CHAPTER 1: INTRODUCTION

The Union Budget 2012-13 presented by the Finance Minister Shri Pranab Mukherjee in LokSabha today identifies five objectives to be addressed effectively in the ensuing fiscal year. They include focus on domestic demand driven growth recovery; create conditions for rapid revival of high growth in private investment; address supply bottlenecks in agriculture, energy and transport sectors particularly in coal, power, national highways , railways and civil aviation; intervene decisively to address the problem of malnutrition especially in the 200 high-burden districts and expedite coordinated implementation of decisions being taken to improve delivery systems , governance, and transparency; and address the problem of black money and corruption in public life. The Finance Minister called for a need to have a close look at the growth of revenue expenditure, particularly, on subsidies. He announced that from 201213 while subsidies related to food and for administering the Food Security Act will be fully provided for, all other subsidies would be funded to the extent that they can be borne by the economy without any adverse implications. He said that the Government will endeavor to restrict the expenditure on central subsidies under 2 per cent of GDP in 2012-13and over the next three years, it would be further brought down to 1.75 per cent of GDP.Shri Mukherjee said that based on recommendations of the Task Force headed by Shri Nandan Nilekani, a mobilebased Fertilizer Management System has been designed to provide end-to-end information on movement of fertilizers and subsidies which will be rolled out nation-wide during 2012. He said that transfer of subsidy to the retailer and eventually to the farmers will be implemented in subsequent phases which will benefit 12 crore farmer families The Union Budget for FY13 is presented at a time when the domestic economy is in the midst of a slowdown with the downturn in the global economic environment further impeding the growth momentum. Measures for boosting demand, especially on the investment front through progressive policy action and at the same time laying a credible fiscal consolidation road map were widely
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anticipated in this budget. However, the announcements in the Union Budget for FY13 could best be described as workmanlike in nature. Acknowledging that the government has limited fiscal space to manoeuvre, the realistically high fiscal deficit target of 5.1% could ensure that going ahead the economic agents would set their expectations on growth on the right path. The Union Budget FY13, though lacks major big bang announcements, it has made an attempt to manage the government finances in a much prudent manner. Hike in the excise duties and service tax was required to garner more revenue. The increase in the tax limits though marginal, would ensure some savings to the middle income group which constitute the majority of the population, thereby boosting demand. Further, the intention to implement the Advance Pricing Agreement which would significantly bring down tax litigation and provide tax certainty to foreign investors is a positive development. On the expenditure front, government‟s decision to stay away from allocating a major proportion of funds towards the social sector or new announcements is a welcome move as it would lead to divergence of funds towards other productive areas. The government has also emphasised the need to accelerate infrastructure development. Allowing irrigation terminal markets, common infrastructure in agriculture markets, soil testing laboratories and capital investment in fertiliser sector, Oil and Gas/LNG storage facilities and oil and gas pipelines, fixed network for telecommunication and telecommunication towers eligible for Viability Gap Funding (VGF) for support to Public Private Participation (PPP) projects would enhance financing. However, it would be the effective realization of the scheme which would boost infrastructure development as during the previous budget announcements lack of implementation had created bottlenecks. The focus of the government on capital market is a positive given it would accelerate capital generation and funding requirement for the Indian corporate thereby boosting investment. Besides, allowing External Commercial Borrowings (ECBs) to part finance Rupee debt of existing power projects, for capital
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expenditure on the maintenance and operations of toll systems for roads and highways and also for working capital requirements of the airline industry is commendable as it would ensure securing of funds by these sectors which are facing financing crunch. The biggest disappointment in the budget was that the government did not lay down a strong reform agenda. While it was highly expected that specific progressive policy action would be taken regarding subsidies, FDI, labour laws or land acquisitions, the budget failed to deliver on Fiscal Arithmetic for FY13 The fiscal year FY13 is expected to witness a slow pace of recovery in growth, thus entailing lower revenue generation and exacting higher expenditure from the government. For FY13, total expenditure is budgeted to increase by 13.1% to ` 14,909.25 bn as compared to the revised estimates (RE) of ` 13,187.20 bn for FY12. As in the last budget, the plan expenditure received a major boost with an allocation of ` 5,210.25 bn, an increase of 22.1% over FY12 (RE). However, unlike the previous budget where the non-plan expenditure was budgeted to decline, this time around it is budgeted to increase by 8.7% to ` 9,699 bn. The subsidy burden during FY13 though budgeted to decrease by 12.2% during FY13 from the revised estimates of FY12; it is budgeted to increase by over 32.0% over the budget estimate of FY12. The government aims to restrict the expenditure on Central subsidies to under 2% of GDP in FY13 through better targeting and leakage proof delivery of the subsidies. For FY13, the Gross Tax Receipts are estimated to increase by 15.6% over FY12 (BE) and by 19.5% over the FY12 (RE) given the moderation in the economic growth. On the direct tax front, corporate profitability is expected to remain subdued; revenue from corporate tax is budgeted to increase only by 13.9% (RE). In spite of broadening of the income tax slabs, the personal income tax collection is budgeted to increase by 13.9% in FY13 over FY12 (RE). The 2% increase in excise duties from 10% to 12% is expected to lead to larger collection of indirect taxes; revenue from Union excise duty is budgeted to increase by

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29.0%. Further as a result of an increase in service tax from 10% to 12%, services tax is budgeted to increase by 30.5% by FY13. Unlike in the previous budget, Non-tax revenue is budgeted to record an increase of 32% during FY13 as compared to (RE) of FY12. This would be achieved primarily owing to significant 82.0% increase in other Non-tax revenue collections as external grants as well as interest receipts have been budgeted to register a decline. During this budget, the Government plans to generate only ` 300.00 bn through disinvestments. During the previous year against a target of ` 400.00 bn, the Government had been able to raise only about ` 140.00 bn from disinvestment. As a result of expected lower revenue regeneration as compared to higher expenditure the government has pegged the fiscal deficit target of 5.1% during FY13 as compared to an estimated of 5.95% during FY12. Market borrowings are slated to increase by around 9.8% to around ` 4790.00 bn as compared to ` 4364.14 bn in FY12 (RE).

