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BUDGET 2012
4/8/12

BY: SAMRIDHI TRIKHA

Finance Minister Pranab Mukherjee presented the Union Budget for the year 2012-13 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.
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But this time there is good news in the detail. With agriculture and services continuing to perform well, India's slowdown can be attributed almost entirely to weak industrial growth. A numerous indicators pertaining to this period suggest that the economy is now turning around. There are signs of recovery in coal, fertilisers, cement and electricity sectors. These are core sectors that have an impact on the entire 4/8/12

Budget highlights

Income tax exemption limit raised toRs.2 lakh to provide relief ofRs.2,000 for all assessees; 20 per cent tax on income overRs.10 lakh, up fromRs.8 lakh.

The biggest beneficiaries would be people having income between 800,001 to 999,999 per annum. They move from the 30 per cent slab to the 20 per cent slab. The basic slab for income tax has been proposed to be raised to Rs 2 lakhs from the 4/8/12

 Deduction

of up toRs.10,000 from interest from savings bank accounts

This will help a large number of small taxpayers with salary incomes up toRs.5 lakh and interest from savings bank accounts up to Rs. 10,000 as they would not be required to file income tax returns. It has also been proposed to allow deduction of Rs. 5000 for preventive health check up.
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Defence to getRs.1.93 lakh crore during 2012-13.

Which is more than 17% hike in India's defence expenditure for the financial year 2012-13, as the country looks to off-set growing Chinese dominance in Asia, barely weeks after the country's northern neighbour announced a whopping 11.2% increase in its militarybudget
Service

tax rate raised from 10 per cent to 12 per cent to bring in an additional revenue ofRs.18,660 crore The government has estimated to

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 Number

of proactive steps taken on black money (stashed away abroad); information has started flowing in, prosecution to be initiated. change in corporate taxes but measures to enable them better access funds. There will be no increase from 35 percent to 40 percent in corporate tax rate, however, there might be changes in slabs of income tax for other categories of taxpayers

No

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 Withholding

tax on external commercial borrowings reduced from 20 per cent to five per cent for power, airlines, roads, bridges, affordable houses and fertilizer sectors government allowed players in power, aviation, roads and low-cost housing projects to go for external commercial borrowings (ECBs), as domestic borrowings turn costly under the high

The

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 National

Skill Development Fund allocatedRs.1,000 crore

The finance minister also provided tax benefits to manufacturers for costs incurred in talent development and exempted vocational training institutions from service tax. The government has set a target of imparting skills training to 500 million people by 2022.
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 Four

thousand residential quarters to be constructed for paramilitary forces with an allocation ofRs.1,185 crore. Population Register to be completed in two years.

National

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Excise duty raised from 10 to 12 per cent. industry exempted from service tax silver jewellery fully exempt from excise duty

Cinema

Branded

duty on warning systems/track upgrade equipment for railways reduced from 10 per 4/8/12

Customs

Allocation Irrigation

ofRs.200 crore for research on climate change. and water resource company to be operationalised

To mobilize large resources to fund irrigation projects, a Government owned Irrigation and Water Resource Finance Company is being operationalised. The Company would 4/8/12 start its operations in 2012-13 by

National

mission on food processing to be started in cooperation with state governments

The food processing sector has been growing at an average rate of over 8 per cent over the past 5 years. In order to have a better outreach and to provide more flexibility to suit local needs, it has been decided that a new 4/8/12

 Integrated

Child Development Scheme to be strengthened and restructured with allocation of Rs.15,850 crore

In this context, Integrated Child Development Services (ICDS) scheme is being strengthened and re-structured. For 2012-13, an allocation of 15,850 crore has been made as against 10,000 crore in 2011-12. This amounts to an increase of over 58 per cent National Programme of Mid Day Meals in Schools has enhanced enrolment, retention, attendance, and also helped in improving nutrition levels among children. In 2012-13, it is 4/8/12

 Allocation Infusion

ofRs.14,000 crore for rural water supply and sanitation ofRs.15,888 crore in public sector banks, regional rural banks and NABARD in 2012-13 will requireRs.50 lakh crore in 12th Plan, half of this from the private sector of highway projects 44 per cent higher than in previous fiscal.

Infrastructure

Completion
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 Hope New

to raiseRs.30,000 crore from disinvestments. equity savings scheme to provide for income tax deduction of 50 per cent for those who investRs.50,000 in equity and whose annual income is less thanRs.10 lakh. market reforms to be initiated.

Corporate Bills

on micro-finance institutions, national land bank and public debt management 4/8/12 among those to be introduced in 2012-13.

 Addressing

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malnutrition, black money and corruption in public life among five priorities in year

 Current

account deficit 3.6 per cent in 2011-12; this put pressure on exchange rate.

The current account deficit as a proportion of GDP for 2011-12 is likely to be around 3.6 per cent. This, along with reduced net capital inflows in the second and third quarters, put pressure on the exchange rate
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 Growth

in 2012-13 estimated at 7.6 per cent; expect inflation to be lower.

Average inflation is expected to be lower next year. Also the current account deficit is expected to be smaller, aided by improvement in domestic financial savings.
Better GDP

monitoring of expenditure on government schemes.

growth in 2011-12 estimated at 6.9 per cent; had to battle double digit 4/8/12 inflation for two years.

Agriculture

and services continued to perform well; economy is now turning around; recovery in core sectors. at juncture where it is necessary to take hard decisions; have to accelerate pace of reforms.

Now

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must address effectively in the ensuing fiscal year.

Focus

on domestic demand driven growth recovery; conditions for rapid revival of high growth in private investment;

Create

supply bottlenecks in agriculture, energy and transport sectors, particularly in coal, power, national highways, railways and civil 4/8/12

Address

Thank You
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