Finance Minister Pranab Mukherjee presented Congress-led United Progressive Alliance (UPA) Govt's Budget 2012-13 his 7th in the Lok Sabha on Friday March 16,2012
TMC and DMK's Comments on the Budget
"In one word, it's a tolerable Budget," said the Trinamool's Sudip Bandopadhyay. The DMK was more positive. "We're happy. It's a pro- development Budget," said its TR Baalu.
Congress leader Rahul Gandhi offered only this short assessment: "It's a good Budget."
Gurudas Dasgupta of the Left said, "The Budget is completely ineffective. The tax system is regressive."
Five Best of Budget 2012-12
1) Negative list for services: The budget has introduced a negative list of services, which will not be subject to service tax. All the rest will be taxed. Currently, only 107 specified services are taxed.
2) Subsidies at 2% of GDP: Fiscal deficit overshot the projected 4.6 percent of GDP mainly on account of higher subsidy burden. Reducing subsidies will help contain fiscal deficit.
Dr C Rangarajan, Chairman of Prime Minister's economic advisory panel told NDTV: The subsidy had gone up very high in the current year and according to the detailed number, subsidy under petroleum is Rs 43,000 crore and that means some policy decision would be taken during the year to control petroleum subsidy.
3) Tax free infra bonds: The finance minister has proposed to allow tax free bonds of Rs 60,000 crore to be issued by various government undertakings, which is double the Rs 30,000 crore assigned in the year 2011-2012. This will give a boost to the infrastructure sector that has been reeling under high interest rates and policy paralysis.
4) Foreign borrowings for low-cost housing: External commercial borrowings permitted to low-cost housing sector. External commercial borrowing of up to $1 billion permitted for airline sector.
TCA Srinivasa Raghavan, Senior Associate Editor, The Hindu Business Line says: The ECB for power and housing is a positive move... These guys need money and if you cannot give them from inside let them have from outside... it’s an option for these sectors.
Omkar Goswami, Chairman, CERG Advisory: I know of several companies who are happy to borrow even at a 3-5% premium if the ECB allows them to borrow.
5) Expansion of venture capital:
Five Worst of Budget 2012-12
1) Fiscal deficit at 5.1% of the GDP: Fiscal deficit for 2011-12 rose to 5.9 percent, much higher than 4.6 per cent promised last year. Next year’s projection is 5.1 percent. There is no roadmap for this ambitious target. Analysts had expected the deficit to be below 5%.
B Muthuraman, President, CII & Vice Chairman says: I don't know how will this happen.
2) Allocation of divestment proceeds:
3) Growth projection at 7.6%: Analysts said this is an ambitious target considering that the Indian economy is likely to grow by only 6.9% this year.
4) Subsidy payment by cash vouchers:
5) Increase in agricultural credit:
Budget Highlights
- GDP to grow by 6.9% in 2011-12
- This year’s performance disappointing
- India still among front runners in economic growth
- Monetary policy was geared towards containing inflation
- Agriculture to services performed well
- Weak growth due to industrial slowdown
- Economy now turning around
- Manufacturing on cusp of revival
- Need to improve micro-economic environment
- Expect headline inflation to moderate in the next few months and remain stable
- Agri growth at 2.5%
- External trade growth encouraging
- India has successfully achieved diversification of import and export market
- Diversification has helped overcome global slowdown
- Current account deficit at 3.6%
- Fiscal balance has deteriorated due to increase in direct tax seepages and increased subsidy
- Expect smaller fiscal deficit in the coming year
- Fiscal target under from act has been indicated
- Concept of effective revenue deficit is being brought in as a fiscal parameter
- Crude oil price to cross USD 115/barrel
- Need to take a close look at revenue expenditure particularly subsidies
- Endeavour to restrict subsidy to under 2% of GDP
- Recommendation of task force under Nandan Nilekani has been accepted
- Direct transfer of fertilizer subsidy to retailer and then on to farmer to be rolled out
- Direct transfer of kerosene subsidy pilot project in Alwar, Rajasthan
- Direct subsidy transfer to be implemented in at least 50 more districts soon
- DTC to be implemented at the earliest
- The structure of GST network has been approved EGoM
- Treasury management for CPACs has been enhanced
- Rs 30000 cr to be raised via disinvestment
- At least 51% stake will remain with the govt
- FDI in multi-band retail held in abeyance
- Treasury management for CPACs has been enhanced
- Rs 30000 cr to be raised via disinvestment
- At least 51% stake will remain with the govt
- FDI in multi-band retail held in abeyance Five focus areas this year:
- Revival of domestic consumption
- Achieve condition for revival of high growth
- Remove supply bottlenecks
- Intervene decisively to address malnutrition
- Expedite improvement in delivery systems and address black money
FM Pegs FY2012-13 Divestment Target at Rs 30,000cr
The FM has pegged the divestment target for the next financial year at Rs 30,000 crore, as against Rs 40,000 crore each in 2010-11 and 2011-12.
In the recent auction of ONGC shares, the government has garnered only Rs 13,911 crore from disinvestment in 2011-12 till date.
The sale in National Buildings Construction Corporation slated this month, the total disinvestment money this year is expected to be around Rs 14,000 crore only.
The government hoped to follow up the ONGC sale by unloading shares in Bharat Heavy Electricals Ltd (BHEL), Steel Authority of India Ltd (SAIL) and Oil India (OIL)
Govt. Debt
The Govt debt was largely domestic and stood at 66.4% of Gross Domestic Product (GDP) at the end of March 2011.This was much below the average of 99.7% of GDP for advanced economies and 85.3% for the euro area for 2010, as shown in the International Monetary Fund's Fiscal Monitor Update, Jan 2012.
I-T Exemption Limit Hiked to Rs 2 lakh
For Individual Taxpayers
The tax slabs proposed are -• Income up to Rs 2 lakh-- Nil
• Income between Rs 2 lakh to Rs 5 lakh - 10%
• Rs 5-10 lakh - 20%
• Above Rs 10 lakh - 30 %
Also interest of up to Rs 10,000 from saving accounts will be tax-deductible. And deduction of up to Rs 5,000 has been allowed for health checkups.
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