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Union budget 2012-13
NHAI, IRFC can raise money through bonds
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Agriculture plan outlay up 18%
Social sector allocations up by Rs 30,931 cr
21% boost for health sector; high-end cigarettes dearer
India seeks Iran’s help in probing car blast case
26/11: Pak panel plea to cross-examine witnesses rejected
HC stays work on Hyderabad Metro Corridor III
Allocations for ICDS,
mid-day meals up Airlines get access to foreign funds Cheers for
Bollywood! Travel, hospitality to become expensive
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Union
budget 2012-13
New Delhi, March 16
Around Rs 79,579 crore, it was Rs 69, 199 crore last year, have been earmarked for capital expenses like for new acquisitions of weapons, warplanes, warships, equipment, naval dockyards and special classified projects. Last year, India had affected a hike of 11.59 per cent in its defence spending. Finance Minister Pranab Mukherjee said this allocation was based on the present needs projected by the Defence Ministry and further needs for security would also be met. India’ budgetary hike comes just weeks after China announced a $106 billion military budget, taking its military spending into the triple digit figures for the first time. In other words, India would be spending some 40 per cent of what China spends on its Defence. The core US defence budget, not including its war funding, has been projected $525 billion for the same period. Pakistan has a defence outlay of $5.75 billion for 2011-12, a raise of 12 per cent. Today’s hike, when seen from the revised budget allocation for this year, works out to be a 13.15 per cent. Interestingly, the share of India’s defence spending out of its gross domestic product (GDP) has gone up slightly. It now stands at 1.90 per cent of the GDP, up from 1.84 per cent for the ongoing fiscal. A World Bank report in 2011 said China’s military expenditure was last reported at 2.01 of its GDP in 2010. China’s economy is much bigger than India’s hence the 2 per cent of GDP translates into billions of dollars more. In India successive Standing Parliamentary Committees on Defence have recommended allocation to be raised to at least 3-3.5 per cent of the GDP if the armed forces are to rapidly modernise. In the past, Prime Minister Manmohan Singh and Defence Minister AK Antony, on separate occasions, have pitched for a 3 per cent share of the GDP for
defence.
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NHAI, IRFC can raise money through bonds
“For 2011-12, tax-free bonds for Rs 30,000 crore were announced for financing infrastructure projects. I propose to double it to raise Rs 60,000 crore in 2012-13,” Finance Minister Pranab Mukherjee said while presenting the Union Budget in Parliament. “This includes Rs 10,000 crore for the NHAI, Rs 10,000 crore for the IRFC, Rs 10,000 crore for the IIFCL, Rs 5,000 crore for HUDCO, Rs 5,000 crore for the National Housing Bank, Rs 5,000 crore for the SIDBI, Rs 5,000 crore for ports and Rs 10,000 crore for the power sector,” Mukherjee said. He said there was a need to strengthen domestic investment environment. “The domestic investment environment has suffered on multiple counts in the past year. It is time to fast track policy decisions and ensure on-time implementation of major projects,” the Finance Minister said. “We need to emphasise on infrastructure and industrial development of the country,” he said while adding that “lack of adequate infrastructure is a major constraint on our growth. The strategy we have followed so far is to increase investment in infrastructure through a combination of public investment and public-private partnerships (PPP)”. During the 12th Five Year Plan, the infrastructure investment would go up to Rs 50 lakh crore with half of that expected from the private sector, he added. In line with investments in the infrastructure sector, the Finance Minister would ease the burden on rupee debt of existing power projects in the country.
