2010-2011

A STATEMENT OF GOVERNMENT ACCOUNTS

Sec-B
Anwesh Padhee
Ekta Agarwal
AN OVERVIEW OF THE INDIAN ECONOMY
 MACROECONOMIC INDICATORS

GDP

IIP, WPI, CPI

EXTERNAL SECTOR

MONEY, BANKING, CAPITAL

MARKET
double digit food inflation
2009-10 has been the emergence of Inflation
•A major concern during the 2nd half of
• The growth rate in manufacturing sector
in December 2009 was 18.5 per cent –
Production
the highest in the past two decades
• The Advance Estimates for Gross
Domestic Product (GDP) growth for
Growth
2009-10 pegged at 7.2 %
• India among the first few countries in
the world to implement a counter-cyclic
Recession
policy package
OVERVIEW OF ECONOMY CONTD…
 INFLATION HISTORICAL TREND
(CPI)

GDP HISTORICAL TREND

IIP HISTORICAL TREND

INFLATION CONTRIBUTORS
WHERE THE RUPEE COMES FROM & WHERE IT GOES….

versus
 WHERE THE RUPEE COMES FROM….
Where the Rupee comes from In Paisa
Borrowing & Other Liabilities 34
Non-Debt Capital Receipts 4
Non-Tax Revenue 14
Income Tax 7
Excise 8
Customs 6
Corporation Tax 23
Service Tax & Other Taxes 4
Service Tax & Other Taxes; 4

Borrowing & Other Liabilities; 34

Borrowing & Other Liabilities
Corporation Tax; 23 Non-Debt Capital Receipts
Non-Tax Revenue
Income Tax
Excise
Customs; 6 Customs
Corporation Tax
Service Tax & Other Taxes
Excise; 8

Non-Debt Capital Receipts; 4

Income Tax; 7 Non-Tax Revenue; 14

 WHERE THE RUPEE GOES….

Where the rupee goes In Paisa

Central Plan 25

State & UT Plan Assistance 9

Interest Payments 22

Defence 13

Subsidies 11

Loans 3

Other Non-Plan Expenditure 17

Other Non-Plan Expenditure; 17

Loans; 3 Central Plan; 25

Central Plan
State & UT Plan Assistance
Interest Payments
Subsidies; 11 Defence
Subsidies
Loans
State & UT Plan Assistance; 9
Other Non-Plan Expenditure
Defence; 13

Interest Payments; 22
1.    Revenue Receipts
       2.    Tax Revenue (net to Centre) SOME CONCEPTS…..
       3.    Non-tax Revenue
4.    Capital Receipts (5+6+7)$ 
       5.    Recoveries of   Loans
       6.    Other Receipts
       7.    Borrowings and other Liabilities REVENUE DEFICIT
8.    Total Receipts  (1+4)$
9.    Non-plan Expenditure      
      10.   On Revenue Account  of          
              which,
      11.   Interest  Payments FISCAL DEFICIT
      12.   On Capital Account
13.   Plan Expenditure
      14.   On Revenue Account
      15.   On Capital Account
16.   Total Expenditure (9+13)
      17.   Revenue Expenditure
             (10+14)
PRIMARY DEFICIT
      18.   Capital Expenditure
             (12+15)
19.   Revenue Deficit (17-1)
20.   Fiscal Deficit {16-(1+5+6)}
21.   Primary Deficit (20-11)
 BUDGET STATISTICS IN BRIEF

Budget Stats (in

2008-2009 Actual 2010-11 Budget Estimates
crore of Rs.)

Revenue Receipts 540259 682212

Capital Receipts 343697 426537
Total Receipts 883956 1108749
Plan Expenditure 275235 373092
Non-Plan Expenditure 608721 735657
Total Expenditure 883956 1108749
Revenue Deficit 253539 (4.5 % of GDP) 276512 (4 % of GDP)
Fiscal Deficit 336992 (6 % of GDP) 381408 (5.5 % of GDP)
Primary Deficit 144788 (2.6 % of GDP) 132744 (1.9 % of GDP)
 NON-PLAN REVENUE EXPENDITURE

Budget 300000
Estimates
NON-PLAN EXPENDITURE 250000 Non-Plan Revenue Exp
In Crore of
Rs. 200000
A. Revenue Expenditure
    Interest Payments and premium 248664
150000
    Defence Services 87344
    Subsidies 116224 100000
    Grants to State and U.T. 46001
50000
    Pensions 42840
    Police 22154 0
    Assistance to States 3560
-50000
    Economic Services 24928
    Other General Services 17487
   Social Services 29483
   Postal Deficit 3596
   Expenditure of U.T. 3190
-3560 Non-Plan Revenue
   Amount met from National Calamity Fund
Exp
   Grants to Foreign Governments 1688
Total Revenue Non-Plan Expenditure 643599
 NON-PLAN CAPITAL EXPENDITURE

NON-PLAN EXPENDITURE Budget Estimates

Non-Plan Capital Exp.
In Crore of Rs. 70000
B. Capital Expenditure
60000
     Defence Services 60000
50000
     Other Non-plan Capital Outlay 31051 40000
     Loans to Public Enterprises 539 30000

     Loans to State and U.T. 89 20000

0 10000
     Loans to Foreign Governments
0
     Others 379
es y s T. nt
s
er
s
vic utla r ise U. e th
Total Capital Non-Plan Expenditure 92058 Se
r
lO rp an
d m O
e ita n te e e rn     
nc p E at v
e fe Ca blic St Go
D an u t o gn
     pl P s ei
on- s to o an For
N n L
er oa      to
t h   
    L
a ns
     Loans to Public Enterprises      Loans to State and U.T.      Others O Lo
1% 0% 0%          
     Defence Services
     Other Non-plan Capital
     Other Non-plan Capital Outlay Outlay
34%      Loans to Public
Enterprises
     Loans to State and U.T.
     Loans to Foreign
Governments
     Defence Services
65%      Others
 PLANNED EXPENDITURE
 
Budget Estimates Planned Revenue Exp
In crore of Rs.       Union Territory
2. PLAN EXPENDITURE Plan; 2561; 1%
A. Revenue Expenditure  
     Central Plan 230881       State Plan; 81683;
26%
      State Plan 81683
      Union Territory Plan 2561      Central Plan;
Total-Revenue Plan Expenditure 315125 230881; 73%
B. Capital Expenditure  
    Central Plan 49719
     State Plan 7241
     Union Territory Plan 1007
Total Capital Plan Expenditure 57967
Total - Plan Expenditure 373092

Planned Capital Exp

     Union Territory
Plan; 1007; 2%
     State Plan;
7241; 12%

    Central Plan;

49719; 86%
 REVENUE RECEIPTS (TAX+NON-TAX)

 
REVENUE  RECEIPTS
In crore of Rs. Tax Revenue
 1.  Tax Revenue  400000
      Gross Tax Revenue  746651
300000
            Corporation tax 301331
200000
             Income tax 120566 100000
Tax Revenue
             Other taxes and Duties* 8103 0

             Customs 115000 -100000

             Union Excise Duties 132000 -200000

             Service Tax 68000 -300000

             Taxes of the UT 1651

Less- NCCD -3560

  Less States' Share -208997 Non-Tax Revenue

534094 80000
  Centre's Net Tax Revenue 70000
  60000
 2. Non -Tax Revenue 50000
         Interest Receipts 19253 40000
30000
         Dividend and Profits 51309 20000
10000
         External Grants 2060 0

         Other Non-Tax Revenue 74571 Non-Tax Revenue

         Receipts of Union Territories 925

Total Non-Tax Revenue 148118

Total Revenue Receipts 682212

 CAPITAL RECEIPTS
 3. CAPITAL RECEIPTS**  
         Recoveries of Loans & Adv 5129
         Miscellaneous Capital Receipts 40000
         Market Loans 345010
         Short term borrowings 0
         External assistance (Net) 22464
         Securities 13256
         State Provident Funds (Net) 7000
         Other Receipts (Net) -6322
              Total  381408
Total Capital Receipts 426537
Capital Receipts
400000
350000
300000
250000
200000
150000
100000
50000
0
v ts s gs ) ) )
-50000 Ad ip an in et ti es et et
e Lo (N i (N (N
&
Re
c t ow e ur s s
ans l r ke orr anc Sec nd ipt
Lo a   u e
it a b ist     F c Capital Receipts
s of Cap      M e rm ass       e nt r Re
ie
ou
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t al
ov
id th
e
v er e o e rn r   O
h xt P  
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o lan S
te    
  R cel                  E t a     
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         M        
   
