HIGHER GDP growth of 9% TAX REVENUE seen rising 18% LEGISLATIVE ACTIONS SERVICE TAX net cast far

LEGISLATIVE ACTIONS SERVICE TAX net cast far wider

and lower inflation of 5% while spending growth is just planned for financial to get a whopping 19% higher
projected for 2011-12 3.4%, the slowest in recent years reforms, silence on retail FDI revenue by next year

THE ECONOMIC TIMES

U N I O BENNETT,
N B U D GCOLEMAN
ET 201 &1
CO- 2 012
LTD WWW.ECONOMICTIMES.COM

MUMBAI | 40 PAGES | PRICE `5.00 OR `7.00 ALONG WITH THE TIMES OF INDIA | BENNETT, COLEMAN & CO LTD TUESDAY, 1 MARCH 2011

Investors Consumers Taxpayers Economy Business

What it pages 2-9 page 10 page 11 pages 14, 15 pages 16-19
Means
OPPORTUNITY TO invest PRIVATE HOSPITALS and HIGHER TAX exemption POOR USERS of kerosene, TAX HOLIDAY for IT
For... in public issues of public diagnostics to cost 5% limit of `1.80 lakh for cooking gas & fertilisers companies finally ends,
sector units courtesy more; domestic and men and a new category to get subsidies, in cash, MAT imposed on
`40,000-crore disinvestment international air travel costlier of senior citizens by March 2012 Special Economic Zones
by `50 and `250
FOREIGN RETAIL investors set to PROVISION FOR tax-free OIL DUTY structure to be 130 ITEMS brought into excise
enter Indian equity market DRESSING-UP to cost 10% more infrastructure bonds extended reviewed in view of West Asia; duty net for the first time with the
through mutual funds with excise on branded clothes by one more year petrol prices to be revised imposition of 1% duty
TAX TREATMENT of debt and EATING OUT where liquor is NEW INCOME-TAX return form BOOST TO infrastructure through CORPORATE TAX surcharge
money market funds put on a par served to get 3% costlier; staying called Sugam to be introduced a record hike in public funding, reduced by 2.5% to 5%, MAT
with fixed deposits in hotels to get 5% dearer for small businesses more private funding too raised by 0.5% to 18.5%

BOLD FROM THE BLUE

It’s a Tie Between 20 Years of
Liberalisation
Deficit & Growth India completes 20 years of
economic freedom this year,
and ET 50 years of
consumers, but several of his cabinet existence. From 1961, we
colleagues are dead against this.
have always clamoured for
The food subsidy will be virtually un-
changed next year at around `60,000 change and when it
crore. The reason: the implementation happened, in 1991,
of the Food Security Act has been post-
poned until 2012-13. The consequent celebrated it. The change has
hole in government finances has been been tumultuous and large
postponed, not avoided. swathes of India have been
SWAMINATHAN S ANKLESARIA AIYAR Only a small part of the fiscal im-
provement in the Budget relates to tax magically transformed,
buoyancy, with statistical revisions of lifting millions of Indians out
INANCE MINISTER GDP data producing much of the ap- of poverty. For this year's
Pranab Mukherjee’s parent improvement. Yet the fact is
Budget lacks tax py- the central government’s debt-to-GDP Budget Edition, we
rotechnics, yet it reveals a ratio, which the 13th Finance commissioned India's top ad
remarkably improved fis- Commission had projected at 52.5% of
agencies to capture the past
cal position and a conceptual break- GDP, is now only 44.2%. This is re-
through in delivering subsidies markable given that economies across two decades with a simple
through cash transfers for kerosene, the world are weighed down by large and clear brief: to capture
fertilisers and cooking gas. increases in this ratio.
He has also boosted reform prospects, Without the spectrum auction bonan-
the journey of the last 20
pledging to revive seven financial sec- za, fiscal deficit this year would have Celebrating 20 years of liberalisation years of liberalisation.
tor bills, including landmark ones to been 6.3% of GDP. Reducing this to 4.6% Across the pages, Piyush
raise foreign direct investment (FDI) next year requires a massive effort to
in insurance to 49% and lift voting check spending. The Budget projects to- Pandey, Prasoon Joshi,
rights of foreign investors in banks. tal spending to rise marginally to `12.57 R Balki, Santosh Padhi,
Mukherjee says he did not highlight Abhijit Avasthi, Josy Paul,
this in his Budget speech because his
party lacks majority in both houses of K S Chakravarthy and
parliament, but is optimistic of secur- Arun Iyer bring you visuals
ing the cooperation of other parties.
Pranab Mukherjee O G I LV Y on the Voyage from ’91.
On FDI in retail, he is non-committal.
A committee under UIDAI chief in conversation with Dear reader, we hope you
Nandan Nilekani will suggest ways to The battery ran out of the socialist clock in 1991. Two decades on, it surely is an exciting time for India and its hard-driving and
Swaminathan S A Aiyar globally expanding entrepreneurs. Gone are the hammer and sickle and even the last vestiges of a system of governance that dulled
will enjoy and preserve
implement the proposed shift from
physical subsidies to cash transfers, Impact on Economy

15 the Indian spirit and dimmed the hopes of millions. Now, in 2011, the Rupee rules, a strong symbol of a new and muscular India this special edition...
using smart cards. Come October,
UIDAI will issue 10 lakh Aadhar lakh crore next year from `12.17 lakh
(unique identity) numbers daily, and crore this year, and such stringency will
this should make it feasible to bring be politically tough.
in cash transfers sometime in 2012.
This reform has the potential to dras-
tically curb leakages and malprac-
tices in subsidies.
Investors will be encouraged by the
decision to permit foreign retail in-
vestors to invest in Indian mutual
funds, and to raise the investment lim-
122.5 POINTS 4’
‘p
Market’s Belief in
India’s fiscal position has long wor- it for foreign funds in infrastructure
ried foreign institutional investors debt to $25 billion, raising the overall
(FIIs), the dominant players in the cap for FII investment in corporate

