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 )