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LA:5140
INDIAN ECONOMIC DEVELOPMENT
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Union Budget 2012-13
BY:
P.MONSON PRASAD(EE09B021)
B.PAUL DINAKAR(ME09B009)
MADHU MOHAN.B(CS09B016)
K.NIKHIL(EE09B013)
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Contents
Introduction
Overview of the economy
Budget 2012-13
1. Tax proposals
2. Effect on different sectors.
Overall Impact
Pros and cons.
conclusion
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Introduction
Whatisbudget?
- Budget is a Plan made for the future Income and Expenditure.
The Union Budget of India, referred to as the annual Financial
Statement in Article 112 of the Constitution of India, is the
annual budget of the Republic of India, presented each by
the Finance Minister of India in Parliament.
The budget has to be passed by the House before it can comeinto effect on April 1, the start of India's financial year
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Introduction
The Union Budget of India for 2012 - 2013
presented by Pranab Mukherjee, the Finance
Minister of India on 16th March 2012.
This was the 7th budget of his career .
These budgetary proposals would be applicable
from 1 April 2012 to 31 March 2013.
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Overview of the Economy
GDP growth estimated at 6.9 per cent in real terms in 2011-12.
Slowdown in comparison to preceding two years is primarily
due to deceleration in industrial growth.
Current account deficit at 3.6 per cent of GDP for 2011-12 and
reduced net capital inflow in the 2nd and 3rd quarters putpressure.
Developments in Indias external trade in the first half of
current year have been encouraging.
Indias GDP growth in 2012-13 expected to be 7.6 per cent +/-0.25 per cent
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Tax Proposals
Direct Tax
Income tax exemption limit raised to Rs.2 lakh to provide
relief of Rs.2,000
20 per cent tax on income over Rs.10 lakh, up from Rs.8
lakh.
Deduction of up to Rs.10,000 from interest from savings
bank accounts.
A net revenue loss of 4,500 crore estimated as a result of
Direct Tax proposals.
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Indirecttax-
To maintain a healthy fiscal situation proposal to raise service tax
rate from 10 per cent to 12 per cent.
Proposals from service tax expected to yield additional revenue of18,660 crore.
Cinema industry exempted from service tax.
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PERSONAL TAXATION-
2010-2011
Men Women
Income Slab Tax Income Slab Tax
Income upto Rs1,80,000 Nil Income upto Rs1,90,000 Nil
Income from Rs
1,80,001 to 5,00,00010 %
Income from Rs
1,90,001 to
5,00,000
10 %
Income from Rs5,00,001 to 8,00,000
20 %
Income from Rs
5,00,001 to
8,00,000
20 %
Income above
8,00,00030 %
Income above
8,00,00030 %
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2012-13
Income TaxSlab (in Rs.)
Tax
Up to Rs. 2 lakh No Tax
Rs. 2 Lakhs toRs. 5 Lakhs
10%
Rs. 5 Lakhs toRs.10 Lakhs 20%
Above Rs. 10
Lakhs
30%
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Senior Citizens (Aged 60 years but less than
80 years)
Income Tax Slab (in Rs.) Tax
Up to Rs. 2.5 Lakh No Tax
Rs. 2.5 Lakhs to Rs. 5
Lakhs10%
Rs. 5 Lakhs to Rs. 10
Lakhs20%
Above Rs. 10 Lakhs 30%
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Very Senior Citizen (Above 80 years)
Up to Rs. 5Lakh No Tax
Rs. 5 Lakhs toRs. 10 Lakhs
20%
Above Rs. 10Lakhs
30%
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Transport: Roads and Civil Aviation
Allocation of the Road Transport and Highways Ministryenhanced by 14 per cent to `25,360 crore.
Target of covering a length of 8,800 km. under NHDP
(National Highways Development Project).
ECB(External Commercial Borrowing) proposed to beallowed for capital expenditure on the maintenance and
operations of toll systems for roads and highways, if they
are part of original project.
ECB to be permitted for working capital requirement of
airline industry for a period of one year, subject to a total
ceiling of US $ 1 billion.
Proposal to allow foreign airlines to participate upto 49 per
cent in the equity of an air transport undertaking under
active consideration of the government
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Textiles
Government has announced a financial package of 3,884 crorefor waiver of loans of handloom weavers and theircooperative societies.
2 more mega handloom
Prakasam and Guntur districts in AP. Godda in Jharkhand.
3 Weavers Service
Mizoram, Nagaland, Jharkhand.
A Powerloom Mega Cluster in Maharastra with a budget of70crore.
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MSME
5,000 crore India Opportunities Venture Fund to be set
up with SIDBI.
2 SME exchanges are launched in Mumbai recently. To
enable greater access to finance by Small and Medium
Enterprises (SME).
Policy requiring Ministries and CPSEs to make min 20% of
their annual purchases from MSEs approved.
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Agriculture
Plan Outlay for Department of Agriculture and co-operationincreased by 18% from Rs 17,123 crore in 2011-12 to Rs20,208 crore in 2012-13.
