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Budget

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union budget 2011

union budget 2011

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  • 1. INDIAN UNION BUDGET<br /> “Pranab Mukherjee”<br />Finance Minister<br />February 28, 2011<br />
  • 2. AGENDA<br />OVERVIEW OF THE ECONOMY<br />CHALLENGES<br />FISCAL CONSOLIDATION<br />FINANCIAL SECTOR LEGAL INITIATIVES<br />DIRECT TAXES<br />INDIRECT TAXES<br />SUBSIDIES<br />SPENDING<br />REVENUE<br />DISINVESTMENT<br />BORROWING<br />POLICY REFORMS<br />SECTOR SPENDING<br />AGRICULTURE<br />ENVIRONMENT & CLIMATE<br />OTHER AREAS<br />SECTORAL IMPACT OF BUDGET<br />
  • 3. OVERVIEW OF THE ECONOMY<br />Analysis of the economic situation of the country over the past 12 months states that:<br /> -Gross Domestic Product (GDP) of India is estimated to have grown at 8.6 per cent.<br /> -Agriculture is estimated to have grown at 5.4 per cent.<br /> -Industry at 8.1 per cent.<br /> -Services at 9.6 per cent.<br /> -Exports have grown at 29.4% to reach US Dollar 184.6 billion.<br /> -Imports at US Dollar 273.6 billion have recorded a growth of 17.6%<br /> - Continued high food prices have been principal concern this year.<br /> - Indian economy expected to grow at 9 per cent with an outside band of +/- 0.25% in 2011-12.<br />
  • 4. CHALLENGES<br />Structural concerns on inflation management to be addressed by improving supply response of agriculture to the expanding domestic demand and through stronger fiscal consolidation.<br />Implementation gaps, leakages from public programmes and the quality of outcomes pose a serious challenge.<br />Impression of drift in governance and gap in public accountability is misplaced.<br />Corruption as a problem to be fought collectively. Government to improve the regulatory standards and administrative practices.<br />Inputs from colleagues on both sides of House are important in the wider national interest.<br />Budget 2011-12 to serve as a transition towards a more transparent and result oriented economic management system in India.<br />
  • 5. -<br />Dearer<br />-Legal Services<br />-Healthcare in top – end Pvt. hospitals.<br />-Branded Cloths<br />-Gold<br />-A/c restaurants serving Liquor<br />-Hotel Services<br />-Printers<br />-Paper<br />-Soap<br />-Steel<br />-Diapers & Sanitary napkins<br />-Homoeopathic Medicines<br />-Yarn/raw silk<br />-Mobile Phones<br />-Agarbatti<br />-Solar Lantern, LED Lights<br />-Battery Driven- Vehicles<br />-Agriculture machinery<br />Cheaper<br />
  • 6. FISCAL CONSOLIDATION <br /><ul><li> Economy is back to its pre-crisis growth trajectory.</li></ul>Total food inflation declined from 20.2 per cent in February 2010 to less than half at 9.3 per cent in January 2011.<br />Fiscal deficit for <br /> -FY'11 at 5.1%<br /> -FY'12 seen at 4.6%<br />Revenue deficit for 2011-12 at 2.3%<br />The Central Government would introduce an amendment to the FRBM Act, laying down the fiscal road map for the next five years.<br />The Government has been in the process of setting-up an independent Debt Management Office in the Finance Ministry.<br />
  • 7. Financial Sector legislative Initiatives<br />Financial Minister propose to move the following legislations in the financial sector:<br />(i) The Insurance Laws (Amendment) Bill, 2008;<br />(ii) The Life Insurance Corporation (Amendment) Bill, 2009;<br />(iii) The revised Pension Fund Regulatory and Development Authority Bill, first introduced in 2005;<br />(iv) Banking Laws Amendment Bill, 2011;<br />(v) Bill on Factoring and Assignment of Receivables;<br />(vi) The State Bank of India (Subsidiary Banks Laws) Amendment Bill, 2009; and<br />(vii) Bill to amend RDBFI Act 1993 and SARFAESI Act 2002.<br />
