OVERVIEW: Budget estimates for 2011-12 projects Rs 9,32,440 crore - an increase of 24 per cent.

Expenditure in 2011-12 is estimated at Rs 12,57,729 crore, an increase of 13.4%.

Revenue deficit fixed at 2.3% in revised estimates of 2010-11 and 1.8% in 2011-12.

Tax reductions to result in revenue loss of Rs 11,500 crore

AGRICULTURE: In what may be a big relief for farmers, the FM said credit flows to farmers will be raised
from Rs 3.75 lakh crore to Rs 4.75 lakh crores and the allocation under Rashtriya Krishi Vikas Yojana will
be raised from Rs 6755 crore in the current year to Rs 7860 crore. ( Farm loans at 4%; credit target
raised to Rs 4,75,000cr )

An additional Rs 300 cr will be provided to promote pulses cultivation in rain-fed areas and another Rs
300 cr to promote farm product cultivation.

In joy for anganwadi workers, their remuneration is being raised from Rs 1500 to Rs 3,000 per month.
Anganwadi helpers will get Rs 1,500 from Rs 750, Pranab said. ( Social spending to be raised by 17% )

Old age pension to persons of over the age of 80 will be raised from Rs 200 to Rs 500.

INCOME TAX: No change in tax slabs has been proposed. The tax exemption limit for general category
has been raised from Rs 1,60,000 to Rs 1,80,000. ( Tax limit enhanced from Rs 1,60,000 to Rs 1,80,000)

No change in tax exemption limit for women.

For senior citizens, exemption age limit has been reduced from 65 to 60. Their tax exemption limit will
be Rs 2,50,000.

Apart from this, a new exemption bracket has been created for those above 80 years of age. Their tax
exemption limit will be Rs 5,00,000.

Surcharge for companies cut to 5 per cent, from 7.5 per cent. (Corporate Tax surcharge reduced to 5%)

A new revised income tax return form 'Sugam' to be introduced for small tax papers.

SERVICE TAX: Service tax widened to cover hotel accommodation above Rs 1,000 per day, A/C
restaurants serving liquor, some category of hospitals, diagnostic tests.

Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international travel in
economy class. On higher classes, it will be 10% flat. ( Service tax on air travel increased )

EXCISE AND CUSTOMS DUTY: There is a proposal to introduce self-assessment of customs duty wherein
importers and exporters will themselves assess payment of duty.
There will be change in excise duty. The standard rate of central exercise duty will be maintained at 10%.
A 1% central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold
and silver jewellery will be exempted and there will be no change in CENVAT rates. (Excise duty retained
at 10%, more items to be taxed)
A new scheme is to be introduced for refund of service tax on the lines of drawback of duties, he
announced. Also, capital investment in fertiliser production will be considered as infrastructure sub-
sector, Pranab said.

Tax-free bonds of Rs 30,000 cr will be issued for infrastructure development which will cover
Warehousing Corporation, NHAI, IRFC and HUDCO.

To boost infrastructure development, tax free bonds of ` 30,000 crore proposed

to be issued by Government undertakings during 2011-12.

TAX REBATE TO BUILDERS

The government proposed full tax rebate on developing such projects under a notified scheme and
raised the ceiling of one per cent interest subsidy on home loans upto Rs 15 lakh from the current Rs 10
lakh.

In the Budget for 2011-12, finance minister Pranab Mukherjee proposed 100% tax deductions on capital
expenditure to develop affordable houses under government scheme, thus promoting builders to focus
more on such homes.
Under the Bill, the government seeks to widen tax slabs to levy 10% tax on income between Rs 2 lakh
and Rs 5 lakh, 20% on Rs 5-10 lakh and 30% above Rs 10 lakh.

