UNIONBUDGET2012:FullTextoftheSpeechofPRANABMUKHERJEE, FinanceMinisterDeliveredinLokSabhaon16THMARCH,2012

[Wehavehighlightedandcoloredbluetheprovisionsofthebudgetwhichwefeelwill beofgreatimportancetobankersforinternalexams,studentspreparingforvarious competitiveexamslikeCivilServices,BankProbationaryOfficersandotherexams.] MadamSpeaker, IrisetopresenttheUnionBudgetfor201213.

2. While I believe that there should be no room for complacency, nor any excuse for whathappensinone'sowncountry,wewillbemisledifweignorethegroundrealities oftheworld.Theglobalcrisishasaffectedus.India'sGrossDomesticProduct(GDP)is estimatedtogrowby6.9percentin201112,afterhavinggrownattherateof8.4per centineachofthetwoprecedingyears.Thoughwehavebeenabletolimittheadverse impact of this slowdown on our economy, this year's performance has been disappointing. But it is also a fact that in any crosscountry comparison, India still remainsamongthefrontrunnersineconomicgrowth. 3.Forthebetterpartofthepasttwoyears,wehadtobattleneardoubledigitheadline inflation. Our monetary and fiscal policy response during this period was geared towards taming domestic inflationary pressures. A tight monetary policy impacted investmentandconsumptiongrowth.Thefiscalpolicyhadtoabsorbexpandedoutlays on subsidies and duty reductions to limit the passthrough of higher fuel prices to consumers.Asaresultgrowthmoderatedandthefiscalbalancedeteriorated.

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FortheIndianeconomy,thiswasayearofrecoveryinterrupted.Whenoneyearago,I rosetopresenttheBudget,thechallengesweremany,buttherewasasensethatthe world economy was on the mend. The Budget was presented in the first glimmer of hope.Butrealityturnedouttobedifferent.ThesovereigndebtcrisisintheEurozone intensified, political turmoil in Middle East injected widespread uncertainty, crude oil pricesrose,anearthquakestruckJapanandtheoverallgloomrefusedtolift.

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4. But there is good news in the detail. With agriculture and services continuing to perform well, India's slowdown can be attributed almost entirely to weak industrial growth. While we do not have aggregate figures for the last quarter of 201112, numerousindicatorspertainingtothisperiodsuggestthattheeconomyisnowturning around. There are signs of recovery in coal, fertilisers, cement and electricity sectors. These are core sectors that have an impact on the entire economy. Indian manufacturingappearstobeonthecuspofarevival. 5. We are now at a juncture when it is necessary to take hard decisions. We have to improve our macroeconomic environment and strengthen domestic growth drivers to sustainhighgrowthinthemediumterm.Wehavetoacceleratethepaceofreformsand improvesupplysidemanagementoftheeconomy. 6. We are about to enter the first year of the Twelfth Five Year Plan which aims at "faster, sustainable and more inclusive growth." The Plan will be launched with the Budget proposals for 201213. In keeping with the stated priorities, I have identified fiveobjectivesthatwemustaddresseffectivelyintheensuingfiscalyear.Theseare:

Expedite coordinated implementation of decisions being taken to improve delivery systems,governance,andtransparency;andaddresstheproblemofblackmoneyand corruptioninpubliclife. 7. Today, India has global responsibilities of a kind that it did not have earlier. Our presence at the high table of global economic policy makers is a matter of some satisfaction. It, however, places new responsibilities on our shoulders. If India can continuetobuildonitseconomicstrength,itcanbeasourceofstabilityfortheworld economyandprovideasafedestinationforrestlessglobalcapital. 8.Iknowthatmerewordsarenotenough.Whatweneedisacredibleroadmapbacked byasetofimplementableproposalstomeetthoseobjectives.Inmyattempttodoso,I havebenefitedfromtheableguidanceofHon'blePrimeMinister,Dr.ManmohanSingh, andstrongsupportoftheUPAChairpersonSmt.SoniaGandhi.

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Intervene decisively to address the problem of malnutrition especially in the 200 highburdendistricts;and

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Addresssupplybottlenecksinagriculture,energyandtransportsectors,particularly incoal,power,nationalhighways,railwaysandcivilaviation;

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Createconditionsforrapidrevivalofhighgrowthinprivateinvestment;

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Focusondomesticdemanddrivengrowthrecovery;

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Iwouldnowbeginwithabriefoverviewoftheeconomy. OverviewoftheEconomy 9.Yesterday,IlaidonthetableoftheHousetheEconomicSurvey201112,whichgives adetailedanalysisoftheeconomyoverthepast12months.India'sGDPisestimatedto grow at 6.9 per cent in real terms in 201112. The growth is estimated to be 2.5 per cent in agriculture, 3.9 per cent in industry and 9.4 per cent in services. There is a significant slowdown in comparison to the preceding two years, primarily due to decelerationinindustrialgrowth,morespecificallyinprivateinvestment.Risingcostof creditandweakdomesticbusinesssentiment,addedtothisdecline. 10. The headline inflation remained high for most part of the year. It was only in December2011thatit moderatedto8.3percentfollowedby6.6percentinJanuary 2012.Monthlyfoodinflationdeclinedfrom20.2percentinFebruary2010,to9.4per cent in March 2011 and turned negative in January 2012. Though the February 2012 inflation figure has gone up marginally, I expect the headline inflation to moderate furtherinthenextfewmonthsandremainstablethereafter. 11. India's inflation is largely structural, driven predominantly by agricultural supply constraintsandglobalcostpush.Evidencesuggeststhatprolongedperiodsofhighfood inflationtendtogetgeneralised.Fortunately,stepstakentobridgegapsindistribution, storage and marketing systems to strengthen food supply chains have helped us in a moreeffectivemanagementofinflationandledtoadeclineinfoodinflation. 12.ThedevelopmentsinIndia'sexternaltradeinthefirsthalfofthecurrentyearwere encouraging. During AprilJanuary 201112, exports grew by 23 per cent to reach US Dollar243billion,whileimportsatUSDollar391billionrecordedagrowthofover29 percent.WhatishearteningisthatIndia hassuccessfullyachieveddiversificationof export and import markets. The share of Asia, including ASEAN, in total trade increasedfrom33.3percentin20002001to57.3percentinthefirsthalfof201112. ThishashelpedusweathertheimpactofglobalcrisisemanatingfromEuropeandtoa lesserextentfromUSA.

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13.ThecurrentaccountdeficitasaproportionofGDPfor201112islikelytobearound 3.6 per cent. This, along with reduced net capital inflows in the second and third quarters,putpressureontheexchangerate. 14. Taking a bird's eye view of the entire economy and keeping in mind the difficult globalenvironment,IexpectIndia'sGDPgrowthin201213tobe7.6percent,+/0.25 percent. 15. I expect average inflation to be lower nextyear. I also expect thecurrentaccount deficittobesmaller,aidedbyimprovementindomesticfinancialsavings. II.Growth Inowturntogrowthandfiscalconsolidation. 16.Ourfiscalbalancehasdeterioratedin201112duetoslippageindirecttaxrevenue and increased subsidies. On both counts our underlying assumptions at the time of Budget presentation last year were belied by subsequent developments. The profit margins came under pressure due to higher interest rates and material costs. This impactedgrowthincorporatetaxes.Further,asagainstanassumptionofUSDollar90a barrel,theaveragepriceofcrudeoilin201112islikelytoexceedUSDollar115.This hasnecessitatedhigheroutlayonsubsidiesthanprojected.Thecontinuinguncertainty intheglobalenvironmentmakesitnecessaryforustostrikeabalancebetweenfiscal consolidation and strengthening macroeconomic fundamentals to create adequate headroomtodealwithfutureshocks. FiscalConsolidation FRBMAct 17.TheimplementationoftheFiscalResponsibilityandBudgetManagementAct,2003 (FRBM Act) at Centre and the corresponding Acts at State level was the pivot in the successfulconsolidationofourfiscalbalancepriortotheglobalfinancialcrisisof2008.

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Theoutbreakofthecrisiscoincidedwiththeyearwhenthemandatedtargetsof3per cent fiscal deficit and elimination of revenue deficit were to be achieved. The Government had to deviate from these targets due to injection of fiscal stimulus at thattime.FollowingmyannouncementinthelastBudgetSpeech,Iamnowintroducing amendmentstotheFRBMActaspartofFinanceBill,2012. ExpenditureReforms 18.ThefiscaltargetsforCentreundertheamendmentstotheFRBMActareindicatedin theBudgetdocuments.Meanwhile,Iwouldliketohighlighttwoofitsfeaturesthatare steps in the direction of expenditure reforms. First, the concept of Effective Revenue Deficit, introduced in the last Budget, to address the structural imbalances in the revenueaccount,isbeingbroughtinasafiscalparameter.EffectiveRevenueDeficitis the difference between revenue deficit and grants for creation of capital assets. Focusing on this will help in reducing the consumptive component of revenue deficit andcreatespaceforincreasedcapitalspending. 19.Second,aprovisionfor"MediumtermExpenditureFrameworkStatement"isbeing introduced in the Act. This statement shall set forth a threeyear rolling target for expenditure indicators. It would help in undertaking a denovo exercise for allocating resources for prioritised schemes and weeding out others that have outlived their utility.Thiswouldprovidegreatercertaintyinmultiyearbudgetingframework.Itwould alsoencourageefficienciesinexpendituremanagement. 20. In implementing the Twelfth Plan, the recommendations made by the Expert CommitteestostreamlineandreducethenumberofCentrallySponsoredSchemesand to address Plan and nonPlan classification, would be kept in view. The Central Plan Scheme Monitoring System would be expanded to facilitate better tracking and utilisationoffundsreleasedbytheCentralGovernment. Subsidies 21.FiscalconsolidationcallsforeffortsbothtoraisethetaxGDPratioandtolowerthe expenditure.Inthiscontext,weneedtotakeacloselookatthegrowthofourrevenue expenditure, particularly on subsidies. The major subsidies at the Centre are for food, fertilisersandpetroleumproducts.Somesubsidiesatthisjunctureinourdevelopment

