by | July 25, 2012 · 9:50 am
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Case Study on budget 2011-12 india

  • 2. Fiscal highlightsGDP growth target – 9% ± 0.25%.Fiscal deficit4.6% of GDP (better than 4.8% set in roadmap L/Y); positive for bond markets. Target looks aggressive given absence of non-tax revenues (3G booty) this year & underestimation of subsidies. Target to reach 4.1% in 2012-13 and 3.5% in 2013-14 welcome. Effective Revenue Deficit – 1.8% of GDP; persistent Revenue Deficit a concern.Net market borrowingsRs 3.43 lakh crore. Lower than estimates; positive for bond markets. Budget 2011 like the India England One-day result A TIE BETWEEN GROWTH & INFLATION BUT NOBODY WINS!!!
  • 3. Direct TaxDirect tax slabs tinkered withExemption limit raised to Rs 1.8 lakh from Rs 1.6 lakh; with inflation at over 10% , hardly any increase in real terms. Exemption limit for senior citizens – raised to Rs 2.5 lakh from Rs 2.4 lakh.Age to qualify as “senior citizen” reduced to 60 from 65.“Very Senior Citizens” (80 years +) – exempt upto Rs 5 lakh.Salaried taxpayers not required to file return of income if tax discharged by way of TDS.Corporate taxesSurcharge reduced from 7.5% to 5%.MAT increased marginally from 18% to 18.5%.SEZ units & developers to be subject to MAT; will hit infra companies.LLPs to be subject to MAT; negative for LLPsPositive for corporates; not much for the aam aadmi

4. Indirect Tax – Excise & ImportNo reversal of excise stimulus given in 2009; positive for auto companies.Environmental concern – Fuel cell, hydrogen cell technology, hybrid vehicles granted concessions. Branded garments to get expensive – excise duty @ 10%.Consumer goods such as sanitary napkins, diapers to get cheaper – excise reduced from 10% to 1%. Efforts to incentivize agriculture by reducing duties: No excise on air-conditioning equipment, refrigeration panels used in cold chains. No excise on equipment used in cold storages, mandis and warehouses. Customs duty on micro-irrigation equipment reduced from 7.5% to 5%. No customs on import of de-oiled rice bran cake. Export duty of 10% to discourage exports; positive for dairy processing organizations.’

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