"The budget should be balanced, the
Treasury should be refilled, public debt
should be reduced, the arrogance of
officialdom should be tempered and
controlled, and the assistance to and
from foreign lands should be curtailed,
lest Rome become bankrupt..."
1 -- Cicero , 55 BC 1
2
MACROECONOMIC PARAMETERS
CHALLENGES
OPPORTUNITIES
IMPACT ON DIFFERENT CLASSES
CONTENT IMPACT ON DIFFERENT SECTORS
S IMPACT ON OUR DAY TO DAY LIFE
HAS BUDGET ADDRESSED IMP ISSSUES
WEAKNESS IN THE BUDGET
INVESTMENT DECISIONS TO CHANGE ?
3 CONCLUSION
MACROECONOMIC PARAMETERS
Fiscal Indicators - Rolling target as % of GDP (at Current market Price)
Target for
Particulars RE 2010-11 BE 2011-12
2012-13 2013-14
Revenue Deficit 3.4 3.4 2.7 2.1
Fiscal Deficit 5.1 4.6 4.1 3.5
Gross Tax Revenue 10.0 10.4 10.8 11.3
Total Outstanding 45.3 44.2 43.1 41.5
Liabilities
4
MACROECONOMIC PARAMETERS
Comparison of MTFP with 13th FC Fiscal Roadmap (at Current market Price)
Particulars 2010-11 2011-12 2012-13 2013-14
Fiscal Deficit 5.1 4.6 4.1 3.5
- MTFP
- 13th FC 5.7 4.8 4.2 3.0
Revenue Deficit
- MTFP 3.4 3.4 2.7 2.1
- 13th FC 3.2 2.3 1.2 0.0
Debt
- MTFP 45.3 44.2 43.1 41.5
- 13th FC 53.9 52.5 50.5 47.5
5
CHALLLENGES BEFORE THE
FINANCE MINISTER
CRUDE PRICES
GOVERNMENT BORROWING AND
EXPENDITURE
SUPPLY SIDE PROBLEMS
CORRUPTION
6
OPPORTUNITIES
Swift and broad based growth in 2010-11 has put the
economy back to its pre-crisis growth trajectory.
Fiscal consolidation has been impressive.
Significant progress in critical institutional reforms that
would set the pace for double-digit growth in the near
future.
Dynamism in the rural economy due to scaled up
7
flow of resources to the rural areas.
IMPACT ON
DIFFERENT
INDIVIDUAL CLASSES
8
Good news for salaried class
Increase in the income tax exemption
limit :
To Rs. 1.80
General Tax Rs. 2000
lakh from
Payers benefit
Rs.1.60 lakhs
9
Is it true?
No more filing of tax returns for the salaried
The electronic filing of Tax
Deduction at Source
(TDS) statement has
stabilized.
Category of salaried
taxpayers who will not be
required to file a return will
10
be notified.
Tax norms tightened for businessmen
To tax life insurance service providers
Legal representation for businesses under
service tax
Service Tax on hotel accommodation above
Rs.1,500 per day
11
Senior citizens now a happier lot
“Very Senior Citizen” introduced: 80 years and above.
Tax exemption for income up to Rs 5.0 lakh
Reduction of age limit : from 65 years to 60 years.
Tax exemption for income up to Rs 2.5 lakh (now Rs 2.4 l)
12
Senior citizens now a happier lot
Eligibility under Indira Gandhi National Old Age
Pension Scheme, reduced to 60 years from 65 years.
Increase in OAP from Rs.200 to Rs. 500 p.m for
13 those of 80 years and above.
Education gets a Boost
Allocation of
Rs.52,057 crore for
education sector
Increased allocation
14
by 24%.
Mixed bag for Homemakers
1% interest subsidy on
low- cost housing loans
(upto Rs 15 lakh for units
costing < Rs 25 lakhs)
Raise in service tax on air
travel.
15
IMPACT ON
DIFFERENT SECTORS
16
Automobile:
Positive as the central excise duty
has been kept unchanged.
17
IT
Overall, the budget was Neutral for IT sector.
Low key affair for the Software Sector.
No mention about extension of fiscal benefits under
STPI Scheme for Export of Software Services, which
18
is due to expire in FY2011.
Infrastructure
Continued stress on infrastructure development
Allocation increased by 23% yoy to Rs 2,14,000 cr
which is 48.5% of the planned expenditure.
The tax benefit for
investment upto
Rs.20,000
Infrastructure Bonds
has been extended by
one year.
19
Metals & Mining:
Export duty on export of iron ore
raised to ad valorem 20% on lumps as well
as fines.
Now : 15% on lumps and 5% on fines
“Negative news for iron ore exporters”
20
Pharma
“Neutral for the pharmaceutical sector”.
20% increased allocation to Ministry of Health &
Family Welfare (Rs.26,760 crore from Rs 22,300 cr.)
No extension on weighted deduction on the in-house
R&D which stands at 200% and available till
FY2012 only. Highly disappointing Pharma Cos. in R &
D activities.
21
Investors get a leg up
Upped priority home loan limit to Rs 25
lakh compared to Rs 20 lakh.
10% excise duty on branded garments.
Likely to be dampener for this class.
22
Capital Goods:
No significant direct measures
BUT has Positive signal
Continued impetus to Infrastructure and
Power Sector of the country.