  • 8. The Direct Taxes Code is likely to be effective from 1 April 2012<br />The Corporate tax , Firms, Local authority, Co operative Societies rate remains unchanged<br />The basic rate of MAT increased to 18.5% from 18 %<br />The surcharge for domestic companies reduced to 5% from 7.5 %<br />The surcharge Non domestic companies reduced to 2% from 2.5 %<br />NEW INCOME-TAX return form called Sugam to be introduced for small business.<br />Salary earners having an income of less than 5 lakh is exempted for filing income tax return from this year.<br />Provision for tax-free infrastructure bonds extended by 1 more year.<br />DIRECT TAXESCorporate Tax<br />
  • 9. TAX HOLIDAY for IT companies finally ends.<br /> Levy MAT on developers of SEZ and units operating in them.<br />Levy Alternative Minimum Tax (AMT) in the case of Limited Liability partnerships at 18.5%<br />Money market and debt funds will pay a higher Dividend Distribution tax (DDT) for investment made by firms.<br />DDT will rise to 30% from 25% but stay unchanged at 12% for individual investors.<br />The TDS structure & rates remains unchanged<br />Above rules are made effective from 01.04.2011<br />
  • 10. Personal Taxation<br />For MEN<br />Current Slabs (`) Proposed Slabs (`) Basic rate of tax<br /> Upto160,000 Upto180,000 Nil<br /> 160,001to500,000 180,001to500,000 10%<br /> 500,001to800,000 500,001to800,000 20%<br /> Above800,001 Above800,001 30%<br />For WOMEN<br />No change in tax Structure<br /> Upto190,000 Upto190,000 Nil<br /> 190,001to500,000 190,001to500,000 10%<br /> 500,001to800,000 500,001to 800,000 20%<br /> Above800,000 Above800,000 30%<br />
  • 11. For Senior Citizen (60-80years)<br />Age for eligibility reduced from 65 years to 60 Years<br />Upto 240,000 Upto 250,000 Nil<br />240,001to500,000 250,001to500,000 10%<br />500,001to800,000 500,001to800,000 20%<br />Above800,001 Above 800,001 30%<br />For Senior Citizen (80years & above)<br />Hike in exemption limit to 5 lakh will result on big gains<br />Upto 240,000 Upto 500,000 Nil<br />240,001to500,000 - 10%<br />500,001to800,000 500,001to800,000 20%<br />Above 800,001 Above 800,001 30%<br />
  • 12. INDIRECT TAXESCentral Excise<br /> Central Excise Duty to be maintained as 10% only (unchanged)<br />Nominal Central Excise Duty of 1 % without Cenvat credit facility is being imposed on 130 items entering in the tax net.<br />Lower rate of Central Excise Duty enhanced from 4 % to 5 %<br />Optional levy on branded garments or made up proposed to be converted into a mandatory levy at unified rate of 10 per cent.<br />Labelled jewellery and Precious metals attract 1% excise duty.<br />Excise duty on sanitary napkin, baby & clinical diapers and adult diapers is being reduced from 10% to 1% with no cenvat credit.<br />Concessional rate of excise duty for Hydrogen / hybrid vehicle.<br />Exemption withdrawn on HD drive, CD/DVD drive,& writers, Flash memory, Combo drives meant for fit inside of CPU or Laptop will attract 5% of concessional excise duty .<br />Changes come into effect immediately unless otherwise specified.<br />
  • 13. Service Tax<br />Service tax rate remains unchanged at 10 percent as a pre-cursor to GST<br />Legal Cases will also become a costly affair to cover all legal consultations, except individual to individual ,under service tax net.<br />Hotel accommodation in excess of 1,000 per day will come under the ambit of tax , although there will be an abatement of 50% service provided by air conditioned restaurants that have license to serve liquor added as new services for levying Service Tax at 3- 5%. After an abatement of 70%<br />Tax on all services provided by hospitals with 25 or more beds with facility of central air conditioning at the rate of 5%<br />Service Tax on air travel raised from 100 to 150 in the case of domestic air travel and 500 to 750 on international journeys by economy class. <br />The domestic air travel on higher classes will be taxed at the standard rate of 10% <br />Services provided by life insurance companies in the area of investment and some more legal services proposed to be brought into tax net.<br />Above rules are made effective from 01.04.2011<br />
