Indian Budget comparison

1. By Soma Giri Comparison of Budget within 2010 & 2011

2. Challenges 2011 2010 To quickly revert to the high GDP growth path of 9 per cent and then find the means to cross the ‘double digit growth barrier’ To harness economic growth to consolidate the recent gains in making development more inclusive To address the weaknesses in government systems, structures and institutions at different levels of governance Structural concerns on inflation management to be addressed by improving supply response of agriculture to the expanding domestic demand and through stronger fiscal consolidation Implementation gaps, leakages from public programmes and the quality of outcomes pose a serious challenge Government to improve the regulatory standards and administrative practices

3. Overview of the Economy 2010 2011 GDP – 7.2 A major concern during the second half of 2009-10 has been the emergence of double digit food inflation India among the first few countries in the world to implement a broad-based counter-cyclic policy package to respond to the negative fallout of the global slow down The growth rate in manufacturing sector in December 2009 was 18.5 per cent – the highest in the past two decade GDP - 8.6 Continued high food prices have been principal concern this year Monetary policy measures taken expected to further moderate inflation in coming months 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

4. Fiscal Consolidation 2010 2011 With recovery taking root, there is a need to review public spending, mobilise resources and gear them towards building the productivity of the economy Fiscal policy shaped with reference to the recommendations of the Thirteenth Finance Commission, which has recommended a calibrated exit strategy from the expansionary fiscal stance of last two years It would be for the first time that the Government would target an explicit reduction in its domestic public debt-GDP ratio Fiscal consolidation targets at Centre and States have shown positive effect on macro economic management of the economy „Amendment to Centre’s FRBM Act, 2003 laying down the fiscal road map for the next five years to be introduced in the course of the year „Proposal to introduce the Public Debt Management Agency of India Bill in the next financial year

5. Tax Reforms 2010 2011 On the Direct Tax Code (DTC) the wide-ranging discussions with stakeholders have been concluded – Government will be in a position to implement the DTC from April 1, 2011 Centre actively engaged with the Empowered Committee of State Finance Ministers to finalise the structure of Goods and Services Tax (GST) as well as the modalities of its expeditious implementation. Endeavour to introduce GST by April, 2011 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 Significant progress in establishing GST Network (GSTN), which will serve as IT infrastructure for introduction of GS

6. People’s Ownership of PSU 2010 2011 Ownership has been broad based in Oil India Limited, NHPC, NTPC and Rural Electrification Corporation while the process is on for National Mineral Development Corporation and SatlujJalVidyut Nigam. This will raise about Rs 25,000 crore during the current year Higher amount proposed to be raised during the year 2010-11 Overwhelming response to public issues of Central Public Sector Undertakings during current year. „ Higher than anticipated non-tax revenue has led to reschedulement of some disinvestment issues planned for current year „40,000 crore to be raised through disinvestment in 2011-12 „Government committed to retain at least 51 per cent ownership and management control of the Central Public Sector Undertakings.

7. INVESTMENT ENVIRONMENT 2010 2011 Foreign Direct Investment Foreign Institutional Investors Financial Sector Legislative Initiatives Public Sector Bank Capitalisation Recapitalisation of Regional Rural Bank Micro Finance Institution Rural Infrastructure Development Fund Micro Small and Medium Enterprise Housing Sector Finance Financial Sector Legislative Reforms Commission Foreign Direct Investment Financial Stability and Development Council Banking Licence Public Sector Bank Capitalisation Recapitalisation of Regional Rural Banks (RRB) Corporate Governance

8. Agriculture 2011 2010 Bringing Green Revolution to Eastern Region Integrated Development of 60,000 pulses villages in rainfed areas Promotion of Oil Palm Initiative on Vegetable Clusters Nutri-cereals National Mission for Protein Supplement Accelerated Fodder Development Programme National Mission for Sustainable Agriculture Agriculture Credit Mega Food Parks Agriculture Produce Marketing Act Storage Capacity and Cold Chains Agricultural production Reduction in wastage of produce Credit support to farmers Impetus to the food processing sector

9. Infrastructure & Industry 2010 2011 Rs 1,73,552 crore provided for infrastructure development which accounts for over 46 per cent of the total plan allocation Allocation for road transport increased by over 13 per cent from Rs. 17,520 crore to Rs 19,894 crore Rs 16,752 crore provided for Railways, which is about Rs.950 crore more than last year Allocation of 2,14,000 crore 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 ` 20,000 crore by March 31, 2011 and ` 25,000 crore by March 31, 2012

10. Education 2010 2011 Plan allocation for school education increased by 16 per cent from Rs.26,800 crore in 2009-10 to Rs.31,036 crore in 2010-11 In addition, States will have access to Rs.3,675 crore for elementary education under the Thirteenth Finance Commission grants for 2010-11 Allocation for education increased by 24 per cent over current year SarvaShikshaAbhiyan „ 21,000 crore allocated, which is 40 per cent higher than Budget for 2010-11 „Pre-matric scholarship scheme to be introduced for needy SC/ST students studying in classes IX and X