23
OVERALL RATING
HOMEMAKER 6/10
INDUSTRIALIST 8/10
SERVICES 6/10
FARMER 8/10
UNEMPLOYED 5/10
SHOPKEEPER 7/10
24
IMPACT ON OUR DAY
TO DAY THINGS
25
TVS -SAME COST
26
FRIDGE SAME COST
27
WASHING MACHINE SAME
COST
28
CHEAPER PCS
29
CHEAPER AC
30
MICROWAVE NO CHANGE
31
COSTLIER MOBILE PHONES
32
CHEAPER LAPTOPS
33
CHEAPER PRINTER
34
FAX MACHINES
PHOTOCOPIERS CHEAPER
35
CAMERA SAME PRICE
36
PROJECTORS NO CHNAGE
37
Cement is set to be dearer across the country by
Rs 8-9 per 50 kg bag
38
SOLAR ENERGY SAME PRICE
39
AIRFARE COSTLIER
40
OUR
EXPENDITURE
OUR REVENUES
41
Here's how the govt earns and
spends its rupee
42
Govt. Borrowings
Good Sign :
Less borrowings by Govt. in 2011-12 than FY 2010-11.
Borrowings comprises
2010-11 2011-12
29 Borrowing 27
% s %
71 73
% %
Gross borrowings in 2011-12
Estimated at Rs 4,17,000 crore ( nearly Rs 40,000 crore,
lower than current FY)
43
Why India will be world's No. 1 economy by 2050
As per Citi Report :
India will be world's largest economy by
2050,
surpassing China and the United States.
In 2020 : China should overtake US
&
In 2050 : India will Overtake
44
DOES BUDGET
ADDRESS IMPORTANT
ISSUES
45
Budget attempts to address four
core issues
Promoting
Improving Growth- Efficiency in Attracting
fiscal related delivery foreign
mechanism &
conditions measures reform measures capital
46
Budget attempts to address four core issues ..
Improving fiscal conditions :
Increase service tax revenues by 18% in
FY12 over FY11.
Due to widening of service tax net along
with robust growth of the service sector
Significant tax buoyancy are expected to
grow gross tax revenues by about 25%.
47
Budget attempts to address four core issues ..
Growth-related measures
Increasing FIIs limit in infrastructure debt
funds to $25 bn,
Attaining about 100% growth (over previous
FYP) in XI Five Year Plan outlay
Increasing infra spend by 23% and
Aiming to increase farm credit by 23% are
certainly pro-growth measures.
48
Budget attempts to address four core issues ..
Measures for promoting Productivity, Efficiency in
delivery mechanism, containing inflation and reform
In agricultural sector and containing food crop inflation
committee to look into expenditure management,
nutrient-based urea policy,
5-fold strategy to tap black money,
increasing interest subvention for timely repayment of farm loans,
IT-backbone for the rural areas,
increased investments for cultivation of edible oil seeds,
direct transfer of subsidy through smart cards and
significant investments in cold storage and warehouses for agri-crops
49
Budget attempts to address four core issues ..
Attracting foreign capital
Proposal to allow foreign investments in equity
schemes of mutual funds,
increasing foreign investment limit in infra debt funds,
firm policy guidelines for new banking licenses by
Mar 2012 and
decision to continue discussion on FDIs
50
Long-term visionary statements:
Apart from concrete proposals,
Certain positive long-term plans like accelerating the
share of industrial GDP in total GDP to 25% from
the current level of 16% in next 10 years,
Improving agricultural productivity in the eastern part
of the country,
Strengthening public debt management, etc.
51
WEAKNESSES IN THE
BUDGET
52
WEAKNESSES IN THE BUDGET
MAT rate should have been brought down to at least 10 per cent
Given current inflation levels, the increase of personal tax
exemption limit will not even be noticed by many.
At least investment limits for investment in long-term infrastructure
bonds could have been increased,.
The missed opportunity relates to the goods and services tax, which
Mukherjee feels is being held hostage by politics, since state
governments have to be on board to sign on.
53
WEAKNESSES IN THE BUDGET
Foreign Direct Investment (FDI)
No major announcement in further liberalizing
foreign direct investment (FDI) even after the
uncharacteristic decline seen in current fiscal. In
particular, there were no announcements on multi-
brand retail after having detailed its potential
positive impact on high food inflation in the
Economic Survey.
54
WEAKNESSES IN THE BUDGET
Fertilizer and fuel subsidies budgeted at Rs 50,000
crore and Rs 24,000 crore respectively.
Crude oil crossing $100 a barrel mark. It is very
difficult to keep the two subsidies anywhere close to
the budgeted estimates.
The budget is clearly silent on the treatment of the
rising subsidy bill.
55
56
FINE PRINT
No Large Changes in Direct Taxes
No Housing Loan Incentives (or disincentives)
Infra bonds to stay
Surcharges reduced to 5%
Foreigners can invest in Equity MFs
Service Tax: You'll pay more
57
CONCLUSION
FINANCE MINISTER HAS
NOT DONE A BAD JOB AT
ALL
THE PESSSIMISM IN THE
SYSTEM HAS BEEN
58
SUCKED OUT
CONCLUSION
AT LEAST THE DIRECTION IS CORRECT THE JOURNEY
MIGHT TAKE A LITTLE LONGER
SIGNALS ARE POSITIVE IN A MEDIUM AND LONG TERM
BASIS THOUGH SUBSIDIES ARE A BIG IMPEDIMENT TO
59
GROWTH
WHERE MUST YOU
INVEST NOW ?
60
WHERE MUST YOU INVEST NOW
WITH INTERST RATES HAVING ALMOST PEAKED
FDs, FMPs, BONDS SHOULD BE CONSIDERED
INVESTMENT IN QUALITY DIVERSIFIED MUTUAL
FUNDS
STOCK MARKET–QUALITY STOCKS ARE
AVAILABLE CHEAP BUT DON’T EXPECT MIRACLES
INVEST IN PROPERTY BELOW 25K AND GOLD
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