A critical analysis of the union budget

Key facts:

GDP growth is 6.9 per cent in real terms in 2011-12.

Fiscal deficit at 5.9 per cent of GDP in RE 2011-12.

Y-O-Y Inflation rate has came down to 9.1%.

Sectoral share: manufacturing 27%, service 59% and

agriculture and allied 14%

food grains production for the year 2010-11 is 244.78 mn tones.

BUDGET

BUDGET OVERVIEW:Revenue: (in cr.)

Tax Receipt : 771071

Non Tax Receipt : 164614

Total revenue Receipt : 935685

Capital Receipt : 41650

(11650+30000)

Total receipt : 977335

Expenditure: (in cr.)

planned expenditure : 521025

non planed expenditure : 969900

total expenditure : 1490925

Fiscal deficit: (in cr.) : 513590 (5.1%)

BUDGET HIGHLITHES:

Income tax exemption limit raised to Rs.2 lakh

Defence to get Rs.1.93 lakh crore

Excise duty and Service tax rate raised from 10 per

cent to 12 per cent.

Number of proactive steps taken on black money .

Allocation of Rs.14,000 crore for rural water supply

and sanitation.

Continued……………,

Infrastructure sector is given with great importance.

External commercial borrowing

Hope to raise Rs.30,000 crore from disinvestments.

agriculture and services continued to perform well.

Rajiv Gandhi Equity Savings scheme is proposed.

INFRASTRICTURE:

Key Highlights:

investment in infrastructure to go up to 50 lakh crore

Tax free bonds worth Rs.60000 crores is to be allowed.

Initiatives to public private partnerships (PPP).

First Infrastructure Debt Fund with an initial size of 8,000 crore launched

Sector Amount

NHAI 10000

IRFC 10000

IIFCL 10000

HUDCO 5000

NATIONAL HOUSING BOARD 5000

SIDBI 5000

PORT 5000

POWER SECTOR 10000

AGRICULTURE:

Key Highlights:

agricultural credit increased in 2012-13 to Rs. 5,75,000 crore.

interest subvention scheme for providing short term crop loans to farmers at 7% interest P.A.

Allocation of Rs. 10,000 crore to NABARD for refinancing the Regional Rural Banks.

Transforming KCC into smart cards Reduction in custom duty from 7.5% to 2.5% in

agriculture and related sectors.

Conclusion:

The Union Budget 2012-13 tries to give a more realistic picture of India government’s fiscal position. However, just like previous budget some questions still remain on subsidies. Major subsidies for 2012-13 imply a decline of 14% from 2011-12. All the major subsidies are pegged to be lower compared to 2011-12 except food subsidy. Even in food subsidy the rise is a marginal 3% considering Food Security Act is to be implemented this year. Hence, there could again be some issues on subsidy front.

"Mistakes are the portals of Discovery."

- James Joyce

Thank You

SANDEEP KUMAR SSHISHIR ARYALSHIVADEVA SWAMY