Union Budget 2012 Live Updates - Test

Source : SIFY
Last Updated: Tue, Jun 11, 2013 05:56 hrs
Pranab hopes an upward revision in GDP growth

1: 10 Here s what the experts are saying  " I don't see any populist schemes, but this not a reformist budget either. It is a status quo budget. I think the political compulsions made them decide that the best way is to play it safe - neither populist nor reformist," says A Prasanna, Economist, ICICI Securities.

What has effectively happened is that a large share of the fiscal deficit, which is above 80 percent, is to be funded through the market borrowing. I think the 10-year yield will cross 8.40 percent, and will move to 8.50 percent, given that the borrowing is larger than what was estimated," says Abheek Barua, Chief economist, HDFC bank.

1: 05: With that ends budget 2012-13.

As expected, no big-bang announcements from Pranab da. For the middle-class, a minor sop in the form of a small rise in the tax exemption limit. The new tax slabs are as follows: Up to Rs 2 lakh – NIL; Rs 2– Rs 5 lakh – 10%; Rs 5–Rs 10 lakh rupees – 20%; Above Rs 10 lakh – 30%.

A hike in service tax rates from 12 percent from 10 percent will hit the services sector. The move though could mop up some much-needed revenue for the government with the services sector accounting for 59% of the GDP.

A gold-loving nation will have to pay more for gold with customs duty on the yellow metal being doubled.

1: 00: Here's what is getting costlier.

Customs duty on gold, platinum doubled.

Beedis, cigarettes and other tobacco products to cost more too.

Customs duty on large, imported SUVs also raised

Basic customs duty on imported bicycles raised to 30 percent.

12: 58: Comment From RV:

Directionless budget so far. I am really concerned about our country's economy now.

12: 56: Comment From bhavitavya bhavitavya :

People earning above the Rs 40 lakh bracket can be taxed more. Those earning between Rs 2-Rs 10 lakh should not be taxed or taxed just 5%.

The new tax slabs again: Up to Rs 2 lakh – NIL; Rs 2– Rs 5 lakh – 10%; Rs 5–Rs 10 lakh rupees – 20%; Above Rs 10 lakh – 30%.

12: 54: Comment From gopal Reddy gopal Reddy :

Nothing new in the budget add plus or minus 5% to Budget 2011-12 and read it as Budget 2012-13.

12: 52: LCD, LED TVs, screens have been exempt from custom duty. What it translates to in terms of reduction in prices should be known soon. Solar power lamps, CFLs, LED bulbs to become cheaper too.

12: 50:
Comment From KN Ajayakumar KN Ajayakumar :

The H'ble Finance Minister has made fun of salaried employees by raising IT exemption limit by a meagre Rs 20,000 12: 48: Large cars to become expensive -to attract up to 27% duty.

12: 45:
The hike in service tax rates from 12 percent from 10 percent will hit the services sector. Remember that services sector account for 59% of GDP and include services provided by most of our IT majors.

12: 40:
Reiterating once again. Here are the new tax slabs: Up to Rs 2 lakh – NIL; Rs 2– Rs 5 lakh – 10%; Rs 5–Rs 10 lakh rupees – 20%; Above Rs 10 lakh – 30%. Interest earned from bank deposits to stay tax free up to Rs 10,000. School education to be exempt from service tax..

12: 28:
Service tax rates raised to 12 percent from 10 percent.

School education, though, will be exempt from service tax.

12: 28: What is provision for reducing corruption?

12: 26:
The Securities Transaction Tax (STT), imposed while buying and selling shares, is brought down by 20%.

12: 23: Interest earned from bank deposits to stay tax free up to Rs 10,000.

No change in corporate tax rate, the Finance minister says. Guess everybody can make their peace with that last bit.

12: 20: No change in corporate tax rate, the Finance minister says. Well, well...

12: 18: Those in the 2 lakh to Rs 5 lakh bracket will now be under the 10% slab.

And those in the 5 lakh to 10 lakh bracket will be under the 20% slab.

30% tax for those with income above Rs 10 lakh, including for the Ambanis of the world.