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Agriculture plan outlay up 18%
New Delhi, March 16
Emphasising that agriculture was a priority for the government, Mukherjee increased the total plan outlay for the sector by 18 per cent, up from Rs 17, 123 crore in 2011-12 to Rs 20,208 crore in 2012-13. As per leading agriculture scientist MS Swaminathan, the increase in the target for agricultural credit to Rs 5,75,000 crore is the only new initiative in Budget. “Mukherjee has essentially tried to consolidate the gains made as a result of the initiatives he had launched during the previous two budgets,” he says. For some farmer’ organisations the 18% hike in Budget and increase in credit target is a “heartening” news. “Frankly, I was not expecting much from this Budget. However, concessions have been given to farming equipment and other agri-processing. Tax exemption on agri-research and extension services will help increase the production of better quality seeds,” says Confederation of Indian Farmers’ Association Secretary General P Chengal Reddy. The Budget has provided weighted deduction of 150% on expenditure incurred for agri extension services. Economists, however, do not see much in the budget for agriculture. They feel that most of the policies are already in place and there are no radical steps to increase crop production or generate employment in a sector that needs resuscitation to sustain future generation and be part of the growth. An increase and allocation here and there does not ensure increased agricultural production, former Agriculture Minister Rajnath Singh says, adding that the attempt to incentivise agriculture research were “too less and too dated” . Swaminathan is also worried about lack of incentives in Budget for attracting and retaining youth in farming. “Diminishing contribution to the GDP of the farm sector is accompanied by an increasing responsibility for employment. Unfortunately, the budget does not contain any provision for attracting and retaining youth in farming, which is the greatest challenge facing Indian agriculture today. With the enactment of a Food Security Bill which confers legal right to a prescribed quantity of food grains, attention to increasing the productivity, profitability and sustainability of small farm agriculture has become even more urgent,” he says. The finance minister has also proposed to improve the governance of subsidy delivery particularly in the case of fertiliser. The subsidy will be paid during this year directly to farmers’ accounts in 50 selected districts. According to Swaminathan “details will have to be worked out since according to the current policy fertiliser subsidy is to be based on nutrients and not products.” Meanwhile, the FM has increase outlay for Rashtriya Krishi Vikas Yojna from 7,860 crore to Rs 9217 crore and that of Bringing Green Revolution to eastern India (BGREI) from Rs 400 crore to Rs 1000 crore keeping in mind the success of the programme that led to an additional paddy production of seven MT in the Kharif season of 2011-12 crop year.
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Social sector allocations up by Rs 30,931 cr
New Delhi, March 16 The proposed overall social sector spending is up by Rs 30,931 crore over the Budget of 2011-2012. This represents 16.5 per cent hike, with the proposed funding going up to Rs 218,041 crore in today’s General Budget as against Rs 187,110 crore in 2011-2012. Every social sector ministry got enhanced allocations with the education sector getting the maximum raise of Rs 9,665 crore. As against Rs 51,772 crore in 2011, the General Budget 2012-2013 proposes Rs 61,427 crore allocation for education. Bulk of the 2012 education Budget has gone for school literacy -- Rs 45,659 crore (a hike of 18 per cent over 2011) as against Rs 15,458 crore for university and higher education. Finance Minister Pranab Mukherjee today announced the setting up of the Education Credit Guarantee Fund to provide state guarantees to educational loans for students. The Government’s focus is the Right to Education Act with Pranab setting aside Rs 25,555 crore for the Sarva Shiksha Abhiyan (SSA), the vehicle implementing the Act. This marks 21.7 per cent raise over 2011-2012. The SSA is being implemented in partnership with states and covers 192 million children. With the RTE in focus, majority school education budget - Rs 34,511 crore - is proposed to be set aside for elementary education as the Act provides free and compulsory elementary education to children aged 6 to 14 years (classes I to VIII).
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Prepare to pay higher mobile phone bills
New Delhi, March 16
However, the telecom industry didn’t react favourably to the increase in service tax as the operators said that this would have a huge impact on customers’ mobile bills.
For operators as well, this would not be good news as the increase in call rate will, in effect, reduce per-minute usage per user, thereby impacting the operator revenue negatively, experts said.
Reacting strongly to the hike in service tax, Bharti Airtel chairman Sunil Bharti Mittal said, "This hike will obviously be passed on to the customers". Mittal also said that the telecom sector was already being heavily taxed on an overall consumption perspective. "About 30 per cent of what customers pay to a telecom company goes in some sort of taxation or the other. I am not talking about indirect taxation which is income tax," Mittal said."Now when you increase service tax, it is obviously an enhancement of those levies on the industry,” he added.
This becomes all the more significant for CDMA-based mobile services, which to a large extent, service the telecom needs of customers who are at the bottom of the pyramid.