Outlay for Rashtriya Krishi Vikas Yojana (RKVY) increased to9,217 crore in 2012-13.
Initiative of Bringing Green Revolution to Eastern India(BGREI) has resulted in increased production and productivityof paddy. Allocation for the scheme increased to `1,000 crorein 2012-13 from `400 crore in 2011-12
500crore to Mission for Protein Supplement for improvingproductivity in dairy sector.
New project with World Bank assistance was allocated2,242crore for broadening production of fish to coastalaquaculture.
Kisan Credit Card (KCC) Scheme to be modified to make KCC asmart card which could be used at ATMs
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Irrigation
To maximise the flow of benefits from investments in
irrigation projects, structural changes in Accelerated
Irrigation Benefit Programme (AIBP) are being made.
Allocation for AIBP in 2012-13 stepped up by 13 per cent
to 14,242 crore.
Irrigation and Water Resource Finance Company being
operationalized to mobilize large resources to fund
irrigation projects.
A flood management project approved by Ganga Flood
Control Commission at a cost of `439 crore.
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Scheduled Castes and Tribal Sub
Plans
Allocation for Scheduled Castes Sub Plan at `37,113 crore in
BE 2012-13 represents an increase of 18 per cent over BE
2011-12.
Allocation for Tribal Sub Plan at `21,710 crore in BE 2012-13
represents an increase of 17.6 per cent.
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Rural Development and Panchayat
Raj Budgetary allocation for rural drinking water and
sanitation increased from 11,000 crore to `14,000 crore
representing an increase of over 27 per cent
Allocation for PMGSY increased by 20 per cent to
Rs.24,000 crore to improve connectivity.
Major initiative proposed to strengthen Panchayats
through Rajiv Gandhi Panchayat Sashaktikaran Abhiyan.
Backward Regions Grant Fund scheme to continue in
twelfth plan with enhanced allocation of 12,040 crore in
2012-13, representing an increase of 22 per cent over
the BE 2011-12.
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Central Plan Outlay(in crores)2010 2011-12 2012-13
Grand total 464316 558172 651509
Agriculture 13825 12861 16121
2Civil Aviation 6223 5621 7293
Communication and IT 13708 15101 21394
Environment and Forest 2181 1902 2430
External Affairs 800 1125 1500
Health and Family welfare 20726 24315 30477
Home Affairs 2542 6152 10500
Human Resource Development 43514 51772 61427Petroleum and Natural Gas 60967 69883 79728
Power 42945 62792 62425
Rural Development 720261 67139 73175
Science and Technology 4650 5432 5975
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Impact Analysis
INDIA INC.
PROPOSAL EFFECT
Excise duty and service tax raised to 12%
from 10%
Price need to be raised, margins may get
affected
Investment in infrastructure to go up to
50 lakh crores in 12th five year plan in
both public and private sectors.
More opportunities for private sector to
invest in PPP projects
New sector to be added for purpose of
investment linked deduction
Incentives for investment
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Impact Analysis
Capital marketPROPOSAL EFFECT
Reduction Of Security Transaction Tax (STT)
on delivery based sale and purchase of share
from 0.125 to 0.1 %
Transaction costs will come down
Qualified foreign investors allowed to invest
in corporate bond market
Deepening of corporate debt
market
Initial Public Offering (IPO) of Rs 10 cr. and
above will only be in electronic from
Cost of issuing shares will come
down.
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Impact Analysis TAXPAYER
PROPOSAL EFFECT
Individuals exemption limit to be raised to
Rs 200,000
Provides tax relief of Rs 2,000
Allow deduction of up to Rs 10 lakhs for
interest from saving accounts
More benefit for senior citizens
Upper limit of 20% to be raised to 10 lakh
from 8 lakh
Tax benefit of Rs20,000
Allow deduction of up to Rs 5000 for
preventive health check up
Health awareness
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Impact Analysis ECONOMY
PROPOSED EFFECT
Rs.30,000 crores to be raised from
disinvestment in 2012-13
Retail investors will get PSU shares
Provision regarding implementation of
Advance Pricing Agreement (APA) to be
introduced in finance bill 2012
Big boost to IT and Business process
outsourcing(BPO) service providers
Rs15 cr. to be provided for capitalization of
public sector banks and financials
institutions
Banks will be better equipped to
face competition
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PROS
This Budget identifies objectives relating to growth
recovery, private investment, malnutrition and governance
matters.
This budget is good for our bright future because
government is trying to reduce fiscal deficit, it is possible
through only increasing tax.
Demand will boost because of rural development
and increase in exemption limit.
Sales will increase as there is rise in the income of
the consumer.
GDP increases.
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Cons
Increase of service tax from 10% to 12% would increase pressure
on common man.
The cost of production also increases due to increase in service
tax adding to existing high input costs.
Even though the income tax slab has been increased it is still anobstacle for the middle class.
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Conclusion
High budget deficit remains as the major problem for
framing the budget plans.
Increase in service tax is necessary for decreasing the
deficit but has its own effects.
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Thank you