budget_v2

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S. P. Jain Institute of Management & Research

Union Budget 2011-12

HIGHLIGHTS

-An Economic Forum initiative

02 March 2011

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ECONOMY-II

PHYSICAL INFRASTRUCTURE-II

FII limit for investment in corp bonds with maturity> 5 yrs rasied by additional USD20b taking the limit to USD25b.

RIDF rasied by Rs 20b to Rs 180b for 2011-12.

SOCIAL SECTOR

Allocation of Rs 1914b provided to social services and rural devp.

Y-O-Y of total budget support stands at 7.8% in 2011-12 as compared to27.4% in 2010-11.

RURAL DEVELOPMENT

Allocation of Rs 741b to Dept of Rural Development is 3% lower than lastyear.

Allocation to MGNREGA is Rs 400b (Rs 1b lower than prev yr).

Pradhan Mantri Gram Sadak Yojana allocated 20% lesser than last yr.

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CAPITAL MARKETS

Allocation for educationraised by 24%, including

Rs 21,000 cr underSarva Siksha Abhiyan

Liberalisation of interestsubvention of 1% on

housing loans

Enhancement of housing loan limit to Rs 25 lakhs under priority

sector lending

Taxation- increase inexemption limits

(uniform tax relief of Rs 2,000)

Taxation- Reduction insurchare from 7.5% to

5% and increase in MATfrom 18% to 18.5%

Target of raising Rs 40,000 cr through

divestment of PSU stake

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AGRICULTURE

Removal of production and distribution bottlenecks for everyday

items.

Allocation under Rashtriya Krishi Vikas Yojana (RKVY) increased from ` 6,755 crore to ` 7,860 crore

Improving Rice based Cropping system in Eastern Region

Promotion of Oil palm production, Millets cultivation and animalbased protein development.

Credit flow for farmers raised from ̀ 3,75,000 crore to `4,75,000 crore

Interest subvention proposed to be enhanced from 2 percent to 3 per cent for providing short-term crop loans.

NABARDs capital base to be strengthened.

15 mega food parks to be built in 2011- 2012.

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INDUSTRY

INFRASTRUCTURE

Allocation of 2,14,000 crores, an increase of 23.3%

IIFCL to achieve cummulative disbursement of 25,000 crores

by march 31, 2012

tax free bonds of ` 30,000 crore proposed to be issued by Government undertakings during 2011-12.

MANUFACTURING & EXPORTS

Share of secondary sector in GDP expected to go up to 25%

from 16% .

Union to address a new manufacturing policy.

7 new mega leather clusters to be set up.

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STRENGTHENING INCLUSION

National food security bill to be introduced this year

Allocation to social sector increased by 17%.

Social sector

Allocation has increased by 480% in 2011-12

To provide rural broadband connectivity to 2,50,000 village

panchayats in 3 years.

Bharat Nirman

MCNREGA

wage rates shall be indexed to the consumer price index.

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TAX PROPOSALS

Direct taxes

� Exemption limit for the general category of individual taxpayers

enhanced from 1,60,000 to 1,80,000.

� Additional deduction of ̀ 20,000 for investment in long-term infrastructure

bonds proposed to be extended for one more year

�Lower rate of 15 per cent tax on dividends received by an Indian

company from its foreign subsidiary

�Investment linked deduction to businesses developing affordable

housing, and producing fertilisers.

�Weighted deduction on payments made to National Laboratories,

Universities and Institutes of Technology to be enhanced to 200 per cent

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TAX PROPOSALS contd. Indirect Taxes

Nominal Central Excise Duty of 1 per cent imposed on 130 items entering in

the tax net.

Optional levy on branded garments or made up to be converted into amandatory levy.

Excise Duty on LEDs reduced to 5 per cent and special CVD being fully exempted

Service tax

Standard rate at 10% while seeking a closer fit with GST.

Service tax levied on Hospitas, Hotel accomodation, restaurants, domestic and

international travel

Services provided by lif e insurance companies in the area of investment and some more legal services to be brought into tax net

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6000 crores to Publicsector banks to

maintain a CRAR of 8%

India Microfinance Equity Fund of Rs. 100crore to be created with

SIDBI

SIDBI to refinance incremental lending by MSMEs

Public sector banks to

achieve a target of 15 %lending to MSMEs under priority sector

lending at the earliest

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budget_v2

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