Professional Documents
Culture Documents
9.0% 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 2008-09 2009-10 2011-12 2011-12E 2012-13E 6.9% 6.7% 8.4% 8.4%
8.60%
7.6%
2013-14E
Fiscal Deficit
7.0%
6.4%
6.0%
As % of GDP
5.0% 4.0%
3.0%
2.0% 1.0%
250000
200000 150000 100000
Rs. in Crore
To be capped at 2%
3.0%
2.5%
2.0%
1.5% 1.0% 0.5% 0.0% 2009-10 2010-11 2011-12BE 2011-12RE 2012-13BE
Fertilizers Interest and Others Food Petroleum Subsidies as a %of GDP (RHS)
50000
0
550,000 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000
Rs. in Crore
2009-10
2010-11
2011-12BE
2011-12RE
2012-13BE
Budgetary Measures
The government has taken several initiatives to boost revenues, scale down expenditure, resolve mechanisms to curtail subsidy outflow and provide a boost to investment, savings and development of capital markets. These are enumerated below :-
Exemption limit for the general category of individual taxpayers proposed to be enhanced from Rs 1,80,000 to Rs 2,00,000 giving tax relief of Rs 2,000
Slabs have been relaxed further as under: 10% of tax on income from Rs 2 lacs to Rs 5 lacs 20% of tax on income from Rs 5 lacs to Rs 10 lacs 30% of tax on income from Rs 10 lacs and above Rajiv Gandhi Equity Saving Scheme to allow for income tax deduction of 50% to new retail investors, who invest upto Rs 50,000 directly in equities and whose annual income is below Rs 10 lakh to be introduced. The scheme will have a lock-in period of 3 years
Old Slab Up to Rs1,80,000 Rs 1,80,001-Rs 5,00,000 Rs5,00,001-Rs 8,00,000 Above Rs. 8,00,000 Taxable Income 2,00,000
Tax Rate (%) 0% 10% 20% 30% Pre-Budget tax 2,000 Post Budget tax 0
New Slab Up to Rs 2,00,000 Rs 2,00,001 - Rs 5,00,000 Rs 5,00,000 - Rs 10,00,000 Above Rs 10,00,001 Saving 2,000
5,60,000
11,00,000
44,000
1,82,000
10
42,000
1,60,000
2,000
22,000
Friday, 16th Mar, 2012
On the expenditure front, the government is emphasising on the Effective Revenue Deficit (to address the structural imbalances in the revenue account) and the Medium term Expenditure Framework (which would help set forth a rolling target for expenditure indicators). The former would help in reducing the consumptive component of the revenue deficit and create space for increased capital spending, while the latter would help in allocating resources for prioritised schemes and weeding out others that have outlived utility.
While interest payments, defence and subsidies are expected to go up sharply, other non plan expenditure items are to be maintained at more or less last years levels. However the worrying factor is the increase in interest payments to 3.2% of GDP On plan expenditure the encouraging news is that the government has not gone overboard in its allocation, however the allocations to energy sector which has been kept at last years levels is slightly disappointing.
12
13
1200000 1000000
Rs. in Crore
800000
600000 400000 200000 0 2009-10 2010-11 2011-12BE 2011-12RE 2012-13BE RE - Int Payment & Debt Servicing RE- Subsidies CE- Loan and Advances to State, UT CE- Others Revenue Expenditure (RE) RE- Defence RE Others CE- Defence Capital Expenditure (CE)
14
Interest Payments
350,000 300,000
Rs. in Crore
3.3% 3.3% 3.2% 3.2% 3.1% 3.1% 3.0% 3.0% 2.9% 2.9% 2.8%
250,000
200,000 150,000 100,000 50,000 2009-10 2010-11 2011-12BE 2011-12RE 2012-13BE
15
Plan Expenditure
(Rs. in Crore) Agriculture and Allied Activities Rural Development Irrigation and Flood Control Energy Industry and Minerals Transport Communications Science Technology & Environment General Economic Services Social Services General Services Total 2010-11 15715.7 42059.9 476.5 110977.1 35951.3 94205.3 10335.7 11921.2 13680.8 127633.0 1359.8 464316.1 2011-12BE 14744.1 46292.1 565.3 155495.2 45213.8 116860.9 20255.5 16186.3 15802.1 153812.2 7229.7 592457.0 2011-12RE 14854.8 39132.2 489.3 147189.5 40580.9 109205.5 11994.4 12712.7 19420.4 157056.2 5536.2 558172.0 2012-13BE Chg BE 13/12 17692.4 20% 40763.5 -12% 1275.0 126% 154841.9 0% 57226.8 27% 125357.1 7% 15411.4 -24% 16591.7 3% 24777.3 57% 188871.7 23% 8700.7 20% 651509.3 10%
16
Plan Expenditure
600000 500000
Rs. in Crore
400000
300000 200000 100000 0 2009-10 2010-11 2011-12BE 2011-12RE 2012-13BE
17
18
20
21
FRBM Act
Introduction of amendments to the FRBM Act as part of Finance Bill, 2012. Concept of Effective Revenue Deficit and Medium Term Expenditure Framework statement are two important features of amendment to FRBM Act in the direction of expenditure reforms.