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FRBM ACT  Introduction of amendments to the FRBM Act as part of Finance Bill.  Headline inflation expected to moderate further in next few months and remain stable thereafter.CHAPTER 2 : OVERVIEW OF THE ECONOMY  GDP growth estimated at 6.0.  Developments in India‟s external trade in the first half of current year have been encouraging. 5 . storage and marketing systems have helped in more effective management of inflation. Slowdown in comparison to preceding two years is primarily due to deceleration in industrial growth.25 per cent.  Deterioration in fiscal balance in 2011-12 due to slippages in direct tax revenue and increased subsidies.  Concept of “Effective Revenue Deficit” and “Medium Term Expenditure Framework” statement are two important features of amendment to FRBM Act in the direction of expenditure reforms. This will help in reducing consumptive component of revenue deficit and create space for increased capital spending.6 per cent +/.  Steps taken to bridge gaps in distribution. 2012.  Current account deficit at 3.9 per cent in real terms in 2011-12.6 per cent of GDP for 2011-12 and reduced net capital inflow in the 2nd and 3rd quarters put pressure on exchange rate.  India‟s GDP growth in 2012-13 expected to be 7. Diversification in export and import market achieved.  Effective Revenue Deficit is the difference between revenue deficit and grants for creation of capital assets.

6 . “Medium-term Expenditure Framework” statement will set forth a threeyear rolling target for expenditure indicators.  Central Plan Scheme Monitoring System to be expanded for better tracking and utilisation of funds.  Recommendations of the Expert Committees to streamline and reduce the number of centrally sponsored schemes and to address plan and non-plan classification to be kept in view while implementing Twelfth Plan.

SECTORAL IMPACT SECTOR Agriculture Social Sector Infrastructure Services Banking. Financial Services and Insurance (BFSI) Hospitality IT&ITeS Media & Entertainment Real Estate & Construction Telecom Manufacturing Automotive Capital Goods & Engineering Cement Consumer Goods Gems & Jewellery Leather Metals & Mining MSMEs Oil & Gas Pharma & Healthcare Power Textiles Neutral Positive Marginally Positive Positive Negative Marginally Positive Positive Positive Marginally Positive Marginally Positive Positive Marginally Positive Neutral Marginally Positive Marginally Positive Positive Neutral Positive+/Positive/Marginally Positive RATING Positive+ Positive Positive 7 .

 A flood management project was approved by Ganga Flood Control Commission at a cost of Rs. reduced from 7.  A new centrally sponsored scheme titled “National Mission on Food Processing” to be started in FY13 in co-operation with state governments  Irrigation and Water Resource Finance Company were operationalized to mobilize large resources to fund irrigation projects. Rs. other than urea. Allocation for Accelerated Irrigation Benefit Programme (AIBP) in FY13 was stepped up by 13% to Rs. Rs.  Outlay for Rashtriya Krishi Vikas Yojana (RKVY) was increased to Rs. 300 crore to Vidarbha Intensified Irrigation Development Programme under RKVY.42 billion. 5 billion provided to broaden scope of production of fish to coastal aquaculture. Structural changes in Accelerated Irrigation Benefit Programme (AIBP)were made to maximize flow of benefit from investments in irrigation projects.CHAPTER 3 : AGRICULTURE SECTOR AGRICULTURE  India was expected to become independent in urea production in the next 5 years. 439 crore for Kandi sub-division of Murshidabad District. Government took steps to finalize pricing and investment policies for urea to reduce India‟s import dependence in urea.  Initiative of bringing Green Revolution to Eastern India (BGREI) resulted in increased production and productivity of paddy.  Agricultural credit target was raised to 5.5% to 5% and from 5% to 2. 8 .75 trillion rupees in 2012 – 13. Allocation for the scheme increased to Rs. 9. Basic customs duty on some water soluble fertilizers and liquid fertilizers.217 crore in 2012-13. 10 billion in FY13.5% respectively.142.

The scheme of capitalization of weak RRBs extended by another 2 years to enable all the states to contribute their share.  Investment-linked deduction of capital expenditure incurred in cold chain facility and warehouses for storage of food grains provided at the enhanced rate of 150% as against the current rate of 100%.  Short term Regional Rural Bank (RRB) credit refinance fund were set up to enhance the capacity of the RRBs to disburse short term crop loans to small and marginal farmers. Interest subvention scheme for providing short term crop loans to farmers at 7% interest per annum to be continued in FY13. Additional subvention of 3% is available for prompt paying farmers. 9 .

LIC was appointed as an aggregator and all public sector banks were appointed as Points of Presence (PoP) and Aggregators.  In the ongoing Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme for BPL beneficiaries. Allocation for Scheduled Castes Sub Plan at Rs.  Lumpsum grant on the death of primary breadwinner of a BPL family.  To enhance access under Swavalamban scheme.  Allocation of Rs.13 billion.000 schools were proposed to be set up at block level as model schools in Twelfth Plan. pension amount was raised from Rs.CHAPTER 4 : SOCIAL SECTOR HUMAN RESOURCE DEVELOPMENT & SOCIAL JUSTICE  Allocation of Rs. in the age group of 18-64 years. Allocation under National Social Assistance Programme (NSAP) raised by 37% to Rs.50 billion proposed for Rajiv Gandhi Scheme for Empowerment of Adolescent Girls.6%.124 crore provided for Rashtriya Madhyamik Shiksha Abhiyan (RMSA) representing an increase of 29 per cent over BE 2011-12.47 billion in FY13. SABLA.50 billion for Integrated Child Development Service (ICDS) scheme. EDUCATION  6. 3.  Rs.20.000. 217. 7.  Special grant was provided to various universities and academic institutions. representing an increase of 18% over BE FY12. Allocation for Tribal Sub Plan at Rs. 10 . representing an increase of 58% over BE FY12. 200 to 300 per month. representing an increase of 17. 371. 84. 158.10 billion. doubled to Rs.

 Existing vaccine units were modernized and new integrated vaccine unit was set up in Chennai. representing an increase of 21.  Proposal to allow deduction of up to Rs. representing an increase of over 27%.  Budgetary allocation for rural drinking water and sanitation was increased from Rs. 11 .115 crore in 2011-12 to Rs. HEALTH  Pradhan Mantri Swasthya Suraksha Yojana expanded to cover up gradation of 7 more Government medical colleges.822 crore in 2012-13. EMPLOYMENT AND SKILL DEVELOPMENT  MGNREGS has had a positive impact on livelihood security. a Credit Guarantee Fund was set up.000 for preventive health checkup.7% over FY12.  Allocation for NRHM increased from Rs. 140 billion. 18.Sarva Shiksha Abhiyan (RTE-SSA).  No new case of polio reported in last one year. 255.  To ensure better flow of credit to students.  119. 5. 110 billion to Rs.55 billion provided for Right to Education .  Special grant provided to various universities and academic institutions.37 billion rupees allocated for National Programme of Mid-Day Meals in schools. 20. This also enhanced their remuneration. For FY13.  Need to bring about greater synergy between MGNREGA and agriculture and allied rural livelihoods.  National Urban Health Mission was launched.  Scope of „Accredited Social Health Activist‟ – ‘ASHA’ was enlarged. Rs.

 Allocation of `3915 crore made for National Rural Livelihood Mission representing an increase of 34 per cent.  Allocation for Prime Minister‟s Employment Generation Programme increased by 23 per cent to `1.  “Himayat” scheme introduced in J&K to provide skill training to 1 lakh youth in next 5 years. 12 . Skill Development  Projects approved by National Skill Development Corporation expected to train 6.000 crore allocated for National Skill Development Fund in 2012-13. corpus for „Women‟s SHG‟s Development Fund‟ enlarged.2 crore persons at the end of 10 years.276 crore in 2012-13.  To improve the flow of institutional credit for skill development. To ease access to bank credit.  Proposal to establish Bharat Livelihoods Foundation of India through Aajeevika scheme.  `1. Entire cost to be borne by Centre. a separate Credit Guarantee Fund to be set up.

Power and Coal  Coal India Limited advised to sign fuel supply agreements with power plants. National Manufacturing Policy  National Manufacturing Policy announced with the objective of raising.  More sectors added as eligible sectors for Viability Gap Funding under the scheme “Support to PPP in infrastructure”.  First Infrastructure Debt Fund with an initial size of `8.CHAPTER 5 : INFRASTRUCTURE SECTOR INFRASTRUCTURE AND INDUSTRIAL DEVELOPMENT  During Twelfth Plan period. 2015.800 kilometre under NHDP next year.  External Commercial Borrowings (ECB) to be allowed to part finance Rupee debt of existing power projects.  A harmonised master list of infrastructure sector approved by the Government. 13 .  Tax free bonds of `60. within a decade. investment in infrastructure to go up to `50 lakh crore with half of this. the share of manufacturing in GDP to 25 per cent and creating of 10 crore jobs.  Government has approved guidelines for establishing joint venture companies by defence PSUs in PPP mode. expected from private sector.000 crore to be allowed for financing infrastructure projects in 2012-13. Transport: Roads and Civil Aviation  Target of covering a length of 8. having long-term PPAs with DISCOMs and getting commissioned on or before March 31.000 crore launched earlier this month.  IIFCL has put in place a structure for credit enhancement and take-out finance for easing access of credit to infrastructure projects.

 Direct import of Aviation Turbine Fuel permitted for Indian Carriers as actual users. Housing Sector  Various proposals to address the shortage of housing for low income groups in major cities and towns including allowing ECB for low cost housing projects and setting up of a credit guarantee trust fund etc.500 crore spread over 5 years approved.  ECB proposed to be allowed for capital expenditure on the maintenance and operations of toll systems for roads and highways.5 billion as Japanese participation in the project. subject to a total ceiling of US $ 1 billion. one to cover Prakasam and Guntur districts in Andhra Pradesh and another for Godda and neighbouring districts in Jharkhand to be set up.  Two more mega handloom clusters. 14 .360 crore. Fertilisers  Government has taken steps to finalise pricing and investment policies for urea to reduce India‟s import dependence in urea.  Three Weaver‟s Service Centres one each in Mizoram.884 crore for waiver of loans of handloom weavers and their cooperative societies. Allocation of the Road Transport and Highways Ministry enhanced by 14 percent to `25.  Proposal to allow foreign airlines to participate upto 49 per cent in the equity of an air transport undertaking under active consideration of the government. Delhi Mumbai Industrial Corridor  In September 2011 central assistance of `18. if they are part of original project. US $ 4. Nagaland and Jharkhand to be set up for providing technical support to poor handloom weavers.  ECB to be permitted for working capital requirement of airline industry for a period of one year. Textiles  Government has announced a financial package of `3.

 To enable greater access to finance by Small and Medium Enterprises (SME).000 crore India Opportunities Venture Fund to be set up with SIDBI. two SME exchanges launched in Mumbai recently.  Policy requiring Ministries and CPSEs to make a minimum of 20 per cent of their annual purchases from MSEs approved. Of this.  A powerloom mega cluster to be set up in Ichalkaranji in Maharashtra with a budget allocation of `70 crore. 15 . `500 crore pilot scheme announced for promotion and application of Geo-textiles in the North Eastern Region. 4 per cent earmarked for procurement from MSEs owned by SC/ST entrepreneurs.  `5.

5 mn for another year.  Set up Credit Guarantee Trust Fund to ensure better flow of institutional credit for housing loans. For people already owning an apartment.  Enhance provisions under Rural Housing Fund from ` 30 bn to ` 40 bn. there is a rise in exemption for the monthly charges payable by a member to a housing society from ` 3.  Investment-linked deduction of capital expenditure incurred in affordable housing business is proposed to be provided at the enhanced rate of 150%.5 mn to ` 1 mn. as against the current rate of 100%. the rate of withholding tax on interest payments on ECBs is proposed to reduce from 20% to 5% for three years.5 mn where the cost of the house does not exceed ` 2.000 to ` 5. mtr. 16 . under the scheme of Affordable  Housing in partnership are also included in the exemptions.CHAPTER 6 : SERVICE SECTOR MEDIA & ENTERTAINMENT  Entertainment and amusement services have been included in the negative list of service tax.000.  For affordable housing.  The industry has been exempted from service tax on copyrights relating to recording of cinematographic films.  Construction services relating to residential dwelling and low-cost mass housing up to an area of 60 sq.  Extend the scheme of interest subvention of 1% on housing loan up to ` 1. REAL ESTATE AND CONSTRUCTION  External Commercial Borrowings (ECBs) are allowed for low cost affordable housing projects.  Enhance the limit of indirect finance under priority sector from ` 0.

DISINVESTMENT POLICY  Government has further evolved its approach to divestment of Central Public Sector Enterprises by allowing them a level playing field vis-à-vis the private sector in respect of practices like buy backs and listing at stock exchanges.  For 2012-13. TAX REFORMS  DTC Bill to be enacted at the earliest after expeditious examination of the report of the Parliamentary Standing Committee. Nation-wide rollout during 2012. a mobile-based Fertilizer Management System has been designed to provide end to-end information on movement of fertilisers and subsidies. `30.000 crore to be raised through disinvestment.  Subsidies related to administering the Food Security Act will be fully provided for.  Drafting of model legislation for the Centre and State GST in concert with States is under progress.  All three public sector Oil Marketing Companies have launched LPG transparency portals to improve customer service and reduce leakage.  Endeavour to scale up and roll out Aadhaar enabled payments for various government schemes in at least 50 districts within next 6 months. while being inevitable. 17 .  Endeavour to keep central subsidies under 2 per cent of GDP in 2012-13.  GST network to be set up as a National Information Utility and to become operational by August 2012. may become undesirable if they compromise the macroeconomic fundamentals of economy. to be further brought down to 1. Over next 3 year.CHAPTER 7 : INVESTMENT SECTOR SUBSIDIES  Some subsidies. At least 51 percent ownership and management control to remain with Government.  Based on recommendation of task force headed by Shri Nandan Nilekani.75 per cent of GDP.