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21% boost for health sector; high-end cigarettes dearer
New Delhi, March 16
The highlight of today's budget was taxation of certain tobacco products that fell short of expectations. More than 65-mm-long high-end cigarettes will be costlier, but low-cost cigarettes, bidis and chewing tobacco makers were let off lightly with marginal increase in excise duty. Public Health Foundation of India president K Srinath Reddy said, "Preventive health check-ups are provided by corporate hospitals and global evidence shows they are not good indicators of health. On taxes, increased duty on cigarettes is welcome but it's not adequate. Only high-end cigarettes with filters will cost more. Bidis, oral tobacco, the largest segment consumed, have been let off lightly. Small excise duty raise on bidis won't help. Ironically while anti-cancer drugs have been made more affordable, the most important cancer causing agent-tobacco-hasn't been controlled through taxation, globally accepted as the most effective control strategy." So far as health allocation goes, the FM announced Rs 30,702 crore for 2012-2013 as against Rs 26,700 in 2011-2012. He said the government would set up National Urban Health Mission in the 12th Plan but didn't provide funds for that. Though the percentage budgetary hike in health is more this time, it is only 0.30 pc of the GDP. The GDP for Budget estimates 2012-2013 has been projected at Rs 1,01,59,884. Bulk of the health budget for 2012-13 has gone for the flagship National Rural Health Mission (NRHM), which got Rs 20, 822 crore as against Rs 18, 115 crore in 2011-2012, a raise of 14.9 pc. Health Minister Ghulam Nabi said allocations could have been more but said "we are happy". Low funding has been made for medical education and research-Rs 4,182 crore. This component covers vaccine development, which got Rs 57 crore despite the FM calling for India's vaccine security by setting up a new integrated vaccine unit near Chennai. "Persistence pays. No new case of polio was reported in India in the last one year. Now we will keep up the pressure on disease eradication and achieve vaccine security," he said, announcing enhanced scope of work of Accredited Social Health Activists (ASHAs) under the NRHM. They will now also target iodine deficiency disorders, 100 per cent immunisation and better spacing of children.
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India seeks Iran’s help in probing car blast case
New Delhi, March 16 “Investigation in the case are ongoing and no conclusions can be drawn at this stage,’’ MEA spokesman Syed Akbaruddin said. He said arrest warrants have been issued against these persons and the process of issuing Red Corner notices has been initiated. New Delhi has also informed Seyed Mehdi Nabizadeh, Iranian Ambassador to India, of these developments to seek Earlier today, the Delhi Police finally confirmed that three Iranian nationals were involved in the terror attack on the Israeli Embassy car that left an Israeli woman diplomat severely injured. Police Commissioner BK Gupta confirmed the involvement of the three Iranian nationals -- Seyed Ali Sadr Mehdian, Mohammed Reza Abolghasemi and Houshang Afshar Irani, although he did not link them to the Iranian Government. He pointed out that the Special Team of the Delhi Police was trying to ascertain which terror group perpetrated the attack. “After initiating investigations into the bomb blast, the Special Team consisting of Crime Branch and Special Cell personnel zeroed in on an Indian journalist, Syed Mohammed Ahmad Kazmi (50), who was arrested on March 6,” Gupta said. “Kazmi was instrumental in the recce of the Israeli Embassy and its surrounding areas by persons of Iranian origin. He has been arrested as a facilitator and for being part of the conspiracy,” he added. In 2011, Kazmi went twice to Iran to meet two Iranian acquaintances, Mehdian and Abolghasemi. They requested him to provide assistance to their associates in India and also paid him $5,500 for the task. After returning to Delhi, Kazmi on the direction of Mehdian met an Iranian national, Houshang Afshar Irani. The two men had discussed targeting Israeli diplomats by using explosive devices and were in constant telephonic connection with each other. Police investigations also revealed a possible link between the failed Bangkok terror attack on February 14 and the bomb blast in New Delhi the previous day. Immediately after the blast, Irani left for Malaysia.
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26/11: Pak panel plea to cross-examine witnesses rejected
Mumbai, March 16 Chief Metropolitan Magistrate SS Shinde, however, allowed the commission to record the statements of the officials, including magistrate RV Sawant Waghule, who had recorded the confessional statement of the lone surviving assailant Ajmal Kasab, and Ramesh Mahale, the officer investigating the case. An eight-member judicial commission from Pakistan arrived in Mumbai last evening to question witnesses. According to reports, the Pakistani team is in India on behalf of a Pakistani court which is trying the alleged perpetrators of the attack, including Lashkar-e-Toiba chief Zaki-ur-Rehman Lakhvi and others. According to information available from the Maharashtra Government authorities, the names of the Pakistani officials and defence lawyers have been given as Khwaja Haris, Riyaz Akram Choudhary, Fakhar Haayat, Raja Ehassan Ulhakhan and Isaam Bin Haris. In addition, the commission includes Choudhary Mohammed Azhar and Choudhary Ali, special public prosecutors, and court official Azad Khan. The commission will record the statements of Ganesh Nitukar, Medical Officer from JJ Hospital, and Shailesh Mohit from the Nair Hospital tomorrow. Both the doctors had conducted the autopsies on the nine terrorists killed, who carried out the attacks.
