KIIT SCHOOL OF MANAGEMENT

The Government of Indias Financial Statement (Union Budget) 2012-13

3/17/2012

Submitted by:Bikram shaw Roll no:-11202247 Section:-D MBA-1

Union budget 2012-13 of India is pragmatic and credible budget revealed by honourable finance minister Mr. Pranab mukherjee. According to Pranab this budget for growth and sustainability but some economist as well as some politician think that it is not a satisfactory budget for this year. According to my point of view there are the five best and five worst announcements in this years budget. Five best: 1) Negative list for services: The budget has introduced a negative list of services, which will not be subject to service tax. All the rest will be taxed. Currently, only 107 specified services are taxed. 2) Raises exemption limit for income tax payment, Direct tax payer get relief from exemption limit. Pranab Mukherjee raised the exemption limit for income tax by just Rs 20,000 from Rs 1, 80000 to Rs 2 lakh. The new tax slabs are as follows: Up to Rs 2 lakh: No tax, From Rs 2 lakh to 5 lakh: 10%, From Rs 5 lakh to 10 lakh: 20%, Above Rs 10 lakh: 30%. 3) Tax free infra bonds: The finance minister has proposed to allow tax free bonds of Rs 60,000 crore to be issued by various government undertakings, which is double the Rs 30,000 crore assigned in the year 2011-2012. This will give a boost to the infrastructure sector that has been reeling under high interest rates and policy paralysis 4) Foreign borrowings for low-cost housing: External commercial borrowings permitted to low-cost housing sector. External commercial borrowing of up to $1 billion permitted for airline sector. 5) Expansion of venture capital. Five worst: 1) Fiscal deficit at 5.1% of the GDP: Fiscal deficit for 2011-12 rose to 5.9 percent, much higher than 4.6 per cent promised last year. Next years projection is 5.1 percent. There is no roadmap for this ambitious target. Analysts had expected the deficit to be below 5%. 2) Growth projection at 7.6%: Analysts said this is an ambitious target considering that the Indian economy is likely to grow by only 6.9% this year. 3) Allocation of divestment proceeds. 4) Increase in agricultural credit. 5) Subsidies at 2% of GDP: Fiscal deficit overshot the projected 4.6 percent of GDP mainly on account of higher subsidy burden. Reducing subsidies will help contain fiscal deficit. The global crisis has affected the Indias gross domestic product (GDP) which indirectly affect in Union 2011-13 budget of India. The budget is mainly emphasis on Infrustacture, capital market reform. The revision in tax slabs will give some direct tax relief to individuals, even as eating out; buying luxury cars, air travel, availing some professional services and investing in gold jewellery will become costlier. There are signs of recovery in coal, fertiliser, cement and electricity sectors. Again there are given libertilisation in FDI in aviation sector, which help the industry to grow and service tax has been reduced and corporate tax remains unchanged. So, it can be concluded that it is a pragmatic and tolerable budget for the year 2012-13.