What are the expectations with Budget 2011 you have?

Mar 4 09:45 2011 Pooja Infobase Print This Article

While presenting Budget 2011, the Union Finance Minister Mr. Pranab Mukherjee stressed on agriculture and infrastructure growth

During the Budget 2011-12 speech on Monday,Guest Posting February 28, 2011, Finance Minister Pranab Mukherjee declared a number of actions to be taken in the forthcoming financial year. Initiatives will also be taken to stimulate demand for information technology in the domestic market.    India has courageously handled the worldwide economic meltdown and the economy of India is currently assumed to be in an improved condition in comparison to its situation a year back. The country underwent serious economic instability in the year 2009 and a significant slump in the cultivation sector because of interruption in rainy season.The principal challenges before the Government of India is to ensure all-inclusive growth. The idea is to speed up economic recovery and make the growth procedure smoother. The Central Government is setting roadmaps for food security and overcoming the malfunctioning of Public Distribution System (PDS) of the government. Through the implementation of budget reforms, the Central Government is also planning to undertake new projects and provide better governance.High inflation is a significant problem in India and the Finance Minister has adeptly dealt with it by recommending few far-reaching measures.Budget 2011 HighlightsGiven below are the prominent highlights of Budget 2011:Taxes

  • Income tax exemption limit increased to Rs.180,000 from Rs.160,000 for individual tax payers
  • Standard rate of excise duty kept at 10%; no alteration in rates of CENVAT
  • Citizens above 80 years to have income tax exemption limit of Rs 5 lakh.
  • For senior citizens, the age of eligibility lowered to 60 years and IT exemption limit increased to Rs.2.5 lakh.
  • A fresh modified income tax return form “Sugam” to be launched for small taxpayers.
  • To decrease surcharge on domestic companies to 5% from 7.5%
  • Direct tax recommendations to result in 115 billion rupees of revenue loss
  • To hike minimum alternate tax (MAT) to 18.5% from 18%
  • Customs and excise recommendations to lead to net revenue increase of Rs.73 billion
  • Rate of service tax held at 10%
  • Insignificant 1% central excise duty on 130 commodities coming into the tax net. Essential food items, fuel, gems, and jewelry made of gold and silver will be relieved from taxation.
  • Duty for iron ore export increased to 20%
  • Central customs duty on farming equipments lowered to 4.5% from 5%.
  • The highest rate of customs duty kept at 10%, taking into consideration the worldwide financial circumstances.
  • Service tax on air trip raised by Rs 50 for domestic tours and Rs. 250 for international tours in economy class. On upper categories, it will be 10% straight.
  • Service tax broadened to include hotel stay over Rs.1,000 per day, air conditioned restaurants offering hard drinks, some groups of pathological tests and hospitals.
  • Art forms free from customs while imported for display in establishments that are operated by the states; this currently will be available to privately held organizations.
  • E-filing of TDS (tax deducted at source) steadied; basic forms to be launched for small taxpayers.
Subsidies and Grants (include direct cash subsidy on fertilizers and fuel by March, 2012)
  • Food subsidy bill in 2011-12 projected at Rs. 605.7 billion
  • Subsidy bill in 2011-12 projected at Rs.1.44 trillion
  • Fertilizer subsidy bill in 2011-12 projected at Rs. 500 billion
  • Modified food subsidy bill for 2010-11 at Rs.606 billion
  • Petroleum subsidy bill in 2011-12 projected at Rs.236.4 billion
  • Amended fertilizer subsidy bill for 2010-11 at Rs. 550 billion
  • State-operated oil vendors to be supplied with a cash subsidy of Rs.200 billion in 2011-12
  • Modified petroleum subsidy bill in 2011-12 at Rs.384 billion
