Highlights: 2012/13 Budget presented to parliament

Fri Mar 16, 2012 3:58pm IST

Finance Minister Pranab Mukherjee (2nd L) poses as he leaves his office to present the 2012/13 budget in New Delhi March 16, 2012. REUTERS/Vijay Mathur

Finance Minister Pranab Mukherjee (2nd L) poses as he leaves his office to present the 2012/13 budget in New Delhi March 16, 2012.

Credit: Reuters/Vijay Mathur

REUTERS - Finance Minister Pranab Mukherjee played it safe in unveiling the federal budget on Friday, pledging reforms but setting only modest targets for trimming a ballooning fiscal deficit, disappointing investors and sending bond yields surging.

For a graph of the budget, click link.reuters.com/cyt96s

FISCAL DEFICIT

* Fiscal deficit seen at 5.9 percent of GDP in 2011-12

* Fiscal deficit seen at 5.1 percent of GDP in 2012-13

* Fiscal deficit seen at 4.5 percent of GDP in 2013-14

* Fiscal deficit seen at 3.9 percent of GDP in 2014-15

(Read main story: Budget aims to ease subsidy burden, click here)

BORROWING

* Gross market borrowing seen at 5.7 trillion rupees in 2012-13

* Net market borrowing seen at 4.8 trillion rupees in 2012-13, excluding treasury bills

(Know more about new tax slabs, click here)

SPENDING

* Total expenditure in 2012-13 seen at 14.9 trillion rupees, up 29 percent

* Plan expenditure budgeted at 521.25 billion rupees in 2012/13, up 18 percent

* Allocates 1.94 trillion rupees for defence in 2012/13, up 18 percent

(Expert views on Budget 2012, click here)

REVENUE AND TAXES

* Gross tax receipts seen at 10.8 trillion rupees in 2012-13

* Non-tax revenue seen at 1.64 trillion rupees in 2012-13

* Disinvestment target in 2012-13 of 300 billion rupees

* Proposes to levy tax on all services except 17 items in the negative list from 2012/13

* Proposes to raise service tax rate to 12 percent from 10 percent

* No change in corporate tax rates

* To enhance tax exemption limit to 200,000 rupees for individuals income in 2012/13

* Proposes to provide full exemption on import duty of thermal coal for power plants

* Proposes to double basic customs duty on gold

SUBSIDIES

* To keep 2012/13 subsidies under 2 percent of GDP, under 1.7 percent of GDP in the next 3 years

* Major subsidies bill estimated at 1.8 trillion rupees in 2012-13

* Food subsidy bill in 2012-13 seen at 750 billion rupees

* Fertilizer subsidy bill in 2012-13 seen at 609.7 billion rupees

* Petroleum subsidy bill in 2012-13 seen at 435.8 billion rupees

* Revised petroleum subsidy bill for 2011-12 at 684.8 billion rupees

* To inject 159 billion rupees to capitalize state-run banks in 2012/13

GROWTH AND INFLATION EXPECTATIONS

* Expect headline inflation to moderate in next few months and remain stable thereafter

* Economy expected to grow at 7.6 percent in 2012/13

* Economy expected to grow at 6.9 percent in 2011/12

* Signs of economy turning around in March quarter

POLICY REFORMS

* Allow external commercial borrowing of up to $1 bln to raise working capital for airlines industry for 1 year

* To allow qualified foreign investors in Indian corporate debt markets

* To allow external commercial borrowing to part finance rupee debt in power projects

* Proposes to remove sector-specific restriction on venture capital fund investments

* Hope to achieve "broad-based consensus" to open multi-brand retail sector to foreign investors

INFRASTRUCTURE DEVELOPMENT

* To award contracts to build 8,800 km of roads in 2012/13

* Government doubles allocation for tax-free bonds to 600 billion rupees for financing infrastructure projects in 2012/13

AGRICULTURE

* Expects country to become self-sufficient in urea production in five years

* Proposes to raise agricultural credit target in 2012/13 to 5.75 trillion rupees

CURRENT ACCOUNT

* Current account deficit seen at 3.6 percent of GDP in 2011/12

* Expect smaller current account deficit in 2012/13

FINANCE MINISTER COMMENTS

"We have to accelerate the pace of reforms and improve supply side management of the economy."

"Economic policy, as medical treatment, often requires us to do something which in the short run may be painful but is good for us in the long run."

"As Hamlet, the Prince of Denmark, said in Shakespeare's immortal words, 'I must be cruel only to be kind'."

(Compiled by Annie Banerji, Matthias Williams and Frank Jack Daniel)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (2)
Surendra wrote:
the current structure of direct taxation fails (for practical reasons) on the principal of equity..as though the tax rate is same for salaried and business people is same, salaried people end up paying much more tax as most of the business income goes unaccounted for…. not sure if the govt. is sensitive about this…

Mar 16, 2012 1:36pm IST  --  Report as abuse
Bharathkumarng wrote:
Income tax exemption limit raised to Rs 2 lakh is very less.why we should pay more tax for politicians who will eat our money later.

Mar 16, 2012 4:27pm IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Popularity Poll

Reuters Showcase

'Small Incident'

Arun Jaitley stirs anger by making light of Delhi rape case.  Full Article 

Arrested Again

Arrested Again

Hunger striking activist Irom Sharmila re-arrested - police.  Full Article 

Drop By Drop

Drop By Drop

Kerala, India's wettest state, to go dry - in 10 years.  Full Article 

New Adviser

New Adviser

Arvind Subramanian likely to be chief econ adviser.  Full Article 

South Asia in Photos

South Asia in Photos

First pictures of Taj Mahal to ‘Hairy family of Burma’: subcontinent photos from 1850-1910.  Full Article 

Day of Mourning

Day of Mourning

Malaysia mourns as bodies of MH17 victims finally come home.  Full Article 

Ukraine Crisis

Ukraine Crisis

Moscow defies Kiev, orders aid convoy onto Ukrainian soil.  Full Article 

Film Review

Film Review

‘Katiyabaaz’ turns banal reality into gripping tale.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage