EF_UnionBudget_28Feb11

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28th February 20

Union Budget 2011-2012

Eastern Financiers Ltd.


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astern Financiers Ltd.

EF- Union Budget 2011-1228thFebruary

IndexParticulars Page No.

Introduction 3

Tax Proposals 4

Direct Tax 4

Indirect Tax 5

Service Tax 6

Data

Budget at a glance 7Key Indicators 8

Impact on Capital Markets 8

Sector-wise Impact 9

Banking and Financial Services 10

Infrastructure 10

Agriculture

Real Estate 11

Automobile Oil & Gas 12

Fertilizer 12

FMCG 12

Telecom 13

Education 13

Metals & Mining 13

Cement 13

Capital Goods 14

Textiles 14

Information Technology 14

Rural Development 14-15

Social Welfare 15

Other Proposals 15-16


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IntroductionThe Union Budget 2011-12 which held humble expectations and was widely expected to be populist one after t

Railway Budget last Friday succeeded in surprising the markets with fiscal deficit below the 5% level at 4.6% for FY1

and 5.1% for FY11 against estimate of 5.5% this year. Government sees a fiscal deficit of 4.1% in FY13. Finance Ministe

Mr. Mukherjee presented a budget that seemed to soothe the miffed market with its fiscal consolidation targets being

ine with the market expectations, reduction in surcharge by 2.5% to 5%, no roll back on excise duty, inviting foreig

money in mutual fund schemes and improving investment environment by way of FDI and FII investment. Governme

did not tinker with the indirect tax codes which kept markets in high spirits. The government plans to liberalize foreig

direct investment policy. However, the Minimum Alternate Tax has been increased to 18.5% from 18%.

Rightly focusing on imperative matters, measures to tackle high food inflation include viability gap funding which will b

provided for cold storage chains and increase in priority sector lending targets from Rs 3.8 to 4.8 lakh cr. Also, given th

hortage of funds in the domestic banking sector, several measures are included to increase fund availability from oth

ources, pertinently FII investments in corporate bonds being increased to USD 40bln, reduction of withholding tassuance of Tax-free bond etc. Together with new bank licenses and increased foreign bank participation over the cour

of next year, the gap between savings and investments should get narrowed, keeping interest rates also in check

positive for banks, infrastructure and the overall economy.

nfrastructure, considered to be the life blood of the economy has been offered bonanza by the government. Th

government has proposed an allocation of Rs. 214000 crores for the sector in FY12, 23.3% higher than FY11 whi

amounts to 48.5% of the Gross Budgetary support to plan expenditure. In order to give a boost to infrastructu

development in railways, ports, housing and highways development, it has been proposed to allow tax-free bonds

Rs30,000 crore to be issued by various government undertakings in the year 2011-12. India Infrastructure Finan

Company Limited (IIFCL) is expected to achieve a cumulative disbursement of Rs 25,000 crore by 31 March 2012. Und

he take out financing scheme, seven projects have been sanctioned with a debt of Rs1500 crore. Another Rs 50rore will be sanctioned during 2011-12.

The Union Budget 2011-12 also proposes to raise the FII limit for investment in corporate bonds with residual maturi

of over five years issued by companies in infrastructure sector by US $20 billion which would now be US $25 billion. Th

would raise the total limit available to FIIs for investment in corporate bonds to US $40 billion. To attract foreign fun

or financing of infrastructure, the Finance Minister has proposed to create special vehicles in the form of notifie

nfrastructure debt funds; subject to interest payment on the borrowings of these funds to a reduced withholding ta

ate of 5% instead of the current rate of 20%; and exempt the income of the fund from tax.

Government has the disinvestment target of Rs. 40000 crores for FY12 against current fiscals target being reduced to R

22144 crores due to higher realizations from other sources.

On governance, there seems to be a firm commitment to plug leakages (direct transfer of cash subsidy), reduce bla

money, tackle corruption, monitor performance of ministries as well as continue fiscal consolidation. Without ove

tretching itself, this Budget includes a decent set of measures without compromising on its fiscal deficit positio

Finance Minister said the proposals on direct taxes are estimated to result in a revenue loss of Rs 11500 crore, whi

hose on indirect taxes are estimated to result in a net revenue gain of Rs 11,300 crore, leaving a net loss of Rs 200 cror

n the Budget.


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Tax Proposals

Direct Taxes

Personal tax Exemption

The Finance Minister has announced tax benefits for individual tax payers.Income tax slabs for individual taxpayers h

been modified.

New category of senior citizens above 80 years to get higher IT deduction limit of Rs 5 lakh from this year.

IT exemption for taxpayers raised from Rs 1.6 lakh to Rs 1.8 lakh. Tax relief is about Rs 2,000 across-the-board.

Senior citizens to get higher IT deduction limit of Rs 2.5 lakh. Entitlement age reduced to 60 from current 65.

The new tax slabs now stand as follows:

Male tax-payers Female tax-payers Senior Citizens

Amount % Amount % Amount

0 to 180000 0 0 to 190000 0 0 to 250000 0

180001 to 500000 10% 190001 to 500000 10% 250001 to 500000 10%

500001 to 800000 20% 500001 to 800000 20% 500001 to 800000 20%

Above 800001 30% Above 800001 30% Above 800001

Current surcharge of 7.5% on domestic companies proposed to be reduced to 5%.

Minimum Alternative Tax proposed to be increased from 18% to 18.5% of book profits.

Tax incentives extended to attract foreign funds for financing of infrastructure.

Additional deduction of Rs.20,000 for investment in long-term infrastructure bonds proposed to be extended

one more year.

Lower rate of 15% tax on dividends received by an Indian company from its foreign subsidiary.

Benefit of investment linked deduction extended to businesses engaged in the production of fertilisers.

Investment linked deduction to businesses developing affordable housing.

Weighted deduction on payments made to National Laboratories, Universities and Institutes of Technology to benhanced to 200%.

System of collection of information from foreign tax jurisdictions to be strengthened.

Net revenue loss of Rs. 11,500 crore estimated as a result of proposals.


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Indirect TaxesCustom Duty & Excise Duty

To stay on course for transition to GST.

Central Excise Duty to be maintained at standard rate of 10%.

Reduction in the number of exemptions in Central Excise rate structure.

Nominal Central Excise Duty of 1% to be imposed on 130 items entering in the tax net.

Lower rate of Central Excise Duty enhanced from 4% to 5%.

Optional levy on branded garments or made up proposed to be converted into a mandatory levy at unified rate

10%.

Peak rate of Custom Duty held at its current level.

Scope of exemptions from Excise Duty enlarged to include equipments needed for storage and warehouse faciliti

on agricultural produce.

Basic Custom Duty reduced for specified agricultural machinery from 5% to 2.5%.

Basic Custom Duty reduced on micro-irrigation equipment from 7.5% to 5%.

De-oiled rice bran cake to be fully exempted from basic Custom Duty. Export Duty of 10 per cent to be levied on

export.

Basic Custom Duty reduced for various items to encourage domestic value addition vis--vis imports, to remove du

inversion and anomalies and to provide a level playing field to the domestic industry.

Rate of Export Duty for all types of iron ore enhanced and unified at 20% ad valorem. Full exemption from Expo

Duty to iron ore pellets.

Basic Custom Duty on two critical raw materials of cement industry viz. petcoke and gypsum reduced to 2.5 per cen

Cash dispensers fully exempt from basic Customs Duty.

Full exemption from basic Customs Duty and a concessional rate of Central Excise Duty extended to batteri

imported by manufacturers of electrical vehicles.

Concessional Excise Duty of 10 per cent to vehicles based on Fuel cell technology.

Exemption granted from basic custom duty and special CVD to critical parts/assemblies needed for Hybrid vehiclesReduction in Excise Duty on kits used for conversion of fossil fuel vehicles into Hybrid vehicles.

Excise Duty on LEDs reduced to 5% and special CVD being fully exempted.

Basic Customs Duty on solar lantern reduced from 10 to 5%.

Full exemption from basic Customs Duty to Crude Palm Stearin used in manufacture of laundry soap.


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Full exemption from basic Excise Duty granted to enzyme based preparation for pre-tanning.

Parallel Excise Duty exemption for domestic suppliers producing capital goods needed for expansion of existi

mega or ultra mega power projects.

Full exemption from basic Customs Duty to bio-asphalt and specified machinery for application in the construction

national highways.

Scope of exemptions from basic Customs Duty for work of art and antiquities extended to apply for exhibition

display in private art galleries open to the general public.

Exemption from Import Duty for spares and capital goods required for ship repair units extended to import by sh

owners.

Concessional basic Custom Duty of 5% and CVD of 5% available to newspaper establishments for high speed printinpresses extended to mailroom equipment.

Jumbo rolls of cinematographic film fully exempted from CVD by providing full exemption from Excise Duty.

Out right concession to factory-built ambulances from Excise Duty.

Relief measures proposed for raw pistachio, bamboo for agarbatti, lactose for the manufacture of homoeopath

medicines, sanitary napkins, baby and adult diapers.

Proposals relating to Customs and Central Excise estimated to result in a net revenue gain of Rs. 7,300 crore.

Service TaxStandard rate of Service Tax retained at 10 per cent, while seeking a closer fit between present regime and its GS

successor.

Hotel accommodation in excess of Rs. 1,000 per day and service provided by air conditioned restaurants that ha

license to serve liquor added as new services for levying Service Tax.

Tax on all services provided by hospitals with 25 or more beds with facility of central air conditioning.

Service Tax on air travel both domestic and international raised.

Services provided by life insurance companies in the area of investment and some more legal services proposed

be brought into tax net.All individual and sole proprietor tax payers with a turnover of upto Rs.60 lakh freed from the formalities of audit.

Proposals relating to Service Tax estimated to result in net revenue gain of Rs. 4,000 crore.

Proposals relating to Direct Taxes estimated to result in a revenue loss of Rs. 11,500 crore and those related Indirect Taxes estimated to result in net revenue gain of Rs. 11,300 crore.


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Budget at a Glance

Particulars 2009-10 2010-11(BE) 2010-11(RE) 2011-12(B

Revenue Receipts 572811 682212 783833 789892Tax Revenue (net to centre) 456536 534094 563685 664457

Non-tax Revenue 116275 148118 220148 125435

Capital Receipts 451676 426537 432743 467837

Recoveries of Loans 8613 5129 9001 15020

Other Receipts 24581 40000 22744 40000

Borrowings and other liabilities 418482 381408 400998 412817

Total Receipts 1024487 1108749 1216576 1257729

Non-Plan Expenditure 721096 735657 821552 816182On Revenue Account of which 657925 643599 726749 733558

nterest Payments 213093 248664 240757 267986

On Capital Account 63171 92058 94803 82624

Plan Expenditure 303391 373092 395024 441547

On Revenue Account 253884 315125 326928 363604

On Capital Account 49507 57967 68096 77943

Total Expenditure 1024487 1108749 1216576 1257729

Revenue Expenditure 911809 958724 1053677 1097162

Of Which, Grants for creation of capital Assets 31317 90792 146853

Capital expenditure 112678 150025 162899 160567

Revenue Deficit 338998 276512 269844 307270(5.20) (4.00) (3.40) (3.40)

Effective Revenue Deficit 245195 179052 160417

(3.50) (2.30) (1.80)

Fiscal deficit 418482 381408 400998 412817

(6.40) (5.50) (5.10) (4.60)

Primary Deficit 205389 132744 160241 144831

(3.10) (1.90) (2.00) (1.60)


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Key IndicatorsParticulars (US$ bln) 2007-08 2008-09 2009-10 2010-11F 2011-12F

GDP growth (%) 9.30 6.80 8.00 8.60 8.10

Exports 163 185 177 221 263mports 251 304 279 340 408

Trade deficit -89 -118 -102 -119 -145

nvisibles 75 90 79 84 92

Remittances 42 45 52 52 56

oftware 37 43 48 55 62

Others -5 2 -21 -24 -26

CAD -17 -29 -23 -35 -53

Capital inflows 108 7 66 71 69

FDI 15 17 20 23 23

FII 30 -14 32 29 22

Others 63 4 14 19 24

Impact on capital markets

ignificant positives from the budget:

Maintaining high GDP growth in the range of 8.75-9.25% for FY12. Narrowing the fiscal deficit was the focus of the budget FM announced to reduce the gap to 4.6% of GDP in FY

from 5.1% in FY11. Further the government expects to reduce the fiscal deficit to 4.1% in FY13 and progressive

to 3.5% in FY14.

Foreign individuals allowed to directly invest in India mutual funds. Allocation of Rs2.14trn for infrastructure in FY12, 48.5% of total plan allocation. 17.9% growth in net tax revenues over FY11. However a mere 3.4% growth in expenditure. No significant change in service tax to bring it in line with GST provisions. Corporate surcharge of 7.5 per cent on domestic companies reduced to 5 per cent. Extension of Tax incentives to foreign funds for financing of infrastructure. Lower rate of 15 per cent tax on dividends received by an Indian company from its foreign subsidiary. Central Excise Duty maintained at standard rate of 10 per cent. Reduction in number of exemptions in Central Excise rate structure. Peak rate of Custom Duty held at its current level. Standard rate of Service Tax retained at 10 per cent. Proposals relating to Service Tax estimated to result in net revenue gain of Rs 4,000crs. Proposals related to Indirect Taxes estimated to result in net revenue gain of Rs 11,300crs. No change in corporate tax was a welcome step, as was the unchanged service tax.


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SECTO -WISE IMPACT


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Banking & Financial Services

Reform Detail Companies Impacted

More Banking LicencesAmendments proposed to the Banking Regulation Act in

the context of additional banking licences to privatesector players.

Positive: IFCI, IDFC, ReligarBajaj Finserv, M&M

Financials, Reliance Capita

PSU Recapitalization

Rs. 6,000 crore to be provided during 2011-12 to enablepublic sector banks to maintain a minimum of Tier I

CRAR of 8 per cent.Positive: UCO Bank, Dena

Bank, Syndicate Bank, CentrBank of India, Andhra Bank

Bank of Maharashtra.Rs. 500 crore to be provided to enable Regional RuralBanks to maintain a CRAR of at least 9 per cent as on

March 31, 2012.

Micro-Finance Institutions

India Microfinance Equity Fund of 100 crore to becreated with SIDBI. Government considering putting in

place appropriate regulatory framework to protect theinterest of small borrowers.

Positive: SKS Microfinance

Ltd.

Enhanced interestsubvention

Interest subvention proposed to be enhanced from 2per cent to 3 per cent for providing short-term croploans to farmers who repay their crop loan on time.

Positive: SBI, PNB, BOB andall other PSUs

Housing Sector FinanceExisting scheme of interest subvention of 1 per cent on

housing loan further liberalised.Positive: LIC Housing, GIC

Housing.

InfrastructureReform Detail Companies Impacted

FII's to invest in corporatenfra bonds

To enhance flow of funds to infrastructure sector, theFII limit for investment in corporate bonds issued in

infrastructure sector being raised by additional USD 20bln to USD 25bln.

Positive: GVK Power,Nagarjuna Constructions,

GMR Infra, IVRCL Infra.

ncreased AllocationAllocation of Rs.2,14,000 crore for infrastructure in2011-12. This is an increase of 23.3% over 2010-11.This also amounts to 48.5% of total plan allocation.

Positive for all Infrastructurcompanies

IFCLs to increaseefinancing

IIFCL to achieve cummulative disbursement target of 20,000 crore by March 31, 2011 and 25,000 crore by

March 31, 2012.


Tax Free BondsTo boost infrastructure development, tax free bonds of

30,000 crore proposed to be issued by Government

undertakings during 2011-12.

Positive for all Infrastructur

companiesAssistance to ongoingMetro projects

In 2011-12, Delhi Metro Phase-III and Mumbai MetroLine III are proposed to be taken up.

Positive: Gammon Infra,Reliance Infra, HCC, L&T.

