Feb-2011-National

NATIONAL AFFAIRS

Union Budget 2011 Highlights

• Standard rate of excise duty held at 10 percent; no change in CENVAT rates.
• Personal income tax exemption limit raised to Rs 180,000 from Rs 160,000 for individual tax payers.
• For senior citizens, the qualifying age reduced to 60 years and exemption limit raised to Rs 2.50 lakh.
• Citizens over 80 years to have exemption limit of Rs 5 lakh.
• To reduce surcharge on domestic companies to 5 percent from 7.5 percent.
• A new revised income tax return form 'