2. Economy
For Indian economy, recovery was interrupted this
year due to intensification of debt crises in Euro
zone, political turmoil in Middle East, rise in crude oil
price and earthquake in Japan.
3. GDP is estimated to grow by 6.9 per cent in 2011-
12, after having grown at 8.4 per cent in preceding two
years.
India however remains front runner in economic
growth in any cross-country comparison.
4. Growth: The Finance Minister mentioned that as
per the latest Economic Survey, India's GDP is
expected to grow at 7.6% plus minus 0.25% in FY13.
India's GDP estimated to grow at 6.9% in 2011-12.
Inflation: Headline inflation to moderate from
current level in next few months and remain
stable thereafter.
5. Fiscal deficit
Fiscal deficit is projected at 5.1% of the gross
domestic product (GDP) for the fiscal year
2013, compared to 5.9% for FY11-12.
FY13 total expenditure is estimated at Rs 14.90 lakh
crores.
Fiscal deficit pegged at Rs 5.13 lakh cr for FY13.
6. Fiscal deficit slipped to 5.9% in
2012-Reasons
The government expects to end FY2012 with a fiscal deficit of 5.9%,
much higher than 4.6% estimated earlier, largely due to
higher subsidies,
lower divestments and
lower corporate tax collections.
Subsidy expenses overshoot by around Rs 73,000cr estimate,
because of higher crude prices and rupee depreciation.
Lower corporate earnings growth due to high inflation and interest
rates led to expected corporate tax revenue falling short by
around Rs 32,000cr.
Further, weaker sentiments in equity markets affected the
government's divestment plan, and revenue shortfall on that
front stands at around Rs 24,500cr.
7. The government plans to correct the worsening fiscal situation in
FY2013 by implementing several revenue augmentation
measures, mainly in tax revenue, and expects to end the year
with fiscal deficit at 5.1%.
Tax revenue is expected to increase substantially by around Rs
1,29,000cr over the revised estimates for FY2012, mainly because
of 2% increase in excise rates and service tax rates and widening
of service tax.
Higher corporate tax revenue by a largely similar quantum on the
direct tax front.
Further, the government expects to increase other non-tax
revenue and non-debt capital receipts by around Rs 52,000cr
mainly on account of Rs 40,000cr from telecom spectrum
auction and Rs 30,000cr from divestment
8. Taxes
Individual & Corporate:
Revised Tax Slabs:
1. No tax up to Rs. 2 lakh;
2. 10% tax on 2 lakh to 5 lakh;
3. 20% on 5 lakh - 10 lakh;
4. 30% on 10 lakh and above
Senior citizens to be exempt from advance tax payments
Health insurance deduction upto Rs 5000 for preventive health
checkup.
Capital gains tax on residential property exempted if sale proceeds
used for SMEs.
No change in corporate tax rate.
Savings bank account interest up to Rs 10,000 exempted from tax.
9. TAX REFORMS
DTC Bill to be enacted at the earliest after expeditious
examination of the report of the Parliamentary
Standing Committee.
Drafting of model legislation for the Centre and State
GST in concert with States is under progress.
10. DISINVESTMENT POLICY
Government has further evolved its approach to
divestment of Central Public Sector Enterprises by
allowing them a level playing field vis-à-vis the private
sector in respect of practices like buy backs and listing
at stock exchanges.
For 2012-13, `30,000 crore to be raised through
disinvestment. At least 51 per cent ownership and
management control to remain with Government.
11. STRENGTHENING INVESTMENT
ENVIRONMENT
Foreign Direct Investment
Efforts to arrive at a broadbased consensus in
consultation with the State
Governments in respect of decision to allow FDI in
multi-brand retail upto 51 per cent.
12. Financial Sector
Rajiv Gandhi Equity Saving Scheme to allow for
income tax deduction of 50 per cent to new retail
investors, who invest upto `50,000 directly in equities
and whose annual income is below `10 lakh to be
introduced. The scheme will have a lock-in period of 3
years.