Exemption on UMPPEquipments Excise duty exemption for equipment supply to UMPPs

Positive: Reliance Power, TaPower.

Low with-holding TaxLow withholding tax of 5% for notified infra-funds.



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Agriculture

Reform Detail Companies ImpactedCut in custom duty onrrigation Equipment

Basic Custom Duty reduced on micro-irrigationequipment from 7.5% to 5%.

Positive: Jain Irrigation, TulExtrusions

Exemptions onwarehouse and storage

Scope of exemptions from Excise Duty enlarged toinclude equipments needed for storage andwarehouse facilities on agricultural produce.

Positive for Voltas, Bluesta

ncreased AllocationAllocation under Rashtriya Krishi Vikas Yojana (RKVY)

increased from 6,755 crore to 7,860 crore.Positive: Advanta India,

Bayer Corp., Kaveri SeedsRallis India, Monsanto Indi

Real EstateReform Detail Companies Impacted

Enhanced Home loan limitExisting housing loan limit enhanced to Rs. 25 lakh for

dwelling units under priority sector lending.Positive: Sobha Developers

HDIL, Purvankara, DLF.

MAT to be levied MAT to levied from the developers of SEZ. Negative for DLF

nterest subventionInterest subvention of 1 per cent on housing loans

extended to houses not exceeding Rs.25 lakh from Rs.20Lakh earlier.

Positive: HDIL, Orbit Corp,Sobha Developers,

Parasvnath, Unitech.

nvestment linkeddeduction

Investment linked deduction to businesses whichdevelop affordable housing under a notified scheme.

All construction companie

AutomobilesReform Detail Companies Impacted

No roll back of exciseBenefits from no increase in excise duty and no

imposition of specific duty on diesel passenger vehiclesPositive: for all auto

companies

Launch of Electric VehicleNational Mission for hybrid and electric vehicle to be

launched.

Positive for Electro thermExemption of custom onbatteries

Full exemption from basic Customs Duty and a

concessional rate of Central Excise Duty extendedto batteries imported by manufacturers of

electrical vehicles.

Reduction in custom duty

Reduction in custom duty on caprolactam from 10% to7.5% Positive for tyre

manufacturers.Reduction in custom duty on carbon black feed from 5%to 2.5%


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Oil & GasReform Detail Companies Impacted

Unchanged DutyNo cut in customs duty on crude oil

Positive for ONGC, Oil IndiaCairn

No reduction in excise duty on petrol/dieselNegative for OMCs, ONGC, O

India and Gail

No extension of benefits Tax benefits not extended for NELP IXNegative for E&P players

bidding for NELP IX

Direct transfer of Cashubsidy in LPG and

Kerosene

Proposed a system of direct transfer of Kerosene & LPGwhich would lead to better utilization of subsidies.

Longer term positive for OM

MAT levied on SEZ unitsHigher cash tax outgo, but no P&L impact as equivalent

deferred tax asset would be created

Neutral

FertilizerReform Detail Companies Impacted

Consideration of newpolicy for urea plants

Nutrient Based Subsidy (NBS) has improved theavailability of fertilizers; Government actively

considering extension of the NBS regime to cover urea.

RCF, Nagarfert, Chambal FerTata Chemical, Coromanda

Fert etc.

Direct transfer of cash

ubsidy

Government to move towards direct transfer of cashsubsidy to people living below poverty line in a phased

manner. Task force set up to work out the modalitiesfor the proposed system.

Positive: All fertilizer

Companies

nvestment in fertilizer tobe given infra status

Capital investment in fertilizer production proposed tobe included as an infrastructure sub-sector.

Positive: All fertilizerCompanies

FMCGReform Detail Companies Impacte

No Change in duty

No increase in excise dutyPositive for all FMCG

companies

No change in excise duty on cigarettes Positive: ITC, GodfreyPhillips

Fifteen additionalmega food parks

Government to set up fifteen additional mega food parksPositive for food

processing companie

Reduction in duty onrude palm

Customs duty on crude palm stearin imported for the manufactureof laundry soap reduced from 20% to nil.

