Budget positive for the education sector: Tata Interactive Systems

Monday February 28, 2011 08:27 pm PST

The Union Budget 2011 has been particularly positive for the education sector, a prerequisite for any country's
growth and development. India is expected to clock an annual GDP of around 9% in years and will also account for
25% of the global increase in workforce over the next 4 decades.

On the flip side, India will have the highest number of illiterate adults and a large percentage of unemployable
literate people. The Government's allocation of Rs. 52,057 crore for the education sector and another one of Rs.
21,000 crore specifically for the primary education segment is indeed an encouraging step to not just widely extend
the benefits of education but also impact the quality to achieve global benchmarks.

I also reiterate that there is a need for a PPP model in the sector not just to execute the delivery but also employ
modern technology infrastructure across schools enabling rapid proliferation of world-class education.

Another positive announcement was an additional Rs 500 crore allocation for the national skill development fund.
Every sector in India is challenged with severe crunch of skilled workforce and such initiatives by the NSDC will no
doubt help fill the gap by training about 10 lakh workers in the next 10 years. But, the gap is widening and there will
be a need for around 50 crore skilled workers across sectors in India by 2022. The Govt & NSDC in particular should
look at employing technology as a strategic partner to fast track and bridge this gap.

Sanjaya Sharma, CEO TATA Interactive Systems 

Union Budget 2011: Big boost for education sector

Impact of Union Budget 2011 on Education Sector

The budget can have a positive impact on the employment generation potential of education,
health care, real estate and housing, infrastructure development, logistics, telecom and the
manufacturing sectors.India plans to raise its expenditure in the education sector by about a quarter
to Rs 520.6 billion (USD 11.50 billion) in the next financial year, Finance Minister Pranab Mukherjee
said on Monday in his budget speech, reinforcing the country’s push to create a skilled workforce to
keep up with fast-paced growth. Education companies cheered the announcement and stocks of
Aptech Ltd, Everonn Education, Edserv Softsystems, NIIT Ltd rose 3 to 5% in intra-day trade
immediately after the announcement. India’s $86 billion education sector is increasingly joined by
private players in its rapid expansion, while increased government spending and fresh interest from
foreigners and large funds who are pumping in money in services, technology and infrastructure play
the catalyst.
Blended growth rate in Indian education services firms is seen at 21% this year, according to
Thomson Reuters StarMine smart estimates, outstripping the 18% growth forecast in the information
 technology sector.Blended growth rate is the average of expected growth in earnings per share from
last year to this year and from this year to next year along with the expected long-term growth rate.

The government will also infuse as much as Rs 2 billion each in Indian Institute of Technology,
Kharagpur, the nation’s premium engineering institute, and Maulana Azad Education Foundation, apart
from other grants to various institutions.

One of the prime challenges for India’s surging growth is severe skills shortage — spanning all levels,
from management to frontline operations, and all sectors, from IT to fast food– , which along with
inadequate infrastructure and poor governance could mar the India story.

The government will also invest as much as Rs 210 billion in Sarva Shiksha Abhiyan, its elementary
education programme.

The only way India can reach to the goal of the Developed country is the skilled man power which can
only come by the quality education. Apart from government sector a big role has been played by the
private sector. Hopefully in the coming years private sector will take lead in the globalization of
education and can also make available quality education to India door.

ndian Budget 2011 Gives Impetus to Education

To make the ‘demographic dividend’ of the country more uniform, the Finance Minister, Pranab
Mukherjee, declared a considerable increase of 24 percent in the Education Sector. He announced
this increment by keeping in the mind the upcoming assembly polls, doling out ‘special grants’ for
educational institutions in Kerala, West Bengal and Tamil Nadu.
For some of the prominent institutions, he declared major grants, such as Rs. 20 crore for IIM-
Calcutta, Rs. 200 crore for IIT-Kharagpur, Rs. 20 crore for Rajiv Gandhi National Institute of Youth
Development and Rs. 100 crore for Kerala Veterinary University.

Education Sector budget was hiked from Rs 15,000 crore to Rs 21,000 crore in order to attain the
objectives of the Right to Education (RTE) that is associated with the Sarva Shiksha Abhiyan. This
budget is targeted to strengthen the elementary education and ‘vocationalisation’ of secondary
education. It will enable students to enrol in job-oriented courses after (10+2) examinations. Mr.
Mukherjee has also introduced pre-matriculation scholarship and he took this step in order to
increase reservations for SC and ST students in Classes X and XII.

