BUDGET 2011 HIGHLIGHTS Shortcomings in distribution system evident in rising prices of some food items Current account deficit

e food items Current account deficit Sees FY11 farm growth at 5.4% Sees industrial growth at 8.1%, service sector at 9.6% Inflation to slow in FY12 Economy expected to grow between 8.6%-9.2% in FY12 Shall be able to finalise DTC in 2011-12 To introduce public debt management bill next fiscal Will introduce GST Bill in current session; preparation for roll out in final stages To provide cash subsidy for urea, kerosense Propose 5-fold strategy to check black money Trafficking of narcotics drugs is also a contributor to black money generation Food Security Bill at final stages and will be introduced in current session Realty stocks rise 1-2% on budget proposals Salaries of angadwadi workers to be raised from Rs 1500 to Rs 3000 and Rs 750 to Rs 1,500 Education allotment raised by 40% in FY12 Scholarship schemes for SC/ST students in 9th-10th grade Rs 50 cr to upcoming institutions at Aligarh Muslim University Rs 200 cr IIT Kharagpur Rs 20 cr to IIM-Calcutta, Maulana Azad Medical College, DSE, Madras School of Economics Pension eligibility age for BPL workers to be lowered from 65 to 60 Allotment of Rs 200 cr for clean up of water bodies other than Ganga Rs 8,000 cr is allotted for J&Ks development; Rs 100 cr for Ladakh, Rs 105 cr for Jammu Health allocation up 20% To simplify service tax refund process UID mission has taken-off; 20 lakh numbers already given Electronic filing available through out the country Propose bill to amend Indian Stamp Act Introduce new simplified return form Gross Tax receipts Rs 9.32 lakh cr FY12 non-tax revenue seen at Rs 1.25lakh crore Brought down fiscal deficit from 5.5% to 5.1% for the yr 2010-11 and estimate it at 4% in FY12 FY12 fiscal deficit seen at 4.6% DT: exemption limit enhanced from 1,60,00 to Rs 1,80,000 Senior citizen tax exemption age lowered to 60 yrs from 65; amount raised to Rs2,50,000 from 2,40,000 New tax exemption for senior citizens of 80 yrs at Rs 5 lakh

Additional 20% exemption for infrastructure bonds MAT raised to 18.5% from 18% Low withholding tax of 5% for notified infra bonds Reduce surcharge on domestic companies to 5% from 7.5% Foreign dividend tax rat lowered to 15% for Indian firms SEZ to come under MAT Indirect Tax: maintain rate of excise duty at 10% 200 items to be brought under tax net of central excise in the GST AC and cooling products get full exemption from excise duties as part of coldstorage development Reduce basic customs duty on raw silk, certain inputs for chemical Customs duty on yarn reduced to 5% 20% duty on all grades of iron ore Custom duty on basic farm machinery reduced to 2.5% Selective Hybrid auto parts to get custom duty exemption Service Tax: retain standard rate of 10% Service tax raised on hotel accommodation Service tax on health checks on hospitals with more than 20 beds; Govt hospitals outside the levy Tax on services by firms allowing investment in insurance sector Increase service tax on air travel Pranab Mukherjee moves the Finance Bill 2011

Borrowing Gross market borrowing for 2011-12 seen at Rs4.17 trillion (Reuters forecast Rs4.5 trillion) Net market borrowing for 2011-12 seen at Rs3.43 trillion (Reuters forecast Rs3.77 trillion) Revised market borrowing for 2010-11 at Rs4.47 trillion Fiscal deficit Fiscal deficit seen at 5.1% of GDP in 2010-11 Fiscal deficit seen at 4.6% of GDP in 2011-12 Fiscal deficit seen at 3.5% of GDP in 2013-14 Spending Total expenditure in 2011-12 seen at Rs12.58 trillion Plan expenditure seen at Rs4.41 trillion in 2011-12, up 18.3% Revenue Gross tax receipts seen at Rs9.32 trillion in 2011-12 Non-tax revenue seen at Rs1.25 trillion in 2011-12 Revenue gain from indirect tax proposals seen at Rs11,300 crore in 2011-12 Service tax proposals to result in net revenue gain of Rs4,000 crore in 2011-12

Taxes

Standard rate of excise duty held at 10% Service tax rate kept at 10% To widen scope of service tax To raise minimum alternate tax to 18.5% from 18% Iron ore export duty raised to 20% Personal income tax exemption limit raised to Rs1,80,000 To reduce surcharge on domestic companies to 5%

Disinvestment Disinvestment in 2011-12 seen at Rs40,000 crore Policy reforms To create infrastructure debt funds To boost infrastructure growth with tax-free bonds of Rs30,000 crore Raised foreign institutional investor limit in 5-year corporate bonds for investment in infrastructure by $20 billion Food Security Bill to be introduced this year 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 To allocate more than Rs1.64 trillion to defence sector in 2011-12 Corpus of rural infrastructure development fund raised to Rs18,000 crore in 201112 To provide Rs20,150 crore capital infusion in state-run banks in 2011-12 To allocate Rs52,050 crore for the education sector To raise health sector allocation to Rs26,760 crore Agriculture To focus on removal of supply bottlenecks in the food sector in 2011-12 To raise target of credit flow to agriculture sector to Rs4.75 trillion Gives 3% 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 Rs3000 crore in a phased manner To provide Rs300 crore for 60,000 hectares under palm oil plantation Actively considering new fertilizer policy for urea Growth, inflation expectations Economy expected to grow at 9% in 2012, plus or minus 0.25% Inflation seen lower in the financial year 2011-12

Finance minister on the state of the economy Fiscal consolidation has been impressive. This year has also seen significant progress in those critical institutional reforms that will pave the way for double digit growth in the near future. At times the biggest reforms are not the ones that make headlines, but the ones concerned with details of governance which affect the everyday life of aam aadmi (common man). In preparing this years budget, I have been deeply conscious of this fact. Food inflation remains a concern Current account deficit situation poses some concern Must ensure that private investment is sustained The economy has shown remarkable resilience.

Finance minister on governance 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