  • 14. Customs Duty<br />Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5%<br />Basic customs duty on raw silk reduced from 30 to 5%.<br />Basic customs duty on solar lantern or lamps reduced from 10 to 5%<br />CVD exempted fully on LEDs used for manf of LEDs light & fixtures.<br />Fully exemption from basic custom duty is being extended battery charger, hands free, head phones and PC connectivity cable of mobile handset including cellular phones.<br />Basic customs duty on bamboo used for manf of agarbattis is being reduced from 30% to 10%<br />The government has added a fixed excise duty of 160 per tonne on cement and reduced custom duty on petcoke and gypsum, key inputs for the sector.<br /> Changes come into effect immediately unless otherwise specified.<br />
  • 15. GST proposed to be rolled out from April 2012<br />Several proposals under the existing tax regime should facilitate a move towards GST:<br />Focus on building robust IT infrastructure<br />Further rationalization of rates under Excise and Customs<br />Central Sales Tax<br />No Changes in CST act 1956<br />Goods and Service Tax<br />
  • 16. SUBSIDIES<br /> Nutrient Based Subsidy (NBS) has improved the availability of fertilizer; Government actively considering extension of the NBS regime to cover urea.<br /> Government to move towards direct transfer of cash subsidy to people living below poverty line in a phased manner for better delivery of kerosene, LPG and fertilizers. Task force set up to work out the modalities for the proposed system.<br />Subsidy bill in 2011-12 seen at 1.44 trillion rupees <br />Food subsidy bill in 2011-12 seen at 605.7 billion rupees<br />Fertilizer subsidy bill in 2011-12 seen at 500 billion rupees<br />Petroleum subsidy bill in 2011-12 seen at 236.4 billion rupees<br />State-run oil retailers to be provided with 200 billion rupee cash subsidy in 2011-12 <br />
  • 17. <ul><li>Total expenditure in 2011-12 seen at 12.58 trillion rupees.
  • 18. Plan expenditure seen at 4.41 trillion rupees in 2011-12, up 18.3%.</li></ul>SPENDING<br />
  • 19. * Gross tax receipts seen at 9.32 trillion rupees in 2011-12 * Non-tax revenue seen at 1.25 trillion rupees in 2011-12 * Corporate tax receipts seen at 3.6 trillion rupees in 2011-12 * Tax-to-GDP ratio seen at 10.4 percent in 2011-12; seen at 10.8 percent in 2012-13 * Customs revenue seen at 1.52 trillion rupees in 2011-12 * Factory gate duties seen at 1.64 trillion rupees in 2011-12 *Service tax receipts seen at 820 billion 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<br /> REVENUE<br />
  • 20. Disinvestment in 2011-12 seen at 400 billion rupees.<br />Government committed to retaining 51 percent stake in public sector enterprises. <br />DISINVESTMENT<br />
  • 21. <ul><li> Net market borrowing for 2011-12 seen at 3.43 trillion rupees, down from 3.45 trillion rupees in 2010-11
  • 22. Gross market borrowing for 2011-12 seen at 4.17 trillion rupees
  • 23. Revised gross market borrowing for 2010-11 at 4.47 trillion rupees </li></ul> BORROWING<br />
  • 24. * To create infrastructure debt funds * FDI policy being liberalised. * 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 * Setting up independent debt management office; Public debt bill to be introduced in parliament soon * Bills on insurance, pension funds, banking to be introduced. *Constitution Amendment Bill for introduction of GST regime in this session. *New Companies Bill to be introduced in current session<br />POLICY REFORMS<br />