11. Health 2010 2011 An Annual Health Survey to prepare the District Health Profile of all Districts shall be conducted in 2010-11 Plan allocation to Ministry of Health & Family Welfare increased from Rs 19,534 crore in 2009-10 to Rs 22,300 crore for 2010-11 Plan allocations for health stepped-up by 20 per cent Scope of RashtriyaSwasthyaBimaYojana to be expanded to widen the coverage

12. Financial Inclusion 2011 2010 Target of providing banking facilities to all 73,000 habitations having a population of over 2,000 to be completed during 2011-2012 Appropriate Banking facilities to be provided to habitations having population in excess of 2000 by March, 2012 Insurance and other services to be provided using the Business Correspondent model By this arrangement, it is proposed to cover 60,000 habitations Augmentation of Rs.100 crore each for the Financial Inclusion Fund (FIF) and the Financial Inclusion Technology Fund, which shall be contributed by Government of India, RBI and NABARD

13. Environment & Climate change 2010 2011 National Clean Energy Fund for funding research and innovative projects in clean energy technologies to be established One-time grant of Rs.200 crore to the Government of Tamil Nadu towards the cost of installation of a zero liquid discharge system at Tirupur to sustain knitwear industry Rs.200 crore provided as a Special Golden Jubilee package for Goa to preserve the natural resources of the State, including sea beaches and forest cover Allocation for National Ganga River Basin Authority (NGRBA) doubled in 2010-11 to Rs.500 crore. Schemes on bank protection works along river Bhagirathi and river Ganga-Padma in parts of Murshidabad and Nadia district of West Bengal included in the Centrally Sponsored Flood Management Programme. A project at Sagar Island to be developed to provide an alternate port facility in West Bengal. Forests - 200 crore proposed to be allocated for Green India Mission from National Clean Energy Fund Environmental Management - 200 crore proposed to be allocated for launching Environmental Remediation Programmes from National Clean Energy Fund Cleaning of Rivers and Lakes - Special allocation of ` 200 crore proposed to be provided for clean-up of some more important lakes and rivers other than Ganga Some Other Initiatives „To boost development in North Eastern Region and Special Category States, allocation for Special Assistance doubled „8,000 crore provided in current year for development needs of Jammu and Kashmir

14. Budget Estimates 2010 2011 The Gross Tax Receipts are estimated at Rs. 7,46,651 crore The Non Tax Revenue Receipts are estimated at Rs. 1,48,118 crore The net tax revenue to the Centre as well as the expenditure provisions in 2010-11 have been estimated with reference to the recommendations of the Thirteenth Finance Commission The total expenditure proposed in the Budget Estimates is Rs. 11,08,749 crore, which is an increase of 8.6 per cent over last year The Plan and Non Plan expenditures in BE 2010-11 are estimated at Rs. 3,73,092 crore and Rs. 7,35,657 crore respectively. While there is 15 per cent increase in Plan expenditure, the increase in Non Plan expenditure is only 6 per cent over the BE of previous year Fiscal deficit for BE 2010-11 at 5.5 per cent of GDP, which works out to Rs.3,81,408 crore Gross Tax receipts are estimated at ` 9,32,440 crore „ Non-tax revenue receipts estimated at ` 1,25,435 crore Total expenditure proposed at ` 12,57,729 crore Increase of 18.3 per cent in total Plan allocation „Increase of 10.9 per cent in the Non-plan expenditure „XI Plan expenditure more than 100 per cent in nominal terms than envisaged for the Plan period Increase of 23 per cent in Plan and Non-plan transfer to States and Uts „Fiscal Deficit brought down from 5.5 per cent in BE 2010-11 to 5.1 per cent of GDP in RE 2010-11. „ Fiscal Deficit kept at 4.6 per cent of GDP for 2011-12

15. Service Tax 2010 2011 Standard rate of Service Tax retained at 10 per cent, while seeking a closer fit between present regime and its GST successor „Hotel accommodation in excess of ` 1,000 per day and service provided by air conditioned restaurants that have license to serve liquor added as new services for levying Service Tax „Tax on all services provided by hospitals with 25 or more beds with facility of central air conditioning Service Tax on air travel both domestic and international raised „Services provided by life insurance companies in the area of investment and some more legal services proposed to be brought into tax net „All individual and sole proprietor tax payers with a turn over upto ` 60 lakh freed from the formalities of audit. Rate of tax on services retained at 10 per cent to pave the way forward for GST Certain services, hitherto untaxed, to be brought within the purview of the service tax levy. These to be notified separately Process of refund of accumulated credit to exporters of services, especially in the area of Information Technology and Business Process Outsourcing, made easy by making necessary changes in the definition of export of services and procedures Accredited news agencies which provide news feed online that meet certain criteria, exempted from service tax Proposals relating to service tax are estimated to result in a net revenue gain of Rs 3,000 crore for the year.

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