ANALYSIS OF UNION BUDGET 2012-13

PRESENTED BY SOP 2A

Overview
Released on March 16th of this year. Income up to Rs 2 lakhs would be tax free. From Rs 2 lakhs to Rs 5 lakhs taxed at 10%. From Rs 5 to Rs 10 lakhs taxed at 20%. Above Rs 10 lakhs taxed at 30%. Interest from savings account up to Rs 10000 would be tax free. Deduction of Rs 5000 for expenses incurred on preventive health check

Senior Citizens have been exempted from filing advance tax. Service Tax has been hiked from 10% to 12%. An excise duty of 12% has been imposed on branded retail garments. The customs duties on the silver and gold prices have gone up to 4% from 2%. The excise duty on big cars, which at present attracts duty based on their engine capacity and length, has gone up from 22 percent to 24 percent.

Expected to bring down the price of mobile phones. Might reduce the rate of interest on educational loans

CHANGE IN FISCAL POSITION

Main aim is to bring down the fiscal deficit measures adopted such as incremental of service tax and other indirect taxes Provisions for subsidies provided The budget has raised the excise, customs and service tax rates in general

Contd
Use of pan card Disinvestment policy FDI in retail Financial reforms Capitalization of Banks and Financial Holding Company Regional Rural Banks

WHAT WOULD BE EXPENSIVE NOW:

Customs Duty has been raised on large cars .it would attract 27% duty. Customs duty on the import of large SUVs. Car would be an expensive thing now. Customs Duty on GOLD and PLATINUM raised . Basic custom duty on bicycles raised to 30 % Custom duty on gold bars coins raised to 4%. Increased duty on some cigarette increased. Eating out and airlines would also be expensive.

Exempted From Customs Duty:

Excise duty on all processed food brought down to merit rate of 6 per cent Coal, LNG exempt from customs duty Thermal Power companies exempted from customs. Iron ore Machinery parts cut duty to 2.5% Airline parts exempted from basic custom duty. Import of fertilizer equipment fully exempted from customs duty for three years. Full exemption from basic customs duty for equipment meant for road and highway construction. Exemption of uranium for generation of electricity for two years. Excise duty on handmade and semi-mechanized matches reduced from 10 to 6 per cent Solar energy exempted from customs duty.

THE IMPACT ON INFLATION

Overall tax collections from excise, customs and service tax are to increase, which will have a bearing on the price level. Though this would be productspecific, the general impact on inflation will be in the upward direction, especially if we add the inflation being caused by the recent freight increases. Inflation expected to being stable for next few months

FOOD INFLATION
Subsidies for administering the Food Security Act provided Higher primary food inflation drives inflation upwards Decelerating non-food primary inflation suggests easing of cost pressure

CURRENT ACCOUNT DEFICIT

The current account deficit as a proportion of GDP for 2011-12 is likely to be around 3.6 per cent. It is expected that the current account deficit to be smaller, aided by improvement in domestic financial savings So basic custom duty on 99.5 %gold & platinum increased from 2 to 4%. Non-standard gold- 5% to 10%.

INFRASTRUCTURE DEVELOPMENT

Increased investment in infrastructure through a combination of public investment and public private partnerships (PPP) Viability Gap Funding (VGF) under the Scheme for Support to PPP in infrastructure Rural development fund of 20,000 Cr. Allocation of the Road Transport and Highways Ministry enhanced by 14 % to 25,360 cr Full exemption from import duty on specified equipment imported for road construction

Infrastructure Development(cont)
2200cr for Delhi metro rail. Encourage investment in infrastructure sector by raising of FII investment limit in long-term infrastructure bonds, corporate bonds and government securities. For 2012-13,tax-free bonds of 60,000 cr were announced for financing infrastructure projects.

AGRICULTURE

Increases outlay by 18%.

RKVY increased to Rs 9217crore Bringing Green Revolution to East India (BGREI)

National mission for protein supplement Agriculture credit Agricultural Research Agricultural Irrigation National mission on food processing

Remaining activities to be merged into following missions in 12th 5 year plan:

National

food security mission National mission on sustainable agriculture including micro irrigation National mission on oil seeds and palm National mission on agricultural extension & technology National horticulture mission

INDUSTRY
National manufacturing policy Power & coal Civil aviation Textiles Micro, small and medium enterprises Public procurement policy Housing sector

GROWTH
Growth is estimated to be 7.5-8% Revival for agricultural sector Efforts to cut subsidies Push investment Recast the entire regien

Sectoral Impact Snapshot

Cement - INCREASING Fertiliser - INCREASING FMCG - INCREASING Infrastructure INCREASING Metals & Mining - INCREASING Mid Caps - INCREASING Oil & Gas STABLE Auto - STABLE IT Services - STABLE Media & Entertainment - STABLE Pharma- DECREASING

Employment generation
Rajiv Gandhi Swarozgar Yojana restructured into National Rural Livelihood Mission Prime Ministers Employment Generation Programme Changes in community employment scheme Skill development programmes Indian railway eye on hiring 1 lakh employee Action plans of jobs

GOVERNANCE
UID-Aadhaar Enrolment of 20 crore persons completed under UID mission. Adequate funds to be allocated to complete enrolment of another 40 crore persons. Black Money Proposal to lay a White Paper on Black Money in current session of Parliament. Public Procurement Legislation Bill regarding Public Procurement Legislation to be introduced in the Budget Session of the Parliament. Legislative measures for strengthening anticorruption framework are at various stages of enactment.

NEW INITIATIVES- GST &DTC

Tax proposals for 2012-13 mark progress in the direction of movement towards DTC and GST. DTC rates proposed to be introduced for personal income tax. Exemption limit for the general category of individual taxpayers proposed to be enhanced from `1,80,000 to `2,00,000 giving tax relief of `2,000.

DTC Bill to be enacted at the earliest after expeditious examination of the report of the Parliamentary Standing Committee. GST network to be set up as a National Information Utility and to become operational by August 2012.