BUDGET 2011 HIGHLIGHTS

SOCIAL SECTOR

– Plan to spend Rs 1.6 lakh crore on social projects, up 17 percent
– 11th plan expenditure up 100% in nominal terms
– India Microfinance Equity Fund of Rs 100 crores to support small MFIs
– NABARD to be given funds for cooperatives financing handloom sector
– To provide Rs 5,000 cr to SIDBI to meet priority lending targets
– To allocate Rs 100 cr to SIDBI for women
– NREGI wage rates indexed to CPI
– Aanganwadi workers honorarium increased to Rs 3000 from Rs 1500. Helpers salary also doubled up from 750 to 1500.
– Close to finalising food security bill this year
– Education allocation increased to Rs 52,057 cr, increase of 24 percent
– Old age pension age-limit to go down from 65 to 60, for people above 80 Rs 200 to Rs 500/-.
– Banks to cover 20,000 villages for opening accounts in FY12
– Rs 500 crore more for national skill development fund
– To distribute 1 million UID cards per day shortly

AGRICULTURE SECTOR

– Agriculture sector has shown significant rebound Growth 5.4%
– Allocation for farm development raised to Rs 7,860 cr
– 3% (increased from 2%) Interest subvention to farmers who pay loans in time
– Cold storage projects classified as infrastructure sector
– Rs 300 cr provided to promote pulses cultivation in rain-fed areas, another Rs 300 cr to promote farm product cultivation
– Farm credit flow raised to Rs 4.75 lakh crore
– To classify capex of fertiliser sector into infrastructure

INDUSTRIAL & FINANCIAL SECTOR

– Industrial Growth 8.1%
– Exports up 9.4%
– Economy to grow at 9 percent, plus or minus 0.25 percent in 2012
– To permit SEBI registered mutual funds to access foreign funds directly
– FIIs allowed to invest in Mutual Funds; unlisted bonds with minimum lock in period of 3 yrs
– To provide Rs 2000 crore for warehousing facilities (to benefit TCI) and an (equal amount for manufacturing facilities
– Interest subvention limit raised to housing upto Rs 25 lakh from Rs 20 lakhs
– FIIs allowed to invest in 5-year unlisted bonds
– To allow Rs 30K crore tax free bonds for railways, NHAI
– Special incentives for hybrid vehicle makers if manufacturing done in India

FISCAL

– Fiscal deficit down at 5.1% from 5.4%. Revenue deficit for FY11 seen at 3.4%. Fiscal deficit seen at 4.1% in FY 13, 3.5% in FY 14
– Current account deficit poses concerns
– Gross Tax Receipts at Rs 9.32 lakh crore, up 25%
– Growth rate of services sector expected at 9.3%
– Total expenditure estimates up 13.4%
– Exports have grown at 29.4%
– India expected to grow at 9 pct in FY 12
– States to cut down fiscal deficit to 3 percent of Gross State GDP by 2014
– Govt to keep up tempo of disinvestment process
– Retain divestment target of Rs 40,000 crore for FY12
– Govt committed to retain 51 percent stake in PSUs
– New series of coins with new rupee symbol to be introduced

REFORMS

– To introduce public debt management bill next fiscal
– DTC to be effective April 1, 2012
– Direct cash transfer for kerosene, fertiliser & LPG subsidy by April 2012
– Govt. considering Malegam report
– Plan to introduce Companies Bill in current session
– Self-assessment in customs for exporters & importers
– Have set up dedicated cell on transfer policy monitoring
– Special Component plans to be specifically earmarked in the budget
– Allocation to Department of Justice increased 3 fold to Rs 3000 cr
– GST Bill to be introduced in parliament this year
– New bank licence guidelines this year

TAXATION

– Tax limit raised from Rs 1,60,000 to Rs 1,80,000. Special sops for Snr citizen.
– A new scheme to be introduced for refund of service tax on lines of drawback of duties
– New category of very senior citizens for those above 80 years introduced, exemption limit Rs 5 lakh. Senior citizens exempt up to Rs 2.5 lakh
– Sugam – new tax return for small businesses
– MAT rate hiked to 18.5% from 18%. Special Economic Zones to come under MAT
– Reduce surcharge of 7.5 percent for domestic companies to 5 percent
– Tax sops of Rs 20,000 on Infra Bonds extended for one year
– Service tax retained at 10%.
– Central excise duty rate unchanged at 10%
– Service tax on hotel accommodation above Rs 1500 per day
– AC restaurants serving liquor under service tax net
– AC hospitals with more than 25 beds under service tax
– Legal representation for businesses under service tax
– Domestic travel to pay Rs 50 service tax, Rs 250 on international travel
– Service Tax to add another 4000 cr revenue gains
– Service tax net extended to include health check-ups
– Low withholding tax of 5% for notified infra funds
– To impose mandatory levy of 10 pct on branded garments
– Base rate on excise duty raised to 5% from 4%
– Direct Tax proposals net loss estimated at Rs 11,500 crore
– Foreign unit dividend tax rate cut to 15% for Indian companies
– Surcharge on domestic companies reduced to 5 % from 7.5%
– No new tax exemption limits for women
– MAT rate hiked from 18% to 18.5%
– Relaxation in e-filing norms for small tax payers

The above highlights are based on Budget speech and may need to be amended after reading the fine print in the Finance Bills.

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