Every budget is a
country’s stock markets. The Budget debt to $40 billion.
claimed fiscal deficit was down this But drafting footloose capital into
year to 5.1% of GDP against the target-
ed 5.5%, and would decline to 4.6% next
debt has its risks. Devising clear-
sighted policies to attract FDI into in-
Pranab Dips in a Day
great budget ,
year against 4.8% mapped out earlier. frastructure is far superior to FII
In response, the Sensex initially flows. The government will allow
jumped nearly 600 points, but handed state-run undertakings to raise up to After zooming 595 points, Sensex loses steam as Dalal
back much of the gains after investors `30,000 crore by way of tax-free infra-
realised some of the Budget’s projec- structure bonds, a boost for the sector, Street discounts Pranab’s optimistic numbers
tions were based on statistical revi-
sions and future optimism rather
than fiscal stringency.
along with the proposed creation of
tax-free debt funds.
The decision to press ahead with the
THE BUDGET SPEECH WAS GREETED
by a relief rally that sent bond prices if you have
the right partner.
For instance, the oil subsidy is pro- Direct Taxes Code and transition to a higher and the Sensex soaring, but ini-
jected to fall to `23,640 crore next year countrywide Goods and Services Tax tial euphoria soon gave way to realism
from `38,386 crore this year, but there is a welcome reform intent. However, as doubts arose whether some of the as-
is no explanation how this will be the sheer spread and number of indi- sumptions underpinning key numbers
managed in an environment of high rect tax rates listed in the Budget gave were far too rosy.
global crude prices. Mukherjee may out a whiff of the 1980s, rather than of The BSE’s 30-share Sensex rose as
want high prices to be passed on to futuristic reform. much as 595 points on relief the finance
minister did not increase excise duties
and announced plans to allow foreign-
ers to invest in local mutual funds while
Who Gains How Much bond yields fell after the government’s
Benefit from the budget with expert
Senior citizens above 80 save the most. Those between 60 and 65 borrowing programme turned out to be economist for India & Asean.
lower than the markets had expected. Others wondered whether the FM’s
gain due to lowered age limit for senior citizens

TAXPAYER PROFILE TAX SAVINGS IN ` (2011-12)

The Sensex closed 122.49 points up at
17,823 after briefly flirting with the 18,300
subsidy numbers had factored in an oil
market on the boil. Or whether an 18%
interpretation from Reli gare .
mark while the 50-share Nifty ended tax revenue growth and an expenditure With presence in over 2000 locations across 540 cities in India
Men (below 60 years) 2,060
29.70 points up at 5,333. Yield on the growth of just 3.4% would materialise.
Women (below 60 years) NIL 8.13% bond maturing in September 2022, “The Budget exercise hinges a lot on
and multiple international locations, Religare Enterprises offers
Men (60-65 years) 9,270 the most actively-traded government pa- keeping fuel subsidy to a minimum and financial solutions to suit the needs of individuals and institutions.
per, dropped 5 basis points to 8.09%. that could be a challenge in the current Today we are a preferred partner for millions with a diverse
Women (60-65 years) 6,180
Once the relief rally played itself out, oil price environment,” said emerging portfolio of integrated financial services. With such scale and
Senior citizens (65-79 years) 1,030 the attention soon turned to the fine markets guru Mark Mobius of Franklin
print. And reality bit as analysts ques- Templeton Investments.
expertise, there is no better partner to help you understand the
80 years and above 26,780
budget. Just write to budget @religare.in for your free copy of
tioned whether the numbers were over- In sum, the dominant view in the mar-
Females will continue to pay a lower tax due to the higher exemption. But they
optimistic. “While we applaud the lower ket was the Budget was a positive sur- the budget analysis.
deficit target, we believe the actual deficit prise given extremely low expectations.
don’t get any benefit in this budget and the difference in the basic exemption will turn out higher than budgeted with “I don’t think personally the Budget
for males and females has narrowed to `10,000. Taxpayers between 60 and revenue forecasts too optimistic and ex- has done enough to break us out of the
65 years gain because the lowering of the age limit for senior citizens pushes tra-budgetary demands expected to raise short-term challenges,” said Akash
* BROKING
up their tax exemption to `2.5 lakh a year. expenditure above budget targets,” said Prakash, chief executive of Singapore- a LOANS
Leif Lybecker Eskesen, HSBC’s chief based fund Amansa Capital.
* INSURANCE
* ASSET MANAGEMENT
BY INVITE: Top CEOs & policymakers decode the Budget for you GUEST WRITERS a WEALTH MANAGEMENT
UDAY KOTAK | RUCHIR SHARMA
a INVESTMENT BANKING
NIRMAL JAIN | MOTILAL OSWAL
PARTHA SHOME | ASHISH GUPTA

•
www.religare .com I sms RELIGARE to 58888

page 10 page 12 page 13 page 14 page 17 page 18

BHARAT IYER | YASHWANT SINHA
PATRICK FRENCH | SITARAM RELICARE .
Values that bind
YECHURY | SUNIL SINGHANIA
India’s Global FinancialServices Company
SUNIL MITTAL MARK MOBIUS MUKESH AMBANI C RANGARAJAN KUMAR BIRLA LAKSHMI NARAYANAN