12: 16: Personal income tax exemption limit raised to Rs 2 lakh, as expected. 12: 15: After reeling of all these stats, Pranabda makes the rather pithy observation: "Madame Speaker, the life of a Finance Minister is not easy." He now breaks into a Hamletian quotation: "I must be cruel only to be kind". With that he moves to the tax proposals. Hear! Hear!

12: 10: The Finance Minister also announces the setting up of a dedicated cell to track black money.

12: 08: The allocation for the National Rural Health Mission (NRHM) has also been increased - to Rs 20,820 crore.

Also, Rs 15,850 crore to be allocated to Integrated Child Development Scheme (ICDS) in 2012-13 as against Rs 10,000 crore during the current fiscal year.

12: 04: The defence budget allocation has been raised to Rs 1.93 lakh crore.12:01: On to graver things then. Government will raise investment in the education sector, the finance minister promises. 6000 more schools will be set up under the 12th year plan, he assures.

11:56: A speech that began with a note of levity at the beginning is proving rather soporific at the moment.

The lighter moment had arrived during a brief disruption at the beginning of the Finance Minister's speech when Pranabda said that he had no problem in a "rollback of the speech"!

This after his speech was interrupted following a trouble with the mike. This led to some protests, including by Bharatiya Janata Party (BJP) leader and former finance minister Yashwant Sinha.

Pranabda halted his speech, checked his mike and asked the members if he should go over the two paragraphs from his speech that he had already read out. An opposition member remarked that the finance minister was "rolling back" his speech.

"Rollback of the speech, no problem," Mukherjee said, smiling broadly, as the house erupted in laughter.

11:49: Watery updates from the budget now. Irrigation projects and dams will be eligible for special funding.

11:48: More support for the ailing aviation sector. External Commercial Borrowings (ECB) to the extent of $ 1 billion to be allowed for aviation sector for next year. Direct import of air traffic fuel also allowed (another demand Vijay Mallya has been making).


11:43: Government to hand out contracts for 8800 km of national highway roads this year, says Pranab. Allocation for the national highways programme has been upped by 14 per cent.


11:40: So what else is exercising the Finance Minister's vocal chords? Announcements of 10000 crore for National Highwats Authority of India (NHAI), Rs 10000 crore for the power sector and a statement that 49 per cent Foreign Direct Investment (FDI) in the airlines sector is under "active consideration". Mr Mallya, does that translate to HOPE?


11:38: Moves to beging direct cash subsidy for LPG, Kerosene have been set in motion.

11:36: He sets aside Rs 15800 crore for capitalisation of PSU banks. With the State Bank of India and other banks taking hits from bad loans like the ones they made to the Kingfisher, they need all the money, now don't they?

And Mr Mallya can now be offered a bigger largesse too.

Kingfisher shares not up, but the shares of government banks take off.

11:34: Moves to beging direct cash subsidy for LPG, Kerosene have been set in motion.

11:32: He sets aside Rs 15800 crore for capitalisation of PSU banks. With the State Bank of India and other banks taking hits from bad loans like the ones they made to the Kingfisher, they need all the money, now don't they?

And Mr Mallya can now be offered a bigger largesse too.

Kingfisher shares not up, but the shares of government banks take off.

11:31: The government expects to raise Rs 30,000 crore from disinvestment this year, Pranabda says.

11:31: He promises Rs 15800 crore for capitalisation of PSU banks.


11:30: The government expects to raise Rs 30,000 crore from disinvestment this year, Pranabda says.

11:29: A Rajiv Gandhi equity scheme has been launched. The scheme aims to reduce short-term capital gains tax for new investors.

11:27: Pranabda is announcing a series of measures to boost the capital markets.
The government will exempt investment of Rs 50000 a year in equities from tax with three year lock-in period.


11:24: Direct transfer of subsidies as per Aadhar head Nandan Nilekani's recommendation.

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11:23: Pranabda announces Aadhar-enabled payment of subsidies for select government schemes in 50 districts on an experimental basis

Exports grew 23% in the first quarter, says the Finance Minister. He expects the Gross Domestic Product (GDP) to grow to 7.6 per cent by next year.

