1. Budget 2012-13: The Devil is in Detail
Debt Tax Income Tax
Revenue Fiscal
Deficit
Inflation
Expenditure
GDP Aadhar
Growth Reforms
Rate Disinvestments
Auto Industry
Impact
Subsidies
Infrastructure
Power

2. Agenda
Macro Economic Overview
Direct Taxes: Income Tax
Major Sectors Impacted

3. Agenda
Macro Economic Overview
Direct Taxes: Income Tax
Major Sectors Impacted

4. Macro Economic Overview
Major Policy Objectives:
• Focus on domestic demand driven growth recovery.
• Create conditions for rapid revival of high growth in private investment.
• Address supply bottlenecks in agriculture, energy and transport sectors,.
• Intervene decisively to address the problem of malnutrition especially in the 200 high-burden districts.
• Improve delivery systems, governance, and transparency.
Receipts Expenditure
Defense
Borrowing 13%
29% Central Plan
Direct Taxes Subsidies 20%
Others 32% 13%
Non Debt 5%
2% Interest Others
Payments 26%
Interest Indirect Taxes 21%
1% Dividend & 28% Capital
Profits Expenditure
3% 7%

5. Macro Economic Overview
Major Policy Decisions:
• Tax Exemptions and Tax Slabs have been changed.
• Excise Duty and Service Taxes have been increased by 2%
• Funding eased for Infrastructure companies . But budget silent on major policy initiatives to address other
concerns.
• Estimated Borrowing are on the optimist side. And looking at recent experiences budgetary estimates are
likely to be understated.
Borrowing
600000 521980 513590 50
500000 40
412817
400000 373591 40
34 30
300000 31 33
20
200000
100000 10
0 0
2010-11 2011-12* 2011-12# 2012-13*
Borrowing in Rs. Cr. (Lhs) % of Reciepts (Rhs)

6. Macro Economic Overview
Fiscal Deficit Consolidation:
• FM has made an honest attempt to control Fiscal Deficit.
• Marginal increase to Small cuts in major flagship social security programs like MGNREGA.
• But major assumptions in the Budget are still on optimist side. Basic assumption made in this budget are
Nominal GDP growth rate of 14% and Crude in between US $ 110-115 per barrel.
• Budget Estimate of Fiscal Deficit of 5.1% is lower because of expectation of funds from auction of Spectrum.
Fiscal Deficit Growth of GDP
18.8
8 20 16.1
5.9 13.8 14
6 4.9 4.6 5.1 15
4 10 7.6 8.4 6.9 7.6
2 5
0 0
2010-11 2011-12* 2011-12# 2012-13* 2009-10 2010-11 2011-12 2012-13*
Fiscal Deficit as % of GDP Nominal GDP Real GDP
* Budget Estimates # Revised Estimates

7. Macro Economic Overview
Fiscal Deficit Consolidation:
• FM has used revenue buoyancy rather than controlling major expenses to rein in Fiscal Deficit
• FM has indicated to control subsides at 2% . Price hike in fuels seems extremely likely. But no clear road map
to remove Fertilizer and Fuel subsidy.
• Revenue from spectrum sale and disinvestments are achievable but are one time.
• Transfer of direct benefits using AADHAR, to help check in leakages.
Fiscal Deficit
7
6.1 6.4
5.9 6 5.9
6
4.9 5.1
5 4.5
3.9 4
4 3.3
3 2.6
2
1
0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12* 2012-13*
Fiscal Deficit as % of GDP
* Budget Estimates # Revised Estimates