  • 25. SECTOR SPENDING <br /> * To allocate more than 1.64 trillion rupees to defense sector in 2011-12 <br /> * 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. Rs.21,000 crore for Sarva Shiksha Abhiyan<br /> * To raise health sector allocation to 267.6 billion rupees.* Rs.500 crore more for national skill development fund. * Rs.54 crore each for AMU (Aligarh Muslim University) centres at Murshidabad and Mallapuram. * Rs.58,000 crore for Bharat Nirman; increase of Rs.10,000 crore. * Mahatma Gandhi National Rural Employment Guarantee Scheme wage rates linked to consumer price index; will rise from existing Rs.100 per day. * Increased outlay on social sector schemes. * Infrastructure critical for development; 23 percent higher allocation in 2011-12.<br />
  • 26. AGRICULTURE<br /> * Removal of supply bottlenecks in the food sector will be in focus in 2011-12 * Agriculture growth key to development: Green Revolution waiting to happen in eastern region. * 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 * 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 * Food storage capacity to be augmented - 15 more mega food parks to be set up in 2011-12; of 30 sanctioned in previous fiscal, 15 set up. * Comprehensive policy on further developing PPP (public-private-partnership) model. * Farmers need access to affordable credit. * Moving to improve nutritional security. * Necessary to accelerate production of fodder.<br /> * Farm loans at 4%.<br />
  • 27. ENVIRONMENT AND CLIMATE<br />200 crore proposed to be allocated for launching Environmental Remediation Programmes from National Clean Energy Fund.<br />Special allocation of Rs. 200 crore proposed to be provided for clean-up of some more important lakes and rivers other than Ganga.<br />Rs 200 crore proposed to be allocated for Green India Mission from National Clean Energy Fund.<br />
  • 28. OTHER AREAS<br /><ul><li>Govt to move towards direct transfer of cash subsidy for kerosene, LPG and fertilizers.
  • 29. Financial Sector Legislative Reforms Commission, to be headed by former Supreme Court judge B Srikrishna, to complete its work in 24 months; to overhaul financial regulations.
  • 30. Five-fold strategy against black money; 13 new double taxation avoidance agreements; foreign tax division of CTBT strengthened; strength of Enforcement Directorate increased three-fold.
  • 31. Bill to be introduced to review Indian Stamp Act.
  • 32. New coins carrying new rupee symbol to be issued.
  • 33. Anganwadi workers salary raised from Rs.1,500 to Rs.3,000.
  • 34. Mortgage risk guarantee fund to be created for economically weaker sections.
  • 35. Housing loan limit for priority sector lending raised to Rs.25 lakh.
  • 36. 20% hike in Health Budget.
  • 37. 11% hike in Defence allocation & Rs.9 lakh as disability compensation for defense personnel.</li></li></ul><li>SECTORAL IMPACT OF BUDGET<br />INFRASTRUCTURE- POSITIVE<br />STEEL INDUSTRY- POSITIVE<br />IT INDUSTRY-NEGATIVE<br />OIL & GAS INDUSTRY –NEGATIVE<br />TEXTILES-NEUTRAL<br />BANKING INDUSTRY-POSITIVE<br />PHARMA INDUSTRY-NEUTRAL<br />FERTILIZERS INDUSTRY-POSITIVE<br />AVIATION INDUSTRY-NEGATIVE<br />HOSPITALITY INDUSTRY-NEGATIVE<br />AUTOMOBILE INDUSTRY-POSITIVE<br />
  • 38. Budget 2011 is balanced, growth-oriented, forward looking……….<br />
  • 39. SUBMITTED TO:<br /> Dr. R.K.MITTAL<br /> SUBMITTED BY:<br /> RENUKA BANSAL<br /> M.F.C(P)<br />
  • 40. THANK YOU…….....<br />
  • 41. QUERIES……..<br />

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