Positive for HUL, GodrConsumer.


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Telecom


Increased Allocation

Increased allocation on various schemes under BharatNirman including Rural Telephoney by Rs.10,000

Crores, Plan to provide Rural Broadband Connectivityto all 250,000 panchayats of India in Three years.

Companies having spectrum ithe BWA space and / or havin

strong rural presence will bepositively impacted. Positive f

RIL and Bharti

Full exemption from SADon parts, components and

accessories

Full exemption from Special Additional Duty (SAD) onparts, components and accessories for manufacture of

mobile phones extended to March 2012. To continue toaid handset makers.

Hand set Manufacturers: SpicMobile.

EducationReform Detail Companies Impacte

Elementary Education Allocation for education increased by 24 per cent over current year. Positive: Everonn,Educomp, NIIT &

Navneet.chool EducationRs. 21,000 crore allocated towards Sarva Siksha Abhiyan, which is

40 per cent higher than Budget for 2010-11.

cholarship for SC/STPre-matric scholarship scheme to be introduced for needy SC/ST

students studying in classes IX and X.Social Benefit

Metals & MiningReform Detail Companies Impacted

ncrease in DutyExport duty from 5% on fines and 15% on lumps increased

to 20%

Negative for Sesa Goa and NMDMarginally positive for domest

steel manufacturers.

Exclusion of duty Removal of export duty on pellets to nil Positive for JSPL

CementReform Detail Companies Impacted

Reduction in dutyBasic Custom Duty on two critical raw materials of cement

industry viz. petcoke and gypsum reduced to 2.5%.

Positive for all cement

Companies

Hike in duty

Replacement of the existing excise duty rates of theCement Sector with composite rates having an ad valoremand specific component with some rationalization. Excise

duty on cement, which was Rs290 per MT on sale pricebelow Rs190/bag, has been changed to 10% on ad valorem

basis + Rs80 per MT, and on sale price exceedingRs190/bag; where duty was 10% on retail sale price, it has

been changed to 10% on ad valorem + Rs160 per MT.

Negative for all cementcompanies.


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Capital goods


Higher Defence OutlayTotal outlay of Rs. 1.64 lakh crore will lead to higher

order inflowsPositive for BEL, BHEL, BEML,

L&T.

Exemption of duty onpares

Full exemption from import duty on spares and Capital goodsimported by Ship owners.

Positive for ABG Shipyard,Bharati Shipyard

TextilesReform Detail Companies Impacted

Reduction in duty

Reduction in basic customs duty from 5 per cent to 2.5 percent on certain textile intermediates.

Positive for Vardhman TextilesRSWM, Himatsingka Seide Ltd

Reduction in basic customs duty on raw silk from 30 to 5per cent.

Reduction in basic customs duty on certain specified inputsfor manufacture of certain technical fibre and yarn from 7.5

per cent to 5 per cent.

Excise Duty raised10% excise duty on branded garments.

Negative for Pantaloons,Koutons, Provogue

Information TechnologyReform Detail Companies Impacted

MAT increased from18% to 18.5% Effective tax rate to be largely unchanged as the increase inMAT rate would be offset by reduction in surcharge Neutral

No extension of STPI No extension of tax exemption u/s 10A & 10B (STPI) Negative

MAT to be levied MAT to be levied on companies operating in SEZ

Marginally negative for largesized and select mid-cap

companies having material SEpresence.

Rural DevelopmentProvision under Rural Housing Fund enhanced to Rs.3,000 crore.

To enhance credit worthiness of economically weaker sections and LIG households, a Mortgage Risk Guarantee Fun

to be created under Rajiv Awas Yojana.

Central Electronic Registry to prevent frauds involving multiple lending on the same immovable property to becom

operational by March 31, 2011.

To improve rice based cropping system in eastern Region an allocation of Rs. 400 crore has been made.

Allocation of Rs.300 crore to promote 60,000 pulses villages in rainfed areas.


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Allocation of Rs.300 crore to bring 60,000 hectares under oil palm plantations. Initiative to yield about 3 lakh Metr

tonnes of palm oil annually in five years.

