OVERVIEW: Budget estimates for 2011-12 projects Rs 9,32,440 crore - an increase of 24 per

cent.

Expenditure in 2011-12 is estimated at Rs 12,57,729 crore, an increase of 13.4%.

Revenue deficit fixed at 2.3% in revised estimates of 2010-11 and 1.8% in 2011-12.

Tax reductions to result in revenue loss of Rs 11,500 crore

INFLATION: The finance minister opened his speech with reference to inflation saying that
food inflation came down from 20.2% last year to 9.3% in January 2011 but it was still a matter
of concern. "Government's principle concern is high food prices... food prices were high for
cereals, there was a spurt in prices of onions and milk," he said. ( Inflation remains principal
concern, to fall next year )

AGRICULTURE: In what may be a big relief for farmers, the FM said credit flows to farmers
will be raised from Rs 3.75 lakh crore to Rs 4.75 lakh crores and the allocation under Rashtriya
Krishi Vikas Yojana will be raised from Rs 6755 crore in the current year to Rs 7860 crore. (
Farm loans at 4%; credit target raised to Rs 4,75,000cr )

An additional Rs 300 cr will be provided to promote pulses cultivation in rain-fed areas and
another Rs 300 cr to promote farm product cultivation.

In joy for anganwadi workers, their remuneration is being raised from Rs 1500 to Rs 3,000 per
month. Anganwadi helpers will get Rs 1,500 from Rs 750, Pranab said. ( Social spending to be
raised by 17% )

Old age pension to persons of over the age of 80 will be raised from Rs 200 to Rs 500.

HEALTH: 20 percent hike in health budget for 2011-2012. (Finance minister announces 20 per
cent hike in health budget)
(
Healthcare industry fumes at Budget)
DEFENCE: The finance minister has allotted Rs 1.64 lakh crore for defence saying that more
will be given if required. (11% hike in defence allocation)

Rs 9 lakh compensation will be given to men of defence and central paramilitary forces for
permanent disability and on being discharged from service. (Rs 9 lakh disability compensation
for defence personnel)

INCOME TAX: No change in tax slabs has been proposed. The tax exemption limit for general
category has been raised from Rs 1,60,000 to Rs 1,80,000. ( Tax limit enhanced from Rs
1,60,000 to Rs 1,80,000)
No change in tax exemption limit for women.

For senior citizens, exemption age limit has been reduced from 65 to 60. Their tax exemption
limit will be Rs 2,50,000.

Apart from this, a new exemption bracket has been created for those above 80 years of age. Their
tax exemption limit will be Rs 5,00,000.

Surcharge for companies cut to 5 per cent, from 7.5 per cent. (Corporate Tax surcharge reduced
to 5%)

A new revised income tax return form 'Sugam' to be introduced for small tax papers.

DIRECT TAX: The FM announced that Direct Tax Code will be implemented from April, 2012
and the Goods and Services Tax Bill is to be introduced in Parliament this year. ( Direct Taxes
Code to be implemented from April 1, 2012 )
Goods and services tax bill in budget session: Pranab Mukherjee

SERVICE TAX: Service tax widened to cover hotel accommodation above Rs 1,000 per day,
A/C restaurants serving liquor, some category of hospitals, diagnostic tests.

Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international
travel in economy class. On higher classes, it will be 10% flat. ( Service tax on air travel
increased )

EXCISE AND CUSTOMS DUTY: There is a proposal to introduce self-assessment of customs

duty wherein importers and exporters will themselves assess payment of duty.

There will be change in excise duty. The standard rate of central exercise duty will be maintained
at 10%. A 1% central excise duty on 130 items entering the tax net. Basic food and fuel and
precious stones, gold and silver jewellery will be exempted and there will be no change in
CENVAT rates. (Excise duty retained at 10%, more items to be taxed)

A new scheme is to be introduced for refund of service tax on the lines of drawback of duties, he
announced. Also, capital investment in fertiliser production will be considered as infrastructure
sub-sector, Pranab said.

Tax-free bonds of Rs 30,000 cr will be issued for infrastructure development which will cover
Warehousing Corporation, NHAI, IRFC and HUDCO.

EDUCATION: A Rs50cr grant is being allocated to Aligarh Muslim University centres in

Murshidabad in West Bengal and Malappuram in Kerala. Also, the government has decided to
allot Rs 200 cr to IIT Kharagpur. ( 24% hike in allocation for education )

GROWTH: Predicting growth patterns over the next fiscal, Pranab said the overall economic
growth in the current fiscal was expected at 8.6 %, agriculture growth at 5.4 %, industry at 8.1 %
and services 9.3 %. In the next fiscal, economic growth was likely to be 9%, he said. ( Economy
grew 8.2% in last 2010 quarter )

Pranab said India raised foreign institutional investor limit in 5-year corporate bonds for
investment in infrastructure by $20 billion.

The government, he said, aims to provide Rs 201.5 billion capital infusion in state-run banks in
2011-12 and Rs 3 billion for 60,000 hectares under palm oil plantation

"I see Budget 2011-12 as transition towards more transparent and result-oriented economic
management," he said adding that stronger fiscal coordination was needed.

He said that corruption continued to be deterrent in the country's development and had to be
fought extensively.

Pranab Mukherjee said the government plans to create a Women Self Help Group development
fund with a corpus of Rs 500 crore. There is also a proposal to increase rural housing fund to Rs
3,000 crore. ( Low-cost housing loans of Rs 15 lakh to get 1% interest sop )

He also announced benefits for Below Poverty Line families by allowing direct transfer of
subsidies in kerosene and LPG for such individuals.

Also, NABARD capital base will be strengthened and Rs 10,000 cr will be provided to it as short
term credit fund.

Pranab announced the formation of Indian micro finance equity with SIDBI at Rs 100 crore.
Another Rs 6,000 cr will be given to public sector banks to maintain capital-to-risk assets ratio
norms, he said. ( Rs 500 cr for Regional Rural Banks )

A budget allocation of Rs 100 cr has been made for Ladakh and Rs 150 cr for Jammu for
implementation of projects identified by taskforce.

TAX REBATE TO BUILDERS

The government proposed full tax rebate on developing such projects under a notified scheme
and raised the ceiling of one per cent interest subsidy on home loans upto Rs 15 lakh from the
current Rs 10 lakh.

In the Budget for 2011-12, finance minister Pranab Mukherjee proposed 100% tax deductions on
capital expenditure to develop affordable houses under government scheme, thus promoting
builders to focus more on such homes.

"Considering the importance of housing, I propose investment linked deduction to businesses,

which develop affordable housing under a notified scheme," he said.
Currently under the section 35AD of the Income Tax Act, a housing project for slum re-
development and rehabilitation is incentivised with 100% tax exemption. ( FM pushes for
affordable homes; full tax rebate to builders )
 1)DIRECT TAX PROVISION

 A new revised income tax return form 'Sugam' to be introduced for small tax-papers
 Exemption Limit for Individuals raised from Rs. 160,000 to Rs. 180,000 for individual tax payers
 For senior citizens, the qualifying age reduced from earlier 65 years to 60 years
 For senior citizens, the Basic Exemption Limit raised to Rs. 250,000
 New Category of tax-payers “Very Senior Citizens” created consisting of Citizens having age of
80 years and above
 Basic Exemption Limit for Very Senior Citizens at Rs. 500,000
 Surcharge on Domestic Companies reduced to 5% from 7.5%
 Minimum Alternate Tax raised to 18.5% from 18%

2) INDIRECT TAX PROVISION

 Service tax widened to cover hotel accommodation above 1,000 per day, A/C restaurants
serving liquor, some category of hospitals, diagnostic tests
 Service tax on air travel increased by 50 for domestic travel and 250 for international travel in
economy class. On other higher classes, Service tax to be at 10%
 Standard rate of excise duty held at 10 percent;
 No change in CENVAT rates
 Service tax rate unchanged at 10%
 Iron ore export duty raised to 20 percent
 Nominal 1% Central Excise Duty on 130 items entering the tax net
 Basic food and fuel and precious stones, gold and silver jewellery to be exempted
 Peak rate of customs duty maintained at 10%
 Basic customs duty on agricultural machinery reduced to 4.5% from 5%

government will provide a direct cash subsidy on kerosene and fertilisers to the poor
government will move toward direct transfer of cash subsidy for people below poverty line (BPL)