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HC stays work on Hyderabad Metro Corridor III
Hyderabad, March 16 After hearing a clutch of petitions filed by social activists, traders and environmentalists, Justice L Narasimha Reddy directed that the construction work on one of the contentious corridors be suspended till the disposal of the case. The petitioners contended that the authorities had changed the alignment unilaterally without taking the consent of the local people. The petitions were filed by the joint action committee of Greenlands, Ameerpet, Madhuranagar, Yusufguda and Srikrishnanagar areas and 20 others. State Advocate General A Sudarshan Reddy had earlier told the court that there was no change in the alignment and the details of the project including the alignment of all the three corridors have been in public domain for many years. The petitioners alleged that the Hyderabad Metro Rail Limited (HMRL) had indeed changed the alignment of Corridor III between Nagole and Shilparamam without regard to the efficacy of the alternative route initially approved and continued with the construction despite giving an undertaking to court that it would stop the work in the corridor. Environmentalists and transport experts have raised objections over the Rs 12,200 crore project being executed by L&T, saying it would deface the city, spoil the skyline and create more chaos. Stretched over 71 km covering three traffic corridors, the project involves construction of 66 stations with modern facilities including escalators and elevators and is expected to be completed by 2016. When completed, it will be bigger than Delhi Metro, the officials said.
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Allocations for ICDS,
mid-day meals up New Delhi, March 16
Among major schemes that got massive outlays today are the Integrated Child Development Services (ICDS), which saw 58 per cent hike over the last year (the highest any scheme got today); mid-day meal scheme got Rs 1,000 crore extra (Rs 11,937 crore in 2012 as against Rs 10,380 crore in 2011); and SABLA, a scheme that provides take home ration to adolescent girls aged 11 to 18 years, which got Rs 750 crore. SABLA, launched in 2010, is running in 200 high malnutrition burden districts through a network of 14 lakh anganwari centres. Finance Minister Pranab Mukherjee, right at the start of his Budget Speech in Lok Sabha today, listed “malnutrition” as one of his five challenges. He announced customs and excise duty cuts on health foods considering protein deficiency among women and children is the most common source of malnutrition in India. The Budget reduced basic customs duty on soya protein concentrate and isolated soya protein from 30 per cent and 15 per cent, respectively to 10 per cent. Excise duty on processed soya foods products was reduced to the merit rate of 6%, making these cheaper. Since the consumption of iodised salt prevents iodine deficiency and related diseases, the Budget provided concessional basic customs duty of 2.5 per cent along with a reduced excise duty of 6 per cent on iodine. This will reduce the cost of iodine containing products like salts. The announcements come in the wake of the Prime Minister’s National Council on Nutritional Challenges deciding to address malnutrition in high-burden districts identified by the Health Ministry. Allocations for the Centrally sponsored ICDS, which offers a package of health, supplementary nutrition and education to children up to six years, pregnant women and nursing mothers, is up from Rs 10,000 in 2011 to Rs 15,850 crore in 2012.