2011”. Legislative Reforms  Official amendment to “The Pension Fund Regulatory and Development Authority Bill. “The Banking Laws (Amendment) Bill. Capital Market  Various steps proposed to be taken for deepening the reforms in the Capital markets. Financial Sector  Rajiv Gandhi Equity Saving Scheme to allow for income tax deduction of 50 percent to new retail investors. Possibility of creating a financial holding company to raise resources to meet the capital requirements of PSU Banks under examination. 2011” and “The Insurance Law (Amendment) Bill.  Various Bills proposed to be moved in the Budget session of the Parliament to take forward the process of financial sector legislative reforms.`15. The scheme will have a lock-in period of 3 years. allowing QFIs to access Indian Bond Market etc.888 crore proposed to be provided for capitalisation.STRENGTHENING INVESTMENT ENVIRONMENT Foreign Direct Investment  Efforts to arrive at a broad based consensus in consultation with the State Governments in respect of decision to allow FDI in multi-brand retail upto51 per cent. Advance Pricing Agreement  Provision regarding implementation of Advance Pricing Agreement to be introduced in Finance Bill. 2012. Capitalisation of Banks and Financial Holding Company  To protect the financial health of Public Sector Banks and Financial Institutions. who invest upto `50. including simplifying process of IPOs. 18 .000 directly in equities and whose annual income is below `10 lakh to be introduced. 2008” to be moved in this session.

113 crore in BE 2012-13 represents an increase of 18 per cent over BE 2011-12. Financial Inclusion  Out of 73. Ultra Small Branches are being set up at these habitations.710 crore in BE 2012-13 represents an increase of 17.6 per cent. 2011 is before Parliamentary Standing Committee.  Allocation for Tribal Sub Plan at `21.  As a next step.000 habitations have been covered. Food Security  National Food Security Bill. 2012. 2012. 19 . INCLUSION Scheduled Castes and Tribal Sub Plans  Allocation for Scheduled Castes Sub Plan at `37. Rest likely to be covered by March 31. Regional Rural Banks  Out of 82 RRBs in India. Priority Sector Lending  Revised guidelines on priority sector lending to be issued after stake holder consultation.  A national information utility for computerisation of PDS is being created. “Swabhimaan” campaign to be extended to more habitations. A central “Know Your Customer” depository to be developed in 2012-13 to avoid multiplicity of registration and data upkeep. To become operational by December.  Proposal to extend the scheme of capitalisation of weak RRBs by another 2 years to enable States to contribute their share. 81 have successfully migrated to Core Banking Solutions and have also joined the National Electronic Fund Transfer system.  In 2012-13.000 identified habitations that were to be covered under “Swabhimaan” campaign by March. about 70. 2012.

Rural Development and Panchayati Raj  Budgetary allocation for rural drinking water and sanitation increased from `11. representing an increase of 58 per cent over BE 2011-12.850 crore made for Integrated Child Development Service (ICDS) scheme. `5.Multi-sectoral Nutrition Augmentation Programme  A multi-sectoral programme to address maternal and child malnutrition in selected 200 high burden districts is being rolled out during 2012-13.24.  `11. Rural Infrastructure Development Fund (RIDF)  Allocation under RIDF enhanced to `20.000 crore to `14.  Backward Regions Grant Fund scheme to continue in twelfth plan with enhanced allocation of `12.040 crore in 2012-13.  The increase in excise duty across categories ranging from 1-2% will contribute to inflationary pressures and we seek a roll back.937 crore allocated for National Programme of Mid Day Meals in schools.000 crore earmarked exclusively for creating warehousing facilities. representing an increase of 22 per cent over the BE 2011-12. Allocation for PMGSY increased by 20 per cent to Rs.000 crore to improve connectivity.  An allocation of `750 crore proposed for Rajiv Gandhi Scheme for Empowerment of Adolescent Girls.  Allocation of `15. Since the 20 .000 crore.  Major initiative proposed to strengthen Panchayats through Rajiv Gandhi Panchayat Sashaktikaran Abhiyan. SABLA.000 crore representing an increase of over 27 per cent. Warehousing  The proposal for setting up the national food Processing Mission is a welcome move which will definitely contribute to enhanced growth of the sector on account of improved centre state coordination and execution of policies.

2013. of which 3 million tones of storage capacity will be added by the end of 2011-12 and 5 million would be added next year  The reduction in customs duty on probiotics and Soya protein concentrate and isolated soya protein as well as reduction in excise duty on all processed soya food products. who invest up to Rs.  Creation of 2 million tones of storage capacity in the form of modern silos has already been approved. 21 . 100 million and above in electronic form through nationwide broker network of stock exchanges.  The Government made it mandatory for companies to issue IPOs of Rs.  Reduction in securities transaction tax by 20% from 0.1% on cash delivery transactions.  Removal of the cascading effect of Dividend Distribution Tax (DDT) in a multi-tier corporate structure. as also the reduction in concessional basic customs duty along with reduced excise duty of 6% on iodine.000 directly in equities and whose annual income is below Rs. warehouses is a positive move towards incentivizing flow of money in these areas. 1 million to be introduced. 50. Nearly 15 million tones capacity is being created under the Private Entrepreneur‟s Guarantee Scheme.  Enhancement in investment linked deduction of capital expenditure towards cold chain facility. The Government provided opportunities for wider shareholder participation through electronic voting facilities. The scheme has a lock-in period of three years. Continuation to allow repatriation of dividends from foreign subsidiaries of Indian companies at a lower tax rate of 15% up to March 31.125% to 0.industry is low margin and high volume the roll back becomes even more pertinent. is a step in the right direction towards achieving nutrition and health goals INVESTMENTS AND CAPITAL MARKET  Rajiv Gandhi Equity Saving Scheme allowed income tax deduction of 50% to new retail investors.

Rs.  A central “Know Your Customer” depository was developed in 2012-13 to avoid multiplicity of registration and data upkeep. 2012.  Provision regarding implementation of Advance Pricing Agreement was introduced in Finance Bill. including simplifying process of IPOs. Proposal to extend the scheme of capitalization of weak RRBs by another 2 years to enabled States to contribute their share..  Various steps were taken for deepening the reforms in the Capital markets.  To protect the financial health of Public Sector Banks and Financial Institutions.888 crore proposed was provided for capitalization. 81 successfully migrated to Core Banking Solutions and have also joined the National Electronic Fund Transfer system. allowing QFIs to access Indian Bond Market etc. 22 . Efforts arrived at a broadbased consensus in consultation with the State Governments in respect of decision to allow FDI in multi-brand retail upto 51 per cent.  Out of 82 RRBs in India. 15.

roof or tuber crop harvesting machine and rotary tiller and weeder.  Basic customs duty to be reduced from 7.5% on sugarcane planter. repair and overhaul of civilian aircraft.  Tax concessions proposed for parts of aircraft and testing equipment for third party maintenance.  Full exemption from basic customs duty to automatic silk reeling and processing machinery as well as its parts.5% on machinery and instruments needed for surveying and prospecting for minerals.  Basic customs duty to be reduced from 10% to 7.  Full exemption from import duty on certain categories of specified equipment needed for road construction.  Import of equipment for expansion or setting up of fertilizer projects to be fully exempt from basic customs duty of 5% for three years. 23 .5% to 2.5% for equipment required for installation of train protection and warning system and up gradation of track structure for high speed trains.  Plant and equipment required for the initial setting up of solar thermal projects are fully exempted from special CVD.  Basic customs duty to be reduced from 10% or 7. tunnel boring machines and parts of their assembly.  Reduction in basic customs duty from 7.CHAPTER 8 : MANUFACTURING SECTOR CAPITAL AND ENGINEERING GOODS  Full exemption from basic customs duty on equipment imported for road and highway construction projects.  Reduction in basic customs duty from 7.5% to 5% on specified coffee plantation and processing machinery.5% to 2.5% to 2.5% on plant and machinery imported for setting up or substantial expansion of iron ore pellet plants or iron ore beneficiation plants.

LCD and LED TV panels and parts of memory card for mobile phones.  Reduction of basic customs duty on specified raw materials for the manufacture of adult diapers from 10% or 7.  Increase in basic excise duty on cigarettes of more than 65 mm length by adding an ad valorem component of 10% to the existing specific rates. Concessional import duty available for installation of mechanized handling systems and pallet racking systems in mandis or warehouses for horticultural produce to be extended.  Basic customs duty on probiotic products reduced from 10% to 5%. CONSUMER GOODS  Basic customs duty reduced from 7.  Excise duty on LED lamps reduced to 6%.  Basic customs duty on bicycles increased from 10% to 30% and on bicycle parts from 10% to 20%.  Concessional basic customs duty of 2.  Full exemption from basic customs duty on waste paper.5% to 5% on specified coffee plantation and processing machinery. Simultaneously.  Full exemption from import duty on tunnel boring machines and parts of their assembly.  Basic customs duty on soya protein concentrate and isolated soya protein reduced from 30% and 15% respectively to 10%.5% along with reduced excise duty of 6% on iodine.  Increase in basic excise duty on hand-rolled bidis from ` 8 to ` 10 per thousand and on machine rolled bidis from ` 19 to ` 21 per thousand. excise duty on all processed soya food products is being reduced to 6%.  Coating chemical used for compact fluorescent lamps is proposed to be fully exempt from basic customs duty. The ad valorem duty would be chargeable on 50% of the retail sale price declared on the pack.5% to 5% with countervailing duty of 6% and nil special countervailing duty. The 24 .

Also.20 mn. out of the` 600 bn tax free bonds for financing infrastructure projects during FY13. the upper limit of 20% tax slab raised from ` 0. POWER  Allocation of tax-free bonds amounting to ` 100 bn towards the power sector.00 mn. unmanufactured tobacco and zarda scented tobacco in pouches are being stepped up taking into account improvements in the efficiency of machines used by this industry.  Investment-linked deduction of capital expenditure incurred on cold chain facility is proposed to be provided at the enhanced rate of 150% as against the current rate of 100%.  The rates of duty specified under the compounded levy scheme per packing machine for pan masala.18 mn to ` 0. gutkha.  Coal India Limited (CIL) has been advised to sign fuel supply agreements with power plants which have entered into long-term Power Purchase Agreements with distribution companies (DISCOM) and would get 25 .  A new centrally sponsored scheme titled “National Mission on Food Processing” would be started.  Weighted deduction at the rate of 150% of expenditure incurred on skill development in the manufacturing sector is proposed to be provided in accordance with specified guidelines.  Exemption limit for the general category of individual taxpayers enhanced from ` 0. in cooperation with the State Governments in FY13.existing exemption available to hand-rolled bidis for clearances up to 2 mn bidis per annum is being retained.  Permitting External Commercial Borrowings (ECBs) to part finance rupee debt of existing power projects.80 mn to ` 1. chewing tobacco.  Bee keeping and production of honey and beeswax is proposed to be added for the purposes of investment-linked deduction.

2015. on or before March 31. if required.e. SOCIAL SECURITY AND THE NEEDS OF WEAKER SECTIONS  Allocation under NSAP raised by 37 per cent to `8. LIC appointed as an Aggregator and all Public Sector Banks appointed as Points of Presence (PoP) and Aggregators. pension amount to be raised from `200 to `300 per month.  In the ongoing Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme for BPL beneficiaries.e.  Extension of the sunset date by one year i. Any further requirement to be met. Security  A provision of `1.93.commissioned on or before March 31.  Reduction in the rate of withholding tax on interest payments on external commercial borrowings from 20% to 5% for three years to provide low cost funds to the sector. in the age group 18-64 years.447 crore in 2012-13. Further. till March 31. doubled to `20.  Special grant provided to various universities and academic instiutions.  Full exemption of basic customs duty and a 1% concessional CVD to steam coal used in thermal power projects for a period of two years i.  100% Counter Vailing Duty (CVD) or excise duty exemption in plants. an inter ministerial group has been set up to undertake periodic review of the allocated coal mines and shall make recommendations on de-allocations.000.  Lump sum grant on the death of primary breadwinner of a BPL family. 2014.579 crore for capital expenditure. 26 .407 crore made for Defence services including `79. equipment etc used in the initial set up of solar energy and solar thermal projects.  Additional 20% depreciation in the initial year to be extended to new assets acquired by power generation companies. 2013 to claim 100% deduction of profits for 10 years.  To enhance access under SWAVALAMBAN scheme.

Adequate funds to be allocated to complete enrolment of another 40 crore persons. GOVERNANCE UID-Aadhaar  Enrolment of 20 crore persons completed under UID mission.000 residential quarters for Central Armed Police Forces. 27 .  `3. Public Procurement Legislation  Bill regarding Public Procurement Legislation to be introduced in the Budget Session of the Parliament. `1.280 crore proposed to be allocated for construction of office building of Central Armed Police Forces.185 crore proposed to be allocated for construction of nearly 4.  Scheme to create National Population Register likely to be completed within next 2 years.  Legislative measures for strengthening anti-corruption framework are at various stages of enactment.

9 per cent of GDP in RE 2011-12.CHAPTER 9 :BUDGET ESTIMATES 2012-13  Gross Tax Receipts estimated at `10.8 per cent of GDP in 2012-13.  Central Government debt at 45.  `3.71.  Fiscal deficit at 5.  Effective Revenue Deficit to be 1.  Fiscal deficit at 5. 28 .925 crore.  Non-debt Capital Receipts estimated at `41.612 crore.650 crore.  Entire amount of subsidy is given in cash and not as bonds in lieu of subsidies.69.65.071 crore.  Non-tax Revenue Receipts estimated at `1.  Plan expenditure for 2012-13 at `5.614 crore.64.1 per cent of GDP in BE 2012-13.  Net market borrowing required to finance the deficit to be `4.79 lakh crore in 2012-13.90.216 crore estimated to be transferred to States including direct transfers to States and district level implementing agencies.  Temporary arrangement to use disinvestment proceeds for capital expenditure in social sector schemes extended for one more year.900 crore.21.025 crore is 18 per cent higher than BE 2011-12.5 per cent.  Net Tax to Centre estimated at `7.  Non-plan expenditure estimated at `9. This is higher than 15 per cent projected in Approach to the Twelfth Plan.77.  99 per cent of the total plan outlay met in the Eleventh Plan.  Total expenditure for 2012-13 budgeted at `14.5 per cent of GDP in 2012-13 as compared to Thirteenth Finance Commission target of 50.

 DTC rates proposed to be introduced for personal income tax.80.  Upper limit of 20 per cent tax slab proposed to be raised from `8 lakh to `10 lakh.000.  Proposal to allow individual tax payers.3.CHAPTER 10: TAX PROPOSALS DIRECT TAXES  Tax proposals for 2012-13 mark progress in the direction of movement towards DTC and GST. a deduction of upto `10.000 giving tax relief of `2.000 to `2.  Proposal to extend weighted deduction of 200 per cent for R&D expenditure in an in house facility for a further period of 5 years beyond March 31.2013.  Proposal to allow deduction of upto `5.  New sectors to be added for the purposes of investment linked deduction.  Exemption limit for the general category of individual taxpayers proposed to be enhanced from `1. rate of withholding tax on interest payment on ECBs proposed to be reduced from 20 per cent to 5 per cent for 3 years for certain sectors.000 for interest from savings bank accounts.  Proposal to continue to allow repatriation of dividends from foreign subsidiaries of Indian companies at a lower tax rate of 15 per cent upto 31.  Investment link deduction of capital expenditure for certain businesses proposed to be provided at the enhanced rate of 150 per cent. 2012.000 for preventive health check up.00.  Restriction on Venture Capital Funds to invest only in 9 specified sectors proposed to be removed.  Senior citizens not having income from business proposed to be exempted from payment of advance tax.  To provide low cost funds to stressed infrastructure sectors. 29 .

500 crore estimated as a result of Direct Tax proposals. complexity in tax law. INDIRECT TAXES Service Tax  Sevice tax confronts challenges of its share being below its potential.  Proposal to introduce General Anti Avoidance Rule to counter aggressive tax avoidance scheme.  Measures proposed to deter the generation and use of unaccounted money. Proposal to provide weighted deduction of 150 per cent on expenditure incurred for agri-extension services.  Overwhelming response to the new concept of taxing services based on negative list.  Proposal to provide weighted deduction at 150 per cent of expenditure incurred on skill development in manufacturing sector.  A net revenue loss of `4.  Exemption from Capital Gains tax on sale of residential property. other than companies.  Proposal to extend the sunset date for setting up power sector undertakings by one year for claiming 100 per cent deduction of profits for 10 years.  Turnover limit for compulsory tax audit of account and presumptive taxation of SMEs to be raised from `60 lakhs to `1 crore. and need to bring it closer to Central Excise Law for eventual transition to GST. 30 .  Proposal to extend the levy of Alternate Minimum Tax to all persons. claiming profit linked deductions.  Reduction in securities transaction tax by 20 per cent on cash delivery transactions. if sale consideration is used for subscription in equity of a manufacturing SME for purchase of new plant and machinery.

 Rules pertaining to point of taxation are being rationalised.  Proposals from service tax expected to yield additional revenue of `18.  Service tax law to be shorter by nearly 40 per cent.  Number of alignment made to harmonise Central Excise and Service Tax.  No change proposed in the peak rate of customs duty of 10 per cent on nonagricultural goods. standard rate of excise duty to be raised from 10 per cent to 12 per cent. with corresponding changes in rates for individual services.  Study team to examine the possibility of common tax code for Central Excise and Service Tax. A common simplified registration form and a common return comprising of one page are steps in this direction.  Place of Supply Rules for determining the location of service to be put in public domain for stakeholders‟ comments.  Exemption from service tax is proposed for some sectors.  Utilization of input tax credit permitted in number of services to reduce cascading of taxes. merit rate from 5 per cent to 6 per cent and the lower merit rate from 1 per cent to 2 per cent with few exemptions.  To maintain a healthy fiscal situation proposal to raise service tax rate from 10 per cent to 12 per cent.  Excise duty on large cars also proposed to be enhanced. Proposal to tax all services except those in the negative list comprising of 17 heads.  New scheme announced for simplification of refunds.660 crore. Other proposals for Indirect Taxes  Given the imperative for fiscal correction.  Revision Application Authority and Settlement Commission being introduced in Service Tax for dispute resolution. 31 .

Roads  Full exemption from import duty on certain categories of specified equipment needed for road construction. Railways  Basic custom duty proposed to be reduced for equipments required for installation of train protection and warning system and upgradation of track structure for high speed trains. 2015. textiles.especially those under stress. repair and overhaul of civilian aircraft. To stimulate investment relief proposals for specific sectors .  Basic custom duty proposed to be reduced for machinery and instruments needed for surveying and prospecting for minerals. tunnel boring machines and parts of their assembly. Manufacturing  Relief proposed to be extended to sectors such as steel. 2014. labour-intensive sectors 32 . branded readymade garments.  Full exemption from basic duty provided to certain fuels for power generation. Civil Aviation  Tax concessions proposed for parts of aircraft and testing equipment for third party maintenance. Agriculture and Related Sectors  Basic customs duty reduced for certain agricultural equipment and their parts  Full exemption from basic customs duty for import of equipment for expansion or setting up of fertiliser projects upto March 31. Infrastructure  Proposal for full exemption from basic customs duty and a concessional CVD of 1 per cent to steam coal till 31st March. low-cost medical devices. Mining  Full exemption from basic customs duty to coal mining project imports.

Insurance  Proposal to move Insurance Laws (Amendment) Bill and LIC Amendment Bill in the current session.producing items of mass consumption and matches produced by semimechanised units.  Basic customs duty and excise duty reduced on Iodine.  Basic customs duty and excise duty reduced on Soya products to address protein deficiency among women and children.  Basic customs duty reduced on Probiotics.  Services provided by life insurance companies in the area of investment are also proposed to be brought into the service tax net on the same lines as ULIPs.  The Rashtriya Swasthya Bima Yojana (RSBY) to be extended to cover unorganised sector workers in hazardous mining and associated industries like slate and slate pencil. Environment  Concessions and exemptions proposed for encouraging the consumption of energy-saving devices.  Proposal to increase basic customs duty on imports of gold and other precious metals. dolomite.  Concession from basic customs duty and special CVD being extended to certain items imported for manufacture for hybrid or electric vehicle and battery packs for such vehicles. 33 . mica and asbestos etc. Health and Nutrition  Proposal to extend concessional basic customs duty of 5 per cent with full exemption from excise duty/CVD to 6 specified life saving drugs/vaccines. plant and equipment needed for solar thermal projects. Black Money  Proposal to lay a white paper on black money in current session of Parliament.

a lumpsum grant of ` 10. in the age group of 18 to 64 years.  Branded Silver jewellery exempted from excise duty.  Cess on crude petroleum oil produced in India revised to `4. hand-rolled bidis. 2012. Additional resource mobilisation  Proposals to increase excise duty on „demerit‟ goods such as certain cigarettes. Measures proposed to deter the generation and use of unaccounted money.  Basic customs duty proposed to be enhanced for certain categories of completely built units of large cars/MUVs/SUVs.  Levy of excise duty of 1 per cent on branded precious metal jewellery to be extended to include unbranded jewellery. Operations simplified and measures taken to minimise impact on small artisans and goldsmiths. Rationalization measures  Excise duty rationalised for packaged cement. and Public Debt Management Agency of India Bill. 2012 to be proposed in the Budget session of the Parliament.500 per metric tonne. gutkha.  Chassis for building of commercial vehicle bodies to be charged excise duty at an ad valorem rate instead of mixed rate.  Import of foreign-going vessels to be exempted from CVD of 5 per cent retrospectively. unmanufactured tobacco and zarda scented tobacco. whether manufactured by mini cement plants or others.  Restriction on Venture Capital Funds to invest only in nine specified sectors proposed to be removed. pan masala.  On the death of the primary breadwinner of a below poverty line family. chewing tobacco.000 has been doubled to ` 20. Others  Indian Stamp (Amendment) Bill. 34 .000 with a matching contribution by the State Governments under the National Family Benefit scheme.

 Indirect taxes estimated to result in net revenue gain of `45.940 crore. Duty-free allowances increased for eligible passengers and for children of upto 10 years. 35 .280 crore.  Net gain of `41.  Proposals relating to Customs and Central excise to result in net revenue gain of `27.440 crore in the Budget due to various taxation proposals.

Additional budget resources positively met the needs of the poor and bridged the gaps in the development of social infrastructure. The budget paid good attention to skill development. Furthermore. school education was also exempted from service tax. Certain moves such as raising the agricultural credit and introducing a short term agricultural credit refinance fund worked well for farmers. it is positive for this year‟s budget. Strengthening of financial institutions helped them in maintaining their minimum capital. However. This helped improve education and in turn contributed to the economic development. Certain investments had to be made into other supporting services as well. Better credit flow to most important sectors encouraged and supported overall fiscal growth in 2013. Infrastructure: The move to execute public-private partnerships brought about a fast paced change in the infrastructure scenario of the country. Proposed allocation to the Ministry of Road Transport and Highway boosted the logistics and transportation sector. Banking Sector: Firm support to the capital base of banks boosted the credit and development of the banking sector. Social Sector: Despite the financial constraints. considerable efforts were put into the realization of inclusive development.CHAPTER 11: THE IMPACT OF BUDGET 2012-13 Agriculture: The agriculture sector has been growing at a steady pace since last year and hence. Interest 36 . the mere pumping of credit did not result in an increased agricultural output. Considerable attention was also paid to the development of rural infrastructure which helped in the indirect development of the agricultural sector.

Automobile Manufacturing Sector: The effect of budget 2012 -13 in this sector was pretty much neutral. Exclusion of the entertainment and amusement services from service tax is expected to boost the industry.subvention and better credit schemes were provided to farmers and this helped them repay their loans on time. Taxation: Income tax exemption benefited individuals considerably. but it did not have any significant impact on the sale of cars. service tax was increased and this resulted in higher service tax charges. was not seen to be very considerable. however. 37 . Vehicle price hikes and the increase in custom duty of large passenger vehicles led to an increase in excise duties. However. exemption of copyrights relating to recording of cinematographic films from service tax will impact the industry positively. thus encouraging their sales. participation of foreign entities was encouraged greatly. Reduction of excise duties on hybrid cars made them affordable. thus increasing their marginal profits. Also. Overall. the announcements in the Budget are expected to have a marginally positive impact on the sector. Tax exemption in a lot of other areas was also introduced. The development in this sector and the development of infrastructure went hand in hand. Media & Entertainment: Entertainment and amusement taxes were exempted from service tax and this boosted the development of this sector. thus ensuring smooth financial operations in banks. The over impact. It also brought down the operating costs of travel operators. Hospitality: The permit to use input tax credits in various hospitality services eliminated the cascading effect of taxes. In terms of foreign investment. The overall impact was marginally positive for this sector.

On the other hand. The accessibility of ECBs and ease in withholding tax on interest payments may encourage private developers to invest in affordable housing projects. there was improvement in the rural as well as the urban sector. including reduced customs duty on specified agricultural machinery and processing equipment. boosting the active pharmaceutical ingredient (API) in India. Capital and engineering goods: Several positive measures focusing on the agricultural and related sectors were announced. In terms of healthcare. the price of raw materials hiked due to an excise duty hike. increase in standard rate of excise duty from 10% to 12% has partially offset the significant positive impact of reduction or exemption in import and customs duties to some extent on the capital and engineering goods sector. Overall the Budget is positive for the sector. The Union Budget FY13 also outlines the importance of the infrastructure sector with greater emphasis on capital investment required in construction of national highways and encouraging PPP projects. The incentives given to the construction sector are likely to have a multiplier effect on the economy nvia growth in downstream sectors and increase in employment. The extension of enhanced limit for interest subvention and increase in the priority sector lending limit are expected to benefit buyers in tier-II.Pharmaceuticals & Healthcare: 200% weight deduction in pharmaceutical R&D brought about some changes in the sector. However. Demand for construction equipment is likely to be boosted owing to several positive proposals in the 38 . III cities and towns. equipment imported for road construction and fertilizer projects also received a whole bunch of duty exemptions. Real estate and construction: The Budget‟s focus on providing low-cost and affordable housing is laudable. Apart from this. Investments in hospitals increased with an enhanced rate of deduction linked to capital expenditure.

Increased thrust on measures to incentivize food processing by launching the „National Mission on Food Processing‟ and by increasing the investment-linked deduction on cold chain facilities is likely to have a positive impact on the processed food category of the consumer goods sector in the medium to long term period. Increase in the basic customs duty on bicycles and bicycle parts will discourage imports of such products. iodine and LED lamps is likely to result in a fall in prices of these and related products. 39 . iodine and coating chemical used for compact fluorescent lamps is likely to boost domestic production of the final products manufactured using the above raw materials/machinery. The reduction in central excise duty on processed soya food products. thereby providing a boost to the domestic industry. thereby protecting the domestic manufacturers. Overall. Deduction on the expenditure incurred on skill development in the manufacturing sector is likely to impact the sector positively. LCD and LED TV panels. gutkha. the consumer goods sector is expected to remain buoyant on the backdrop of positive announcements in the FY13 Budget coupled with strong domestic consumption. In the medium term. Reduction/exemption in customs duty on coffee plantation and processing machinery. parts of memory card for mobile phones. Allocation of ` 795. probiotic products. chewing tobacco.infrastructure sector. Negative announcements of an increase in basic excise duty on cigarettes and hand-rolled bidis and increase in the rates of duty specified under the compounded levy scheme on pan masala. soya protein concentrate and isolated soya protein. raw materials for the manufacture of adult diapers. the Budget is anticipated to have a positive impact on the capital and engineering goods Sector Consumer goods: Enhancement of the exemption limit for the general category of individual taxpayers is expected to leave the consumers with a higher disposable income adding to the demand for consumer goods.79 bn for capital expenditure made in the defense services will also provide a boost to the capital and engineering goods industry in FY13.

on the overall basis. Proposals such as extension of the sunset date.unmanufactured tobacco and zarda scented tobacco in pouches are likely to have a marginally negative impact on the sector. FY13 Budget is positive for the consumer goods sector. Reducing the CVD by 100% in the initial set up of solar power plants is expected to have a positive impact as it is expected to promote the renewable energy generation and usage in India. providing additional 20% depreciation during the initial years etc are expected to encourage more companies to enter the power sector or the existing companies to expand operations. This will further encourage new players or existing players to enter into the renewable segment of the power sector. The Government also focuses on reducing the raw material cost through the agreement with CIL and reducing the duties imposed on the steam coal used as an input in the thermal power plants. This measure will help the power generation companies to stabilize the volatile prices of raw materials. 40 . However. Power The overall focus of the Government has been towards increasing investments through the allocation of ` 100 bn tax free bonds as well as increasing the financing options in the sector through the introduction of ECBs as well as reducing their interest rates. These measures are expected to have a positive impact on the power sector. This is expected to improve the working capital requirements of the companies in this sector.

assuming a 7. the Government believes to bring down fiscal deficit further and has targeted a reduction in fiscal deficit to 4.1% of GDP in 2012-13: Based on a projected buoyancy in non-tax revenue and indirect taxes  The nominal growth rate of GDP is expected to be 14% for 2012-13: This translates into a 6.8 lakh to Rs 2 lakh  Growth impulse could be dampened by the 2% hike in excise duty and service tax: These hikes are expected to add to inflationary pressures and would work against budget expectations of lower inflation  Over the medium term.9% by FY2015: Fiscal consolidation will remain a challenge  Budget targets to contain the central subsidies under 2% of GDP in 201213: It will be a difficult task  Gross market borrowings will finance 93% of the fiscal deficit in 2012-13: Indication of government borrowing to finance non-plan expenditures  The Government did not enunciate any actionable roadmap for implementation of either the GST or the DTC  No revival of investment allowance.5% inflation rate.5% by FY2014 and 3.6% GDP projection in the next fiscal  Exemption limit for general category of individual taxpayers has been raised from Rs1. no restoration of tax exemption on dividend income or capital gains for infrastructure capital fund / company and no hike in depreciation rate in budget  Reduction in withholding tax on interest payable on External Commercial Borrowings (ECBs) in certain sectors and extension of concessional tax treatment on the repatriation of overseas dividends are welcome: The raising of the ECB limit for infrastructure sector will also encourage investment in the sector. 41 .CHAPTER 12: CONCLUSION  Fiscal deficit projected at 5.

 The removal of cascading impact of DDT.  Provision of extension of 200% weighted deduction for R&D expenditure is specially welcome as it has been announced for a period of 5 years  150% weighted deduction for agricultural extension will hopefully encourage private sector investment in agriculture and raise crop yields  For the power sector besides access to low cost funds the Budget has also extended the sunset date by one year until March 31. 42 . This measure would encourage investment in power generation. 2013 by claiming 100% deduction of profits for 10 years along with an additional distribution of 20%. The extension of tax benefit period for companies engaged in in-house R&D activities may also provide some relief to the companies. which was recommend by FICCI is most welcome.

2636557.zdnet.slideshare.00.scribd.ht ml  http://www.com  www.gazhoo.10475.eprimers.com/budget/stories/main/0.org 43 .CHAPTER 13: WIBLIOGRAPHY Websites or links referred are as follows http://www.com/doc/201105281211242104/Project+Repor t+on+budget 2012-2013  www.net  www.

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