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are inevitable. But they become undesirable if they compromise the macroeconomic fundamentals of the economy, more so, when they don't reach the intended beneficiaries. 22. The Government has decided that from 201213 subsidies related to food and for administeringtheFoodSecurityActwillbefullyprovidedfor.Allothersubsidieswould be funded to the extent that theycan be borne by the economy without any adverse implications.ItwouldbemyendeavourtorestricttheexpenditureonCentralsubsidies tounder2percentofGDPin201213.Overthenextthreeyears,itwouldbefurther broughtdownto1.75percentofGDP.Suchastepisneededtoimprovethequalityof public spending. Our effort now will be directed towards better targeting and leakage proofdeliveryofthesubsidies. 23. The recommendations of the task force headed by Shri Nandan Nilekani on IT strategy for direct transfer of subsidy have been accepted. Based on these recommendations, a mobile based Fertiliser Management System (mFMS) has been designed to provide endtoend information on the movement of fertilisers and subsidies,fromthemanufacturertotheretaillevel.Thiswillberolledoutnationwide during2012.Directtransferofsubsidytotheretailer,andeventuallytothefarmerwill beimplementedinsubsequentphases.This stepwillbenefit12crorefarmerfamilies, whilereducingexpenditureonsubsidiesbycurtailingmisuseoffertilisers. 24.AllthethreepublicsectorOilMarketingCompanieshavelaunchedLPGtransparency portalstoimprovecustomerserviceandreduceleakage.ApilotprojectforsellingLPG at market price and reimbursement of subsidy directly into the beneficiary's bank account is being conducted in Mysore. A similar pilot project on direct transfer of subsidyforkeroseneintothebankaccountsofbeneficiarieshasbeeninitiatedinAlwar districtofRajasthan.TheAadhaarplatformhasalsobeensuccessfullyusedtovalidate PDSrationcardsinJharkhand. 25. These pilot projects show that substantial economies in subsidy outgo can be achievedbytheuseofAadhaarplatform.Itwillbeourendeavourtoscaleupandroll out these Aadhaar enabled payments for various government schemes in at least 50 selecteddistrictswithinthenextsixmonths. TaxReforms 26.AsHon'bleMembersareaware,theDirectTaxesCode(DTC)Billwasintroducedin ParliamentinAugust2010.ItwasourearnestdesiretogiveeffecttoDTCfromApril1,

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2012. However, we received the Report of the Parliamentary Standing Committee on March 9, 2012. We will examine the report expeditiously and take steps for the enactmentofDTCattheearliest. 27. Similarly, the Constitution Amendment Bill, a preparatory step in the implementationofGoodsandServicesTax(GST)wasintroducedinParliamentinMarch 2011 and is before the Parliamentary Standing Committee. As we await recommendationsoftheCommittee,draftingofmodellegislationforCentreandState GSTinconcertwithStatesisunderprogress. 28. The structure of GST Network (GSTN) has been approved by the Empowered Committee of State Finance Ministers. GSTN will be set up as a National Information UtilityandwillbecomeoperationalbyAugust2012.TheGSTNwillimplementcommon PANbasedregistration,returnsfilingandpaymentsprocessingforallStatesonashared platform.TheuseofPANasacommonidentifierinbothdirectandindirecttaxes,will enhance transparencyand check tax evasion. I solicit the support of all my colleagues cuttingacrosspartylinesforanearlypassageoftheselandmarklegislations.

29. The Government has further evolved its approach to divestment of Central Public SectorEnterprises (CPSEs). The CPSEs are beinggiven a level playing field visavis the privatesectorwithregardtopracticeslikebuybacksandlistingatstockexchange.The treasury management options for CPSEs have also been enhanced. This will help improve the returns on public assets, support transparent environment for the divestmentprocess,besidesunlockingthevalueandresourcesforallstakeholders. 30.In201112,asagainstatargetofRs40,000crore,theGovernmentwillraiseabout Rs 14,000 crore from disinvestment. For 201213, I propose to raise Rs 30,000 crore through disinvestment. Let me reiterate here that while we are committed to enhancing people's ownership of CPSEs, at least 51 per cent ownership and managementcontrolwillremainwiththeGovernment. StrengtheningInvestmentEnvironment 31.Thedomesticinvestmentenvironmenthassufferedonmultiplecountsinthepast year. It is time to fast track policy decisions and ensure ontime implementation of majorprojects. ForeignDirectInvestment

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32.Organisedretailhelpsinreducingcostofintermediationduetoeconomiesofscale, benefiting both consumers and producers. At present, FDI in single brand and in cash and carry wholesale trade is permitted to the extent of 100 per cent. The decision in respect of allowing FDI in multibrand retail trade up to 51 per cent, subject to compliancewithspecifiedconditions,hasbeenheldinabeyance.Effortsareontoarrive atabroadbasedconsensusinconsultationwiththeStateGovernments. AdvancePricingAgreement 33.Inaglobalisedeconomywithexpandingcrossborderproductionchainsandgrowing trade within entities of the same group, Advance Pricing Agreement (APA) can significantly bring down tax litigation and provide tax certainty to foreign investors. Though,theprovisionforAPAhasbeenincludedintheDTCBill,2010,Iproposetobring forwarditsimplementationbyintroducingitintheFinanceBill,2012.

35. To encourage flow of savings in financial instruments and improve the depth of domesticcapitalmarket,itisproposedtointroduceanewschemecalledRajivGandhi EquitySavingsScheme.Theschemewouldallowforincometaxdeductionof50per centtonewretailinvestors,whoinvestuptoRs50,000directlyinequitiesandwhose annualincomeisbelowRs10lakh.Theschemewillhavealockinperiodof3years. Thedetailswillbeannouncedinduecourse. CapitalMarkets 36.Duringtheyear201112,wetookaseriesofstepstodeepenthecapitalmarketand encourage investment in infrastructure sector. These steps included raising of FII investment limit in longterm infrastructure bonds, corporate bonds and government securities. The limit on External Commercial Borrowings (ECB) was also raised and qualifiedforeigninvestorswereallowedtoinvestinspecifiedIndianmutualfundsand directlyinequities. 37.InowproposetotakethenextstepsindeepeningthereformsinCapitalmarketby:

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34. Reforms in the financial sector have been pursued with the objective of more efficientmarketintermediationbetweensaversandinvestors.

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AllowingQualifiedForeignInvestors(QFIs)toaccessIndianCorporateBondmarket; SimplifyingtheprocessofissuingInitialPublicOffers(IPOs),loweringtheircostsand helping companies reach more retail investors in small towns. To achieve this, in additiontotheexistingIPOprocess,Iproposetomakeitmandatoryforcompaniesto issue IPOs of Rs 10 crore and above in electronic form through nationwide broker networkofstockexchanges; Providing opportunities for wider shareholder participation in important decisions of the companies through electronic voting facilities, besides existing process for shareholdervoting,whichwouldbemademandatoryinitiallyfortoplistedcompanies; and Permitting twoway fungibility in Indian Depository Receipts subjectto a ceilingwith theobjectiveofencouraginggreaterforeignparticipationinIndiancapitalmarket. LegislativeReforms

TheMicroFinanceInstitutions(DevelopmentandRegulation)Bill,2012; TheNationalHousingBank(Amendment)Bill,2012; TheSmallIndustriesDevelopmentBankofIndia(Amendment)Bill,2012; NationalBankforAgricultureandRuralDevelopment(Amendment)Bill,2012; RegionalRuralBanks(Amendment)Bill,2012; IndianStamp(Amendment)Bill,2012;and PublicDebtManagementAgencyofIndiaBill,2012. 40.TheEnforcementofSecurityInterestandRecoveryofDebtsLaws(Amendment)Bill, 2011hasalreadybeenintroducedinParliament.

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39.Totakeforwardtheprocessoffinancialsectorlegislativereforms,theGovernment proposestomovethefollowingBillsintheBudgetSessionoftheParliament:

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38.WehavereceivedtherecommendationsoftheStandingCommitteeonFinanceon "The Pension Fund Regulatory and Development Authority Bill, 2011", "The Banking Laws (Amendment) Bill, 2011" and "The Insurance Laws(Amendment) Bill, 2008". The officialamendmentstotheseBillswillbemovedinthissessionoftheParliament.

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 CapitalisationofBanksandFinancialHoldingCompany 41. The Government is committed to protect the financial health of Public Sector Banksandfinancialinstitutions.Fortheyear201213,IproposetoprovideRs15,888 crore for capitalisation of Public Sector Banks, Regional Rural Banks and other financial institutions including NABARD. The Government is also examining the possibilityofcreatingafinancialholdingcompanywhichwillraiseresourcestomeet thecapitalrequirementsofPublicSectorBanks. 42.Tobringbankingpaymentstructureatparwithglobalstandards,acomprehensive action plan has been prepared for implementation in 201213. A central Know Your Customer (KYC) depository will be developed in 201213 to avoid multiplicity of registrationanddataupkeep. PrioritySectorLending

FinancialInclusion

44. In 201011, "Swabhimaan" campaign was launched to extend banking facilities throughBusinessCorrespondentstohabitationshavingpopulationinexcessof2000.I am happy to announce that out of 73,000 identified habitations that were to be coveredbyMarch,2012,about70,000habitationshavebeenprovidedwithbanking facilities. With this, over 2.55 crore beneficiary accounts would have been operationalised.TheremaininghabitationsarelikelytobecoveredbyMarch31,2012. As a next step, Ultra Small Branches are being set up at these habitations, where the BusinessCorrespondentswoulddealwithcashtransactions. 45.In201213,Iproposetoextendthe"Swabhimaan"campaigntohabitationswith population of more than 1000 in North Eastern and hilly States and to other habitationswhichhavecrossedpopulationof2,000asperCensus2011.

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43. A committee set up by RBI to reexamine the existing classification and suggest revisedguidelinesonprioritysectorlendinghassubmitteditsreport.Afterstakeholder consultation,revisedguidelineswillbeissued.