At present, the government provides kerosene at subsidised rates to families living below the poverty
line through the public distribution system ( PDS). Furthermore, LPG is provided at a subsidised rate to
households.
the government provides subsidy to companies so that farm inputs, which include urea and imported
fertilisers, can be provided to farmers at cheaper rates

the government set up a task force under the former chief of Infosys, Nilekani, who at present is Unique
Identification Authority of India ( UIDAI) chairman. The panel also included secretaries from the
ministries of finance, chemicals and fertilisers, agriculture, food, petroleum and rural development.
TAXES ( Read full story on taxes ) 
* Standard rate of excise duty held at 10 percent; no change in CENVAT
rates 
* Personal income tax exemption limit raised to Rs 180,000 from Rs 160,000
for individual tax payers 
*For senior citizens, the qualifying age reduced to 60 years and exemption
limit raised to Rs 2.50 lakh. 
*Citizens over 80 years to have exemption limit of Rs 5 lakh. 
* To reduce surcharge on domestic companies to 5 percent from 7.5 percent. 
* A new revised income tax return form 'Sugam' to be introduced for small tax
papers. 
* To raise minimum alternate tax to 18.5 percent from 18 percent ( Read
story ) 
* Direct tax proposals to cause 115 billion rupees in revenue loss 
* Service tax rate kept at 10 percent 
* Customs and excise proposals to result in net revenue gain of 73 billion
rupees 
* Iron ore export duty raised to 20 percent 
*Nominal one per cent central excise duty on 130 items entering the tax net.
Basic food and fuel and precious stones, gold and silver jewellery will be
exempted. 
*Peak rate of customs duty maintained at 10 per cent in view of the global
economic situation. 
*Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5
per cent. 
*Service tax widened to cover hotel accommodation above Rs 1,000 per day,
A/C restaurants serving liquor, some category of hospitals, diagnostic tests. 
*Service tax on air travel increased by Rs 50 for domestic travel and Rs 250
for international travel in economy class. On higher classes, it will be ten per
cent flat. 
* Electronic filing of TDS returns at source stabilised; simplified forms to be
introduced for small taxpayers. 
* Works of art exempt from customs when imported for exhibition in state-run
institutions; this now extended to private institutions
SUBSIDIES ( Read: Direct cash subsidy on fuel, fertilizers by March, 2012 ) 
* Subsidy bill in 2011-12 seen at 1.44 trillion rupees 
* Food subsidy bill in 2011-12 seen at 605.7 billion rupees 
* Revised food subsidy bill for 2010-11 at 606 billion rupees 
* Fertiliser subsidy bill in 2011-12 seen at 500 billion rupees 
* Revised fertiliser subsidy bill for 2010-11 at 550 billion rupees 
* Petroleum subsidy bill in 2011-12 seen at 236.4 billion rupees 
* Revised petroleum subsidy bill in 2010-11 at 384 billion rupees 
* State-run oil retailers to be provided with 200 billion rupee cash subsidy in
2011-12 

FISCAL DEFICIT ( Read full story ) 

* Fiscal deficit seen at 5.1 percent of GDP in 2010-11 
* Fiscal deficit seen at 4.6 percent of GDP in 2011-12 
* Fiscal deficit seen at 3.5 percent of GDP in 2013-14 

SPENDING 
* Total expenditure in 2011-12 seen at 12.58 trillion rupees 
* Plan expenditure seen at 4.41 trillion rupees in 2011-12, up 18.3 percent 

REVENUE 
* Gross tax receipts seen at 9.32 trillion rupees in 2011-12 
* Non-tax revenue seen at 1.25 trillion rupees in 2011-12 
* Corporate tax receipts seen at 3.6 trillion rupees in 2011-12 
* Tax-to-GDP ratio seen at 10.4 percent in 2011-12; seen at 10.8 percent in
2012-13 
* Customs revenue seen at 1.52 trillion rupees in 2011-12 
* Factory gate duties seen at 1.64 trillion rupees in 2011-12 
*Service tax receipts seen at 820 billion rupees in 2011-12 
* Revenue gain from indirect tax proposals seen at 113 billion rupees in 2011-
12 
* Service tax proposals to result in net revenue gain of 40 billion rupees in
2011-12 
GROWTH, INFLATION EXPECTATIONS ( Read: Inflation remains principal
concern ) 
* Economy expected to grow at 9 percent in 2012, plus or minus 0.25 percent 
* Inflation seen lower in the financial year 2011-12 

DISINVESTMENT 
* Disinvestment in 2011-12 seen at 400 billion rupees 
* Government committed to retaining 51 percent stake in public sector
enterprises. 