Budget 2011 And Its Impact On You

March 3rd, 2011 by Harjot

 The budget has impacted each of us in one way or the other, on basis of the age, profile, income
standards, occupational standards and the rest. But one thing for sure is that it has impacted us for sure.
How?
 Let us find out.

o If you are a businessman

1.       Business class travel on domestic and international sectors will attract service tax of 10%.
2.       Excise duty of 10% imposed on branded readymade garments (RMG) and made-ups would lead to
yarn and fabric manufacturers paying a higher excise duty of 5% vis à vis an optional 4% duty paid earlier.
3.       Introduction of a scheme for the refund of taxes paid on services used for export of goods on the
lines of drawback of duties in a far more simplified and expeditious manner has been announced in order to
ease the difficulties faced.
4.       Reduction in the current surcharge of 7.5 per cent on domestic companies to 5 per cent. Standard
rate of Central excise duty has been maintained at 10 per cent.
5.        A nominal Central Excise duty of 1 per cent has been imposed on the 130 items that are entering the
tax net, increasing it from 4% to 5%. No CENVAT credit would be available for the manufacture of these
items. Basic food and fuel would continue to be exempt. This levy would also not apply to precious metals
and stones.
In totality your travel and branded readymade garments would become costlier. In such a scenario it would
be smart to use your credit cards for purchase since you would get more reward points in wake of higher
purchases. On the other hand with the taxes refund taking place you would be in a position of higher
disposable income coming into your hands. These tax refunds would add a bulk to your income and you can
invest these additional windfall funds in avenues requiring one time investments such as single premium
insurance plans.

o If you are a salaried person

1.       Income tax exemption has changed for you from the earlier limit of Rs.1.6 lakh to Rs.1.8 lakh.
2.       The electronic filing of Tax Deduction at Source (TDS) statements has stabilized. The Board shall soon
notify a category of salaried taxpayers who will not be required to file a return of income as their tax liability
has been discharged by their employer through deduction at source. CBDT will provide a separate web-
based facility to enable a direct, stand-alone interface for taxpayers with the Income Tax Department so
that they can report and track the resolution of their refunds and credit for prepaid taxes.
Income at your disposal will increase marginally and you can invest this additional fund in systematic
investment plans requiring small but regular investments. Unitized shares and mutual funds for medium to
long-term hold good opportunities for you.  Gold ETFs could be another suitable investment avenue for you.

o If your income is derived from the agricultural sector

1.       Increase in interest rate subvention for agriculture loans to 3% will increase availability of funds at
cheaper rates.
2.       The existing interest subvention scheme of providing short term crop loans to farmers at 7% interest
will be continued during 2011-12.
 3.       The government had provided an additional 2% interest subvention to those farmers who repay their
crop loans on time. The proposal to enhance the additional subvention to 3% in 2011-12 has been made.
Thus, the effective rate of interest for such farmers will be 4% per annum.
4.       In order to give a boost to production in the agriculture sector, extension of the benefit of investment
linked deduction to businesses engaged in the production of fertilizers has been done.
5.       Agricultural machinery, irrigation equipment and cattle feed have become cheaper.
With interest alterations coming up, you are at an advantage and can now borrow more funds for
investments into business. Also with machinery and other equipment becoming cheaper for you, your
disposable income is bound to rise. With the additional sources you can always look at buying property by
investing this additional free fund as a down-payment and then opting for a home loan, since you would be
able to pay EMIs through this increased flow of regular saving.

o If your income is derived from infrastructure sector

1.       Replacement of the existing excise duty rates with a 10% ad valorem rate, and an additional Rs 160
per ton of cement has been proposed. This will result in 2% to 4% increase in the excise duty payout.
2.       Considering the importance of housing, a proposal for investment linked deduction to businesses
which develop affordable housing has been introduced under a notified scheme.
3.       Bio-based asphalt is an emerging, green technology for the surfacing of roads. Full exemption from
basic customs duty is being extended to bio-asphalt and specified machinery for its application in the
construction of national highways. Tunnel-boring machines required for the construction of highways are
also being included in this exemption.
Increased excise duty could make things a little difficult for you if you deal with construction. But the effect
could be set-off at a later stage if you are linked to real estate. So there would be a net no change situation
for you.

