Union Budget 2011-12

Highlights of Union Budget 2011-2012

The Union Budget for 2011-12 has been announced by the Union Finance Minister, Mr Pranab Mukherjee, in Parliament on February 28, 2011.

OVERVIEW OF THE ECONOMY

• Gross Domestic Product (GDP) estimated to have grown at 8.6 per cent in 2010-11 in real terms. Economy has shown remarkable resilience
• Indian economy expected to grow at 9 per cent with an outside band of +/- 0.25 per cent in 2011-12
• Exports have grown by 29.4 per cent, while imports have recorded a growth of 17.6 per cent during April to January 2010-11 over the corresponding period last year

SUSTAINING GROWTH

• Fiscal consolidation targets at Centre and States have shown positive effect on macroeconomic management of the economy
• Direct Taxes Code (DTC) to be finalised for enactment during 2011-12. DTC proposed to be effective from April 1, 2012
• Areas of divergence with States on proposed Goods and Services Tax (GST) have been narrowed. As a step towards roll out of GST, Constitution Amendment Bill proposed to be introduced in this session of Parliament

INVESTMENT ENVIRONMENT

• Discussions underway to further liberalise the FDI policy
• SEBI registered mutual funds permitted to accept subscription from foreign investors who meet KYC requirements for equity schemes
• Rs 6,000 crore (US$ 1.30 billion) to be provided during 2011-12 to enable public sector banks to maintain a minimum of Tier I CRAR of 8 per cent
• Rs 500 crore (US$ 108.5 million) to be provided to enable Regional Rural Banks to maintain a CRAR of at least 9 per cent as on March 31, 2012
• “India Microfinance Equity Fund” of Rs 100 crore (US$ 21.7 million) to be created with SIDBI.

AGRICULTURE

• Rs. 300 crore (US$ 65.1 million) expenditure to promote 60,000 pulses villages in rain fed areas for increasing crop productivity and strengthening market linkages
• Proposal to spend Rs. 300 crore (US$ 65.1 million) to promote oil palm plantation in 60,000 hectares and Rs. 300 crore (US$ 65.1 million) for the initiative on vegetable cluster
• Rs 400 crore (US$ 86.8 million) is proposed to be spent to improve rice based cropping system in the Eastern Region.

SOCIAL SECTOR

• The allocation for social sector has been increased by 17 per cent to Rs. 1,60,887 crore (US$ 34.9 billion) which amounts to 36.4 per cent of the total plan allocation.
• Remuneration for Anganwadi workers have been increased to Rs. 3000 (US$ 65.1) per month from Rs. 1500 (US$ 32.6) per month while the Anganwadi helpers will get Rs. 1500 (US$ 32.6) per month. This will be effective from 1st April 2011 benefiting about 22 lakh Anganwadi workers and helpers.

EDUCATION

• The allocation on education has been increased by 24 per cent to Rs 52,057 crore (US$ 11.3 billion). Sarva Shiksha Abhiyan gets Rs 21,000 crore (US$ 4.6 billion) which is 40 per cent higher than the previous year’s allocation of Rs. 15,000 crore (US$ 3.3 billion)
• The Finance Minister also proposed to introduce a scholarship scheme for needy students belonging to the Scheduled Castes and Scheduled Tribes studying in classes IX and X. It would benefit about 40 lakh students

HEALTH

• Plan allocation for Health has also been increased by 20 per cent to Rs 26,760 crores (US$ 5.8 billion). The Rashtriya Swasthaya Bima Yojana will be extended to the unorganized sector workers in hazardous mining and associated industries

HOUSING SECTOR

• Existing scheme of interest subvention of 1 per cent on housing loan further liberalized
• Existing housing loan limit enhanced to Rs 25 lakh (US$ 54,271.1) for dwelling units under priority sector lending
• Provision under Rural Housing Fund enhanced to Rs 3,000 crore (US$ 651.3 million)
• To enhance credit worthiness of economically weaker sections and LIG households, a Mortgage Risk Guarantee Fund to be created under Rajiv Awas Yojana
• Central Electronic Registry to prevent frauds involving multiple lending on the same immovable property to become operational by March 31, 2011

INFRASTRUCTURE AND INDUSTRY

• Allocation of Rs 2,14,000 crore (US$ 46.5 billion) for infrastructure in 2011-12. This is an increase of 23.3 per cent over 2010-11. This also amounts to 48.5 per cent of total plan allocation
• Government to come up with a comprehensive policy for further developing PPP projects
• IIFCL to achieve cummulative disbursement target of Rs 20,000 crore (US$ 4.3 billion) by March 31, 2011 and Rs 25,000 crore (US$ 5.4 billion) by March 31, 2012
• Under take out financing scheme, seven projects sanctioned with debt of Rs 1,500 crore (US$ 325.6 million). Another Rs 5,000 crore (US$ 1.1 billion) will be sanctioned during 2011-12
• To boost infrastructure development, tax free bonds of Rs 30,000 crore (US$ 6.5 billion) proposed to be issued by Government undertakings during 2011-12

NATIONAL MANUFACTURING POLICY

• hare of manufacturing in GDP expected to grow from about 16 per cent to 25 per cent over a period of 10 years. Government will come out with a manufacturing policy
• Two Committees set up for greater transparency and accountability in procurement policy; and for allocation, pricing and utilisation of natural resources
• Issues relating to reconciliation of environmental concern from various departmental activities including those related to infrastructure and mining to be considered by a Group of Ministers
• National Mission for hybrid and electric vehicle to be launched
• Financial Assistance to be made available for metro projects in Delhi, Mumbai, Bengaluru, Kolkata and Chennai
• Capital investment in fertiliser production proposed to be included as an infrastructure sub-sector.

INNOVATIONS

• National Innovation Council set up to prepare road map for innovations in India
• Special grant provided to various universities and academic institutions to recognise excellence

SKILL DEVELOPMENT

• Additional Rs 500 crore (US$ 108.5 million) proposed to be provided for National Skill Development Fund during the next year
• An international award with prize money of Rs 1 crore (US$ 217,085) being instituted for promoting values of universal brotherhood as part of National celebrations of 150th Birth Anniversary of Gurudev Rabindranath Tagore

BUDGET ESTIMATES

• Gross Tax receipts are estimated at Rs 9,32,440 crore (US$ 202.4 billion)
• Non-tax revenue receipts estimated at Rs 1,25,435 crore (US$ 27.2 billion)
• Total expenditure proposed at Rs 12,57,729 crore (US$ 273 billion)
• Increase of 18.3 per cent in total Plan allocation
• Increase of 10.9 per cent in the Non-plan expenditure.