8. Agenda
Macro Economic Overview
Direct Taxes: Income Tax
Major Sectors Impacted

9. Direct Taxes: Income Tax
Lack of clarity on implementation of DTC but Tax slabs have been moved to DTC levels:
 Minimum deduction has been increased to 2 lakhs. (No change in minimum deduction for senior citizens).
 Tax slabs changed from Rs. 5 to 8 lakhs to Rs. 5 to 10 lakhs.
 Deduction on investment up to Rs. 20000 in infrastructure bond has been removed.
 A new scheme, Rajiv Gandhi Equity Saving Scheme The scheme would allow for income tax deduction of 50 per
cent to new retail investors, who invest up to ` 50,000 directly in equities and whose annual income is below `
10 lakh. More clarity is needed, waiting for notification.
Up to 2Lakhs 2 – 5 Lakhs 5 – 10 Lakhs 10 Lakhs +
Men and
Nil 10% 20% 30%
Women
up to Nil .03% .03% .03%
Age 60 Nil 10.03% 20.06% 30.09%
Nil Rs. 2060 Rs. 2060- 10300 Rs. 20600-22600

10. Direct Taxes: Income Tax
 Rajiv Gandhi Equity Saving Scheme is a positive step and seem to be designed more in line with US 401K
equity savings program.
 Will channel more money in to capital market, will provide depth and has potential to channelize up to Rs.
50000 Cr. ( from 1-1.5 Cr retail investors) this is as big as FII investment in most years.
Rs. 1 Rs. Rs. Rs. 1.5 Rs. 1.65
Lakh 20000 15000 Lakh Lakh
Section 80 D
Section Section 80CCF premium on Section 24(B) Total
80C, 80CCC Investment in Health Interest due Deductions
and 80CCD Infra Bonds Insurance on home loan

11. Agenda
Macro Economic Overview
Direct Taxes: Income Tax
Major Sectors Impacted

12. Major Sector Impact: Infrastructure
Steps taken to enhance funding:
• Tax free bond limit doubled from Rs. 30,000 Cr to Rs. 60,000 Cr.
• Withholding tax on interest payments on ECB reduced from 20% to 5%
• NHDP target of 8,800 KM of roads over next year. Budgetary allocation sees a marginal increase of 14%
• Viability Gap funding extended to other sectors esp. Irrigation and Telecom towers, implementation procedure
though not clear yet.
Positive: Score Board
 IRB Infra
 IVRCL 3 Major Funding Policy measures taken.
 Sadbhav Engineering
Issues
 Adani Ports and SEZ Environmental Clearance Budget is Silent
Ltd.
 GMR Land Acquisition Budget is Silent

13. Major Sector Impact: Power
Major Initiatives:
• Full Custom duty exemption for importing coal for a period of 2 Years. Positive for imported coal based and
blended coal based power plants.
• Power companies can part finance Rupee debt on existing power projects using ECBs.
• Sunset clause extended for new projects that come up by March 2013. 100% deduction on profits and 20%
depreciation benefit.
• Coal India to sign Fuel Supply Agreement with power plants expected to commission by March 2015.
• Proposal to raise Rs.10000 Cr. for the power sector using tax free bonds.
Score Board
Positive: Funding Policy measures taken.
 Adani Power 4 Major
 Tata Power Environmental Clearance Budget is Silent
Issues
 Reliance Power
Land Acquisition & Mining Budget is Silent
 NTPC
Health of SEB Budget is Silent

14. Major Sector Impact: Auto
Major Policy decisions:
 Hike in excise duty of 5% (from 22% to 27%) on large cars, but additional duty on diesel cars spared.
 Large cars to be impacted. Will impact all major Car companies as this is fastest growing segment.
 Custom duty hike on cars costing >$40000. But impact will be marginal as India is expected to sign Free Trade
Agreement (FTA) with EU.
 Increased disposable income to be slightly positive for two wheeler segments
 Interest Rate cuts to be moderate, which will result in higher than expected funding cost on CVs.
Marginally Positive: Score Board
 Bajaj Auto
 Hero Honda Higher Disposable Income Increased Tax Deduction
 TVS Motors 4 Major
Excise Duty increased Cost to be passed on.
 Maruti Issues
Marginally Negative: Moderate Interest Rate Decline Funding cost to be high
 Tata Motors
 Ashok Leyland Custom Duty hike Marginal benefits