Finance Minister Pranab Mukherjee presented Union Budget 2012, the 81st Budget in India
Below are the key highlights of Union Budget 2012:
Approach to the Budget:
1. GDP is estimated to grow by 6.9% in 2011-12, after having grown at 8.4% in preceding two years.
2. Key reasons for the interruption of Indian economy: euro zone crisis, economy, political turmoil in Middle East and rise in crude oil price.
3. Growth moderated due to tight monetary policy.
4. Economy is turning around as core sectors and manufacturing show signs of recovery.
5. At this juncture, hard decision is needed to improve macroeconomic environment and strengthen domestic growth drivers.
6. Twelfth Five Year Plan to be launched with the aim of "faster, sustainable and more inclusive growth".
Overview of the economy:
1. GDP growth estimated at 6.9% in real terms in 2011-12.
2. Headline inflation expected to moderate further in next few months and remain stable thereafter.
3. Current account deficit at 3.6% of GDP for 2011-12.
4. Deterioration in fiscal balance in 2011-12 due to slippages in direct tax revenue
5. and increased subsidies.
5. and increased subsidies.
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7. Fiscal deficit for 2012-13 pegged at
Subsidies:
1. Efforts to keep central subsidies under 2% of GDP in 2012-13. Over next 3 year, to be further brought down to 1.75%.
2. Subsidies related to administering the Food Security Act will be fully provided for.
2. Subsidies related to administering the Food Security Act will be fully provided for.
3. A mobile-based fertilizer management system (recommended by the task force headed by Nandan Nilekani) has been designed to provide end-to-end information on movement of fertilisers and subsidies. (Nation-wide rollout during 2012)
4. State-owned oil marketing companies have launched LPG transparency
5. Portals to improve customer service and reduce leakage. Endeavour to scale up and roll out Aadhaar enabled payments for various government schemes in at least 50 districts within next 6 months.
4. State-owned oil marketing companies have launched LPG transparency
5. Portals to improve customer service and reduce leakage. Endeavour to scale up and roll out Aadhaar enabled payments for various government schemes in at least 50 districts within next 6 months.
Tax Reforms:
1. Direct Tax Code (DTC) Bill to be enacted at the earliest after expeditious examination of the report of the Parliamentary Standing Committee.
2. Drafting of model legislation for the Centre and State Goods Services Tax in concert with States is under progress.
3. GST network to be set up as a National Information Utility and to become operational by August 2012.
2. Drafting of model legislation for the Centre and State Goods Services Tax in concert with States is under progress.
3. GST network to be set up as a National Information Utility and to become operational by August 2012.
Disinvestment Policy:
For 2012-13, 30,000 crore to be raised through disinvestment.
Foreign Direct Investment:
1. Efforts are on to arrive at a broad-based consensus to allow FDI in multi-brand retail upto 2. 51%.
Direct Taxes:
1. Exemption limit for the general category of individual taxpayers proposed to be enhanced from 1, 80,000 to 2, 00,000.
2. Upper limit of 20% tax slab proposed to be raised from 8 lakh to 10 lakh.
3. Proposal to allow individual tax payers, a deduction of up to 10,000 for interest from savings bank accounts.
4. Senior citizens not having income from business proposed to be exempted from payment of advance tax.
2. Upper limit of 20% tax slab proposed to be raised from
3. Proposal to allow individual tax payers, a deduction of up to
4. Senior citizens not having income from business proposed to be exempted from payment of advance tax.
Financial Sector:
1. Rajiv Gandhi Equity Saving Scheme to allow for income tax deduction of 50% to new retail investors (whose annual income is below 10 lakh), who invest upto 50,000 directly in equities. The scheme will have a lock-in period of 3 years.
Legislative Reforms:
1. 15,888 crore capital support proposed to public sector banks and financial institutions.
2. Official amendment to "The Pension Fund Regulatory and Development Authority Bill, 2011", "The Banking Laws (Amendment) Bill, 2011" and "The Insurance Law (Amendment) Bill, 2008" to be moved in this Budget session.
Infrastructure and Industrial Development:
1. During 12th Five Year Plan period, investment in infrastructure to go up to 50 lakh crore, half of which is expected from private sector.
2. Tax free bonds of 60,000 crore to be allowed for financing infrastructure projects in 2012-13. It was 30,000 crore in 2011-12.
4. IIFCL has put in place a structure for credit enhancement and take-out finance for easing access of credit to infrastructure projects.
2. Tax free bonds of
4. IIFCL has put in place a structure for credit enhancement and take-out finance for easing access of credit to infrastructure projects.
Power and Coal:
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1. Coal
Indirect Taxes:
1. Standard rate of excise duty to be raised from 10% to 12%, merit rate from 5% to 6% and the lower merit rate from 1% to 2% with few exemptions.
2. Excise duty on large cars also proposed to be enhanced.
1. Standard rate of excise duty to be raised from 10% to 12%, merit rate from 5% to 6% and the lower merit rate from 1% to 2% with few exemptions.
2. Excise duty on large cars also proposed to be enhanced.
3. Indirect taxes estimated to result in net revenue gain of 45,940 crore.
Civil Aviation:
1. Tax concessions proposed for parts of aircraft and testing equipment for third party maintenance, repair and overhaul of civilian aircraft.
1. Tax concessions proposed for parts of aircraft and testing equipment for third party maintenance, repair and overhaul of civilian aircraft.
2. External Commercial Borrowing (ECB) to be permitted for working capital requirement of airline industry for a period of one year, subject to a total ceiling of US $ 1 billion.
Housing Sector:
1. Various proposals to address the shortage of housing for low income groups in major cities and towns including allowing ECB for low cost housing projects and setting up of a credit guarantee trust fund.
Education:
1. To ensure better flow of credit to students, a Credit Guarantee Fund proposed to be set up.
2. For 2012-13, 25,555 crore provided for RTE-SSA representing an increase of 21.7 per cent over 2011-12.
2. For 2012-13,
Financial Inclusion:
1. Out of 73,000 identified habitations that were to be covered under "Swabhimaan"campaign by March, 2012, about 70,000 habitations have been covered. Rest likely to be covered by March 31, 2012.
2. Out of 82 Regional Rural Banks in India
Source : Moneycontrol.com