Professional Documents
Culture Documents
Swati Saxena
swati.saxena@religare.com
Pranab Mukherjee said that Indias GDP growth in 2012-13 is expected to be 7.6 per cent +/-0.25 per cent. He said that in 2011-12, Indias GDP is estimated to grow at 6.9% after having grown at the rate of 8.4% in each of the two preceding years. He said though the global crisis had affected India, it still remains among the front runners in economic growth. Mukherjee said the slowdown is primarily due to deceleration in industrial growth. Stating that the headline inflation remained high for most part of the year, the Finance Minister expressed hope that it will moderate further in the next few months and remain stable thereafter.
The Finance Minister called for a need to have a close look at the growth of revenue expenditure, particularly, on subsidies. He announced that from 2012-13 while subsidies related to food and for administering the Food Security Act will be fully provided for, all other subsidies would be funded to the extent that they can be borne by the economy without any adverse implications. He said that the Government will endeavor to restrict the expenditure on central subsidies under 2 per cent of GDP in 2012-13and over the next three years, it would be further brought down to 1.75 per cent of GDP.
Divestment Policy
The Central Public Sector Enterprises (CPSEs) are being given a level playing field vis--vis private sector with regard to practices like buy-backs and listing at stock exchange. While in 2011-12, the Government raised about Rs 14,000crore from disinvestment as against a target of Rs 40,000 crore, the Finance Minister proposed to raise Rs 30,000 crore through disinvestment in 2012-13. He said at least 51 per cent ownership and management of CPSEs will remain with the Government.
Customs duty increases from 50% to 75% on the import of some vehicle
Excise duty brought down to 6% on all processed food Cigarettes, diamonds and imported cycles become more expensive Customs duty is increased on bicycles and its parts Iodized salt, match-boxes, soya products to become cheaper Customs duty raised from 2% to 4% on standard gold Prices of Solar power lamps, LED bulbs goes down Exemption from basic customs duty for road and highway construction equipment. Rs. 15888 crore for PSU Banks' recapitalization plan for FY13. FY13 tax receipts seen up 15% , FY13 gross taxes at 10.6% of GDP.
New warehouses for food-grain stocks to be built FY13 midday meal scheme outlay at Rs 11937 crore Government to set up company to finance minor irrigation works Kisan credit cards can be used in ATMs 27% increase in funds for drinking water and sanitation of rural areas Rs 20,822 crore earmarked for National Rural Health Mission against Rs 18,115 crore this year
ECB for low cost housing projects and ECB cap raised for airlines
FM proposed to introduce the Rajeev Gandhi equity scheme for small investors Foreign loans for low cost housing projects Govt. raises foreign loan limit for aviation sector Tax-free bonds limit is increased GDP to grow at 6.9 % in budget 2012-13 Expect current account deficit to be lower next year Rs 242 crore project with World Bank assistance to improve dairy production Largest expenditure in fuel and fertilizer subsidies Food security subsidy proposed to be fully provided Direct cash subsidy for LPG and Kerosene to consumers 10% of IPO above Rs 10 crore via electronic platform.
Revision Application Authority and Settlement Commission being introduced in Service Tax for dispute resolution
Utilization of input tax credit permitted in number of services to reduce cascading of taxes Place of Supply Rules for determining the location of service to be put in public domain for stakeholders comments Study team to examine the possibility of common tax code for Central Excise and Service Tax
The Sedan lovers will be disappointed with an increase in the excise duty on large cars. Given the current economic scenario and the revenue deficit of the country, the hike in excise duty was fully anticipated. The industry will pass on the entire burden of excise duty to customers. The demand will definitely remain affected for some time, however, if the interest rates come down in near future then the revival in demand could be possible in near future.
Banking
FM proposed to provide Rs 15,888 crore for capitalization of Public Sector Banks, Regional Rural Banks and other financial institutions including NABARD. He added that a Central Know Your Customer (KYC) depositary will be developed in 2012-13 to avoid multiplicity of registration and data upkeep.