Effective Revenue Deficit is the difference between revenue deficit and grants for creation of capital assets. This will help in reducing consumptive component of revenue deficit and create space for increased capital spending.
Medium-term Expenditure Framework statement will set forth a three-year rolling target for expenditure indicators. Recommendations of the Expert Committees to streamline and reduce the number of centrally sponsored schemes and to address plan & non-plan classification to be kept in view while implementing Twelfth Plan.
22
Budget Summary
(Rs. in Crore) Revenue Receipts Net Tax Revenue Non tax Revenue Capital Receipts Recoveries of receipts Other Reciepts (Disinvestments) Debt Reciepts Draw Down Balance of Cash Total Receipts Non Plan Expenditure Non Plan Revenue Interest Payments Non Plan Capital Plan Expenditure Plan Revenue Plan Capital Total Expenditure GDP Nominal Gross Fiscal Deficit Fiscal deficit as a % of GDP Revenue Deficit Revenue deficit as a % of GDP Primary Deficit Primary deficit as a % of GDP 2009-10 572,811 456,536 116,275 453,062 8,613 24,581 419,868 (1,386) 1,024,487 721,096 657,925 213,093 63,172 303,391 253,884 49,507 1,024,488 6,550,271 418,483 6.4% 338,998 5.2% 205,389 3.1% 2010-11 788,471 569,869 218,602 402,427 12,420 22,846 367,161 6,430 1,197,328 818,299 726,491 234,022 91,808 379,029 314,232 64,797 1,197,328 7,877,947 373,591 4.7% 252,252 3.2% 139,569 1.8% 2011-12BE 789,892 664,457 125,435 447,837 15,020 40,000 392,817 20,000 1,257,729 816,182 733,558 267,986 82,624 441,547 363,604 77,943 1,257,729 8,986,860 412,817 4.6% 307,270 3.4% 144,831 1.6% 2011-12RE 766,990 642,252 124,738 576,396 14,258 15,493 546,645 (24,664) 1,318,722 892,117 815,741 275,618 76,376 426,605 346,201 80,404 1,318,722 8,912,179 521,981 5.9% 394,952 4.4% 246,363 2.8% 2012-13BE Chg 12 BE/RE Chg BE 13/12 935,684 771,070 164,614 555,241 11,650 30,000 513,591 1,490,925 969,900 865,596 319,759 104,304 521,025 420,513 100,512 1,490,925 10,159,884 513,591 5.1% 350,425 3.4% 193,832 1.9% -3% -3% -1% 29% -5% -61% 39% 5% 9% 11% 3% -8% -3% -5% 3% 10% -1% 26% 28% 29% 30% 70% 72% 18% 16% 31% 24% -22% -25% 31% 19% 19% 18% 19% 26% 18% 16% 29% 19% 13% 24% 10% 14% 1% 34% 18%
23
24
Sector Summary
Sector Automobiles Aviation Banking / Financial Services Capital Goods Cement FMCG / Consumer Durables Budget Impact Neutral Neutral Neutral Negative Neutral Neutral Key Highlights No additional excise duties on diesel cars & increase in excise duty from 10% to 12% Slight increase in duties Re-capitalization of PSU banks & Reduction of STT No import duty imposed on power equipments. Infrastructure spending to boost demand, cost pressures to persist Increase in excise duty from 10% to 12%
Fertilizers
Healthcare / Pharma
Positive
Neutral
Infrastructure
Positive
Sector Summary
Key Highlights Rs. 14,232 crore allocated to complete enrolment of 40 crore persons under UID mission No declaration on raising FDI limits Import duty on flat-rolled steel enhanced from 5% to 7.5% Cess on crude petroleum oil produced in India revised to Rs 4,500 per metric tonne. Coal India advised to sign FSA with power plants and full exemption from basic customs duty on fuel
Power / Utilities
Positive
26
allocation
to
rural
Positive
N/A
Positive
Companies Mahindra & Mahindra, Maruti Suzuki India Ltd, Tata Motors
27
Aviation
No timeline on enhancement of FDI limit
