 per cent; no change in peak customs duty of 10 per cent on non-agricultural goods

Relief in indirect taxes to sectors under stress; agriculture, infrastructure, mining, railways, roads, civil aviation, manufacturing, health and nutrition, and environment get duty relief

Certain cigarettes and bidis attract higher excise duty; large cars attract higher customs duty

Excise imposed on unbranded jewellery also; measures to minimize impact on small artisans and goldsmiths; branded silver jewellery exempted from excise duty

Net gain of Rs.41,440 crore due to taxation proposals

Total expenditure budgeted at Rs. 14,90,925 crore; plan expenditure at Rs. 5,21,025 crore 18 per cent higher than 2011-12 budget; non plan expenditure at Rs. 9,69,900 crore

Fiscal deficit targeted at 5.1 per cent of GDP, as against 5.9 per cent in revised estimates for 201112

Central Government debt at 45.5 percent of GDP as compared to Thirteenth Finance Commission target of 50.5 percent

Medium-term Expenditure Framework Statement to be introduced; will set forth 3-year rolling target

http://www.ndtv.com/article/india/union-budget-2012-highlights-186645

New Delhi: Finance Minister Pranab Mukherjee presented the Union Budget for the year 2012-13, his seventh. At the very beginning of his speech Mr Mukherjee said that a "year of recovery interrupted" meant that it was time to take tough decisions. The idea ahead of the budget was that fiscal deficit needed to be controlled by cutting subsidies and raising taxes. The finance minister has raised taxes and promised cuts in subsidies. Here are the highlights of the Budget. Income tax exemption limit raised to Rs.2 lakh to provide relief of Rs.2,000 for all assessees; 20 per cent tax on income over Rs.10 lakh, up from Rs.8 lakh. Deduction of up to Rs.10,000 from interest from savings bank accounts. Defence to get Rs.1.93 lakh crore during 2012-13. Service tax rate raised from 10 per cent to 12 per cent to bring in Rs.18,660 crore. Number of proactive steps taken on black money (stashed away abroad); information has started flowing in, prosecution to be initiated; White Paper in current session. No change in corporate taxes but measures to enable them better access funds. Withholding tax on external commercial borrowings reduced from 20 per cent to five per cent for power, airlines, roads, bridges, affordable houses and fertiliser sectors. National Skill Development Fund allocated Rs.1,000 crore. Four thousand residential quarters to be constructed for paramilitary forces with an allocation of Rs.1,185 crore. National Population Register to be completed in two years. Excise duty raised from 10 to 12 per cent. Cinema industry exempted from service tax. Branded silver jewellery fully exempt from excise duty. Customs duty on warning systems/track upgrade equipment for railways reduced from 10 per cent to 7.5 per cent. Import duty on equipment for iron ore mining reduced from 7.5 to 2.5 per cent. Allocation of Rs.200 crore for research on climate change. Irrigation and water resource company to be operationalised. National mission on food processing to be started in cooperation with state governments.

Integrated Child Development Scheme to be strengthened and restructured with allocation ofRs.15,850 crore. Allocation of Rs.14,000 crore for rural water supply and sanitation. Infusion of Rs.15,888 crore in public sector banks, regional rural banks and NABARD in 2012-13. Infrastructure will require Rs.50 lakh crore in 12th Plan, half of this from the private sector. Completion of highway projects 44 per cent higher than in previous fiscal. External commercial borrowing of up to $1 billion permitted for airline sector. External commercial borrowings permitted to low-cost housing sector. From 2012-13, full subsidies for providing food security; in other sectors to the extent the economy can bear this. Hope to raise Rs.30,000 crore from disinvestments. New equity savings scheme to provide for income tax deduction of 50 per cent for those who invest Rs.50,000 in equity and whose annual income is less than Rs.10 lakh. Corporate market reforms to be initiated. Bills on micro-finance institutions, national land bank and public debt management among those to be introduced in 2012-13. Addressing malnutrition, black money and corruption in public life among five priorities in year ahead. India's inflation structural, driven largely by agricultural constraints. Current account deficit 3.6 per cent in 2011-12; this put pressure on exchange rate. Growth in 2012-13 estimated at 7.6 per cent; expect inflation to be lower. Better monitoring of expenditure on government schemes. Fiscal 2011-12 year of recovery interrupted; reality turned out to be different. GDP growth in 2011-12 estimated at 6.9 per cent; had to battle double digit inflation for two years. Good news: agriculture and services continued to perform well; economy is now turning around; recovery in core sectors. Now at juncture where it is necessary to take hard decisions; have to accelerate pace of reforms.

http://www.dnaindia.com/money/column_budget-2012-being-more-honest_1663446
The hype on growth, governance and inclusion met a severe reality check last year as inflation stayed high and growth fell. The Budget this year is more sober and realistic. More of its projections may be met. For example, not covering subsidies blew a big hole in last years fiscal deficit target which came in at 5.9% instead of the targeted 4.6%. This year provision is made for subsidies, and moreover they are capped at 2% of GDP.The Government had tried to pass the blame for its fiscal slippage to the foreign hand (oil price hikes), but measures like budgeting in subsidies, or capping them and passing on price hikes can reduce slippage. Last year they chose to ignore the danger signs on the oil front. This year the dangers are reduced and they have provided for them.

The cap is also important for credible fiscal consolidation. The deficit in itself is not larger than the economy can bear, but the tendency of the Government to commit to non-large discretionary expenditures without the means of financing was frightening. Now at least there some limit will be attempted on this tendency. There is also a recommitment to the Fiscal Responsibility and Budget Management (FRBM). Article continues below the advertisement... But laws in themselves are not adequate to deliver without pragmatic measures to make improvement feasible. As always the budget promises improvements in governance, but these do not seem to be materialising. So incentives have been included for the private sector to deliver. These have been well-designed to address current bottlenecks. Examples are tax breaks, easier financing, and custom duty exemptions for infrastructure. A crying need was to kickstart private investment.Here lowering withholding tax for 3 years in a range of critical areas will encourage investment in order to make use of the concessions available now, even as the concessions will not remain as a permanent drain on government revenues. Investment linked capital deductions have also been enhanced. Partially reversing the cut in standard excise duty rate by 2%, aligning the service tax to the excise rate of 12%, increasing the coverage of the service tax and of minimum alternate tax, are the right way to improve government revenueby keeping rates low and broadening the tax base. Social justice is met by the higher exemption limits and adjustment of lower tax slabs, since inflation had eroded the real value of incomes. The 20% cut in securities transaction tax (STT) on cash delivery is also in the right direction since the STT was too high and created distortions between the spot and derivative markets. Negatives are the proposed retrospective amendment of tax laws violates a contract, since private decisions are made on existing laws. A prospective change would be all right. Also subsidies are capped but the mechanism by which they are to be reduced is not put in place. The various budget statements on new schemes and expenditures must be taken with a pinch of salt. Last year its total capital expenditure fell by about 4%, but that has not stopped the government from promising a 30% rise this year. Normally, the government is unable to restrict its consumptionand cuts are then made on capital expenditure. The medium term expenditure framework proposed as a part of the revised FRBM giving three year rolling targets for expenditure indicators with provision for monitoring, may be useful especially if measures to increase, or at least protect, the share of capital expenditure are included.

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