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 RegionalRuralBanks 46.RegionalRuralBanks(RRBs)haveplayedacrucialroleinmeetingthecreditneedsof rural areas. I am happy to inform that of the 82 RRBs in India, 81 have successfully migrated to Core Banking Solutions (CBS) andhave also joined the National Electronic FundTransfersystem. 47. The Government had initiated the process of capitalisation of 40 financially weak RRBs,whichhasbeencompletedinrespectof12RRBsbytheendofFebruary,2012.I propose to extend the scheme of capitalisation of weak RRBs by another 2 years to enablealltheStatestocontributetheirshare.

49.ViabilityGapFunding(VGF)undertheSchemeforSupporttoPPPininfrastructureis animportantinstrumentinattractingprivateinvestmentintothesector.Thisyearithas beendecidedtomakeirrigation(includingdams,channelsandembankments),terminal markets, common infrastructure in agriculture markets, soil testing laboratories and capital investment in fertiliser sector eligible for VGF under this scheme. Oil and Gas/LNG storage facilities and oil and gas pipelines, fixed network for telecommunicationandtelecommunicationtowerswillalsobemadeeligiblesectorsfor VGF. 50. TheGovernmenthasapprovedguidelinesforestablishingjointventurecompanies bydefencePublicSectorUndertakingsinPPPmode.Thiswillservethedualpurposeof achievingsubstantiveselfrelianceinthedefencesectorandproductionofstateofthe artdefencegoods. 51. I had announced the setting up of Infrastructure Debt Funds to tap the overseas markets for long tenor pension and insurance funds. I am happy to inform the House

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48.Lackofadequateinfrastructureisamajorconstraintonourgrowth.Thestrategywe havefollowedsofaristoincreaseinvestmentininfrastructurethroughacombination of public investment and public private partnerships (PPP). During the Twelfth Plan period, infrastructure investment will go up to Rs 50 lakh crore. About half of this is expectedtocomefromprivatesector.

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Letmenowturntoinfrastructureandindustrialdevelopment.

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III.InfrastructureandIndustrialDevelopment

that the first Infrastructure Debt Fund with an initial size of Rs 8000 crore, has been launchedearlierthismonth. 52. For the year 201112, taxfree bonds for Rs 30,000 crore were announced for financing infrastructure projects. I propose to double it to raise Rs 60,000 crore in 201213. This includes Rs 10,000 crore for NHAI, Rs 10,000 crore for IRFC, Rs 10,000 croreforIIFCL,Rs5,000croreforHUDCO,Rs5,000croreforNationalHousingBank,Rs 5,000croreforSIDBI,Rs5,000croreforportsandRs10,000croreforpowersector. 53. A harmonised master list of infrastructure sector has been approved by the Government.Thiswillhelpinremovingambiguityinthepolicyandregulatorydomain andencourageinvestmentintheinfrastructuresector. 54. To ease access of credit to infrastructure projects, India Infrastructure Finance CompanyLimited(IIFCL)hasputinplaceastructureforcreditenhancementandtake out finance. A consortium for direct lending and grant of inprinciple approval to developersbeforethesubmissionofbidsforPPPprojectshasalsobeencreated. NationalManufacturingPolicy

56. I will now address some issues that have impacted infrastructure and industrial activityinthepastmonths. PowerandCoal 57.Inpowergeneration,fuelsupplyconstraintsareaffectingproductionprospects.To address this concern, Coal India Limited (CIL) has been advised to sign fuel supply agreements, with power plants that have entered into longterm Power Purchase AgreementswithDISCOMsandwouldgetcommissionedonorbeforeMarch31,2015. An interministerial group is being constituted to undertake periodic review of the allocatedcoalminesandmakerecommendationsondeallocations,ifsorequired. 58.IproposetoallowExternalCommercialBorrowings(ECB)topartfinanceRupeedebt ofexistingpowerprojects. Transport:RoadsandCivilAviation

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55. The Government has announced a National Manufacturing Policy on October 25, 2011withtheobjectiveofraising,withinadecade,theshareofmanufacturinginGDP to 25 per cent and creation of 10 crore jobs. The Policy encourages the settingup of NationalInvestmentandManufacturingZones(NIMZs)acrossthecountry.

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59.TheMinistryofRoadTransportandHighwaysissettoachieveitstargetofawarding projectscoveringalengthof 7,300 kmunderNHDPduring 201112. Thiswouldbe44 per cent higher than the best everlength of 5,082 km awarded in 201011. Of the 44 projectsawardedduring201112,24projectshavefetchedapremium.Iproposetoset atargetofcoveringalengthof8,800kmsunderNHDPnextyear.Theallocationofthe Ministryhasbeenenhancedby14percenttoRs25,360crorein201213. 60.Toencouragepublicprivatepartnershipsinroadconstructionprojects,Iproposeto allowECBforcapitalexpenditureonthemaintenanceandoperationsoftollsystemsfor roadsandhighwayssolongastheyareapartoftheoriginalproject. 61.Theairlineindustryisfacingfinancialcrisis.Thehighoperatingcostofthesectoris largelyattributabletothecostofAviationTurbineFuel(ATF).ToreducethecostofATF, GovernmenthaspermitteddirectimportofATFbyIndianCarriers,asactualusers. 62.ToaddresstheimmediatefinancingconcernsoftheCivilAviationsector,Ipropose topermitECBforworkingcapitalrequirementsoftheairlineindustryforaperiodofone year,subjecttoatotalceilingofUSDollar1billion. 63.Aproposaltoallowforeignairlinestoparticipateupto49percentintheequityof anairtransportundertakingengagedinoperationofscheduledandnonscheduledair transportservicesisunderactiveconsiderationoftheGovernment.

64.TheDelhiMumbaiIndustrialCorridor(DMIC)isbeingdevelopedoneithersidealong the alignment of the Western Dedicated Rail Freight Corridor. The project has made significant progress. In September 2011, Central assistance of Rs 18,500 crore spread over a period of 5 years has been approved. The Japanese Prime Minister has announcedUS$4.5billionasJapaneseparticipationinDMICproject. Housingsector 65.Inviewoftheshortageofhousingforlowincomegroupsinmajorcitiesandtowns,I proposeto: AllowECBforlowcostaffordablehousingprojects; Set up Credit Guarantee Trust Fund to ensure better flow of institutional credit for housingloans; EnhanceprovisionsunderRuralHousingFundfromRs3000croretoRs4000crore;

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Extendtheschemeofinterestsubventionof1percentonhousingloanuptoRs15 lakhwherethecostofthehousedoesnotexceedRs25lakhforanotheryear;and EnhancethelimitofindirectfinanceunderprioritysectorfromRs5lakhtoRs10lakh. Fertilisers 66. To reduce India's import dependence in urea, Government has taken steps to finalise pricing and investment policies for urea. It is expected that with the implementation of the investment policy, country will become self sufficient in manufacturing urea in the next five years. In case of the potassicphosphatic (P&K) fertiliser, use of single super phosphate (SSP) will be encouraged through greater extensionwork.Thisfertiliserismanufacturedentirelyinthedomesticsector.Enhanced productionwouldbringdownourdependenceonimportsintheP&Ksector.

69. The Ministry of Textiles runs Weavers' Service Centres in different parts of the countryforprovidingtechnicalsupporttopoorhandloomweavers.Iproposetosetup threesuchCentres,oneeachinMizoram,NagalandandJharkhand.Iamalsohappyto announceRs500crorepilotschemeintheTwelfthPlanforpromotionandapplication ofGeotextilesintheNorthEastRegion. 70. To address the need of the local artisans and weavers, I propose to set up a powerloommegaclusterinIchalkaranjiinMaharashtrawithaBudgetallocationofRs70 crore. Micro,SmallandMediumEnterprises

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68.Inadditionto4megahandloomclustersalreadyoperationalised,Iamnowhappyto announce two more mega clusters, one to cover Prakasam and Guntur districts in AndhraPradeshandtheotherforGoddaandneighbouringdistrictsinJharkhand.Ialso proposetoprovideassistanceinsettingupofdormitoriesforwomenworkersinthe5 megaclustersrelatingtohandloom,powerloomandleathersectors.

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67. TheGovernmenthasrecentlyannouncedafinancialpackageofRs3,884crorefor waiverofloansofhandloomweaversandtheircooperativesocieties.

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71.InordertoenhanceavailabilityofequitytoMSMEsector,IproposetosetupaRs 5,000croreIndiaOpportunitiesVentureFundwithSIDBI. 72.TheSmallandMediumEnterprises(SMEs)arethebuildingblocksofoureconomy. Theyrelyprimarilyonloansfrombanksandinformalsourcestoraisecapital.Toenable theseenterprisesgreateraccesstofinance,twoSMEexchangeshavebeenlaunchedin Mumbairecently. PublicProcurementPolicyforMicroandSmallEnterprises 73. With the objective of promoting market access of Micro and Small Enterprises, Government has approved a policy which requires Ministries and CPSEs to make a minimumof20percentoftheirannualpurchasesfromMSEs.Ofthis,4percentwillbe earmarkedforprocurementfromMSEsownedbySC/STentrepreneurs.

IV.Agriculture Inowtakeupagriculture.

75.TheoutlayforRashtriyaKrishiVikasYojana(RKVY)isbeingincreasedfromRs7,860 crorein201112toRs9,217crorein201213.IamhappytoinformtheHousethatthe initiative of Bringing Green Revolution to Eastern India (BGREI) has resulted in a significantincreaseinproductionandproductivityofpaddy.StatesineasternIndiahave reportedadditionalpaddyproductionofsevenmilliontonnesinKharif2011.Ipropose toincreasetheallocationforthisschemefromRs400crorein201112toRs1000crore in201213. 76.Thisyear,underRKVY,IalsoproposetoallocateRs300croretoVidarbhaIntensified IrrigationDevelopmentProgramme.ThisSchemeseekstobringinmorefarmingareas underprotectiveirrigation. 77.TheGovernmentintendstomergetheremainingactivitiesintoasetofmissionsto address the needs of agricultural development in the Twelfth Five Year Plan. These Missionsare:

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74.AgriculturewillcontinuetobeapriorityfortheGovernment.Thetotalplanoutlay for the Department of Agriculture and Cooperation is being increased by 18 per cent fromRs17,123crorein201112toRs20,208crorein201213.