Budget Expectations Direct Import of ATF Proposal to allow foreign airlines to participate up to 49% of the total equity. N/A N/A Budget Declaration Direct import of Aviation Turbine Fuel permitted for Indian Carriers. However infrastructure development would take 2-3 years. Under active discussion. ECB to be permitted for WC requirement (up to $1bn) for a period of one year. Basic custom duty exemption on import of aircraft parts. Impact Neutral
Positive
Companies
28
29
Budget Expectations
Budget Declaration
Agricultural credit is targeted to increase to Rs5.75 lakh crore (21% yoy basis) Microfinance institutions(development and regulation) bill to be passed in this year
Impact
Neutral for All Banks Positive for SKS Micro finance
Positive HF`s
for
Banks
and
Neutral
Impact
Companies
Gainers
Losers
30
Capital Goods
No declaration on levy of import duties on power equipments
Budget Expectations Imposition of 19% import duties (currently nil) on power generation equipment Expect 10% hike in capital outlay for defense sector Increase in depreciation rate Higher allocation to R-ARDRP
Budget Declaration No declaration Defense capital outlay up by 14% to Rs 79500 crore No declaration Allocation to R-ARDRP up by 53.0% to Rs 3114 crore.
Impact Negative
31
Cement
Government spending to boost demand
Budget Expectations Higher spending infrastructure Budget Declaration Government to spend Rs 25 lakh crore in the 12th Five year plan No declaration Impact Positive
Review of the duty structure on imports of Coke, Pet Coke (current 2.5%) and Gypsum
Negative
Companies
32
FMCG/Consumer Durables
Hike in excise duty
Budget Expectations Budget Declaration Increase in basic excise duty on cigarettes of more than 65mm length by 10% advalorem Increase in basic excise duty on hand-rolled bidis from Rs 8 to Rs 10 per thousand and on machine-rolled bidis from Rs 19 to Rs 21 per thousand Excise duty increased to 12% from 10% Efforts being put for consensus on FDI in multibrand retail Allocation of Rs Rs 74,100 crore 73,175 crore as against Impact
Increase in excise duty from current 10% to 12%. Clarity on FDI in retail sector Higher allocation spending to rural
Neutral for the sector Neutral for retail sector Negative for the sector Positive for the sector
Full exemption from basic customs duty on LCD and LED TV panels Impact Gainers Losers Companies
33
Fertilizers
Policies on urea to be the decision maker
Budget Expectations Urea will be brought under the NBS regime Per unit subsidy to be cut under the Nutrient Based Subsidy (NBS) system for non-urea fertilizers Budget Declaration Mobile-based Fertilizer Management System on movement of fertilizer and subsidies Government to finalize pricing and investment policies for urea Viable Gap Funding for capital investment Full exemption from basic customs duty for import of equipment for expansion or setting up of fertilizer projects Reduction of customs duty on some water soluble & liquid fertilizers other than urea, from 7.5 per cent to 5 per cent and from 5 per cent to 2.5 per cent; Impact Positive
Positive
Positive Positive
Positive
Impact
Gainers Losers
Companies
Nagarjuna Fertilizer, Chambal Fertilizer
34
Healthcare / Pharma
In line with expectations
Budget Expectations Higher Weighted Deduction for R&D (From 150% to 200%) Tax holiday on healthcare in TierII and III towns should be extended from 5 years to 10 years Increased healthcare spending on Budget Declaration Weighted deduction remains unchanged, however tax exemptions for in-house R&D extended further by 5 years Impact Positive
No declaration
Rs. 20,822 crore earmarked for National Rural Health Mission against Rs. 18,115 crore in FY11.