Infrastructure
Infrastructure sector will get a big boost with Rs 50,00,000 lakh crore investment announced by the Finance Minister Pranab Mukherjee in the Union Budget 2012-13. Stating that in 2011-12 tax free bonds for Rs 30,000 crore were announced for financing infrastructure projects, he proposed to double it to raise Rs 60,000 crore in 2012-13. Budget outlay has been meaningfully increased from last year and this bodes well for infrastructure mutual fund schemes that the retail investor has exposure to.
Textile Sector
The Finance Minister announced setting up of two more mega clusters, one to cover Prakasam and Guntur districts in Andhra Pradesh and other for Godda and neighboring districts in Jharkhand in addition to 4 mega handloom clusters already operationalized. He also proposed setting up of three Weavers Service Centres, one each in Mizoram, Nagaland and Jharkhand. The Minister proposed a Rs 500 crore pilot scheme in twelfth plan for promotion and application of Geo-textiles in the North East. A powerloom Mega Cluster will be set up in Ichalkaranji in Maharashtra.
Agriculture
Shri Mukherjee proposed an increase by 18% to Rs 20,208 crore in the total Plan Outlay for the Department of Agriculture and Cooperation in 2012-13. He said that the outlay for Rashtriya Krishi Vikas Yojana (RKVY) is being increased to Rs 9217 crore in 2012-13. The Finance Minister proposed to raise the target for agricultural credit to Rs 5,75,000 crore, which represents an increase of Rs 1,00,000 crore over the target for the current year. A short term RRB Credit Refinance Fund is being set up to enhance the capacity of Regional Rural Banks to disburse short term crop loans to the small and marginal farmers.Further modification of Kisan Credit Card Scheme will help farmers as it can be used at ATMs.
Irrigation
Structural changes in Accelerated Irrigation Benefit Programme (AIBP) being made to maximize the flow of benefit from investments in irrigation projects. Allocation for AIBP in 2012-13 stepped up by 13% to Rs14,242 crore. Irrigation and Water Resource Finance Company being operationalised to mobilize large resources to fund irrigation projects. A flood management project is approved by Ganga Flood Control Commission at a cost of Rs 439 crore for Kandi sub-division of Murshidabad District.
Power and Coal
Coal India Limited advised to sign fuel supply agreements with power plants, having long-term PPAs with DISCOMs and getting commissioned on or before March 31, 2015. External Commercial Borrowings (ECB) to be allowed to part finance Rupee debt of existing power projects.
Education
For 2012-13, Rs25,555 crore provided for RTE-SSA representing an increase of 21.7 per cent over 2011-12. 6,000 schools proposed to be set up at block level as model schools in Twelfth Plan. Rs 3,124 crore provided for Rashtriya Madhyamik Shiksha Abhiyan (RMSA) representing an increase of 29 per cent over BE 2011-12. To ensure better flow of credit to students, a Credit Guarantee Fund proposed to be set up.
Health
No new case of polio reported in last one year. Existing vaccine units to be modernized and new integrated vaccine unit to be set up in Chennai. Scope of Accredited Social Health Activist ASHA is being enlarged. This will also enhance their remuneration. Allocation for NRHM proposed to be increased from Rs18,115 crore in 2011-12 to Rs20,822 crore in 2012-13. National Urban Health Mission is being launched. Pradhan Mantri Swasthya Suraksha Yojana being expanded to cover Upgradation of 7 more Government medical colleges.
Fertilisers
Government has taken steps to finalise pricing and investment policies for urea to reduce Indias import dependence in urea .
Transport: Roads and Civil Aviation
Target of covering a length of 8,800 kilometre under NHDP next year. Allocation of the Road Transport and Highways Ministry enhanced by 14 per cent to Rs 25,360 crore.ECB proposed to be allowed for capital expenditure on the maintenance and operations of toll systems for roads and highways, if they are part of original project.Direct import of Aviation Turbine Fuel permitted for Indian Carriers as actual users.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. Proposal to allow foreign airlines to participate upto 49 per cent in the equity of an air transport undertaking under active consideration of the government.
Thrust on housing
Finance Minister proposed various measures to address the shortage of housing for low income groups in major cities and towns including ECB for low cost housing projects and setting up of a Credit Guarantee Trust Fund.