Finance Budget 2012 Highlights

New Delhi: Today’s Budget is one of the biggest challenges of Pranab Mukherjee’s long political career and the Finance Minister set the tone for it when he described the year gone by as a "year of recovery interrupted." He began with listing grim ground realities – the global economic scenario, the battle with double digit inflation and said it was time for tough decisions. Here are the highlights of this fiscal’s financial budget.

  • Service tax raised from 10 percent to 12 percent
  • Income tax exemption limit raised to Rs.2 lakh to provide relief of Rs.2,000 for assessees in this category; Rs.2 Lacs – 5 Lacs 10% , Rs.5 Lacs – 10 Lacs 20% and 30% tax on income over Rs.10 lakh.
  • Deduction of up to Rs.10,000 from interest from savings bank accounts.
  • No change in corporate taxes but measures to enable them better access funds
  • Witholding tax on external commercial borrowings reduced from 20 percent to five percent for power, airlines, roads, bridges, affordable houses and fertiliser sectors.
  • Defence to get Rs.1.93 lakh crore during 2012-13.
  • National Skill Development Fund allocated Rs.1,000 crore.
  • Four thousand residential quarters to be constructed for paramilitary forces with an allocation of Rs.1,185 crore.
  • National Population Register to be completed in two years.
  • Number of proactive steps taken on black money (stashed away abroad); information has started flowing in, prosecution to be initiated; White Paper in current session.
  • Allocation of Rs.200 crore for research on climate change.
  • Irrigation and water resource company to be operationalised.
  • National mission on food processing to be started in cooperation with state governments.
  • Integrated Child Development Scheme to be strengthened and restructured with allocation of Rs.15,850 crore.
  • Allocation of Rs.14,000 crore for rural water supply and sanitation.
  • Infusion of Rs.15,888 crore in public sector banks, regional rural banks and NABARD in 2012-13.
  • Infrastructure will require Rs.50 lakh crore in 12th Plan, half of this from the private sector.
  • Completion of highway projects 44 percent higher than in previous fiscal.
  • External commercial borrowing of up to $1 billion permitted for airline sector.
  • External commercial borrowing permitted to low-cost housing sector.
  • From 2012-13, full subsidies for providing food security; in other sectors to the extent the economy can bear this.
  • Hope to raise Rs.30,000 crore from disinvestments.
  • New equity savings scheme to provide for income tax deduction of 50 percent for those who invest Rs.50,000 in equity and whose annual income is less than Rs.10 lakh.
  • Corporate market reforms to be initiated.
  • Bills on micro-finance institutions, national land bank and public debt management among those to be introduced in 2012-13.
  • Addressing malnutrition, black money and corruption in public life among five priorities in year ahead.
  • India’s inflation structural, driven largely by agricultural constraints.
  • Current account deficit 3.6 percent in 2011-12; this put pressure on exchange rate.
  • Growth in 2012-13 estimated at 7.6 percent; expect inflation to be lower.
  • Better monitoring of expenditure on government schemes.
  • Fiscal 2011-12 year of recovery interrupted; reality turned out to be different.
  • GDP growth in 2011-12 estimated at 6.9 percent; had to battle double digit inflation for two years.
  • Good news: agriculture and services continued to perform well; economy is now turning around; recovery in core sectors.
  • Now at juncture where it is necessary to take hard decisions; have to accelerate pace of reforms.


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10 thoughts on “Finance Budget 2012 Highlights

    Hi nice summary; I watched TV and enjoyed his Bengali pronunciation body language and how many members were on the verge of dozing!
    Small retailers welcome the abolition of tax on sb interest upto 10K, another vehicle on ELSS pattern with a ceiling of 50K named on Rajiv Gandhi ( how else to please Sonia !), restriction of subsidies to a targeted amount -( but because of such exercise fert cos are hard hit, there was a report that more that 30K crores of fert subsidy was pending last week -this is a strain on their working capital ), disbursement of subsidy direct to farmer is a good beginning – it will be indirectly beneficial to banks as more accounts will be opened, may be frill-less accounts!


  2. A masterly summary of an otherwise saltless budget, with inflation promoting expenditures and raising to 12% the service tax, on many businesses and professions, generating employment.
    How many businesses have 12% margin? Wholesalers, stocking and risking their money realise only 3% on volume.When are govt dandies cut their expenditure and travel singly, without a retinue?
    The paltry increae of 25,000 Rs. cannot cover the rising costs of vegetables, rice and pulses and the poor man on the streets, has no pavement, to walk on, as all roads are flooded by increasing no., of cars, purchases in instalments and borrowing.
    God save the pedestrians in the pavements and garbage!.


  3. Aftr loosing the Vodafone case this government has amended the IT Act from 1962 meaning Thousands of cases will be opened by IT Dept. Big Negative by foolish economists since it will make India loose its credibility Globally.


    • Previously the GDP growth was 7-8%.Now it is 6.9%. Even after Globalization in every field and opening the markets to private sectors we aren’t able to improve our GDP and our inflation rate is rising in double digits. Only corporates coming up and small units vanishing.


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