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11:20: Government will address issues of black money, corruption in public life, says the Finance Minister

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11:15: The market, which edged higher after a slightly cautious and listless start, are in positive territory now with some frontline stocks from realty, banking, capital goods and power sectors trading firm on fairly strong buying support.


Information technology and healthcare stocks are also fairly steady at present. Metal and oil stocks are trading flat, while automobile and consumer durables stocks are trading weak.


The Sensex is up 80 points or 0.45% at 17,756, while the Nifty is up with a gain of 28.55 points or 0.53% at 5409.05.

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11:14: Reeling of facts is Pranabda. We shall not bore you.

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11:09:
The Gross Domestic Produc expected to grow at 6.9 per cent in the year ahead, the Finance Minister reiterates.
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11:08: Sings that the economy is turning around, says the Finance Minister. Which way, we wonder.
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11:06: For those who missed what happened in the world in the year that went by, don't you worry. Pranabda is reeling of everything important from the tsunami in Japan to the rise in crude oil prices across the world.
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11:03: There is some turmoil already and we have Pranabda saying, "please, please, please". Meira Kumar also gets the opportunity to employ her singsong voice and say, "Please sit down". The class has begun indeed.

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11:02: Pranabda has begun making his speech dot at the appointed hour.
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11:02: At last, it is all about to get underway on budget day at the Lok Sabha.
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10:15: With his government in strife, will Pranab Mukherjee table a pro-bharat, populist budget? It is rather likely.

But like many, including our columnist and renowned economist Dr Jayati Ghosh have underlined, focusing on making the electorate happy might not be a bad move all.

After all, if the aam janata are truly going to be pleased with the budget, there has to be some merit in the measures.

Even the markets are expected to support a pro-bharat leaning budget too. More of that right here.

Enough of all that then.

Ahead of Friday's budget, here is a look at a few expected announcements, a cartoon to get you in the mood for the budget presentation and a thoughtful analysis from Dr Jayati Ghosh.

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Good news for the salaried class?

Reports say that the Finance Minister is expected to raise the income tax exemption limit to at least Rs 2 lakh in his budget proposals to be unveiled in the Lok Sabha on Friday.


Pranabda may also marginally raise the slabs in the tax brackets of 10 per cent, 20 per cent and 30 per cent. The Direct Taxes Code (DTC) Bill has also made a mention of this.

But there is bad news in the offing too. Particularly for prospective car buyers as the Finance Minister is expected to hike taxes on cars.

Automakers are bracing for a possible tax of up to 80,000 rupees on diesel cars to partially help fuel retailers for selling fuel at below cost. Analysts say if levied, the tax could result in the cost of a diesel car increasing by up to 20 percent.

Pranabda is also likely to raise the exemption limit on investments in long-term tax-free infrastructure bonds.

It will be interesting to see if the banking sector's expectations of tax breaks on long-term deposits will be met.

Taxes on consumer goods and cement too could go up.

The IT industry has also asked for reviving tax exemption for units in special economic zones.

Pranabda might also remove the 5 percent import duty on LNG and natural gas.


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Comment From Prakash
Prakash : ] Expecting pranab da to do more of fiscal consolidation and less of populist measures.

That then was Prakash's expectations from the budget.

We spoke to people right across India to find out their expectations from the budget too.


The Union Budget is set to be tabled in Parliament on Friday, March 16. Ahead of the budget, we present our columnist and renowned economist Dr Jayati Ghosh'spre-budget analysis. In the column, she talks of how the electoral budget that the Congress suffered and the UPA's tenuous majority in Parliament might help in ensuring a pro-bharat budget, which the markets are also expected to welcome
:

There has been a rising cacophony of voices advising the central government on how to approach the next fiscal year.

If anything, the voices have been louder and more insistent than normal. This reflects the growing sense of urgency and even a slight sense of panic that has seized India Inc., which has apparently realised that the great Indian economic growth story may be in the process of unravelling.

Thus, there is much angst about the deceleration of the GDP growth rate to an estimated annual rate of 6.1 per cent in the third quarter of the current fiscal year, and concern that the gloomy global economic scenario will act as a further depressant on domestic growth.