Positive
Companies
Sun Pharmaceuticals, Cadilla Healthcare (impacted negatively due to domestic formulations partnerships bought under perview of MAT)
35 Friday, 16th Mar, 2012
Infrastructure
Increased spending to boost growth
Budget Expectations Higher spending infrastructure Budget Declaration Infrastructure spending in Twelfth Plan period to go up to Rs. 50 lakh crore. Rate of withholding tax for interest payment on ECBs proposed to be reduced from 2% to 5% for 3 years for certain sectors. Allocation to road transport enhanced by 14% to Rs. 25,360 crore. Exemption from import duty on certain equipment needed for road construction Impact Positive
on
Positive
road for
on
rural
Higher investment limits for FII in corporate bonds Impact Gainers Losers Companies
36
IT / BPOs
Budget A non event for the sector
Budget Expectations Revival of these benefits under section 10A/B of the Income tax Act for STP/EOU units Financial incentives for ITBPO vendors who take up eGovernance projects Abolishing MAT levy on the SEZ developers/ units and carry forward of MAT credit entitlement for an indefinite period Budget Declaration Impact
No Declaration
Rs. 14,232 crore allocated to complete enrolment of 40 crore persons under UID mission
Neutral.
No Declaration
Companies
37
Media
Lack of steps on FDI limit, weakens investor sentiments
Budget Expectations Raising of FDI limit for broadcast carriage services to 74% (Current Radio 26%, DTH -49% and Cable 49%) Reduction of customs duty on digital headends and set top boxes (current 5%) Relief from levy and collection of service tax on subscription charges Amortization rules for intangibles like license fees paid by radio broadcasters Budget Declaration Impact
No Declaration
No Declaration
Negative
Service tax rate increased from 10% to 12%. Film industry will get tax exemption copyright relating to recording cinematographic films on of
Negative
Positive
Companies
38
Companies
39
Neutral
No Impact
No declaration
Companies
40
Power / Utilities
Bag full of positives
Budget Expectations Budget Declaration Coal India advised to sign FSA with power plants Full exemption from basic customs duty and a concessional CVD of 1% for a period of two years till March 31, 2014 for steam coal Full exemption from basic duty to natural gas and LNG Tax-free bonds of Rs 10,000 crore allocated to power sector To allow External Commercial Borrowings (ECB) to part finance rupee debt of existing power projects Withholding tax on interest payments on ECBs to be reduced to 5% from 20% Impact Gainers Losers Companies Impact
Positive sector
for
the
power
for for
the the
power power
for
the
power
41
Miscellaneous
Budget Declaration Coal India to sign FSAs with power projects commissioning companies before 31st March15 Cascading impact of dividend distribution tax to be eliminated
Impact Negative impact for Coal India All companies Branded Jewellery Players
No excise duty on branded silver jewellery whereas non branded gold jewellery to attract 1% excise duty
Increase in excise duty from 1.5% to 3% on import of refined gold Exemption of basic custom duty for waste paper Abatement on excise duty for branded retail business enhanced to 70% from 55% earlier, reducing the incident of duty from 4.5% to 3.6%
42
Appendix
43
Receipts
