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India's 2011/12 Budget Presented to Parliament

Service : Economy
TEHRAN, Feb 28 (ICANA) – Finance Minister Pranab Mukherjee on Monday presented to parliament India's federal budget for the coming financial year beginning in April.
Monday, February 28, 2011 12:55:52 PM
India's 2011/12 Budget Presented to Parliament

According to Reuters, the following are the highlights of the budget: BORROWING * Gross market borrowing for 2011-12 seen at 4.17 trillion rupees (Reuters forecast 4.5 trillion rupees) * Net market borrowing for 2011-12 seen at 3.43 trillion rupees (Reuters forecast 3.77 trillion rupees) * Revised market borrowing for 2010-11 at 4.47 trillion rupees FISCAL DEFICIT * Fiscal deficit seen at 5.1 percent of GDP in 2010-11 * Fiscal deficit seen at 4.6 percent of GDP in 2011-12 * Fiscal deficit seen at 3.5 percent 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 percent 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 * Revenue gain from indirect tax proposals seen at 113 billion rupees in 2011-12 * Service tax proposals to result in net revenue gain of 40 billion rupees in 2011-12 TAXES * Standard rate of excise duty held at 10 percent * Service tax rate kept at 10 percent * To widen scope of service tax * To raise minimum alternate tax to 18.5 percent from 18 percent * Iron ore export duty raised to 20 percent * Personal income tax exemption limit raised to 180,000 rupees * To reduce surcharge on domestic companies to 5 percent DISINVESTMENT * Disinvestment in 2011-12 seen at 400 billion rupees POLICY REFORMS * To create infrastructure debt funds * To boost infrastructure growth with tax-free bonds of 300 billion rupees * Raised foreign institutional investor limit in 5-year corporate bonds for investment in infrastructure by $20 billion * Food security bill to be introduced this year * To permit Securities and Exchange Board of India (SEBI) registered mutual funds to access subscriptions from foreign investments * Public debt bill to be introduced in parliament soon SECTOR SPENDING * To allocate more than 1.64 trillion rupees to defence 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 focus on removal of supply bottlenecks in the food sector in 2011-12 * To raise target of credit flow to agriculture sector to 4.75 trillion rupees * Gives 3 percent interest subsidy to farmers in 2011-12 * Cold storage chains to be given infrastructure status * Capitalisation 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 fertiliser policy for urea GROWTH, INFLATION EXPECTATIONS * Economy expected to grow at 9 percent in 2012, plus or minus 0.25 percent * Inflation seen lower in the financial year 2011-12 FINANCE MINISTER ON THE STATE OF THE ECONOMY * "Fiscal consolidation has been impressive. This year has also seen significant progress in those critical institutional reforms that will pave the way for double digit growth in the near future." * "At times the biggest reforms are not the ones that make headlines, but the ones concerned with details of governance which affect the everyday life of aam aadmi (common man). In preparing this year's budget, I have been deeply conscious of this fact." * Food inflation remains a concern * Current account deficit situation poses some concern * Must ensure that private investment is sustained * "The economy has shown remarkable resilience." FINANCE MINISTER ON GOVERNANCE * "Certain events in the past few months may have created an impression of drift in governance and a gap in public accountability ... such an impression is misplaced." * Corruption is a problem, must fight it collectively

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