    
 CENTRAL PLAN FOR SECTORS

Sector
Budget Estimates in  Central Plan Outlay by Sectors
crore of rupees
160000

140000
Agriculture and Allied 12308
Activities 120000

Rural Development* 55190 100000

Irrigation and Flood Control 526 80000

Energy 146579 60000

Different Sectors
Industry and Minerals 39019 40000

Transport ** 101997 20000

Communications 18529 0
es t* ol y ls * s nt es * es
13677 v iti en ntr nerg era rt * tion me rvic es** rvic
Science Technology & Environment ti m o E in spo ica on Se vic Se
Ac elop d C M r
d ran mun nvi mic Ser eral
7554 ill e ev Floo
d
a n T m E no ial n
General Economic Services A l D y e
nd ura n an
d str Co gy & Eco Soc G
127570 a R o du lo l
Social Services*** re In o ra
ltu i gati chn ene
1535 ric
u
Irr Te G
General Services Ag n ce
ie
524484 Sc
Grand Total
 CENTRAL PLAN FOR SECTORS

General Services Agriculture and Allied Activities

0% 2%
Rural Development*
11%

Irrigation and Flood Control

0%

Social Services***
24%

Agriculture and Allied Activities

Rural Development*
Irrigation and Flood Control
Energy
Industry and Minerals
General Economic Services Transport **
1% Energy
28% Communications
Science Technology & Environment
3% Science Technology & Environment
General Economic Services
Communications Social Services***
4% General Services

Transport **
19%

Industry and Minerals

7%
SECTORAL STRATEGIES
 sector
• Five more mega food park projects (already 10 exist)
• External Commercial Borrowings to be available for cold
food processing
storage or cold room facility Impetus to the
• Agriculture credit flow target has been set at Rs.3,75,000
crore
to farmers
• The period for repayment of the loan amount by farmers
extended by 6 months under the Debt Waiver and Debt
Credit support
Relief Scheme
• Rs. 400 crore provided to extend the green revolution- production
EASTERN STATES
• Rs. 300 crore provided to organise 60,000 “pulses and oil Agricultural
seed villages” in rain-fed areas (RKVY)
AGRICULTURE
 INFRASTRUCTURE

Rs
Rs 1,73,552
1,73,552 crore
crore provided
provided for
for infrastructure
infrastructure development
development which
which
accounts
accounts for over 46
for over 46 %
% of
of the
the total
total plan
plan allocation
allocation

Rs
Rs 16,752
16,752 crore
crore provided
provided for
for Railways
Railways,, which
which is
is about
about Rs.950
Rs.950 crore
crore
more
more than
than last
last year
year

Allocation
Allocation for
for road
road transport
transport increased
increased by
by over
over 13
13 %% from
from Rs.
Rs.
17,520
17,520 crore
crore to
to Rs
Rs 19,894
19,894 crore.
crore. Construction of national
Construction of national highways
highways
(NHs)
(NHs) at
at the
the pace
pace of
of 20
20 km
km per day. PPPs
per day. PPPs encouraged.
encouraged.
 ENERGY

 Plan allocation for power sector excluding RGGVY doubled from Rs.2230
crore in 2009-10 to Rs.5,130 crore in 2010-11

 Government proposes to introduce a competitive bidding process for

allocating coal blocks for captive mining

 A “Coal Regulatory Authority” to create a level playing field in the coal

sector proposed to be set up

 Solar, small hydro and micro power projects at a cost of about

Rs.500 crore to be set up in Ladakh region of Jammu and Kashmir
 ENVIRONMENT

• National Clean Energy Fund for funding research and innovative

projects in clean energy technologies to be established
• Rs.200 crore provided as a Special Golden Jubilee package for Goa
to preserve the natural resources of the State, including sea beaches and
forest cover

• One-time grant of Rs.200 crore to the Government of Tamil Nadu

towards the cost of installation of a zero liquid discharge system at Tirupur to
sustain knitwear industry

• Schemes on bank protection works along river Bhagirathi and river

Ganga-Padma in parts of Murshidabad and Nadia district of West Bengal
included in the Centrally Sponsored Flood Management Programme
 EDUCATION & HEALTH

