Budget 2011-2012 Review: Geojit Comtrade
Comments on Budget 2011-12 by Ankita Parekh -Research Analyst, Geojit Comtrade Ltd
February 28, 2011 / 21:06 IST
Comments on Budget 2011-12 by Ankita Parekh -Research Analyst, Geojit Comtrade Ltd
The budget highlights for the year 2011-12 are as follows:TAXES AND DUTIES- To reduce surcharge on domestic companies to 5%
- To raise minimum alternate tax to 18.5 % from 18%
- Direct tax proposals to cause 115 billion rupees in revenue loss
- Service tax rate kept at 10%
- Central excise duty rate remains unchanged at 10%
- Customs and excise proposals to result in net revenue gain of 73 billion rupees
- Iron ore export duty raised to 20% from 5% for fines and from 15% for lumps
- Stainless Steel exempted from excise customs duty
FISCAL DEFICIT- Fiscal deficit seen at 5.1% of GDP in 2010-11
- Fiscal deficit seen at 4.6% of GDP in 2011-12
- Fiscal deficit seen at 3.5%of GDP in 2013-14
SPENDING- Total expenditure in 2011-12 seen at 12.58 trillion rupees
- Plan expenditure seen at 4.41 trillion rupees in 2011-12, up 18.3%
REVENUE- Gross tax receipts seen at 9.32 trillion rupees in 2011-12
- Non-tax revenue seen at 1.25 trillion rupees in 2011-12
GROWTH, INFLATION EXPECTATIONS- Economy expected to grow at 9 % in 2012, plus or minus 0.25%
- Inflation seen lower in the financial year 2011-12
INVESTMENT:- FII cap on corporate bonds raised by 20 billion dollars
- Foreign Institutional Investors can invest in mutual funds
DISINVESTMENT- Disinvestment in 2011-12 seen at 400 billion rupees
BORROWING
- Net market borrowing for 2011-12 seen at 3.43 trillion rupees, down from 3.45 trillion rupees in 2010-11
INFRASTRUCTURE
- Infrastructure spending to be raised by 23%
- Tax free bonds of Rs 30,000 cr to be issued for infrastructure development
- Extension of investment on long-term infrastructure bonds by one more year
POLICY REFORMS
- To create infrastructure debt funds
- To boost infrastructure development with tax-free bonds of 300 billion rupees
- Food security bill to be introduced this year
- To permit SEBI registered mutual funds to access subscriptions from foreign investments
- Raised foreign institutional investor limit in 5-year corporate bonds for investment in infrastructure by $20 billion
- Public debt bill to be introduced in parliament soon
SECTOR SPENDING
- To allocate more than 1.64 trillion rupees to defense sector in 2011-12
- Corpus of rural infrastructure development fund raised to 180 billion rupees in 2011-12
- To provide 201.5 billion rupees capital infusion in state-run banks in 2011-12
- To allocate 520.5 billion rupees for the education sector
- To raise health sector allocation to 267.6 billion rupees
AGRICULTURE- To raise target of credit flow to agriculture sector from 3.75 to 4.75 trillion rupees
- Gives 3 percent interest subsidy to farmers in 2011-12
- Capitalization of National Bank for Agriculture and Rural Development(NABARD) of 30 billion rupees in a phased manner
- To provide 3 billion rupees for 60,000 hectares under palm oil plantation
- Actively considering new fertilizer policy for urea
- Rs 300 cr will be allocated for improving pulses production.
- 10% export duty imposed on de-oil rice bran oil cake
- Infrastructure spending to be raised by 23%
- Tax free bonds of Rs 30,000 cr to be issued for infrastructure development
- Extension of investment on long-term infrastructure bonds by one more year
- Basic Custom Duty reduced for specified agricultural machinery from 5 % to 2.5%
- Cold storage chains to be given infrastructure status
- Removal of supply bottlenecks in the food sector will be in focus in 2011-12
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