BUDGET 2011 HIGHLIGHTS

SOCIAL SECTOR

–         Plan to spend Rs 1.6 lakh crore on social projects, up 17 percent

–         11th plan expenditure up 100% in nominal terms

–         India Microfinance Equity Fund of Rs 100 crores to support small MFIs

–         NABARD to be given funds for cooperatives financing handloom sector

–         To provide Rs 5,000 cr to SIDBI to meet priority lending targets

–         To allocate Rs 100 cr to SIDBI for women

–         NREGI wage rates indexed to CPI

–         Aanganwadi workers honorarium increased to Rs 3000 from Rs 1500. Helpers salary also doubled up from 750 to 1500.

–         Close to finalising food security bill this year

–         Education allocation increased to Rs 52,057 cr, increase of 24 percent

–         Old age pension age-limit to go down from 65 to 60, for people above 80 Rs 200 to Rs 500/-.

–         Banks to cover 20,000 villages for opening accounts in FY12

–         Rs 500 crore more for national skill development fund

–         To distribute 1 million UID cards per day shortly

AGRICULTURE SECTOR

–         Agriculture sector has shown significant rebound Growth 5.4%

–         Allocation for farm development raised to Rs 7,860 cr

–         3% (increased from 2%) Interest subvention to farmers who pay loans in time

–         Cold storage projects classified as infrastructure sector

–         Rs 300 cr provided to promote pulses cultivation in rain-fed areas, another Rs 300 cr to promote farm product cultivation

–         Farm credit flow raised to Rs 4.75 lakh crore

–         To classify capex of fertiliser sector into infrastructure

INDUSTRIAL & FINANCIAL SECTOR

–         Industrial Growth 8.1%

–         Exports up 9.4%

–         Economy to grow at 9 percent, plus or minus 0.25 percent in 2012

–         To permit SEBI registered mutual funds to access foreign funds directly

–         FIIs allowed to invest in Mutual Funds; unlisted bonds with minimum lock in period of 3 yrs

–         To provide Rs 2000 crore for warehousing facilities (to benefit TCI) and an (equal amount for manufacturing facilities

–         Interest subvention limit raised to housing upto Rs 25 lakh from Rs 20 lakhs

–         FIIs allowed to invest in 5-year unlisted bonds

–         To allow Rs 30K crore tax free bonds for railways, NHAI

–         Special incentives for hybrid vehicle makers if manufacturing done in India

FISCAL

–         Fiscal deficit down at 5.1% from 5.4%. Revenue deficit for FY11 seen at 3.4%. Fiscal deficit seen at 4.1% in FY 13, 3.5% in FY 14

–         Current account deficit poses concerns

–         Gross Tax Receipts at Rs 9.32 lakh crore, up 25%

–         Growth rate of services sector expected at 9.3%

–         Total expenditure estimates up 13.4%

–         Exports have grown at 29.4%

–         India expected to grow at 9 pct in FY 12

–         States to cut down fiscal deficit to 3 percent of Gross State GDP by 2014

–         Govt to keep up tempo of disinvestment process

–         Retain divestment target of Rs 40,000 crore for FY12

–         Govt committed to retain 51 percent stake in PSUs

–         New series of coins with new rupee symbol to be introduced

REFORMS

–         To introduce public debt management bill next fiscal

–         DTC to be effective April 1, 2012

–         Direct cash transfer for kerosene, fertiliser & LPG subsidy by April 2012

–         Govt. considering Malegam report

–         Plan to introduce Companies Bill in current session

–         Self-assessment in customs for exporters & importers

–         Have set up dedicated cell on transfer policy monitoring

–         Special Component plans to be specifically earmarked in the budget

–         Allocation to Department of Justice increased 3 fold to Rs 3000 cr

–         GST Bill to be introduced in parliament this year

–         New bank licence guidelines this year

TAXATION

–         Tax limit raised from Rs 1,60,000 to Rs 1,80,000. Special sops for Snr citizen.

–         A new scheme to be introduced for refund of service tax on lines of drawback of duties

–         New category of very senior citizens for those above 80 years introduced, exemption limit Rs 5 lakh. Senior citizens exempt up to Rs 2.5 lakh

–         Sugam – new tax return for small businesses

–         MAT rate hiked to 18.5% from 18%. Special Economic Zones to come under MAT

–         Reduce surcharge of 7.5 percent for domestic companies to 5 percent

–         Tax sops of Rs 20,000 on Infra Bonds extended for one year

–         Service tax retained at 10%.

–         Central excise duty rate unchanged at 10%

–         Service tax on hotel accommodation above Rs 1500 per day

–         AC restaurants serving liquor under service tax net

–         AC hospitals with more than 25 beds under service tax

–         Legal representation for businesses under service tax

–         Domestic travel to pay Rs 50 service tax, Rs 250 on international travel

–         Service Tax to add another 4000 cr revenue gains

–         Service tax net extended to include health check-ups

–         Low withholding tax of 5% for notified infra funds

–         To impose mandatory levy of 10 pct on branded garments

–         Base rate on excise duty raised to 5% from 4%

–         Direct Tax proposals net loss estimated at Rs 11,500 crore

–         Foreign unit dividend tax rate cut to 15% for Indian companies

–         Surcharge on domestic companies reduced to 5 % from 7.5%

–         No new tax exemption limits for women

–         MAT rate hiked from 18% to 18.5%

–         Relaxation in e-filing norms for small tax payers

The above highlights are based on Budget speech and may need to be amended after reading the fine print in the Finance Bills.