Union Budget 2012 Highlights

Sectors covered/impacted: Infrastructure, Power, Retail, Agriculture & Rural Sector, Defense, Banking & Financial Sector, Education, Energy, Transport Sectors untouched/neglected: Telecom, IT & ITES Key Highlights: GDP: 2011-12 expected to grow 6.9% 2012-13 grow at 7.6%

Fiscal Deficit: Target set at 5.1% of GDP in Budget 2012-13 Current Account Deficit: 3.6% Tax Slab for individuals: up to Rs 2 lakh NIL 2-5 lakh 10% 5-10 lakh 20% 10 lakh & above 30% No change in corporate tax rates Subsidies: Central subsidies trimmed, to be kept under 2% of GDP, bring down subsidy to 1.7 % of GDP in the next 3 years Duty changes: Standard excise duty hiked to 12% Service tax up from 10% to 12% GST to be operational by August 2012, implement DTC at the earliest Disinvestment: Govt will continue to hold 51% stake in state owned companies, Rs 30,000cr divestment target in FY 13 Power Sector: Coal India advised to sign FSA with power plants, Rs 10000 crore of tax fee bonds for power sector Infrastructure: Increase in investments in infrastructure through PPP Infrastructure investment in 12th Plan to go up to Rs 50 lakh crore Retail: Commitment to push for 51% FDI in multi-brand FDI Inclusive Growth: Rs 12,040 cr for backward area projects in FY13, New state owned Irrigation Company to be set up, FY13 midday meal scheme outlay at Rs 11,937 crore New equity savings scheme (scheme named after Rajiv Gandhi): income tax deduction of 50 percent for investment of Rs.50,000 in equity and annual income is less than Rs.10 lakh

Overall Budget Analysis: Populist Budget with No negative surprises Inclusive Growth approach GDP growth target is realistic Service Tax Net Increases as Expected, to align with GST Income Tax Changes Welcome but Modest Modest Target for Disinvestment

Sector Wise Analysis: Infrastructure: Increase in investments in infrastructure through PPP Double infra debt amount to Rs 60,000 crore Infrastructure investment in 12th Plan to go up to Rs 50 lakh crore; half of it to come from private sector FY13 tax free bonds of Rs 10000cr for NHAI Allocation for national highways up 14 per cent. 8,800 km of highways to be developed under National Highway Development Project in 201213 Infrastructure sector to get Rs 50,00,000 lakh crore investment

Power Sector: Coal India advised to sign FSA with power plants Rs 10000 crore of tax fee bonds for power sector Will allow external commercial borrowing for power, housing road construction companies

Defense: Defense outlay at 193,407 crore, a hike by more than 17%

Banking & Financial Sector: 10000 crores allocated to NABARD to fund RRB To allow qualified foreign investors in Indian corporate debt market To introduce new law for micro finance institution

Agriculture/Rural Sector: New state owned irrigation company to be set up Rs 14000 crore for rural drinking and sanitation in FY 13 Rs 12,040cr for backward area projects in FY13 FY13 midday meal scheme outlay at Rs 11937 crore NRHM allocation hiked to 20820 crores against Rs 18,115 crore this year Rural development fund of 20000 crores Allocated Rs 25,555cr for Right to Education in FY13; cuts interest rates on loans to women self help groups allots Rs 24,000 crore for rural road plan in FY13 Agriculture credit target raised to Rs 5.75 lakh crore To roll out computerized scheme for fertilizer subsidy transfer To allocate Rs 14232cr to UID project, up 13% in FY 13

Duty Changes: Standard excise duty hiked to 12% Service tax up from 10% to 12, will result in Rs 18660 crores rise Thermal power companies exempted from customs duty for 2 years 5% customs duty exempted on equipment for fertilizer plant No change in peak customs duty Customs duty reduced from 7.5% to 2.5% for iron ore equipment LCD and LED panels exempted from custom duty 12% excise duty imposed on branded retail garments Mobile phone parts exempted from basic customs duty Cuts customs duty on rail equipment to 7.5% from 10% Basic customs duty on cigarettes reduced Customs duty on refined gold doubled

Stock Market Reaction:

Sensex: Nifty: AUTO INDEX: BSE Power Index: BSE - CONS. DURABLES:

17,451.24 INR 224.61 1.27% 5,317.90 INR 10,170.32 INR 2,191.42 INR 6,486.73 INR 62.60 1.16% 37.84 0.37% 67.34 2.98% 35.51 0.54%

Analysis and Highlights prepared by: Team Constrat References: Yahoo finance, economic times, moneycontrol, ibnlive