Fiscal Deficit 
  • Fiscal deficit projected at 5.1% of Gross Domestic Product in 2010-11
  • Fiscal deficit estimated at 4.6% of Gross Domestic Product in 2011-12
  • Fiscal deficit projected at 3.5% of Gross Domestic Product in 2013-14
Inflation and Growth
  • Inflation estimated to be less in the financial year 2011-12
  • Economy anticipated to develop at 9% in 2012, up or down 0.25%
Expenditure
  • Planned spending expected at Rs. 4.41 trillion in 2011-12, plus 18.3 percent
  • Overall spending in 2011-12 at Rs.12.58 trillion
Revenue
  • Non-tax revenue estimated at Rs.1.25 trillion in 2011-12
  • Gross tax receipts predicted at Rs.9.32 trillion in 2011-12
  • Tax-to-GDP ratio at 10.4% in 2011-12; at 10.8% in 2012-13
  • Corporate tax revenue at Rs.3.6 trillion in 2011-12
  • Factory gate levies at Rs.1.64 trillion in 2011-12
  • Customs receipts at Rs.1.52 trillion in 2011-12
  • Revenue increase from indirect tax plans at Rs.113 billion in 2011-12
  • Service tax income estimated at Rs.820 billion in 2011-12
  • Service tax modifications to lead to net revenue hike of Rs.40 billion in 2011-12
Policy Reforms
  • To promote infrastructural growth with tax-exempt bonds of Rs.300 billion
  • To generate infrastructure debt funds
  • To allow Securities and Exchange Board of India (SEBI) listed mutual funds to get contributions from international investments
  • Food security bill to be brought in this year
  • Public debt bill to be tabled in parliament shortly
  • Enhanced the cap of foreign institutional investment (FII) in 5-year corporate bonds for infrastructure investment by $20 billion
  • Establishing independent debt management office; Public debt bill will be tabled in Parliament shortly
  • Bills on pension funds, insurance, and banking to be passed.
  • New Companies Bill will be tabled in present session
Disinvestment
  • Disinvestment is predicted at Rs.400 billion in 2011-12
  • Government dedicated to keeping 51% stake in public sector enterprises.
Agriculture
  • Agricultural development necessary for growth: Green Revolution expected to take place in eastern India.
  • Elimination of supply blockages in the food industry will be in spotlight in 2011-12
  • 3% interest subsidy to cultivators in budget 2011-12
  • To enhance extent of credit influx to agriculture industry to Rs.4.75 trillion
  • Capitalization of National Bank for Agriculture and Rural Development (NABARD) of Rs.30 billion rupees in a gradual way
  • Cold storage chains to receive infrastructure grade
  • Dynamic plans for new fertilizer scheme for urea
  • Palm oil estate of 60,000 hectares to receive Rs.3 billion
  • All-inclusive strategy on additional improvement of PPP (public-private partnership) prototype.
  • Food storage facility to be enhanced - 15 more mega food parks to be established in 2011-12; of 30 approved in past fiscal, 15 have already been established.
  • Plan to enhance nutritional security.
  • Cultivators to get access to credit at reasonable costs
  • Plans to speed up output of fodder
Sector Spending
  • Amount  of rural infrastructure development fund enhanced to Rs.180 billion rupees in 2011-12
  • To assign over Rs.1.64 trillion to defense sector in 2011-12
  • To assign Rs.520.5 billion for the education sector
  • To supply Rs.201.5 billion capital inflow in state-operated banks in 2011-12
  • To increase health industry funding to 267.6 billion rupees
Borrowing
  • Gross market borrowing at Rs.4.17 trillion for 2011-12
  • Net market borrowing at Rs.3.43 trillion, showing a slump from Rs.3.45 trillion in 2010-11
  • Modified gross market borrowing at Rs.4.47 trillion for 2010-11
Finance Minister on Economy
  • Fiscal integration has been inspiring.
  • Food inflation still is a critical issue
  • Current account shortfall circumstances create some worries
  • Must make sure that private sector investment is maintained
  • The economy has indicated significant flexibility.

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