Budget 2011-2012 Review: Geojit Comtrade

Comments on Budget 2011-12 by Ankita Parekh -Research Analyst, Geojit Comtrade Ltd

• 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 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

• 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%

• Gross tax receipts seen at 9.32 trillion rupees in 2011-12
• Non-tax revenue seen at 1.25 trillion rupees in 2011-12

• Economy expected to grow at 9 % in 2012, plus or minus 0.25%
• Inflation seen lower in the financial year 2011-12

• FII cap on corporate bonds raised by 20 billion dollars
• Foreign Institutional Investors can invest in mutual funds

• Disinvestment in 2011-12 seen at 400 billion rupees

• Net market borrowing for 2011-12 seen at 3.43 trillion rupees, down from 3.45 trillion rupees in 2010-11

• 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

• 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

• 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

• 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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