Exports are already affected by the changes not only in the US and European economies. They are likely to be affected even more importantly by the shift currently occurring in China, which is also looking to rebalance its own production more towards meeting domestic demand.

Within the country, the concerns range from dealing with internal and external imbalances to the slowing down of growth.

And the prescriptions of course vary dramatically, depending upon not just the diagnosis of the disease but even what is identified as the disease in the first place.

There is one set of analysts and observers for whom GDP growth is all that matters, and they are relatively less concerned about how much of that growth is "trickling down" or how much employment it generates or whether it is ecologically sustainable.

Within this group, it is common to accept that GDP growth must be powered by private investment, and therefore that maintaining or improving "investor sentiment" is the most critical task for government. This in turn leads to the belief that "reforms" in the form of greater privatisation and easing rules for foreign investment in various activities (including FDI in retail, banking and so on) is the best way to improve the confidence of investors.

This is the group that has been tut-tutting about the sclerosis within the UPA government that has prevented it from taking "tough" measures. Such so-called tough measures include not just the actions just mentioned, but attempts to rein in the fiscal deficit by cutting spending on subsidies on food and fuel, and raising indirect taxes. It is interesting that toughness is never seen as desirable when applied to corporate taxes, as that is supposed to be "anti-growth".

The gloom and frustration in this camp has only been accentuated by the results of the recent Assembly elections in five states.

The poor electoral showing of the Congress Party, especially in Uttar Pradesh, has been cited as one factor that may reduce the appetite of the central government for the kind of actions they desire.

It is now feared that in the coming Union Budget, the Finance Minister will avoid the required fiscal consolidation for fear of further political backlash. The concern that is being expressed is that, instead, there will be more "populist" measures, rather than what they perceive of as "growth" measures - which are essentially more carrots for private business.

But suppose we decide to look at the economy differently - not solely in terms of GDP growth, but rather in terms of the material conditions of most of the people living in the country. (It turns out that even electorally speaking, this might be the wiser thing for the parties in power at the central government to do.)

Then the variables that need to be looked at are quite different: employment generation, especially regular employment in formal sector activities; prices of essential goods, especially food, in relation to wage incomes; livelihood conditions of small producers in both agriculture and non-agriculture; access to good quality social services like health and education at affordable rates; availability of essential infrastructure like paved roads.

If these become the priorities, then it is only too obvious that we need not less public spending but much more of it. So, the focus should not be on cutting down, but rather increasing government expenditure in these essential areas, and in providing more fiscal transfers to state governments that are primarily responsible for delivery of all of these in the Indian federal system.

Of course people will immediately reply that it is crazy and irresponsible to suggest this when the fiscal deficit is already seen as too high.

But in fact such spending need not even involve a higher fiscal deficit. Rather, the time has definitely come to tax the beneficiaries of the past boom, who have been disproportionately receiving the spoils of the GDP growth.

This does not even have to mean higher tax rates. Rather, simply cutting down on the wide range of admissible deductions especially on corporate taxes and actually enforcing existing tax rates can have a huge impact.

Cracking the whip on those with massive tax arrears (a list that reads like a Who's Who of the Indian corporate class) will not just have a positive effect for the future but can also deliver massive amounts to the state exchequer immediately.

Getting rid of the excise tax incentives for particular sectors that were provided in the wake of the 2008 crisis will also provide more revenues.


And surely the time has come to end the kid glove fiscal and monetary treatment of the developers who are concentrated in luxury housing and similar elite-oriented real estate, and instead provide incentives for affordable mass housing.

The bogey that all this will adversely affect investor confidence has to be revealed for the nonsense that it is.

In many countries across the world (even small countries like Ecuador and Myanmar) recent experience has confirmed that such action may be resented by corporate groups, but it need not have any negative effects on either GDP or investment rates.

In fact, public spending that creates more employment and improves living conditions actually increases the domestic market, and therefore acts as a powerful incentive to invest even for private players.

So the recent elections in several states may even have a salutary effect on the central government if they force it to reconsider the current economic strategy.

In the medium term, such a shift is much more likely to generate truly inclusive growth that the government is so fond of talking about.


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