 Plan allocation for school education increased by 16 % from Rs.26,800

crore in 2009-10 to Rs.31,036 crore in 2010-11

 In addition, States will have access to Rs.3,675 crore for elementary

education under the Thirteenth Finance Commission grants for 2010-11

 An Annual Health Survey to prepare the District Health Profile of all

Districts shall be conducted in 2010-11

 Plan allocation to Ministry of Health & Family Welfare increased from

Rs 19 ,534 crore in 2009-10 to Rs 22,300 crore for 2010-11
 RURAL DEVELOPMENT

 Rs. 66,100 crore provided for Rural Development

 Allocation for Mahatma Gandhi National Rural Employment

Guarantee Scheme stepped up to Rs.40,100 crore

 An amount of Rs.48,000 crore allocated for rural infrastructure

programmes under Bharat Nirman

 The allocation for Indira Awas Yojana scheme is being increased to

Rs.10,000 crore

 Allocation to Backward Region Grant Fund enhanced by 26 %

 URBAN DEVELOPMENT & HOUSING

• Allocation for urban development increased by more than 75 % from

Rs.3,060 crore to Rs.5,400 crore

• Allocation for Housing and Urban Poverty Alleviation raised from

Rs.850 crore to Rs.1,000 crore

• Rs.1,270 crore allocated for Rajiv Awas Yojana as compared to Rs.150

crore last year
 UNORGANISED SECTOR

• National Social Security Fund for unorganised sector workers to be set

up with an initial allocation of Rs.1000 crore. This fund will support
schemes for weavers, toddy tappers, rickshaw pullers, bidi workers etc

• Rashtriya Swasthya Bima Yojana benefits extended to all such

Mahatma Gandhi NREGA beneficiaries who have worked for more than 15
days during the preceding financial year
A new initiative, “Swavalamban” will be available for persons who join
New Pension Scheme (NPS), with a minimum contribution of Rs.1,000
and a maximum contribution of Rs.12,000 per annum during the financial
year 2010-11, wherein Government will contribute Rs.1,000 per year to each
NPS account opened in the year 2010-11. Allocation of Rs.100 crore made
for this initiative

National Skill Development Corporation has approved 3 projects

worth about Rs 45 crore to create 10 lakh skilled manpower at the rate
of 1 lakh per annum
 SOCIAL WELFARE

• Plan outlay for Women and Child Development stepped up by almost

50%
• “Saakshar Bharat” to further improve female literacy rate launched with
a target of 7 crore non-literate adults which includes 6 crore women
• Mahila Kisan Sashaktikaran Pariyojana to meet the specific needs of
women farmers to be launched with a provision of Rs 100 crore
• Plan outlay of the Ministry of Social Justice and Empowerment
enhanced by 80 % to Rs.4500 crore
• Plan allocation for the Ministry of Minority Affairs increased by 50 %
from Rs.1,740 crore to Rs.2,600 crore
• People's ownership of PSUs (Government's disinvestment programme ):
Oil India Limited, NHPC, NTPC and Rural Electrification Corporation- Rs 40000 crore & 3G
Spectrum auction- Rs 35000 crore

• Foreign Direct Investment:

 For the first time, both ownership and control have been recognised as central to
the FDI policy
 Another major initiative has been the complete liberalization of pricing and
payment of technology transfer fee, trademark, brand name and royalty payments.
These payments can now be made under the automatic route

• Banking Licence:
RBI is considering giving some additional banking licenses to private sector players. NBFCs
could also be considered, if they meet the RBI's eligibility criteria

• Public Sector Bank Capitalisation:

A sum of Rs.16,500 crore is proposed to ensure that the Public Sector Banks are able to
attain a minimum 8 per cent Tier-I capital by March 31, 2011

• Special Economic Zones (SEZs):

Government is committed to ensuring continued growth of SEZs to draw investments and
boost exports and employment
TAX PROPOSALS
 TAX PROPOSALS CONTD….

• Plans to implement Direct Tax Code(DTC) from April 1, 2011.