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(i) National Food Security Mission which aims to bridge the yield gap in respect of paddy,wheat,pulses,milletandfodder.TheongoingIntegratedDevelopmentofPulses Villages, Promotion of Nutricereals and Accelerated Fodder Development Programme wouldnowbecomeapartofthisMission; (ii)NationalMissiononSustainableAgricultureincludingMicroIrrigationisbeingtaken up as a part of the National Action Plan on Climate Change. The Rainfed Area DevelopmentProgrammewillbemergedwiththis; (iii) National Mission on Oilseeds and Oil Palm aims to increase production and productivityofoilseedsandoilpalm; (iv)NationalMissiononAgriculturalExtensionandTechnologyfocusesonadoptionof appropriate technologies by farmers for improving productivity and efficiency in farm operations;and (v) National Horticulture Mission aims at horticulture diversification. This will also includetheinitiativeonsaffron.

NationalMissionforProteinSupplement

78. Mission for Protein Supplement is being strengthened. To improve productivity in thedairysector,aRs2,242croreprojectisbeinglaunchedwithWorldBankassistance. To broaden the scope of production of fish to coastal aquaculture, apart from fresh wateraquaculture,theoutlayin201213isbeingsteppeduptoRs500crore.Suitable allocationsarealsobeingmadeforpoultry,piggeryandgoatrearing. AgricultureCredit 79. Farmers need timely access to affordable credit. I propose to raise the target for agricultural credit in 201213 to Rs 5,75,000 crore. This represents an increase of Rs 1,00,000croreoverthetargetforthecurrentyear. 80.Theinterestsubventionschemeforprovidingshorttermcroploanstofarmersat7 percentinterestperannumwillbecontinuedin201213.Anadditionalsubventionof 3percentwillbeavailabletopromptpayingfarmers.Inaddition,thesameinterest subvention on post harvest loans up to six months against negotiable warehouse receiptwillalsobeavailable.Thiswillencouragethefarmerstokeeptheirproducein warehouses.

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81.AShorttermRRBCreditRefinanceFundisbeingsetuptoenhancethecapacityof Regional Rural Banks to disburse short term crop loans to the small and marginal farmers. I propose to allocate Rs 10,000 crore to NABARD for refinancing the RRBs throughthisfund. 82. Kisan Credit Card (KCC) is an effective instrument for making agricultural credit availabletothefarmers.KCCschemewillbemodifiedtomakeKCCasmartcardwhich couldbeusedatATMs. AgriculturalResearch 83. Food security and agricultural development in the coming decades would depend upon scientific and technological breakthroughs in raising productivity. We have to develop plant and seed varieties that yield more and can resist climate change. I proposetosetasideasumofRs200croreforincentivisingresearchwithrewards,both forinstitutionsandtheresearchteamresponsibleforsuchscientificbreakthroughs.

84.Unlesswerecognisewaterasaresource,thedayisnotfarwhenwaterstresswill start threatening our agricultural production. Focus on micro irrigation schemes to dovetail these with water harvesting schemes is necessary. To maximise the flow of benefits from investments in irrigation projects, structural changes in Accelerated IrrigationBenefitProgramme(AIBP)arebeingmade.TheallocationforAIBPin201213 isbeingsteppedupby13percenttoRs14,242crore. 85. To mobilise large resources to fund irrigation projects, a Government owned IrrigationandWaterResourceFinanceCompanyisbeingoperationalised.TheCompany would start its operations in 201213 by focusing on financing subsectors like micro irrigation,contractfarming,wastewatermanagementandsanitation. 86.AfloodmanagementprojectforKandisubdivisionofMurshidabadDistricthasbeen approvedbytheGangaFloodControlCommissionatacostofRs439crore,tobetaken upforfundingundertheFloodManagementProgramme. NationalMissiononFoodProcessing

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87.Thefoodprocessingsectorhasbeengrowingatanaveragerateofover8percent overthepast5years.Inordertohaveabetteroutreachandtoprovidemoreflexibility to suit local needs, it has been decided that a new centrally sponsored scheme titled "NationalMissiononFoodProcessing"wouldbestarted,incooperationwiththeState Governmentsin201213. 88.TheGovernmenthastakenstepstocreateadditionalfoodgrainstoragecapacityin thecountry.Creationof2milliontonnesofstoragecapacityintheformofmodernsilos hasalreadybeenapproved.Nearly15milliontonnescapacityisbeingcreatedunderthe PrivateEntrepreneur'sGuaranteeScheme,ofwhich3milliontonnesofstoragecapacity willbeaddedbytheendof201112and5millionwouldbeaddednextyear. V.Inclusion Letmenowtakeupproposalsforinclusivedevelopment. ScheduledCastesandTribalSubPlans

90.OurGovernmenthastakendefinitestepstocreatefoodsecurityatthehousehold levelbymakingfoodalegalentitlementforalltargetedpeople,especiallyforthepoor and vulnerable segments of our population. The National Food Security Bill, 2011 is beforetheParliamentaryStandingCommittee. 91. To ensure that the objectives of the National Food Security Bill are effectively realised, a Public Distribution System Network is being created using the Aadhaar platform.ANationalInformationUtilityforthecomputerisationofPDSisbeingcreated. ItwillbecomeoperationalbyDecember2012. MultisectoralNutritionAugmentationProgramme 92. Following the decision taken in the Prime Minister's National Council on India's Nutritional Challenges, a multisectoral programme to address maternal and child malnutritioninselected200highburdendistrictsisbeingrolledoutduring201213.It

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89. From the year 201112, allocations are being made for Scheduled Castes Sub Plan (SCSP) and Tribal Sub Plan (TSP) under separate minor heads as part of the Plan allocations. In201213, theallocationforSCSPisRs37,113crorewhichrepresentsan increase of 18 per cent over 201112. The allocation for TSP in 201213 is Rs 21,710 crorerepresentinganincreaseof17.6percentover201112.

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willharnesssynergiesacrossnutrition,sanitation,drinkingwater,primaryhealthcare, womeneducation,foodsecurityandconsumerprotectionschemes. 93. In this context, Integrated Child Development Services (ICDS) scheme is being strengthenedandrestructured.For201213,anallocationofRs15,850crorehasbeen madeasagainstRs10,000crorein201112.Thisamountstoanincreaseofover58per cent. 94. National Programme of Mid Day Meals in Schools has enhanced enrolment, retention,attendance,andalsohelpedinimprovingnutritionlevelsamongchildren.In 201213,IproposetoallocateRs11,937croreforthisschemeasagainstRs10,380crore in201112. 95. Rajiv Gandhi Scheme for Empowerment of Adolescent Girls, SABLA, has been introducedlastyearwithaviewtoaddressthenutritionalneedsandothereducational and skill development initiatives for self development of adolescent girls in the age groupof11to18years.For201213,anallocationofRs750crorehasbeenproposed forthescheme. RuralDevelopmentandPanchayatiRaj

97.PradhanMantriGramSadakYojana(PMGSY)hasbeenasuccessfulprogramme.In 201213,Iproposetoraisetheallocationby20percenttothisschemebyprovidingRs 24,000crore.ItwillaccelerateconnectivityintheStates. 98. A major initiative has been proposed to strengthen Panchayatsacross the country through the Rajiv Gandhi Panchayat Sashaktikaran Abhiyan (RGPSA). This programme willexpandontheexistingschemesforPanchayatcapacitybuilding. 99.InmyBudgetSpeechlastyear,Ihadreferredtoourfocusonthedevelopmentof backwardregions.WehavedecidedtocarrytheBackwardRegionsGrantFundscheme into the Twelfth Plan with an enhanced allocation of Rs 12,040 crore in 201213, an increaseofabout22percentoverBEof 201112.ThisincludestheStatecomponentwhichcoversprojectsinbackwardareasin Bihar,WestBengalandtheKalahandiBolangirKoraputregionofOdisha,development projects for drought mitigation in the Bundelkhand region and projects under the

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96. Along with water quality, poor sanitation is one of the factors contributing to malnourishment.Hon'bleMemberswillbehappytoknowthatIproposetoincreasethe budgetary allocation for rural drinking water and sanitation from Rs 11,000 crore in 201112toRs14,000crorein201213.Thisisanincreaseofover27percent.

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Integrated Action Plan to accelerate the pace of development in selected tribal and backwarddistricts. RuralInfrastructureDevelopmentFund 100. This year, I propose to enhance the allocation under Rural Infrastructure Development Fund (RIDF) to Rs 20,000 crore. Further in view of the warehousing shortage in the country, I propose to earmark an amount of Rs 5,000 crore from the aboveallocationexclusivelyforcreatingwarehousingfacilitiesunderRIDF. Education 101. The Right to Education (RTE) Act is being implemented with effect from April 1, 2010throughtheSarvaShikshaAbhiyan(SSA).For201213,IhaveprovidedRs25,555 croreforRTESSA.Thisisanincreaseof21.7percentover201112. 102.IntheTwelfthPlan,6,000schoolshavebeenproposedtobesetupatblocklevelas model schools to benchmark excellence. Of these, 2500 will be set up under Public PrivatePartnership. 103.TheRashtriyaMadhyamikShikshaAbhiyan(RMSA)waslaunchedinMarch,2009to enhanceaccesstoqualitysecondaryeducation.In201213, I have allocated Rs 3,124 crore for RMSA which is nearly 29 per cent higher than the allocationin201112. 104. A scheme for education loans is being implemented by banks. To ensure better flowofcredittodeservingstudents,IproposetosetupaCreditGuaranteeFundforthis purpose. Health 105. They say persistence pays. I am happy to inform Hon'ble Members that no new caseofpoliowasreportedinthelastoneyear.Bymodernisingexistingunitsandsetting up a new integrated vaccine unit near Chennai, the Government will achieve vaccine securityandkeepthepressureondiseaseeradicationandprevention. 106. National Rural Health Mission (NRHM) is being implemented through 'Accredited SocialHealthActivist''ASHA'.ThescopeofASHA'sactivitiesisbeingenlargedtoinclude

