Saturday, March 17, 2012

Salient feature of the Budget 2012-13:

• FY12 fiscal deficit revised to 5.9% of GDP vs 4.6% target.
• FY13 GDP seen 7.6% plus or minus 0.25% after 6.9% in FY12.
• FY13 fiscal deficit is forecasted to be 5.1% of the FY13 GDP.

• Government intends to increase the Gross Tax to GDP ratio in FY13 to 10.7% from 10.1% in
• Government has raised both standard excise and service tax rates from existing 10% to 12%.
• On the service tax side, they have increased the scope of services covered under the tax net by
introducing “negative list”.
• The income tax slabs has been raised brining more disposable income in the hands of the
• Introduction of the “Rajiv Gandhi Equity Saving Scheme” is heartening, wherein small investors’
get annual tax exemptions on equity investments upto 50000 Rs with three years lock in.
• Government intends to reduce the Expenditure to GDP ratio in FY13 to 14.7% from 14.8% in
• Government allocation towards plan expenditure has risen by 22% against overall expenditure
growth of 13%.
• Government capital expenditure is budgeted to grow by 31% from -2% in FY12.
• Government estimates to bring the subsidies down to 1.79 lakh crores from 2.08 lakh crores INR
in FY12.
• Introduction of GST in August 2012 is proposed. Direct tax code (DTC) to be introduced in FY14.
• In terms of the overall tone, this budget is pro investments and pro infrastructure, while it seems
to be neutral on consumption.

On the whole, the intent of this budget, which matters the most looks right.
Source : relianceMF

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