• Endeavour to introduce Goods and Services tax(GST) from April, 2011.
• Setting up of two more Centralized processing centres such as the one
at Bengaluru
• The “Sevottam” scheme will be extended to four more cities during
the year
• The mission mode project for computerization of Commercial taxes in
states has been approved. The total outlay for the project is 1133
Crore of which centre’s share is 800 Crore. The project will lay the
foundation for the launch of GST.
• SARAL-II form for individual salaried taxpayers will be identified during
the year.
DIRECT TAX
 DIRECT TAX CONTD…

• Proposals on direct taxes are estimated to

result in a revenue loss of Rs. 26000 crore for
the year.
• Income Tax slabs for individual tax payers are
as follows:-
Pre Budget Post Budget
Income upto Rs. 1.6 Lakh Income upto Rs. 1.6 Lakh Nil
Income above Rs. 1.6 Lakh and Income above Rs. 1.6 Lakh and upto 10 %
upto 5 lakh 3 lakh
Income above Rs. 5 Lakh and Income above Rs. 3 Lakh and upto 5 20 %
upto 8 lakh lakh
Income above Rs. 8 Lakh Income above Rs. 5 Lakh 30 %
• Juggling with the tax slabs
The finance minister has given the middle class a reason to smile. The tax
burden of salaried individuals especially those with taxable incomes
ranging from 5 Lakh per year to 8 Lakh per year has been substantially
reduced. Their tax liability will reduce between Rs. 20600 to Rs. 51,500
per year. Following increase in excise duties and bringing more services
under the tax banner will lead to price hikes. So the money may not buy
you as much as it did. “Here’s the money, now spend”.
 DIRECT TAX CONTD…

• Deduction of an additional amount of Rs. 20000 allowed, over and above the existing
limit of Rs. 1 Lakh on tax savings provided the investment is made in long-term
infrastructure bonds. However this will only benefit those people who already save
the existing limit of 1 Lakh. This move is with an eye to boost the infrastructure
development in the country.
• Contribution to the Central Govt. Health scheme is allowed as a deduction
• Current surcharge of 10 percent on domestic companies reduced to 7.5 percent
• Rate of Minimum Alternate Tax(MAT) increased from current rate of 15 percent to 18
percent on book profits. An increase in MAT means that companies will have to
shell out more by way of taxes which will hurt them. It will mostly effect the
infrastructure developers, telecom, information technology and the power utilities.
• Encouragement of R&D across all sectors of the economy through enhancement of
weighted deduction on expenditure incurred on in-house R&D  from 150 per cent to
200%. Weighted deduction on payments made to National Laboratories, research
associations, colleges, universities and other institutions, for scientific research
enhanced from 125% to 175%.
 DIRECT TAX CONTD…

• Payment made to an approved association engaged in research in social sciences or

statistical research to be allowed as a weighted deduction of 125 per cent. The income of
such approved research association shall be exempt from tax.
• Benefit of investment extended to new hotels of two-star category and above anywhere in
India to boost investment in the tourism sector.
• Limits for turnover over which accounts need to be audited enhanced to Rs60lakh for
businesses and to Rs15 lakh for professions.
•  Limit of turnover for the purpose of presumptive taxation of small businesses enhanced to
Rs60 lakh. This will reduce their compliance and administrative costs.
•  If tax has been deducted on payment by way of any expense and is paid before the due
date of filing the return, such expenditure to be allowed for deduction. Interest charged on
tax deducted but not deposited by the specified date to be increased from 12% to 18% per
annum.
• Transfer of assets as a result of the conversion of small companies into Limited liability
partnerships not to be subjected to capital gains tax.
• “The advancement of any other object of general public utility” to be considered as
“charitable purpose” even if it involves carrying on of any activity in the nature of trade,
commerce or business provided that the receipts from such activities do not exceed Rs10
lakh in the year .
 INDIRECT TAXES

• Proposals are estimated to result in a net revenue gain of Rs. 46,500 crore for
the year.
• The Excise duty rate on all non-petroleum products enhanced from 8 percent to
10 percent. Similarly rates on Portland cement and cement clinker also adjusted
upwards proportionately.
• Excise duty on large cars, multi-utility vehicles and sports-utility vehicles
increased by 2 percentage points to 22%.
•  Basic duty of 5% on crude petroleum; 7.5% on diesel and petrol and 10% on
other refined products retained. Central Excise duty on petrol and diesel
enhanced by Re.1 per litre each.
• Some structural changes in the excise duty on cigarettes, cigars and cigarillos to
be made coupled with some increase in rates. Excise duty on all non-smoking
tobacco such as scented tobacco, snuff, chewing tobacco etc to be enhanced.
Compounded levy scheme for chewing tobacco and branded unmanufactured
tobacco based on the capacity of pouch packing machines to be introduced.
 AGRICULTURE AND RELATED SECTORS

