ANALYSIS OF BUDGET 2012-2013 Against the backdrop of negative growth trends globally, India has tried to balance the

seemingly conflicting macroecomic facets of managing growth and retaining inflation simultaneously. Though in 2008, the effects of global slowdown on Indian economy were not much, now the impact of globalization has clearly reduced the GDP to 6.9%. Though India is ranked third in terms of GDP(or PPP) by IMF, our GDP is lowest since the economic crisis of 2008. Fiscal deficit is on the rise, fluctuating global prices of goods and services, increase in the international crude oil prices have had an impact on India. Given the political situation in the country where the coalition partners may withdraw support at an agenda with a conflict with the respective partys ideology, the budget did not envisage much anticipated key reforms. The impact of the Budget on various sectors is examined in detail: Agriculture: Kisan Credit Card (KCC) scheme to be modified to make KCC a smart card compatible with ATMs. National Mission on Food Processing to be started. This will give thrust to small farmers, but more focus should be given on food storing facility in the country. Transportation industry: The central excise duty has been raised from 10% to 12% Automobiles: Excise duty on large cars is increased to 24% from 22%, whereas that on specific parts of some vehicles is reduced from 10% to 6%.This will slight impact on sales of large cars. The reduction of tax on machine parts will reduce the cost of existing vehicles. Aviation: The government has reiterated direct import of Aviation Turbine Fuel (ATF) for Indian carriers. This will give a respite to the ailing aviation industry as ATF cost around 50% of the total operating cost of the company. But, a point to be noted is that none of the Indian carriers at present have neither the capital nor the infrastructure to import ATF directly.

Banking: As the custom duty enhanced on standard gold imports, this would help banks channelize savings into financial investments. FMCG (Fast Moving Consumer Goods): The excise duty on cigarettes by adding an ad valorem component will increase the price slightly; hence the impact is expected to be neutral. The manufacturing cost of paint will be reduced due to the reduction in the excise duty of titanium dioxide, a raw material in paint manufacturing. Telecommunications industry: The budget signaled that the government is expecting to generate revenue of Rs. 40,000 crores from 2G spectrum allocations, but this expectation is outsized as already 3G and BWA auctions are over. The focus on rural development through schemes such as NREGA will improve the conditions of huge rural population generating clientele for telecom companies. The excise duty on accessories of mobile handsets has been further extended to parts,sub-componnents and components required for producing SIM cards,this will have positive impact on the industry. Infrastructure: The budget has finally given some impetus to the Infrastructure development which badly needed it. Tax free bonds of Rs 60,000 cr have been allowed for financial projects in 2012-2013. The budget targets to award 8,800 km of road projects,and also plans to increase the allocation to NHDP(National Highway Development Programme) and AIBP(Accelerated Irrigation Benefit Programmme) by 14% and 13% respectively.This move will not only improve the infrastructure facilities , but also ia a positive sign for Engineering & Construction companies and many people and sub companies related to the work.

Various infrastructure segments such as irrigation and oil and gas have been made eligible for validity gap funding ,this move will attract more private investment in PPP projects . Subsidies: Some subsidies,while being inevitable ,may become undesirable,if the compromise the macroeconomic fundamentals of an economy. The aim wil be to keep central subsidies below 2% of the GDP,and over next 3 years further decreasing the share to 1.75% of GDP. Education: Rs. 25,555 cr have been allocated under Sarva Shiksha Abhiyaan , which is 21.7 % greater than the previous year.The allocation for general education has been increased by 17.6% . This will certainly improve the current literacy rate which stands at 74.04 %. Taxation: The tax slabs have been revised, but the increase in the tax slabs is grossly inadequate given the aim of the budget to focus on domestic demand driven economy. While Rs 4,500 crore have are lost in revenue by way of direct taxes, but the revenue due to indirect taxes is expected to be around Rs.45, 940 crores. The price of all the basic commodities will increase due to increase in excise duty from 10% to 12%. The budget intends to the General Anti Avoidance Rules (GAAR) as a counter to tax avoidance schemes.Tax proposals mark progress in the direction towards DTC(Direct Tax Code ) and GST (Goods and Services Tax).Some portions of DTC bill have already been included in the budget. Stock market: The secured transaction tax (SST) has been reduced from 0.125% to 0.100% for cash delivery transactions on the stock market. Rajiv Gandhi Equity Savings Scheme will be started,wherein 50% tax benefit will be given to the shareholder ,but this comes with a 3 year lock in period for starters. The existing ELSS(Equity linked Savings Scheme )where the shareholder gets 100% tax benefit under section 80C seems insipid.