(Rs. in Crore) 2009-10 Total Receipts 1,024,487 Revenue Receipt 572,811 Tax revenue (Gross) 624,527 Corporation tax 244,725 Income tax 132,315 Wealth Tax 507 Customs 83,324 Union Excise Duties 103,621 Service Tax 58,422 Taxes of the Union 1,614 Less: Share of State, UT 164,832 Less: Transfer to NCCF 3,160 Tax Revenue for Central (Net) 456,536 Non Tax Revenue 116,275 Interest Receipts 21,756 Dividends and Profits 50,248 Other non-tax 44,271 Capital Receipt 453,062 Debt Receipts 419,868 Mark et Borrowings 398,424 Other short, medium & long term loan (9,769) External Debt 11,038 Others 20,175 Non Debt Receipts 33,194 Recoveries of loan and Advances 8,613 Others 24,581 Draw Down Balance of Cash (1,386) 2010-11 1,197,328 788,471 793,072 298688 146587 687 135813 138299 71016 1982 219303 3900 569,869 218,602 19733 47992 150877 402,427 367,161 325414 7759 23556 10,432 35,266 12420 22846 6430 2011-12BE 1,257,729 789,892 932,440 359990 172026 635 151700 164116 82000 1973 263458 4525 664,457 125,435 19578 42624 63233 447,837 392,817 343000 15000 14500 20,317 55,020 15020 40000 20000 2011-12RE 1,318,722 766,990 901,664 327680 171879 1092 153000 150696 95000 2317 255414 3998 642,252 124,738 20125 50122 54491 576,396 546,645 436414 116084 10311 -16164 29,751 14258 15493 -24664 2012-13BE Chg BE 13/12 Chg 12 BE/RE 1,490,925 19% 5% 935,684 18% -3% 1,077,611 16% -3% 373227 4% -9% 195786 14% 0% 1244 96% 72% 186694 23% 1% 194350 18% -8% 124000 51% 16% 2310 17% 17% 301921 15% -3% 4620 2% -12% 771,070 16% -3% 164,614 31% -1% 19231 -2% 3% 50153 18% 18% 95230 51% -14% 555,241 24% 29% 513,591 31% 39% 479000 40% 27% 9000 -40% 674% 10148 -30% -29% 15443 -24% -180% 41,650 -24% -46% 11650 -22% -5% 30000 -25% -61% 0 -100% -223%
44
Expenditure
(Rs. in Crore) Total Expenditure Non Plan Expenditure Revenue Expenditure Int. Payment and Debt Servicing Defence Subsidies Others Capital Expenditure Loan and Advances to State, UT Defence Others Plan Expenditure Revenue Expenditure State Plan Central Plan Capital expenditure State Plan Central Plan 2009-10 1,024,488 721,096 657,925 213,093 90,669 141,351 212,812 63,172 83 51,112 11,976 303,391 253,884 75,082 178,802 49,507 9,408 40,099 2010-11 1,197,328 818,299 726,491 234022 92061 173420 226,988 91,808 85 62056 29,667 379,029 314,232 81778 232454 64,797 11,301 53,496 2011-12BE 1,257,729 816,182 733,558 267986 95216 143570 226,786 82,624 85 69199 13,340 441,547 363,604 95317 268287 77,943 10,709 67,234 2011-12RE 1,318,722 892,117 815,741 275618 104793 216297 219,033 76,376 75 66144 10,157 426,605 346,201 93604 252597 80,404 11,595 68,809 2012-13BE 1,490,925 969,900 865,596 319759 113829 190015 241,993 104,304 85 79579 24,640 521,025 420,513 116985 303528 100,512 13,013 87,499 % Change Chg 12 BE/RE 19% 5% 19% 9% 18% 11% 19% 3% 20% 10% 32% 51% 7% -3% 26% -8% 0% -12% 15% -4% 85% -24% 18% -3% 16% -5% 23% -2% 13% -6% 29% 3% 22% 8% 30% 2%
45
Deficit Ratios
(Rs. in Crore) GDP Nominal Gross Fiscal Deficit Fiscal deficit as a % of GDP Revenue Deficit Revenue deficit as a % of GDP Primary Deficit Primary deficit as a % of GDP 2009-10 6,550,271 418,483 6.4% 338,998 5.18% 205,389 3.14% 2010-11 2011-12BE 2011-12RE 2012-13BE 7,877,947 8,986,860 8,912,179 10,159,884 373,591 412,817 521,981 513,591 4.74% 4.59% 5.86% 5.06% 252,252 307,270 394,952 350,425 3.20% 3.42% 4.43% 3.45% 139,569 144,831 246,363 193,832 1.77% 1.61% 2.76% 1.91% Chg 13/12 Chg 12 BE/RE 13% -1% 24% 26% 10% 28% 14% 29% 1% 30% 34% 70% 18% 72%
46
47