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preventionofIodineDeficiencyDisorders,ensure100percentimmunisationandbetter spacingofchildren.Atthecommunitylevel,amoreactiveroleisenvisagedforASHAas the convenor of the Village Health and Sanitation Committee, as also to support the initiative on malnutrition. Since ASHAs receive activitywise, performancebased payments,thiswillalsoenhancetheirremuneration.Iproposetoincreasetheallocation toNRHMfromRs18,115crorein201112toRs20,822crorein201213. 107. National Urban Health Mission is being launched to encompass the primary healthcareneedsofpeopleintheurbanareas.ThePradhanMantriSwasthyaSuraksha Yojana(PMSSY)aimedatsettingupofAIIMSlikeinstitutionsandupgradationofexisting Government medical colleges is being expanded to cover upgradation of 7 more Government medical colleges. It will enhance the availability of affordable tertiary healthcare. EmploymentandSkillDevelopment

109. The Swarnjayanti Gram Swarozgar Yojana (SGSY) has been restructured into NationalRuralLivelihoodMission(NRLM)toprovideselfemploymentopportunities. A subcomponent, Mahila Kisan Sashaktikaran Pariyojana, under NRLM seeks to provide better targeting of women farmers. For NRLM, I propose to increase the allocation by over 34 per cent from Rs 2,914 crore in 201112 to Rs 3,915 crore in 201213. 110.Inlastyear'sBudgetIhadannouncedcreationofa'Women'sSHG'sDevelopment Fund'.ThishasbeensetupinNABARD.In201213,IproposetoprovideRs200croreto enlarge the corpus to Rs 300 crore. This Fund will also support the objectives of Aajeevika i.e. the National Rural Livelihood Mission. It will empower women SHGs to access bank credit. I propose to provide interest subvention to Women SHGs to avail loansuptoRs3lakhat7percentperannum.WomenSHGsthatrepayloansintimewill get additional 3 per cent subvention, reducing the effective rate to 4 per cent. The initiative, in the first phase, would focus on selected 600 Blocks of 150 districts, includingtheLeftWingExtremismaffecteddistricts.

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108.TheMahatmaGandhiNationalRuralEmploymentGuaranteeScheme(MGNREGS) hashadapositiveimpactonlivelihoodsecurity.Forthefirsttime,thereisaneffective floorwagerateforruralworkers.Distressmigrationhascomedown.Communityassets havebeencreated.Productivityofbarrenandfallowlandshasgoneup.Theneedfor improvingqualityofassetsandbringingaboutgreatersynergybetweenMGNREGAand agricultureandalliedrurallivelihoodsisbeingaddressed.

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111. It is proposed to establish a Bharat Livelihoods Foundation of India through Aajeevika. The Foundation would support and scale up civil society initiatives and interventions particularly in the tribal regions covering around 170 districts. Private trusts and philanthropic organisations would be encouraged to partner with the autonomousbodythatwillbemanagedprofessionally. 112.Toencouragemicroenterprises,acreditlinkedsubsidyprogrammenamelyPrime Minister'sEmploymentGenerationProgramme(PMEGP)isbeingimplementedthrough KVIC. The allocation for this programme has been increased by 23 per cent from Rs 1,037crorein201112toRs1,276crorein201213. SkillDevelopment 113. In 201112 National Skill Development Corporation (NSDC) approved 26 new projects,therebydoublingthenumberofprojectssanctionedsince2009to52,witha totalfundingcommitmentofRs1,205crore.Attheendof10years,theseprojectsare expected to train 6.2 crore persons and augment vocational training capacity by 1.25 croreperyearintheprivatesector. 114.TheNSDCpartnershaveopened496permanentand2429mobilecentresin220 districtsacross24states.Morethan89,500personshavebeentrainedandalmost80 per cent employed. Under NSDC, 10 Sector Skill Councils have been sanctioned. Of these, 3 Skill Councils for Automobile, Security and Retail sectors have become operational. For 201213, I propose to allocate Rs 1000 crore to National Skill DevelopmentFund(NSDF). 115.Inordertoimprovetheflowofinstitutionalcreditforskilldevelopment,Ipropose to set up separate Credit Guarantee Fund. This will benefit youth in acquiring market orientedskills. 116.Anewschemetitled"Himayat"wasintroducedinJammuandKashmirfrom2011 12.Itaimstoprovideskilltrainingtoonelakhyouthinthenextfiveyears.Theentire costofthisprogrammeisbeingbornebytheCentre. Socialsecurityandtheneedsofweakersections 117.IamraisingtheallocationundertheNationalSocialAssistanceProgramme(NSAP) by37percentfromRs6,158crorein201112toRs8,447crorein201213.Underthe

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ongoing Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme for BPL beneficiaries, the monthly pension amount per personisbeingraisedfromRs200toRs300. 118.OnthedeathoftheprimarybreadwinnerofaBPLfamily,intheagegroup18to64 years, a lumpsum grant of Rs 10,000 is presently provided under the National Family Benefit scheme. I propose to double this amount to Rs 20,000 and expect a matching contributionbytheStateGovernments. 119.Inordertopromotevoluntarysavingstowardspensions,acocontributoryscheme SWAVALAMBAN was started in September, 2010. Over 5 lakh subscribers have been enrolled by February 2012. In order to enhance access to this scheme, LIC has been appointed as an Aggregator and all Public Sector Banks have also been appointed as PointsofPresence(PoP)andAggregators.

Rs50croreforUniversityofAgriculturalSciencesDharwad,Karnataka; Rs50croretoChaudharyCharanSinghHaryanaAgriculturalUniversity,Hissar; Rs50croretoOrissaUniversityofAgricultureandTechnology; Rs100croretoAcharyaN.G.RangaAgriculturalUniversityinHyderabad; Rs15croretoNationalCouncilforAppliedEconomicResearch; Rs10croretoRajivGandhiUniversity,DepartmentofEconomics,Itanagar;and Rs 10 crore to Siddharth Vihar Trust Gulbarga, to establish a Pali language Research Centre. Security

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120. The driving force of a modern nation is research and the creation of new knowledge.WiththisinmindIproposetoprovide:

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121. In the Budget for 201213, a provision of Rs 1,93,407 crore has been made for DefenceServiceswhichincludeRs79,579croreforcapitalexpenditure.Asalways,this allocationisbasedonpresentneedsandanyfurtherrequirementwouldbemet. 122.Governmentismakingeffortstoincreasetheavailabilityofresidentialquartersto forces. In 201213, it is envisaged to construct nearly 4,000 residential quarters for Central Armed Police Forces for which Rs 1,185 crore is proposed to be allocated. A provision of Rs 3,280 crore for 201213 has also been made for construction of office buildingsincludinglandacquisitionandbarrackstoaccommodate27,000personnel. 123.TheschemetocreatetheNationalPopulationRegister(NPR)isprogressingwell.It islikelytobecompletedwithinthenexttwoyears.TheGovernmentisalsoconsidering a proposal of issuing Resident Identity Cards bearing the Aadhaar numbers to all residentswhoareofage18yearsandabovetohelpintheegovernanceinitiatives.

BlackMoney 125.LastyearIhadoutlinedafiveprongedstrategytotacklethemalaiseofgeneration and circulation of black money and its illegitimate transfer outside India. Government hastakenanumberofproactivestepstoimplementthisstrategy.Asaresult:

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124. The enrolments into the Aadhaar systemhave crossed 20 croreand theAadhaar numbers generated upto date have crossed 14 crore. I propose to allocate adequate fundstocompleteanother40croreenrolmentsstartingfromApril1,2012.TheAadhaar platform is now ready to support the payments of MGNREGA; old age, widow and disability pensions; and scholarships directly to the beneficiary accounts in selected areas.

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82DoubleTaxationAvoidanceAgreements(DTAA)and17TaxInformationExchange Agreements (TIEA) have been finalised and information regarding bank accounts and assetsheldbyIndiansabroadhasstartedflowingin.Insomecasesprosecutionwillbe initiated; Dedicated exchange of information cell for speedy exchange of tax information with treatycountriesisfullyfunctionalinCBDT; India became the 33rd signatory of the Multilateral Convention on Mutual AdministrativeAssistanceinTaxMatters;and DirectorateofIncomeTaxCriminalInvestigationhasbeenestablishedinCBDT. 126. I propose to lay on the table of the House a white paper on Black Money in the currentsessionofParliament.

Benami Transactions (Prohibition) Bill, 2011 is currently being examined by the StandingCommitteeonFinance.Itwouldreplacethe'BenamiTransactions(Prohibition) Act,1988';and National Drugs and Psychotropic Substances (Amendment) Bill, 2011 introduced in Parliamentwithaviewtostrengthenlegalprovisionsforimplementationofthenational policyonNarcoticDrugsandPsychotropicSubstances. VII.BudgetEstimates201213 InowturntotheBudgetEstimatesfor201213.

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Prevention of Money Laundering (Amendment) Bill, 2011 introduced in Parliament withaviewtobringcertainprovisionsoftheActinlinewithglobalstandards;

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128.Thefollowinglegislativemeasuresforstrengtheninganticorruptionframeworkare invariousstagesofenactment:

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127.GovernmentiscommittedtotheenactmentofaPublicProcurementlegislationto enhanceconfidenceinpublicprocurementandtoensuretransparencyandefficiencyin the process. The Bill in this regard is to be introduced in the Budget session of the Parliament.