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Airlines get access to foreign funds New Delhi, March 16
"The Finance Minister has made no mention about reduction of taxes on the fuel which is the bane of Indian carrier. All he did was to make statements on oil import and the FDI, the two intentions of the government that are already in the public domain but about which there is still no clarity as to when they will be implemented," said aviation expert Jitendra Bhargava As far as ECB is concerned, Bhargava called it a "good measure" but the one that may only "provide temporary relief and that too with great difficulty. Anyone who lends money will look at financial viability of an airline and unless fundamental issues like ATF are tackled, airlines will find difficult to convince financers to lend. While the central plan outlay for Civil Aviation Ministry in 2012-13 is estimated at Rs. 7,293 crore, a demand for plan allocation of Rs 4,000 crore to AI has also been proposed in the budget. Acknowledging that the airline industry was facing a financial crisis, he said: "The high operating costs of the sector is largely attributable to the jet fuel cost. To reduce the cost of ATF, the government has permitted direct import of ATF by Indian carriers, as actual users". To address immediate financial concerns of the tottering sector, Pranab proposed permitting "External Commercial Borrowings (ECBs) for working capital requirements of the airline industry for a period of one year, subject to a total ceiling of one billion dollars". So far, airlines are allowed to raise foreign capital only for import of capital equipment like aircraft and have been clamouring for FDI participation. The FM said the proposal to allow foreign airlines to participate up to 49 % equity of an airline company, operating scheduled or non-scheduled services, was "under active consideration". Pranab said India had the potential to establish itself as a hub for third-party Maintenance, Repair and Overhaul (MRO) of civilian aircraft therefore spare parts of aircraft and testing equipment would be fully exempted from basic customs duty and countervailing duty. Experts feel that some of these measures may help in making India competitive in the MRO industry. The proposal for fully exempting new and retreaded aircraft tyres from basic custom duty and excise duty for instance may help bring down operational costs of airlines. Meanwhile, as a sop to those travelling abroad, he also proposed to raise the duty-free baggage allowance, which was last revised in 2004, from Rs 25,000 to Rs 35,000 and for children of up to 10 years from Rs 12,000 to Rs 15,000.
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The proposal announced by Finance Minister Pranab Mukherjee in his 2012-13 Budget speech was welcomed by Bollywood which said it is a huge relief and the “best gift” for the film industry coinciding with the start of the Centenary year of Indian Cinema this year. The Film Producers Guild called off its proposed strike to press for the exemption after Mukherjee made the announcement. It has been making this demand for a long time. With this move, the film exhibitors would be exempted from levy of service tax on payments made by them to distributors for exploitation of cinematographic rights. It is expected to improve the overall cash flows and improve finances of the film sector. Mukherjee drew applause in the Lok Sabha when he made a reference to changing trends in film titles while making the announcement. — PTI
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Travel, hospitality to become expensive New Delhi, March 16 “We expect tour prices to increase due to the cascading effect of the service tax increase resulting in an adverse impact on the travel and tourism industry as a whole,” Thomas Cook India Managing Director Madhavan Menon said. He said the inbound segment, already reeling under the impact of global slowdown in key source markets, would be further impacted with a decline in foreign tourist arrivals. “It will be a further dampener on the growth rate in foreign exchange earnings already estimated to be down to 16.7 per cent in 2011 from 24.6 per cent in 2010,” he added. In the Economic Survey, the government had suggested various measures to promote India as an attractive tourist destination. — PTI
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India announced a justifiable 17.6 per cent hike in its defence spending to allocate an additional Rs 28,992 crore for 2012-13, over the ongoing year’s Rs 1,64,415 crore defence budget.
New Delhi will spend Rs 1,93,407 crore, nearly $38.6 billion, on defence.
Close on the heels of a national survey revealing 42 per cent of India’s children as underweight, the Government moved decisively today to fight malnutrition and hiked allocations in this year’s budget for all schemes that address the issue. The Government announced major duty cuts on health foods like soya proteins, probiotics and iodised products to make them cheaper.
New Delhi, March 16
Finance Minister Pranab Mukherjee announced duty cuts and exemptions on life-saving drugs and vaccines used in the treatment of HIV/AIDS and cancers. He also allowed a deduction of Rs 5,000 in the income tax on preventive health check-ups.
Women and Child Development Minister Krishna Tirath on Friday said she was expecting more money for the Integrated Child Development Services, which has to be restructured, and had asked for
Rs 1 lakh crore for the entire 12th Plan (Rs 20,000 crore a year). The actual ICDS allocation is only
Rs 15,850 crore for 2012
Airlines, however, do not appear to be cheering much because, as per aviation experts, the Union Budget has not bothered to address two key fundamentals - tax reduction on ATF and the FDI. 
New Delhi/Mumbai, March 16
GAIN
l Mandatory reporting of assets abroad and re-opening of I-T return filings up to 16 years
l Passengers travelling in all AC classes and first class will have to pay charges in addition to the recent hike in train fares with the Budget on Friday bringing journeys in them under the ambit of service tax.
l The Union Budget has proposed to extend concessional basic customs duty of 5 per cent with full exemption from excise/countervailing duty to six specified life-saving drugs and vaccines, even as the stress has been laid on vaccine security.