PRESENTED BY : REHA VASHISTVARINDER SINGHJASMEET KAURSUDHANSHU VARMA
“Not so long ago, India appeared to be cruising towards superpower Dom . Thebad weather Struck, at home and abroad. With elections looming on thehorizon , Chidambaram faces a Twin challenge :“Keep Congress hopes afloat while steering the economy out of choppywaters”. He’s soaked the rich , made a splash for women, and sought to shoreup investments .
“I acknowledge that the Indian economy is challenged,but I am absolutely confident that with your Cooperation,we will get out of the trough and get on to the highgrowth path.”
A general government operating surplus (i.e. a surpluson the day-to-day or recurrent operations of thegeneral government sector) of $196 million is forecastfor 2012-13. This is the difference betweenforecast revenue of $25.5 billion, and recurrent spending(or expenses) of $25.3 billion. Combined withan affordable level of borrowings, the operating surplushelps fund the Government’s investment ineconomic and social infrastructure, which in 2012-13totals $7.6 billion.
Divestment target of Rs 40k Cr laid out in the budget.
Tough TargetsTO ACHIEVE THIS IT ISRELYING ON• Higher GDP growthexpectation• Revenues from 10%surcharge on the superrich and companies• Direct taxes growth of18.2%• Indirect taxes growth of20.1%RISKS TO FISCAL NUMBERS• Assumption of nominal GDPgrowth of 13.4% in 2013-2014against the CSO estimate of 11.7%for FY13.• Government expects moderation inInflation to boost growth, but itmay remain sticky• Revenues of 40k Cr from Telecomsector may be difficult due to stateof Industry.• 40k Cr from stake sales in PSUs maybe difficult if Stock markets remainchoppy.
Set Top BoxesImport Duty on set top boxes hiked to 10% from 5%. This will increase cost ofset top boxes.Impact :- Spur local manufacturing of set top boxes, one of fast movingelectronic goods that represent a market of $2 billion over the next two years.
Eating out in AC restaurantsEating out will cost more. Service tax will be levied on all air-conditioned restaurants.Impact:- Expect to pay Rs 120 more on a bill of Rs 1000
HomesAbatement in service tax for 1 Cr-plus or 2000 sq.ft. plus homes reduced from 75% to70%.Impact :- Cost of such luxury homes will go up as your service tax component will goup.Raw silkDuty on raw silk has been increased from 5% to 15%. Use of raw silk as dress materialwill hence cost more.
Mobiles phonesExcise duty on mobile phones costing more than Rs 2000 raised to 6%. As a result, mobilephones will cost more.Impact:- Cost of smart mobile phone risesExcise duty on marbles from Rs 30 per square metre to Rs 60 per square metre. Cost ofmarbles when used in households will increase.
Handmade carpetsThe Union Budget exempted handmade carpets and textile floor coverings of coir orjute from excise duty. This makes handmade carpets and coir jute textile floorcoverings cheaper for the housewife.Leather and leather goods including footwearThe Union Budget reduced customs duty on specified machinery for manufacture ofleather and leather goods, including footwear, from 7.5% to 5%. Prices of leathergoods and leather footwear will come down.
Precious and Semi Precious stonesHousewives can now purchase precious and semi precious stoneswithout guilt. The Budget reduced customs duty on precious and semi-precious stones from 10% to 2%.Limits on Personal import of jewellery relaxedImpact:- Male passengers can now bring in jewellery worth Rs 50,000and women up to Rs 1 lakh.
IMPACT ON INVESTORSProposalTax benefit for newstock, MF investorsextended for two moreyears.The govt. to issue inflationlinked bonds and nationalsecurity certificates.Impact Investors will get a tax benefit ofup to Rs 25k, first timers will havetaste of equity and mutual funds.Hit by Inflation, investors look forsafe returns may be attractedtowards the new product and buyless gold.
FOR WOMENOne of recurring themes of this Budget was women. FM announced the setting up of a Rs 1000 Cr “Nirbhaya Fund” for the “Dignity andSafety of women” and will lend to businesses that are run by women, employwomen, support livelihood. Rs 200 Cr to end “gender discrimination” to help “Vulnerable groups” like single women& widows.
SKILL DEVELOPMENTTarget of skilling 50 million people in the 12th Plan period, including 9 millionin 2013-14. allocated Rs 1,000 crore for skill development.
IPOMeasure:- SMEs, including start ups, permitted to list on the SME exchange sans IPImpact:- Will allow greater liquidity, and bring down listing costsGOOD NEWS FOR GARMET MAKERSMeasure:-Zero duty regime brought back for branded ready made garmentsImpact:- Ready made garments price to fall by about 3%. A branded shirt priced at Rs1250, will now cost around 1200 .