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129.TheGrossTaxReceiptsareestimatedatRs10,77,612crorewhichisanincreaseof 15.6percentovertheBudgetEstimatesand19.5percentovertheRevisedEstimates for201112.AsapercentageofGDP,grosstaxesareestimatedat10.6percentinBE 201213asagainst10.4percentinBE201112.AfterdevolutiontoStates,thenettaxto Centrein201213isestimatedatRs7,71,071crore.TheNonTaxRevenueReceiptsfor 201213areestimatedatRs1,64,614croreandNondebtCapitalReceiptsatRs41,650 crore. The temporary arrangement to use disinvestment proceeds for capital expenditureinsocialsectorschemesisbeingextendedforonemoreyearto201213. 130.Thetotalexpenditurefor201213isbudgetedatRs14,90,925crore.Ofthis,the PlanExpenditurefor201213isRs5,21,025crore,whichis18percenthigherthanthe BudgetEstimatesof201112.Thisishigherthanthe15percentincreaseprojectedin the Approach to the Twelfth Plan for 201213. I am happy to inform the Hon'ble MembersthatintheEleventhPlan,wehavebeenabletomeet99percentofthetotal planoutlay. 131.TheNonPlanExpenditurefor201213isbudgetedatRs9,69,900crorewhichis8.7 percenthigherthantheRevisedEstimatesfor201112and18.8percenthigherthan theBudgetEstimatesfor201112.Thisincreaseismainlyonaccountofhigherprovision for major subsidies. While making adequate provisions for funding the desirable subsidies,asindicatedearlier,Iamdeterminedtocontaintheincreasingsubsidyburden throughmeasuresincludingimprovedtargeting. 132. The Plan and Non Plan resources transferred to States and Union Territories including direct transfers to State and district level implementing agencies are Rs 3,65,216croreinBE201213.ThisincludesRs18,655croreofgranttolocalbodiesas pertherecommendationsofThirteenthFinanceCommission. 133.Theyear201112wasoneofchallengesforfiscalmanagement.Duetotheslower economic growth, direct tax collection fell short by Rs 32,000 crore of the Budget Estimates. At the same time, the Government absorbed duty reduction in petroleum sectorwithannualrevenuelossofRs49,000crore.TheGovernmenthadtoincurhigher expenditure on petroleum and fertiliser subsidy to insulate the people from the rising prices.Whiletheoutgoonaccountofsubsidiesincreased,Ihaveensuredthattheentire amount is given in cash and not as bonds in lieu of subsidies. This is in line with the approachthatIoutlinedinmyBudgetSpeechfor201011. 134. The combined effect of lower tax and disinvestment receipts and higher expenditure,mainlyonaccountofsubsidies,haspushedthefiscaldeficitto5.9percent of GDP in the Revised Estimates for 201112. However, I have made a determined

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attempttocomebacktothepathoffiscalconsolidationintheBudgetfor201213by peggingthefiscaldeficitatRs5,13,590crorewhichis5.1percentofGDP.Aftertaking into account other items of financing, the net market borrowings through dated securitiestofinancethisdeficitisRs4.79lakhcrore.Withthis,thetotalDebtstockat the end of 201213 would work out at 45.5 per cent of GDP as compared to the Thirteenth FinanceCommission target of 50.5 per cent of GDP. The EffectiveRevenue DeficitinBE201213worksouttoRs1,85,752crorewhichis1.8percentofGDP. PartB VIII.TaxProposals MadamSpeaker, InowcometoPartBofmyproposals. 135.ThelifeofaFinanceMinisterisnoteasy.Variousplayers,includingpolicymakers, politicians,agriculturistsandbusinesshouses,participateinthemakingoftheeconomy. Wheneverythinggoeswellwiththeeconomy,weallshareinthejoy.However,when things go wrong, it is the Finance Minister who is called upon to administer the medicine.Economicpolicy,asinmedicaltreatment,oftenrequiresustodosomething, which,intheshortrun,maybepainful,butisgoodforusinthelongrun.AsHamlet,the PrinceofDenmark,hadsaidinShakespeare'simmortalwords,"Imustbecruelonlyto bekind." Withthisreminder,letmenowturntothetaxproposals. 136.Lastyear,IhadsetthecompassformovementtowardstheDTCinDirectTaxesand GSTinIndirectTaxes.Mytaxproposalsforfiscalyear201213markfurtherprogressin thatdirection. DirectTaxes Ishallnowdealwithdirecttaxes. 137.LastyearIprovidedrelieftoindividualtaxpayersbyenhancingtheexemptionlimit as a move towards DTC rates. Although DTC will not be effective from this year, I proposetointroducetheDTCratesforpersonalincometax.Iproposetoenhancethe exemptionlimitforthegeneralcategoryofindividualtaxpayersfromRs1,80,000toRs 2,00,000. This measure will provide tax relief upto Rs 2,000 to every taxpayer of this category. Ialso propose to raise the upper limit of the 20 per cent tax slab from Rs 8 lakhtoRs10lakh.Theproposedpersonalincometaxslabsare:

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IncomeuptoRs2lakh:Nil IncomeaboveRs2lakhanduptoRs5lakh:10percent IncomeaboveRs5lakhanduptoRs10lakh:20percent IncomeaboveRs10lakh:30percent Thesechangeswillprovidesubstantialrelieftotaxpayers. 138.Iproposetoallowindividualtaxpayers,adeductionofuptoRs10,000forinterest from savings bank accounts. This would help a large number of small taxpayers with salaryincomesuptoRs5lakhandinterestfromsavingsbankaccountsuptoRs10,000, astheywouldnotberequiredtofileincometaxreturns. 139.Withintheexistinglimitfordeductionallowedforhealthinsurance,Iproposeto allowadeductionofuptoRs5,000forpreventivehealthcheckup.

power; airlines; roadsandbridges; portsandshipyards; affordablehousing; fertilizer;and dams 143.TherestrictiononVentureCapitalFundstoinvestonlyinninespecifiedsectorsis proposed to be removed. It is further proposed to remove the cascading effect of

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142.Inordertoprovidelowcostfundstosomestressedinfrastructuresectors,therate ofwithholdingtaxoninterestpaymentsonexternalcommercialborrowingsisproposed tobereducedfrom20percentto5percentforthreeyears.Thesesectorsare:

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141.Inthecaseofcorporates,Iamnotproposinganychangeinthetaxrates.However, I propose certain measures to allow corporates to access lower cost funds and to promotehigherlevelofinvestmentsinseveralsectors.

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DividendDistributionTax(DDT)in amultitier corporatestructure. Ialsoproposeto continue to allow repatriation of dividends from foreign subsidiaries of Indian companiestoIndiaatalowertaxrateof15percentasagainstthetaxrateof30per centforonemoreyeari.e.uptoMarch31,2013. 144. Investment linked deduction of capital expenditure incurred in the following businessesisproposedtobeprovidedattheenhancedrateof150percent,asagainst thecurrentrateof100percent. Coldchainfacility Warehousesforstorageoffoodgrains Hospitals Fertilisers Affordablehousing

beekeepingandproductionofhoneyandbeeswax

146.Topromoteinvestmentinresearchanddevelopment,itisproposedtoextendthe weighteddeductionof200percentforR&Dexpenditureinan inhousefacilitybeyondMarch31,2012forafurtherperiodoffiveyears. 147. I also propose to provide weighted deduction of 150 per cent on expenditure incurredforagriextensionservicesinordertofacilitategrowthintheagriculturesector. 148. For the power sector, besides access to low cost funds as outlined above, I also proposeextensionofthesunsetdatebyoneyearforpowersectorundertakingssothat theycanbesetuponorbeforeMarch31,2013forclaiming100percentdeductionof profitsfor10years.Additionaldepreciationof20percentintheinitialyearisproposed tobeextendedtonewassetsacquiredbypowergenerationcompanies.

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145. The following new sectors are proposed to be added for the purposes of investmentlinkeddeduction:

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149. For SMEs, the turnover limit for compulsory tax audit of accounts as well as for presumptivetaxationisproposedtoberaisedfromRs60lakhtoRs1crore. 150.InordertoaugmentfundsforSMEs,Iproposetoexemptcapitalgainstaxonsale ofaresidentialproperty,ifthesaleconsiderationisusedforsubscriptioninequityofa manufacturingSMEcompanyforpurchaseofnewplantandmachinery. 151.Consideringtheshortageofskilledmanpowerinthemanufacturingsectorandto generateemployment,Iproposetoprovideweighteddeductionattherateof150per cent of expenditure incurred on skill development in manufacturing sector in accordancewithspecifiedguidelines. 152.Inordertoreducetransactioncostsinthecapitalmarkets,Iproposereductionin SecuritiesTransactionTax(STT)by20percent(from0.125percentto0.1percent)on cashdeliverytransactions. 153.Inordertomoderatetheoutgoonprofitlinkeddeductions,Iproposetoextendthe levy of Alternate Minimum Tax (AMT) on all persons other than companies, claiming profitlinkeddeductions. 154.IproposetointroduceaGeneralAntiAvoidanceRule(GAAR)inordertocounter aggressive tax avoidance schemes, while ensuring that it is used only in appropriate cases,byenablingareviewbyaGAARpanel.

Introductionofcompulsoryreportingrequirementincaseofassetsheldabroad. Allowingforreopeningofassessmentupto16yearsinrelationtoassetsheldabroad. TaxcollectionatsourceonpurchaseincashofbullionorjewelleryinexcessofRs2 lakh. Taxdeductionatsourceontransferofimmovableproperty(otherthanagricultural land)aboveaspecifiedthreshold. Taxcollectionatsourceontradingincoal,ligniteandironore. Increasing the onus of proof on closely held companies for funds received from shareholdersaswellastaxingsharepremiuminexcessoffairmarketvalue.

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155. I propose a series of measures to deter the generation and use of unaccounted money.Tothisend,Ipropose

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Taxationofunexplainedmoney,credits,investments,expendituresetc.,atthehighest rateof30percentirrespectiveoftheslabofincome. 156. My proposals on Direct Taxes are estimated to result in a net revenue loss of Rs 4500crorefortheyear. IndirectTaxes 157.Ishall nowturntoindirecttaxes.Inaslightdeparturefromthepreviousyears,I shallbeginwithServiceTax.