o If you are an investor

1.       Additional tax exemption of Rs 20,000, applied in 2010-11, on investment in long-term infrastructure
bonds has been extended to 2011-12.
2.       The Government will rise about Rs 22,144 crore from disinvestment in 2010-11. So you have a good
chance of participating in beneficial IPOs and FPOs.
3.       Currently, only FIIs and sub-accounts registered with the SEBI and NRIs are allowed to invest in
mutual fund schemes. To liberalize the portfolio investment route, it has been decided to permit SEBI
registered Mutual Funds to accept subscriptions from foreign investors who meet the KYC requirements for
equity schemes. This would enable Indian Mutual Funds to have direct access to foreign investors and
widen the class of foreign investors in Indian equity market which would provide a good change to Indian
investors to profit too.
4.       The FII limit for investment in corporate bonds, with residual maturity of over five years issued by
companies in infrastructure sector, is being raised by an additional limit of US Dollar 20 billion taking the
limit to US Dollar 25 billion. This will raise the total limit available to the FIIs for investment in corporate
bonds to US Dollar 40 billion. Since most of the infrastructure companies are organized in the form of SPVs,
FIIs would also be permitted to invest in unlisted bonds with a minimum lock-in period of three years.
 5.       It has been represented that the taxation of foreign dividends in the hands of resident taxpayers at
full rate is a disincentive for their repatriation to India and they continue to remain invested abroad. For the
year 2011-12, a lower rate of 15% tax on dividends received by an Indian company from its foreign
subsidiary has been proposed.
6.       Services provided by life insurance companies in the area of investment are also proposed to be
brought into tax net on the same lines as ULIPs.
It would be a good idea to invest in infrastructure sector for a medium to long term. But you would have to
be cautious about your investments now on. With an increased limit, returns from infrastructure sector
would be prone to global fluctuations more. So it could turn out to be a loss for short term investors who
play on technical analysis. Investing in eco-friendly products, agriculture and education sector would be
other good options.
The proposed increase in the service tax on life insurance products will make both traditional and unit-linked
insurance plans, more expensive. In ULIPS, where the policyholder chooses the investment mix (how much
to put in equity or debt), the service tax will be charged on the portion of the premium not allocated for
investment, like premium allocation and policy administration charges. At present, the service tax is only on
mortality and fund management charges.

o If you are a woman:

1.       No changes have been made in the tax slabs and exemptions for woman.
If you are a working woman, you would be a little disappointed. But on the household front, you would be
satisfied to find out the other alterations which have been made for good. These alterations have been
discussed in the ‘common man’ section.

o If you are a student

1.       The Government has been providing special grants to recognise excellence in universities and
academic institutions. In the course of 2011-12, I propose to provide: – Rs 50 crore each to upcoming
centres of Aligarh Muslim University at Murshidabad in West Bengal and Malappuram in Kerala;Rs 100 crore
as one-time grant to the Kerala Veterinary and Animal Sciences University at Pookode, Kerala; Rs 10 crore
each for setting up Kolkata and Allahabad Centres of Mahatma Gandhi Antarrashtriya Hindi Vishwavidyalaya,
Wardha;Rs 200 crore as one time grant to IIT, Kharagpur; Rs 20 crore for Rajiv Gandhi National Institute of
Youth Development, Sriperumbudur, Tamil Nadu, Rs 20 crore for IIM, Kolkata, to set up its Financial
Research and Trading Laboratory; Rs 200 crore for Maulana Azad Education Foundation; Rs 10 crore for
Centre for Development Economics and Ratan Tata Library, Delhi School of Economics, Delhi; and Rs 10
crore for Madras School of Economics.

o If you are a senior citizen, above 60 years of age

1.       The income tax exemption limit has been raised from current Rs2.4 lakh to Rs2.5 lakh.
o Is you are a senior citizen above 80 years of age

1.       This category has been developed as ‘very senior citizens’ and has been given an exemption limit of
Rs.5 lakh.

o Inclusions that affect the common man

1.       The on-line preparation and e-filing of income tax returns, e-payment of taxes through 32 agency
banks, ECS facility for electronic clearing of refunds directly in taxpayers’ bank accounts and electronic filing
of TDS returns are now available throughout the country. These measures have empowered taxpayers to
meet their tax obligations without visiting an income tax office.
2.       Raw silk materials, agarbatti, homeopathic medicine, pistachio, imported art and antiques have
become cheaper.
3.       Consumer durables like TV, fridge, washing machines have remained as they were.
4.       Health check-ups are bound to become expensive
5.       Treatment in air-conditioned private hospitals, meals at restaurants serving liquor, hotels charging
more than Rs.1,000 per room per day, legal services, air tickets, branded jewellery, branded clothes have
become expensive than earlier.
6.       Automobiles (Hybrid electrical vehicles, compressed natural gas kits), low-end housing loans,
homeopathic medicines, light emitting diode (LED) lights, syringes and needles, ink jet, laser jet printers,
7.       In 2011-12, Delhi Metro Phase-III and Mumbai Metro Line III are proposed to be taken up. The
ongoing Metro projects of Bengaluru, Kolkata and Chennai will be provided financial assistance for speedy
implementation.
8.       Service tax on domestic economy class air tickets has been increased by Rs 50, and by Rs 250 for
international routes.
All in all, there have been made alterations which would affect you in one way or the other. A number of
alterations have been targeted so as to increase investments rather than spending. With new regulations,
guidelines and changes for a number financial products coming in, you will naturally be more inclined
towards making investments where the platforms are safe and regulated. The regulators and the
government, together, are making all efforts to channelize your investments for development of capital
intensive sectors. With RBI raising its deposit rates, you are at a win-win situation even if you are a
conservative investor. So go ahead, investments are bound to give better returns.