Union Budget 2012-13 Facts & Highlights

Union Budget 2012-13

Finance Minister Pranab Mukherjee presented the Budget 2012-13 in Parliament on Wednesday, March 16 2012.



Budget 2012-13 - An Analysis 

Highlights of Pranab Mukherjee's Union Budget 2012-13 Speech

POLICY REFORMS

• Allow external commercial borrowing of up to $1 bln to raise working capital for airlines industry for 1 year
• To allow qualified foreign investors in Indian corporate debt markets
• To allow external commercial borrowing to part finance rupee debt in power projects
• Proposes to remove sector-specific restriction on venture capital fund investments
• Hope to achieve "broad-based consensus" to open multi-brand retail sector to foreign investors

INFRASTRUCTURE SPENDING

• To award contracts to build 8,800 km of roads in 2012/13
• Govt to provide 600 billion rupees in tax free bonds for financing infrastructure projects in 2012/13

FINANCE MINISTER ON GOVERNANCE

• We have to accelerate the pace of reform, says Pranab

GROWTH AND INFLATION EXPECTATIONS

• Expect headline inflation to moderate in next few months and remain stable thereafter
• Economy expected to grow at 7.6 percent in 2012/13, plus or minus 0.25 percent
• Economy expected to grow at 6.9 percent in 2011/12
• Signs of economy turning around in March quarter

AGRICULTURE

• Expects country to become self-sufficient in urea production in five years
• Proposes to raise agricultural credit target in 2012/13 to 5.75 trillion rupees

DISINVESTMENT

• Disinvestment target in 2012-13 of 300 billion rupees
• Expects country to become self-sufficient in urea production in five years
• Proposes to raise agricultural credit target in 2012/13 to 5.75 trillion rupees

SUBSIDIES 

• To keep 2012/13 subsidies under 2 percent of GDP
• Major subsidies bill estimated at 1.8 trillion rupees in 2012-13
• Food subsidy bill in 2012-13 seen at 750 billion rupees
• Fertilizer subsidy bill in 2012-13 seen at 609.7 billion rupees
• Petroleum subsidy bill in 2012-13 seen at 435.8 billion rupees
• Revised petroleum subsidy bill for 2011-12 at 684.8 billion rupees
• To inject 159 billion rupees to capitalize state-run banks in 2012/13

CURRENT ACCOUNT

• Current account deficit seen at 3.6 per cent of GDP in 2011-12

SECTOR SPENDING 

• Allocates 1.94 trillion rupees for defence in 2012/13, up from 1.64 trillion rupees in previous year

FISCAL DEFICIT 

• Fiscal deficit seen at 5 . 9 percent of GDP in 2011-12
• Fiscal deficit seen at 5 . 1 percent of GDP in 2012-13

SPENDING 

• Total expenditure in 2012 / 13 seen at 14 . 9 trillion rupees
• Plan expenditure budgeted at 521.25 billion rupees in 2012/13, up 18 percent

REVENUE AND TAXES 

• Gross tax receipts seen at 10.8 trillion rupees in 2012-13
• Non-tax revenue seen at 1.64 trillion rupees in 2012-13
• Proposes to levy tax on all services except 17 items in the negative list from 2012/13
• Proposes to raise service tax rate to 12 percent from 10 percent
• No change in corporate tax rates
• To enhance tax exemption limit to 200,000 rupees for individuals income in 2012/13
• Proposes to provide full exemption on import duty of thermal coal for power plants
• Proposes to double basic customs duty on gold

BORROWING

• Net market borrowing seen at 4.8 trillion rupees in 2012-13

WHAT GOES UP 

• AC, gold jewelery, refrigerator, telephone bills, SUVs and cigarettes 

WHAT GOES UP DOWN 

• Cinema and films, LCDs and LEDs, bicycles, housing society charges, LPG, mobile phones, medicines for treating cancer and HIV

IMPORTANT FINANCE MINISTER COMMENTS 

• "We have to accelerate the pace of reforms and improve supply side management of the economy."
• "Economic policy, as medical treatment, often requires us to do something which in the short run may be painful but is good for us in the long run."
• "As Hamlet, the Prince of Denmark, said in Shakespeare's immortal words, 'I must be cruel only to be kind'." 

Highlights & Facts from Earlier Indian budgets which impacted the Indian economic history 

• February 28, 1970: Indira Gandhi presented the Budget against the backdrop of bank nationalisation that began in the previous year.
• February 28, 1982: Pranab Mukherjee presented the Budget after India signed an agreement with IMF for a $ 5 billion loan.
• March 16, 1985: VP Singh presented the Budget on the heels of an improvement in the economy. India had voluntarily terminated its agreement with IMF in May, 1984.
• July 24, 1991: Manmohan Singh presented the Budget in the wake of a balance of payments crisis and double digit inflation.
• February 28, 1997: P Chidambaram presented the Budget after an average growth of 7 per cent for three years. It was called the 'Dream Budget' and many widely accepted it as the best budget.
• February 27, 1999: Yashwant Sinha presented the Budget amid the fallout of the Asian financial crisis and economic sanctions on India for conducting nuclear tests.
• February 28, 2005: P Chidambaram presented the Budget soon after the economy began its highest ever growth phase.

More Earlier Budgets' Facts & Highlights:

• Morarji Desai has presented the maximum number of budgets: 10 times
• Jawaharlal Nehru, Indira Gandhi and Rajiv Gandhi  are the Prime Ministers to have presented a Budget
• Indira Gandhi has been the only woman finance minister of India so far
• HM Patel in 1977 gave the shortest ever interim budget speech. His speech was 800 words long.
• Manmohan Singh as Finance Minister introduced the concept of service tax
• Jaswant Singh held the Finance Minister's portfolio for the shortest period of time. He was the finance minister only for 13 days.
• R Venkataraman has been the only Finance Minister to have risen to be the President of India
• Shankar Acharya was the Chief Economic Advisor for the maximum number of budgets - seven Union Budgets and two Interim Budgets.