• concessional import duty of 5% for the setting up of mechanised

handling systems and pallet racking systems in ‘mandis’ or warehouses
for food grains and sugar as well as full exemption from service tax for
the installation and commissioning of such equipment.
• concessional customs duty of 5% with full exemption from service tax to
the initial setting up and expansion of:-
- Cold storage, cold room including farm pre-coolers for preservation or
storage of agriculture and related sectors produce ; and
- Processing units for such produce.
• full exemption from customs duty to refrigeration units required for the
manufacture of refrigerated vans or trucks.
• Concessional customs duty of 5% to specified agricultural machinery not
manufactured in India
 AGRICULTURE AND RELATED SECTORS CONTD…

• central excise exemption to specified equipment for preservation, storage

and processing of agriculture and related sectors and exemption from service
tax to the storage and warehousing of their produce
• full exemption from excise duty to trailers and semi-trailers used in
agriculture.
• Concessional import duty to specified machinery for use in the plantation
sector to be, extended up to March 31, 2011 along with a CVD exemption.
• Testing and certification of agricultural seeds exempted from service tax.
• Transportation by road of cereals and pulses to be exempted from service
tax.
• Small scale manufacturers:- Permitted to take full credit of central excise
duty paid on capital goods in a single installment in the year of their receipt;
Permitted to pay central excise duty on a quarterly rather than monthly
basis.
 ENVIRONMENT

• Clean energy cess on coal produced in India at a nominal rate of Rs.50

per tonne to be levied. This cess will also apply on imported coal.
• concessional customs duty of 5 per cent to machinery, instruments,
equipment and appliances etc. required for the initial setting up of
photovoltaic and solar thermal power generating units and also
exempt them from Central Excise duty. Ground source heat pumps
used to tap geo-thermal energy to be exempted from basic customs
duty and special additional duty.
•  A few more specified inputs required for the manufacture of rotor
blades for wind energy generators exempted from Central Excise duty.
• Some critical parts of electric cars and vehicles exempted from basic
customs duty and enjoy a concessional CVD of 4%.
SERVICE TAX
 SERVICE TAX CONTD…

• Proposals are estimated to result in a net revenue gain of Rs.

3000 crore for the year.
• Rate of tax on services retained at 10% to make way for GST.
• Accredited news agencies which provide news feed online
that meet certain criteria, exempted from service tax.
• Certain services to be brought within the purview of the
service tax levy.
 BUDGET IMPACT

What is Dearer What is Cheaper

• Cars: Rs. 3000-41000 • Mobile phones: Rs. 60-200
• Two wheelers: Rs. 500-1500 • Water purifier without RO
• Microwave oven:Rs.100-350
• Toy Balloons
• Refrigerator: Rs. 250-350
• Washing m/c: Rs. 600-750 • Supari
• Air conditioners:Rs.500-1200 • Quilts
• Executive health check-ups • LED lights, CFL bulbs
• Tobacco
• Coaching centres
• IT-Services
• Gold and silver
AGRICULTURE
 AGRICULTURE CONTD…

• Heavily tilted towards the social sector.

• Government has finally realized to focus beyond Punjab and Haryana.
• Ease supply bottlenecks by removing services charges on movement
of cereals and pulses.
• Does not provide enough incentive for private investment in
agriculture.
• The diesel and petrol price hikes will have serious implications
especially for Punjab-Haryana farmers who buy diesel to run water
pumps to irrigate their rice fields.
• The fertilizer subsidy is expected to promote balanced fertilization
through new fortified products. This will lead to increase in
agricultural productivity and consequently better returns for the
farmers.
 AUTOMOBILE

• With an increase in general excise duty

rates by 2% on automobiles and
petroleum products, the costs will go up.
• However the price rise was expected and
will lead to an extra Rs. 500-1000 on the
cost of two-wheelers. Thus, there won’t
be a major impact on consumer demand.
• Specific duty exemptions have been
granted to electrically operated vehicles
and solar energy based rickshaws to
promote use of alternate eco-friendly
vehicles.
 OIL & GAS