Allocation of Rs. 300 crore for implementation of vegetable initiative to provide quality vegetable at competit

prices.

Allocation of Rs.300 crore to promote higher production of Bajra, Jowar, Ragi and other millets, which are high

nutritious and have several medicinal properties.

Allocation of 300 crore to promote animal based protein production through livestock development, dairy farmin

piggery, goat rearing and fisheries.

Allocation of Rs.300 crore for Accelerated Fodder Development Programme to benefit farmers in 25,000 villages.

In view of enhanced target for flow of agriculture credit, capital base of NABARD to be strengthened by Rs. 3,00

crore in phased manner.

Rs. 10,000 crore to be contributed to NABARDs Short-term Rural Credit fund for 2011-12.

Approval being given to set up 15 more Mega Food Parks during 2011-12.

Social Welfare

National Food Security Bill (NFSB) to be introduced in the Parliament during the course of this year.

Allocation for social sector in 2011-12 ( 1,60,887 crore) increased by 17 per cent over current year. It amounts

36.4 per cent of total plan allocation.

Bharat NirmanAllocation for Bharat Nirman programme proposed to be increased by Rs. 10,000 crore from the current year to R

58,000 crore in 2011-12.

Plan to provide Rural Broadband Connectivity to all 2,50,000 Panchayats in the country in three years.

MGNREGAIn pursuance of last years budget announcement to provide a real wage of Rs.100 per day, the Government h

decided to index the wage rates notified under the MGNREGA to the Consumer Price Index for Agricultural Labour.

Other Proposals

National Manufacturing PolicyShare of manufacturing in GDP expected to grow from about 16 per cent to 25 per cent over a period of 10 year

Government will come out with a manufacturing policy.

Two Committees set up for greater transparency and accountability in procurement policy; and for allocatio

pricing and utilization of natural resources.


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Issues relating to reconciliation of environmental concern from various departmental activities including tho

related to infrastructure and mining to be considered by a Group of Ministers.

Basic Custom Duty reduced for specified agricultural machinery from 5% to 2.5%.

Black MoneyFive fold strategy to be put into operation to deal with the problem of generation and circulation of black money.

Membership of various international fora engaged in anti money laundering, Financial integrity and Econom

development, Exchange of information for tax purposes and transparency, secured.

Various Tax Information Exchange Agreements (TIEA) and Double Taxation Avoidance Agreements (DTAA

concluded. Foreign Tax Division of CBDT has been strengthened to effectively handle increase in tax informatio

exchange and transfer pricing issues.

Enforcement Directorate strengthened three fold to handle increased number of cases registered under amende

Money Laundering Legislation.

Finance Ministry has commissioned study on unaccounted income and wealth held within and outside the country.

nnovationsNational Innovation Council set up to prepare road map for innovations in India.

Special grant provided to various universities and academic institutions to recognise excellence.

Skill Development

Additional Rs. 500 crore proposed to be provided for National Skill Development Fund during the next year. An international award with prize money of Rs. 1 crore being instituted for promoting values of univer

brotherhood as part of National celebrations of 150th Birth Anniversary of Gurudev Rabindranath Tagore.


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EASTERN FINANCIERS RESEARCH DESK

Rajesh Agarwal Head of Research 033 4011 7811 [email protected]

Nandita Jaiswal- Sr. Research Analyst 033 4011 7800 [email protected]

Biswarup Chakraborty- Research Analyst 033 4011 7800 [email protected]

Disclaimer

Eastern Financiers Ltd. as a firm may have investment positions in the company shares discussed above. This document i

meant for our clients only and is not for public distribution. This material is for the personal information of the authorized

recipient, and we are not soliciting any action based upon it. This report is not to be construed as an offer to sell or the

solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. The

material is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and

it should not be relied upon as such. Neither Eastern Financiers Ltd., nor any person connected with it, accepts any

liability arising from the use of this document. The recipient of this material should rely on their own investigations andtake their own professional advice. Opinions expressed are our current opinions as of the date appearing on this materia

only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be

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Documents

EF_UnionBudget_28Feb11