Currently, income up to Rs 1.6 lakh per annum is exempt from tax for individuals. For women and senior
citizens, the limit is 1.9 lakh and 2.4 lakh, respectively.
To raise minimum alternate tax to 18.5 percent from 18 percent.
* Direct tax proposals to cause 115 billion rupees in revenue loss.
Customs and excise proposals to result in net revenue gain of 73 billion rupees
* Iron ore export duty raised to 20 percent
*Nominal one per cent central excise duty on 130 items entering the tax net. Basic food and fuel and
precious stones, gold and silver jewellery will be exempted.
*Peak rate of customs duty maintained at 10 per cent in view of the global economic situation.
*Basic customs duty on agricultural machinery reduced to 4.5 per cent from 5 per cent.
*Service tax widened to cover hotel accommodation above Rs 1,000 per day, A/C restaurants serving
liquor, some category of hospitals, diagnostic tests.
*Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international travel in
economy class. On higher classes, it will be ten per cent flat.
* Electronic filing of TDS returns at source stabilised; simplified forms to be introduced for small
taxpayers.
* Works of art exempt from customs when imported for exhibition in state-run institutions; this now
extended to private institutions.

.. ........Questions………………………………………………………………………

Q: What is the main thrust of the Budget?

A: The finance minister has sought to do three things. One, he has tried to push growth and do
that along with financial inclusion. Second, he has tried to move ahead on the path of fiscal
consolidation. And third, he has announced fresh reform measures such as legislative changes in
the financial sector and the push for introduction of Goods and Services Tax (GST).

Inflation is another focus area as the government is worried about it. So, there is an increase in
allocation for agriculture and several schemes have been announced. Increase in international
commodity prices affects us. Given the expectation of higher global prices and its likely impact
in India, the idea is to step up local production and yields.

Q: Did inflation force you against raising excise duty rates?

A: No. It was purely because of the desire to move towards GST.

Q: You have once again talked about direct cash transfers. What is holding back its
implementation when several pilot projects have been conducted such as the one on food
coupons?

A: While it is true that we have talked about it in the past, states have not really come forward
for it. We are trying to first do it with kerosene and also extend it to fertiliser. Initially, in case of
fertiliser, the implementation will be limited to retail stage. The idea is to try it out. The Nandan
Nilekani committee is working on it and we hope to move on it quickly. The outer limit for
implementing it is March 2012.

Q: There are fears that a lot of people using LPG gas will be impacted.

A: The apprehension that LPG subsidy is being taken away is incorrect. Individuals and
households who have LPG connections will continue to get subsidised gas. It is commercial
establishments that will stop getting subsidy. Subsidy needs to be contained and go to those who
actually need it. This will help the government cut subsidies and provide funding to the really
needy.

Q: Successive finance ministers have talked about reprioritising expenditure but there has been
limited movement. Why is it so?
A: There is not too much on non-plan expenditure. It mainly consists of salaries, pension,
defence expenditure, interest payments and subsidies. The only place where some leeway is
available is if you can contain subsidies. In case of plan expenditure, many states are saying that
a one-size-fits-all approach does not work and they want flexibility. They want that money
should go directly but the line ministries are not willing. A committee under C Rangarajan is
looking into it. Let's see what happens in the next plan.

Q: You are once again trying to raise Rs 40,000 crore from disinvestments. Does the market
have the appetite for such large fund-raising?

A: We are told it has the appetite. In fact, there is appetite not just for this but also for the Rs
30,000 crore worth of tax-free bonds that have been announced.

Q: You have not budgeted for the Food Security Act and you have budgeted for a 3% increase in
plan spending. Same is the case with subsidies. So, is the 4.6% fiscal deficit target a fair
estimate?

A: The food security law is being discussed. As and when it happens we will provide for it. In
case of overall expenditure, last year, we got a significant amount of funds from the 3G auction
and the finance minister used it to provide more for social and infrastructure sector schemes. So,
budget estimates make for better comparison. In case of subsidies, we have actually provided
more. In the past, what was being provided was little amounts of Rs 3,000 crore or so for oil.
This year we have actually provided much more.