Indian Union Budget 2012-2013 - March 16, 2012
HIGHLIGHTS OF THE INDIAN UNION BUDGET 2012-13
OVERVIEW OF THE ECONOMY
* GDP growth estimated at 6.9 per cent in real terms in 2011-12. Slowdown in comparison to preceding two years is primarily due to deceleration in industrial growth.
* Headline inflation expected to moderate further in next few months and remain stable thereafter.
* Steps taken to bridge gaps in distribution, storage and marketing systems have helped in more effective management of inflation.
* Developments in India's external trade in the first half of current year have been encouraging. Diversification in export and import market achieved.
* Current account deficit at 3.6 per cent of GDP for 2011-12 and reduced net capital inflow in the 2nd and 3rd quarters put pressure on exchange rate.
* India's GDP growth in 2012-13 expected to be 7.6 per cent +/- 0.25 per cent.
* Deterioration in fiscal balance in 2011-12 due to slippages in direct tax revenue and increased subsidies.
* 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.
* GST network to be set up as a National Information Utility and to become operational by August 2012.
*Government has further evolved its approach to divestment of Central Public Sector Enterprises by allowing them a level playing field vis-a-vis the private sector in respect of practices like buy backs and listing at stock exchanges.
*For 2012-13, Rs 30,000 crore to be raised through disinvestment. At least 51 per cent ownership and management control to remain with Government.
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.
Advance Pricing Agreement
* Provision regarding implementation of Advance Pricing Agreement to be introduced in Finance Bill, 2012.
* 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.
* Various steps proposed to be taken for deepening the reforms in the Capital markets, including simplifying process of IPOs, allowing QFIs to access Indian Bond Market etc.
* Official amendment to "The Pension Fund Regulatory and Development Authority Bill, 2011", "The Banking Laws (Amendment) Bill, 2011" and "The Insurance Law (Amendment) Bill, 2008" to be moved in this session.
* Various Bills proposed to be moved in the Budget session of the Parliament to take forward the process of financial sector legislative reforms. Capitalisation of Banks and Financial Holding Company
* To protect the financial health of Public Sector Banks and Financial Institutions, `15,888 crore proposed to be provided for capitalisation. Possibility of creating a financial holding company to raise resources to meet the capital requirments of PSU Banks under examination.
* A central "Know Your Customer" depository to be developed in 2012-13 to avoid multiplicity of registration and data upkeep.
Priority Sector Lending
* Revised guidelines on priority sector lending to be issued after stakeholder consultation.
* Out of 73,000 identified habitations that were to be covered under "Swabhimaan" campaign by March, 2012, about 70,000 habitations have been covered. Rest likely to be covered by March 31, 2012.
* As a next step, Ultra Small Branches are being set up at these habitations. n In 2012-13, "Swabhimaan" campaign to be extended to more habitations. Regional Rural Banks
* Out of 82 RRBs in India, 81 have successfully migrated to Core Banking Solutions and have also joined the National Electronic Fund Transfer system.
* Proposal to extend the scheme of capitalisation of weak RRBs by another 2 years to enable States to contribute their share.
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