Highlights of budget for next fiscal year (April 1, 2011- March 31,2012) presented by Indian Finance Minister Pranab Mukherjee on Monday to the parliament. Budget summary sourced from Reuters.
At US$ 1= IRs 45.18 exchange rate [100 crore = 1 billion], total estimated expenditure equals to US$ 278.38 billion, total estimated revenue (tax and non-tax) equals to US$ 174.83 billion; and total deficit borrowing (recovery of loans, other receipts and borrowing and other liabilities) equals to US$ 103.54 billion. Total estimated GDP for FY 2011-12 is US$ 1.99 trillion.
BORROWING
- Gross market borrowing for 2011-12 seen at 4.17 trillion rupees
- Net market borrowing for 2011-12 seen at 3.43 trillion rupees
- Revised gross 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 4.1 percent of GDP in 2012-13
- 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
- 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
- Non-tax revenue seen at 1.25 trillion rupees in 2011-12
- Service tax receipts seen at 820 billion rupees in 2011-12
- Telecoms fees, auction of broadband spectrum to raise 296.5 billion rupees in 2011-12
SUBSIDIES
- Subsidy bill in 2011-12 seen at 1.44 trillion rupees
- Food subsidy bill in 2011-12 seen at 605.7 billion rupees
- Revised food subsidy bill for 2010-11 at 606 billion rupees
- Fertiliser subsidy bill in 2011-12 seen at 500 billion rupees
- Revised fertiliser subsidy bill for 2010-11 at 550 billion rupees
- Petroleum subsidy bill in 2011-12 seen at 236.4 billion rupees
- Revised petroleum subsidy bill in 2010-11 at 384 billion rupees
- State-run oil retailers to be provided with 200 billion rupee cash subsidy in 2011-12
GROWTH, INFLATION EXPECTATIONS
- Inflation seen at 5 percent in 2011-12
- Economy expected to grow at 9 percent in 2012, plus or minus 0.25 percent
TAXES
- Standard rate of excise duty held at 10 percent
- Service tax rate held at 10 percent
- Scope of service tax to be widened
- Minimum alternate tax raised 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
DISINVESTMENT
- Disinvestment in 2011-12 seen at 400 billion rupees
POLICY REFORMS
- Food security bill to be introduced this year
- Foreign direct investment policy to be liberalised further * Infrastructure debt funds to be created
- Infrastructure growth to be boosted with tax-free bonds of 300 billion rupees
- Foreign institutional investor limit in 5-year corporate bonds for investment in infrastructure to be raised by $20 billion
- 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
- Infrastructure allocation increased by 23.3 percent to 2.14 trillion rupees in 2011-12
- 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
- Mahatma Gandhi National Rural Employment Guarantee Scheme wage rates linked to consumer price index; will rise from existing Rs.100 per day.
AGRICULTURE
- To focus on removing supply bottlenecks in the food sector
- To raise credit flow target to agriculture sector to 4.75 trillion rupees
- Give 3 percent interest subsidy to farmers in 2011-12
- Cold storage chains to be given infrastructure status
- To provide 3 billion rupees for 60,000 hectares under palm oil plantation
- Actively considering new fertiliser policy for urea
MAJOR CONCERNS
- Food inflation remains a concern
- Current account deficit situation poses some concern
- Must ensure private investment is sustained
- "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