ServiceTaxlawiscomplexandsometimesavoidablydifferentfromCentralExcise.We needtobringthetwoascloseaspossibleinthelightofoureventualgoaloftransition toGST. Ihaveattemptedtoaddressboththeseissuesthisyear. 159. Last year, I had initiated a public debate on the desirability of moving towards taxationofservicesbasedonanegativelist.Inthedebatethatcontinuedforthebetter partoftheyear,wereceivedoverwhelmingsupportforthisnewconcept.Ithasbeen perceivedbothassoundeconomicsandprudentfiscalmanagement. 160. Thus, I propose to tax all services except those in the negative list. The list comprises 17 heads and has been carefully drawn up, keeping in view the federal nature of our polity, the best international practices and our socioeconomic requirements. 161.Theimportantinclusionsinthenegativelistcompriseallservicesprovidedbythe government or local authorities, except a few specified services where they compete

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Theshareofservicesintaxesremainsfarbelowitspotential.Thereisaneedtowiden thetaxbaseandstrengthenitsenforcement;

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158.AttheendofJunethisyear,thistaxwillattainadulthoodbycompleting18years.It is therefore time to shift gears and accelerate ahead. However, service tax needs to confronttwoimportantchallengestosustainthejourney.Theseare:

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with private sector. The list also includes preschool and school education, recognised education at higher levels and approved vocational education, renting of residential dwellings, entertainment and amusement services and a large part of public transportationincludinginlandwaterways,urbanrailwaysandmeteredcabs. 162. Agriculture and animal husbandry enjoy a very important place in our lives. Practically all services required for cultivation, breeding, production, processing or marketinguptothestagetheproduceissoldintheprimarymarketsarecoveredbythe list. 163.Inadditiontothenegativelist,thereisalistofexemptionswhichincludehealth care, services provided by charities, religious persons, sportspersons, performing artists in folk and classical arts, individual advocates providing services to non businessentities,independentjournalists,andservicesbywayofanimalcareorcar parking.

166.TheYear2012marksthebeginningofthecentenaryyearofIndiancinema.Despite the change in titles from Dada Saheb Phalke's "Raja Harishchandra" to "Ra. One" in recenttimes,theindustryhasplayedapivotalroleinunifyingourcountryinthewake ofherconsiderablediversity.Toaddtotheirspiritofcelebration,Iproposetoexempt the industry from service tax on copyrights relating to recording of cinematographic films. 167. Movement towards the negative list will result in reducing nearly 290 definitions and descriptions in the Act to 54, and the exemptions from the existing 88 to 10, of coursemergingsomeoftheexistingexemptionsintoarevisednotification.Intermsof numberofpages,thelawwillbeshorterbynearly40percent. 168.AsameasureofharmonisationbetweenCentralExciseandServiceTax,anumber of alignments have been made. These include a common simplified registration form and a common return for Central Excise and Service Tax, to be named EST1. This

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165. Construction services relating to specified infrastructure, canals, irrigation works, postharvest infrastructure, residential dwelling, and lowcost mass housing up to an area of 60 sq. mtr. under the Scheme of Affordable Housing in Partnership are also includedintheexemptions.Tomakethelifeofthosewhoalreadyownanapartmenta little easier, I propose to raise the exemption for the monthly charges payable by a membertoahousingsocietyfromRs3,000toRs5,000.

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164.Totakefinancialservicestothedoorstepsinruralareas,Ihavealsoexemptedthe servicesofbusinessfacilitatorsandcorrespondentstobanksandinsurancecompanies.

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commonreturnwillcompriseonlyonepage,whichwillbeasignificantreductionfrom the15pagesofthetworeturnsatpresent. 169.RevisionApplicationAuthorityandSettlementCommissionarebeingintroducedin ServiceTaxtohelpresolvedisputeswithfargreaterease. 170.Cascadingoftaxeshasbeensignificantlyreducedbypermittingutilisationofinput taxcreditsinanumberofservicessuchascatering,restaurants,hotelaccommodation, pandalandshamianaandtransportsectors. 171. Place of Supply Rules, that will determine the location where a service shall be deemedtobeprovided,arebeingplacedinpublicdomainforstakeholders'comments and shall be notified when the negative list is put into effect. These rules will also provideapossiblebackdroptoinitiateaninformeddebatetoassessalltheissuesthat mayariseinthetaxationofinterstateservicesfortheeventuallaunchofGST. 172.IproposetosetupaStudyTeamtoexaminethepossibilityofacommontaxcode for service tax and central excise which could be adopted to harmonise the two legislationsasmuchaspossibleattherighttime. 173. While the problems faced by exporters of goods with respect to taxes on input serviceswasaddressedearlierthisyear,disbursementoftaxesthatgointotheexport ofserviceshasbeenanirritantforlong.Inowannounceanewschemethatwillsimplify refunds without resorting to voluminous documentation or verification. As an added incentive, such refunds will also be admissible for taxes on taxable services that have beenexempted. 174. Rules pertaining to the Point of Taxation are also being rationalised, providing greaterclarityandremovingtheirritants.Cenvatcreditsinanumberofareasarebeing restored.Thereareanumberofotherproposalsbothforthefacilitationofbusinessand to check malpractices. I do not wish to take the valuable time of this House for discussingalltheseproposals. 175. You will notice that most of these measures are guided by the need to move towardsasystemthatissimple,equitableandprogressivebutareunlikelytomakethe exchequer richer in any significant way. Looking at our vast commitments and to maintain a healthy fiscal situation, I propose to raise the service tax rate from 10 per centto12percent,withconsequentialchangesinratesforservicesthathaveindividual taxrates.

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176. My proposals from service tax are expected to yield an additional revenue of Rs 18,660 crore. Keeping in mind that the share of services in GDP is 59 per cent, you wouldagreethattheproposedincreaseisnottooharsh. Ishallnowdealwithproposalsrelatingtotheotherindirecttaxes. 177.Inthewakeoftheglobalfinancialcrisisin200809,thestandardrateofexciseduty for nonpetroleum goods was reduced from 14 per cent to 8 per cent in a phased manner.Thisratewasraisedfrom8percentto10percentinBudget201011.Given theimperativeforfiscalcorrection,Iproposetonowraisethestandardratefrom10per centto12percent,themeritratefrom5percentto6percent,andthelowermerit rate from 1 per cent to 2 per cent. However, the lower merit rate for coal, fertilisers, mobilephonesandpreciousmetaljewelleryisbeingretainedat1percent. 178. Large cars currently attract excise duty depending on their engine capacity and length.Inkeepingwiththeincreaseproposedinthestandardrate,Iproposetoenhance thedutyfrom22percentto24percent.Inthecaseofcarsthatattractamixedrateof dutyof22 percent+Rs15000pervehicle,Iproposetoincreasethedutyandswitch overtoanadvaloremrateof27percent. 179. No change is proposed in the peak rate of customs duty of 10 per cent on non agricultural goods. Barring a few individual items, the rates below the peak are also beingretained. 180. I shall now take up relief proposals for specific sectors especially those under stress.Thesehavebeenformulatedtostimulateinvestmentandmanufacturinggrowth. Agriculture&RelatedSectors 181. Carrying forward the initiatives taken for agriculture and agroprocessing in the previousBudgets,Ipropose: toreducebasiccustomsdutyfrom7.5percentto2.5percenton: sugarcaneplanter,rootortubercropharvestingmachineandrotarytillerandweeder; partsforthemanufactureofthese; to reduce basic customs duty from 7.5 per cent to 5 per cent on specified coffee plantationandprocessingmachinery;

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 to extend project import benefit to green house and protected cultivation for horticultureandfloricultureatconcessionalbasiccustomsdutyof5percent; to reduce basic customs duty on some water soluble fertilisers and liquid fertilisers, otherthanurea,from7.5percentto5percentandfrom5percentto2.5percent; toextendconcessionalimportdutyavailableforinstallationofMechanisedHandling SystemsandPalletRackingSystemsinmandisorwarehousesforhorticulturalproduce. 182. Imports of equipment for initial setting up or substantial expansion of fertiliser projectsarebeingfullyexemptedfrombasiccustomsdutyof5percentforaperiodof threeyearsuptoMarch31,2015. Infrastructure 183.Intherealmofinfrastructuremyproposalsaddresssomeweaknessesinthetroika ofpower,coalandrailways. 184. Domestic producers of thermal power have been under stress because of high prices of coal. I propose to ease the situation by providing full exemption from basic customs duty andaconcessional CVD of 1 per cent to Steam coal fora period oftwo yearstillMarch31,2014.Fullexemptionfrombasicdutyisalsobeingprovidedtothe followingfuelsforpowergeneration: NaturalGasandLiquifiedNaturalGas;and Uraniumconcentrate,SinteredUraniumDioxideinnaturalandpelletform. Mining 185. Better surveying and prospecting for minerals are essential for improving the productivityandefficiencyofourminingsector.Iproposetoreducebasiccustomsduty onmachineryandinstrumentsforsurveyingandprospectingfrom10percentor7.5per cent to 2.5 per cent. In addition, full exemption from basic customs duty is being providedtocoalminingprojects. Railways 186. Over the next five years, Indian Railways are undertaking two major projects for passenger safety and better service delivery. These are the installation of Train ProtectionandWarningSystemandupgradationoftrackstructureforhighspeedtrains.

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Iproposetoreducebasiccustomsdutyonequipmentrequiredfortheirimplementation from10percentto7.5percent. Roads 187. Full exemption from import duty on specified equipment imported for road constructionbycontractorsofMinistryofRoadTransportandHighways,NHAIandState Governments is being extended to contracts awarded by Metropolitan Development Authorities. 188. Tunnel boring machines and parts for their assembly are covered by this exemption.Iproposetoallowtheirimportfreeofdutywithoutendusecondition. CivilAviation 189. India has potential for establishing itself as a hub for thirdparty Maintenance, RepairandOverhaul(MRO)ofcivilianaircraft.Toactualizethispotential,Iproposeto fullyexemptfrombasiccustomsdutypartsofaircraftandtestingequipmentimported forthispurpose.Asameasureofsupporttotheairlineindustry,itisalsoproposedto fullyexemptbothnewandretreadedaircrafttyresfrombasiccustomsdutyandexcise duty.

191.Toencourageenrichmentoflowgradeironore,ofwhichwehavehugereserves,I proposetoreducebasiccustomsdutyonplantandmachineryimportedforsettingup orsubstantialexpansionofiron orepelletplantsoriron orebeneficiationplantsfrom 7.5percentto2.5percent.Myotherproposalsrelatingtothesteelsectorareasunder: toreducebasiccustomsdutyon: coatingmaterialformanufactureofelectricalsteelfrom7.5percentto5percent nickeloreandconcentrateandnickeloxide/hydroxidefrom2.5percentor7.5percent toNil toenhanceexportdutyonchromiumorefromRs3000pertonneto30percentad valorem

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190. My proposals for the manufacturing sector that needs support at this juncture, seektoprovidereliefthroughcostreductionofrawmaterials,inputs,componentsand capitalgoods.