• The petroleum sector will have to bear

the increase in excise duty rates on
inputs.
• The re-imposition of customs duties on
crude oil would impact the refineries.
• Customs duty incidence on petrol and
diesel, specific petroleum products and
excise duty incidence on petrol and
diesel levy will also have an adverse
impact on the prices of oil and gas.
 CEMENT

• Essential input for realty and infrastructure

sector.
• The proposed hike in excise duty on cement
can push up construction costs, leading to
high price levels. This could potentially
impact the revenues of developers such as
DLF, Unitech and Ansal.
• In projects such as housing commercial,
infrastructure projects where the
customers are not able to claim a set off of
duty paid on cement for their projects, the
hike is likely to translate into higher costs.
 FMCG/RETAIL

• There will be direct price hike of

fast moving consumer goods from
the excise duty hike contributed
by costlier petroleum products.
• However the demand for FMCG
products is expected to rise.
• This can be attributed to the fact
that the broadening of income
tax slabs will put greater amounts
of disposable incomes in middle
class wallets.
 TEXTILE

• The import of ready-made

garments in pre packaged form
intended for retail sale is now
exempted from additional duty
on customs. (ADC).
• Thus the exporters wont have to
go through the tedious job of
claiming refunds.
• However the hike in excise duty
and petroleum prices will raise
the input and raw material
costs.
 CONSUMER DURABLES

• Expanded list of specified materials

required for manufacture of sports
goods to be fully exempted from import
duty.
• Reduction in basic Customs duty on
one of the key components in
production of micro-wave ovens,
namely magnetrons, from 10% to 5%.
• Reduction in central excise duty on
replaceable kits for household type
water filters other than those based on
RO technology to 4%
• Makers of the above mentioned
products will gain from this.
 POWER

• Increase in excise duty rate from the

existing 8% to 10%.
• Clear focus on capacity enhancement in
the power sector.
• Duty exemptions extended to various
equipments required to set-up power
projects using non-conventional energy.
• But higher duties on fuel (including the
proposed clean energy cess of Rs 50 per
tonne on production and import of coal)
could push up the cost of conventional
power.
• Power transmission will gain from
service tax exemption.
 TELECOM

• Retention of duty
exemption for
parts/components of
mobile phones and
additional exemption for
parts used in the
manufacture of specified
mobile phone accessories
will encourage production
and reduce costs.
 REAL ESTATE

• Budget has proposed service tax

amendments for the real estate
sector.
• developers will now be liable to
service tax on transactions where
prospective buyers make
payments prior to completion of
construction of property. This will
put a burden on the developers.
• The increase in excise duty on
cement is likely to increase
construction costs.
 LOGISTICS

• Tax has been imposed on the

transportation of goods by
railways. Air travel will now attract
a service tax of 10%.
• While tax on rail transportation
will provide a level-playing field to
private operators, tax on air travel
may result in a price war between
full service airlines and their no-
frills counterparts.
 INFOTECH

• proposals to remove dual levy

of service tax and excise
duty/customs duty on
packaged software and
simplification of export rules is
seen as a major relief measure
for the sector.
• On the flip side, information
technology software services
provided to governmental
entities will now attract service
tax.
 OTHER PROPOSALS

• Customs duty hike on gold import (Rs. 200 per 10 gram to Rs. 300 per 10
grams): Increase in gold prices. The yellow metal will cost more.
• Rs. 1000 incentive for NPS accounts: The government would contribute
Rs. 1000 per year to each account opened in the next four years
beginning in April, 2010. This would benefit about 1 million people.
• Air fares will go up by a minimum of 10% depending upon the base fare.
This can be partially attributed to a hike in customs duty of ATF (Aviation
Turbine Fuel).
• The Budget proposal to limit the Service Tax to Fund Management
Charges only in ULIPs (Unit-Linked Insurance Policies), has removed the
anomaly of not having a level playing field for various financial products.
This step will improve the returns for life insurance policy-holders.
 OUR VIEWS

• Ignoring bulk producing states like AP, western UP, Punjab and
Haryana will be a mistake as the farmers here are already
grappling with the economic conditions and geographical
degradation. They are only provided a rebate of 2 percent.
• Promoting the use of non- conventional sources of energy in
the power sector and the automobile sector through duty
exemptions will have a substantial impact on the environment.
• Full exemption currently available to medical equipments and
devices is only for government hospitals and hospitals set up
under a statute. This will adversely affect the private hospitals.
THANK
YOU