BORROWING 
* Net market borrowing for 2011-12 seen at 3.43 trillion rupees, down from
3.45 trillion rupees in 2010-11 
* Gross market borrowing for 2011-12 seen at 4.17 trillion rupees 
* Revised gross market borrowing for 2010-11 at 4.47 trillion rupees 

POLICY REFORMS 
* To create infrastructure debt funds 
* FDI policy being liberalised. 
* To boost infrastructure development with tax-free bonds of 300 billion
rupees 
* Food security bill to be introduced this year 
* To permit SEBI registered mutual funds to access subscripttions from
foreign investments 
* Raised foreign institutional investor limit in 5-year corporate bonds for
investment in infrastructure by $20 billion 
* Setting up independent debt management office; Public debt bill to be
introduced in parliament soon 
* Bills on insurance, pension funds, banking to be introduced. 
*Constitution Amendment Bill for introduction of GST regime in this session. 
*New Companies Bill to be introduced in current session 

SECTOR SPENDING 
* To allocate more than 1.64 trillion rupees to defence sector in 2011-12
(Read: 11% hike in defence allocation ) 
* Corpus of rural infrastructure development fund raised to 180 billion rupees
in 2011-12 
* To provide 201.5 billion rupees capital infusion in state-run banks in 2011-
12 
* To allocate 520.5 billion rupees for the education sector. Rs. 21,000 crore for
Sarva Shiksha Abhiyan. ( Read full story ) 
* To raise health sector allocation to 267.6 billion rupees (Read: 20% hike in
health budget ) 
* Rs. 500 crore more for national skill development fund. 
* Rs. 54 crore each for AMU (Aligarh Muslim University) centres at
Murshidabad and Mallapuram. 
* Rs. 58,000 crore for Bharat Nirman; increase of Rs. 10,000 crore. 
* Mahatma Gandhi National Rural Employment Guarantee Scheme wage
rates linked to consumer price index; will rise from existing Rs. 100 per day. 
* Increased outlay on social sector schemes. ( Read: Social sector allocation
up by 17%) 
* Infrastructure critical for development; 23 percent higher allocation in 2011-
12. ( Read: Rs. 2,14,000 cr allocated for infrastructure sector ) 

AGRICULTURE ( Read: Farm loans at 4 per cent ) 

* Removal of supply bottlenecks in the food sector will be in focus in 2011-12 
* Agriculture growth key to development: Green Revolution waiting to happen
in eastern region. 
* To raise target of credit flow to agriculture sector to 4.75 trillion rupees 
* Gives 3 percent interest subsidy to farmers in 2011-12 
* Cold storage chains to be given infrastructure status 
* Capitalisation of National Bank for Agriculture and Rural Development
(NABARD) of 30 billion rupees in a phased manner 
* To provide 3 billion rupees for 60,000 hectares under palm oil plantation 
* Actively considering new fertiliser policy for urea 
* Food storage capacity to be augmented - 15 more mega food parks to be
set up in 2011-12; of 30 sanctioned in previous fiscal, 15 set up. 
* Comprehensive policy on further developing PPP (public-private-
partnership) model. 
* Farmers need access to affordable credit. 
* Moving to improve nutritional security. 
* Necessary to accelerate production of fodder. 

ON THE STATE OF THE ECONOMY ( Read: Pranab on 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 year's 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." 
* Setting tone for newer, vibrant economy. 
* Economy back to pre-crisis trajectory. 
* Development needs to be more inclusive.

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 

MORE 
*Govt to move towards direct transfer of cash subsidy for kerosene, LPG and
fertilisers. 
*Financial Sector Legislative Reforms Commission, to be headed by former
Supreme Court judge B Srikrishna, to complete its work in 24 months; to
overhaul financial regulations. 
* Five-fold strategy against black money; 13 new double taxation avoidance
agreements; foreign tax division of CTBT strengthened; strength of
Enforcement Directorate increased three-fold. 
* Bill to be introduced to review Indian Stamp Act. 
* New coins carrying new rupee symbol to be issued. 
* Anganwadi workers salary raised from Rs. 1,500 to Rs. 3,000. 
* Mortgage risk guarantee fund to be created for economically weaker
sections. 
* Housing loan limit for priority sector lending raised to Rs. 25 lakh.