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toenhancebasiccustomsdutyonnonalloy,flatrolledsteelfrom5percentto7.5per cent. 192.Ourtextileindustry,especiallytheweavingsector,urgentlyneedstomodernise.I proposetofullyexemptautomaticshuttlelessloomsfrombasiccustomsdutyof5per cent.Similarly,fullexemptionfrombasicdutyisbeingaccordedtoautomaticsilkreeling and processing machinery as well as its parts. It is also proposed to restrict these exemptionsandtheexistingconcessionalrateofbasiccustomsdutyof5percentonly tonewtextilemachinery.Secondhandmachinerywouldnowattractbasicdutyof7.5 percent.Otherproposalsontextilesare: toreducebasiccustomsdutyonwoolwasteandwooltopsfrom15percentto5per cent toreducebasiccustomsdutyonTitaniumdioxidefrom10percentto7.5percent toextendfullexemptionfrombasiccustomsdutytoaramidyarnandfabricusedfor themanufactureofbulletproofhelmets 193. Excise duty of 10 per cent is applicable to branded readymade garments with abatementof55percentfromtheRetailSalePrice.Alongwithincreaseindutyto12 percent,Iproposetoenhancetheabatementto70percent.Asaresult,theincidence ofdutyasapercentageoftheRetailSalePricewouldcomedownfrom4.5percentto 3.6percent. 194.OurMSMEsectorisfertilegroundfortheproductionoflowcostmedicaldevices. Inordertoprovideimpetustothissector,Iproposetoreducebasiccustomsdutyto2.5 percentwithconcessionalCVDof6percentonspecifiedparts,componentsandraw materials for the manufacture of some disposables and instruments. Full exemption frombasiccustomsdutyandCVDisalsobeingextendedtospecifiedrawmaterialsfor the manufacture of coronary stents and heart valves. These concessions would be subjecttoactualusercondition. 195.Myotherproposalstosupportthemanufacturingsectorinclude: Fullexemptionfrombasiccustomsdutyon wastepaper, LCDandLEDTVpanels,andpartsofmemorycardformobilephones

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 Reduction of basic customs duty on specified raw materials for the manufacture of adultdiapersfrom10percentor7.5percentto5percentwithCVDof6percentand nilspecialCVD. 196.Myattentionhasbeendrawntotheplightofafewsectorsthatarehighlylabour intensiveandproduceitemsofmassconsumption.Asameasureofsupport,Ipropose to enhance basic customs duty on bicycles from 10 per cent to 30 per cent and on bicyclepartsfrom10percentto20percent. 197.Fullexemptionfromexcisedutyiscurrentlyavailabletohandmadematcheswhile others attract the standard rate. It is proposed to reduce excise duty on matches manufacturedbysemimechanisedunitsfrom10percentto6percent. HealthandNutrition 198. It is proposed to extend concessional basic customs duty of 5 per cent with full exemptionfromexciseduty/CVDtosixspecifiedlifesavingdrugs/vaccines.Theseare usedforthetreatmentorpreventionofailmentssuchasHIVAIDS,renalcancer,etc. 199.Proteindeficiencyamongwomenandchildrenisoneofthemostcommonsources of malnutrition in India. I propose to reduce basic customs duty on Soya protein concentrateandisolatedsoyaproteinfrom30percentor15percentrespectivelyto10 per cent. Simultaneously, excise duty on all processed soya food products is being reducedtothemeritrateof6percent. 200. Consumption of iodised salt prevents iodine deficiency and related diseases. I propose to provide a concessional basic customs duty of 2.5 per cent along with reducedexcisedutyof6percentoniodine. 201. Probiotics are a costeffective means of combating bacterial infections. It is proposedtoreducethebasiccustomsdutyonthisitemfrom10percentto5percent. Environment 202. In order to fully realise our potential in the realm of solar energy, solar thermal projectsneedencouragement.Iproposetofullyexemptplantandequipmentetc.for theinitialsettingupofsuchprojectsfromspecialCVD. 203. Concessions have already been provided for encouraging the consumption of energysaving devices. I propose to fully exempt a coating chemical used for compact fluorescent lamps, from basic customs duty. Excise duty on LED lamps is also being reducedto6percent.

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204. Specified parts required for the manufacture of hybrid vehicles enjoy full exemptionfrombasiccustomsdutyandspecialCVDwithconcessionalexciseduty/CVD of6percent.Thisconcessionisbeingextendedtospecifiedadditionalitemsandlithium ion batteries imported for the manufacture of battery packs for supply to electric or hybridvehiclemanufacturers. 205.Oneoftheprimarydriversofthecurrentaccountdeficithasbeenthegrowthof almost 50 per cent in imports of gold and other precious metals in the first three quarters of this year. I have been advised to strengthen the steps already taken to check this trend for better results. I propose to increase basic customs duty on standardgoldbars;goldcoinsofpurityexceeding99.5percentandplatinumfrom2 percentto4percentandonnonstandardgoldfrom5percentto10percent.Insync with these, basic duty on gold ore, concentrate and dore bars for refining is being enhancedfrom1percentto2percent.Ontheexciseside,dutyonrefinedgoldisbeing increasedinthesameproportionfrom1.5percentto3percent.

208.Ialsoproposetocarryoutanominalincreaseinbasicexcisedutyonhandrolled bidisfromRs8toRs10perthousandandonmachinerolledbidisfromRs19toRs21 perthousand.Theexistingexemptionavailabletohandrolledbidisforclearancesupto 20lakhbidisperannumisbeingretained. 209.Panmasala,gutkha,chewingtobacco,unmanufacturedtobaccoandzardascented tobaccoinpouchesareleviabletoexcisedutyunderthecompoundedlevyscheme.The ratesofdutyspecifiedperpackingmachinefortheseitemsarebeingsteppeduptaking intoaccountimprovementsintheefficiencyofmachinesusedbythisindustry. 210.CrudepetroleumoilproducedinIndiaattractsacessofRs2,500permetrictonne undertheOilIndustriesDevelopmentAct.ThisratewaslastrevisedinBudget200607. Asameasureofindexation,IproposetoincreasetherateofcesstoRs4,500permetric tonne.

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207.Ishallnowtakeupmyproposalson"demerit"goods.Iproposetoincreasebasic excise duty on cigarettes of more than 65mm length by adding an ad valorem componentof10percenttotheexistingspecificrates.Theadvaloremdutywouldbe chargeableon50percentoftheRetailSalePricedeclaredonthepack.

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206.Inordertopreventroundtripping,itisproposedtoimposebasiccustomsdutyof2 percentoncutandpolished,colouredgemstonesatparwithdiamonds.

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211.CompletelyBuiltUnitsoflargecars/MUVs/SUVshavingenginecapacityabovea prescribed threshold and whose value exceeds US dollar 40,000 per vehicle are permitted for import without type approval. Basic customs duty on such vehicles is beingenhancedfrom60percentto75percentadvalorem. RationalisationMeasures 212.Packagedcement,whethermanufacturedbyminicementplantsorothers,attracts differential excise duty depending on the Retail Sale Price per bag. It is proposed to prescribeaunifiedrateof12percent+Rs120PMTfornonminicementplantsand6 percent+Rs120PMTforminicementplants.Itisproposedtochargethisdutyonthe RetailSalePricelessabatementof30percent. 213.TheHousewouldrecallthatIhadreintroducedalevyofexcisedutyof1percent onbrandedpreciousmetaljewelleryinthelastBudget.Asameasureofrationalisation, Iproposetoincludejewellery,notbearingabrandname,underitsambit.However,to simplify its operation and minimise its impact on small artisans and goldsmiths, I propose:

to place the onus of registration and payment on the person who gets jewellery manufacturedonjobwork. 214.Iproposetofullyexemptbrandedsilverjewelleryfromexciseduty. 215.Buildingofcommercialvehiclebodiesiscurrentlyexemptfromexciseduty.Inlieu ofthisduty,aspecificrateofRs10,000isbeingchargedonchassisinadditiontothe applicableadvaloremduty.Thisdutystructureisregressive.Itisproposedtoconvert thespecificcomponentofdutytoanadvaloremrateof3percent. 216.InthelastBudget,excisedutyexemptiononshipsandvesselsincludingdredgers waswithdrawn.Accordingly,CVDof5percentbecameleviableontheirimports.Asthe intentionwasnottolevythisdutyontheimportofforeigngoingvessels,Iproposeto exempt such vessels from CVD retrospectively. However, to ensure that ships, vessels

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and dredgers manufactured in India do not face disability visvis foreigngoing ships convertingintocoastalvessels,necessarysafeguardisbeingprovided. BaggageAllowance 217. Baggage allowance for Indians travelling abroad was last revised in 2004. I propose to increase the dutyfree allowance for eligible passengers of Indian origin fromRs25,000toRs35,000andforchildrenofupto10yearsfromRs12,000toRs 15,000. 218. My proposals relating to Customs and Central excise are estimated to result in a netrevenuegainofRs27,280croreforafullyear. 219. My proposals on Direct Taxes are estimated to result in a net revenue loss of Rs 4500crorefortheyear.ProposalsrelatingtoIndirectTaxesareestimatedtoresultina netrevenuegainofRs45,940crore,leavinganetgainofRs41,440croreintheBudget. 220. For the Indian economy, this was a challenging year. A number of global and domesticfactorsmilitatedagainstthegrowththathadrevivedinthelasttwoyears.But IndiahasthrivedunderchallengesandIndiawilldosonow.Inthemiddleofeverycrisis, thereisalsoanopportunity.Itisanopportunitytorethink,reassessandmakewayfor newideasandpolicies.ItisinthisspiritthatIapproachedtheBudgetofthisyear.The aim is to create an enabling atmosphere for corporates, farmers, entrepreneurs and workerstotakeinitiativesforrobustgrowth.Theaimisalsotoensurethatthebenefits of growth reach all sections of population. India stands on the brink of a major resurgence. Whether or not today's announcements make tomorrow morning's headlinesmatterslittle,aslongastheyhelpinshapingtheheadlinesthatdescribeIndia adecadefromnow. MadamSpeaker,withthesewords,IcommendtheBudgettotheHouse.

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