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Following is a quick overview of Budget 2011-12.

Basic Thrust

 Seeks to provide a fresh impetus to the growth momentum

 Makes an attempt to tackle the gaps in the supply side, the main source of inflationary pressures in the
economy
 Designs a growth strategy which relies on investment
 Focus on infrastructure creation, especially investment in agricultural infrastructure
 Emphasises on equity and inclusion
 Begins process of fiscal consolidation
 Begins process of implementing tax reforms: Constitution Amendment Bill to be introduced as precursor to
rolling out Goods and Services Tax; Direct Tax Code to be effective April 1, 2012
 Payment of subsidy will be made directly to people living below the poverty line for better delivery of
LPG, kerosene and fertilizer subsidies

Basic Numbers

 Total expenditure up 3.4% to `12,57,729 crore in 2011-12

 Gross tax revenues up 24.9% to `9,32440 crore in 2011-12
 Net market borrowings in 2011-12: `3.43 lakh crore, Disinvestment target retained at `40,000 crore
(against actual `22,144 crore in 2010-11).
 Fiscal deficit for 2011-12 pegged at 4.6%, of GDP
 Defence allocation pegged at `1,64,415 crore

Fiscal Position
 GST and Direct Tax Code to be implemented by April 2012
 Fiscal consolidation flagged off, government to move towards direct transfer of cash subsidy to people liv-
ing below poverty line
 13th Finance Commission recommendations for financial consolidation to be followed
 Independent Debt Management Office to come up in Finance Ministry.

Banking

 Druing 2011-12, `6,000 crore would be provided to Public Sector Banks so as to help them maintain Tier I
CRAR at 8%. In the financial year 2010-11, it is a sum of `20,157 crore.
 RBI will issue guidelines before March 31, 2011, for issue of new banking licences.

FDI and FII

 Discussions on to liberalise the FDI policy.

 Mutual Funds registered with SEBI are allowed to take subscription from foreign investors provided they
meet the KYC norms for equity schemes.
 FII limit for investment in corporate bonds raised by an additional $20 billion to $25 billion, taking the to-
tal limit for FIIs investing in corporate bonds to $40 billion. As an additional sweetener, the withholding
tax on dividend payment has been reduced from 20% to 5%

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Micro Finance Institutions

 A `100 crore, India Microfinance Equity Fund would be created with SIDBI.
 A `500 crore, Women’s Self Help Group’s Development Fund would be created.

Agriculture

 A further allocation of `400 crore to extend Green Revolution to Eastern India. In the last budget also, the
same amount was provided.
 Allocation increased by `1,105 crore under Rashtriya Krishi Vikas Yoyana (RKVY) to reach `7,860 crore
for removing bottlenecks related to production and distribution of items such as fruits and vegetables, milk,
poultry, fish, and meat.
 `300 crore each has been provided for the following:
 60,000 pulses villages in rainfed areas
 To bring 60,000 hectares under oil palm plantations
 To provide quality vegetable at competitive prices
 To promote higher production of Bajra, Jowar, Ragi and other other millets
 To promote animal based protein production
 For Accelerated Fodder Development Programme
 Interest subvention improved from 2% to 3 % for timely repayment of loans. Effective subvention rate:
4%.
 Credit flow target to the farmers raised from `3, 75,000crore to `4, 75,000 crore. Banks have been asked to
enhance direct lending for agriculture and credit to marginal farmers.

Infrastructure
 Total allocation of `2.14 lakh crore (48.5% of planned allocation)
 Government to come up with a comprehensive policy for further developing PPP projects.
 IIFCL to disburse `25,000 crore by March 31, 2012 from `20,000 crore in 2010-11.
 Tax free bonds of `30,000 crore to be issued by Government undertakings
 Allocation for Bharat Nirman programme increased by `10,000 crore to `58,000 crore
 To provide Rural Broadband Connectivity to all 2.5 lakh Panchayats in the country within three years
 Corpus of Rural Infrastructure Development Fund XVII raised from `16,000 crore to `18,000 crore.

Environmentally Friendly
 Allocation to National Clean Energy Fund at `200 crore for Forest Management
 Another `200 crore for Environmental Remediation Programmes
 Cleaning up of important lakes and rivers other than Ganga is allocated `200 crore

Social Sector Schemes

 Allocation for Bharat Nirman Programme increased by `10,000 to `58,000 crore

 Plan to provide broadband connectivity to all 2,50,000 Pachayats in the country in three years.

Remuneration increase
 Anganwadi workers `1,500-3,000 per month
 Anganwadi Helpers `750-1,500 per month.

Direct Tax
 Income up to `1.8 lakh will attract 0% tax.
 `1.8-5 lakh : 10% I-T
 `5-8 lakh : 20% I-T

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 Above `8 lakh: 30% I-T

 Tax exemption on up to `20,000 in long term infra bonds( above the existing 80C limit of 1 lakh) ex-
tended for FY11-12.
 For senior citizens of 80 years and above, the exemption limit has been raised to `5 lakh
 Surcharge on corporate tax reduced from 7.5% to 5%.
 Rate of Minimum Alternative Tax increased from 18% to 18.5%.
 Tax rate on dividends received by Indian companies from its foreign subsidiary reduced to 15%.
 Direct taxes proposal will lead to loss of `11,500 crore.

Indirect Taxes
 Standard excise duty rate maintained at 10%
 Excise exemption on 130 items removed; 1% duty to be levied
 Cement: Basic Custom Duty on petcoke and gypsum reduced to 2.5% which will reduce cost of pro-
duction for cement manufacturers and will be positive for the industry.
 Capital goods for expansion of existing mega or ultra mega power projects provided by domestic
suppliers exempt from excise. Level playing ground for domestic companies like BHEL and L&T.
 Full exemption from basic customs duty to bio-asphalt and specified machinery for application in the
construction of national highways. Will reduce overall cost for constructing highways.
 Exemption from import duty for spares and capital goods required for ship repair units by ship owners.

 Standard rate of service tax retained at 10%

 Hotel accommodation in excess of `1,000 per day and service provided by air conditioned restaurants
with licence to serve liquor added to service tax net.
 Service tax on air travel both domestic and international raised. Air travel to become dearer.

Other Measures
 Cash subsidy on LPG, kerosene and fertilisers to be provided to individuals below poverty line
 Aadhar cards, as part of the UID scheme, to help in disbursing subsidy directly to beneficiaries
 Mega cluster scheme for exports of leather products to be extended. Seven mega leather clusters to be
set up
 Allocation to defence services `1,64,415 crore, including `69,199 crore for capital expenditure towards
defence services

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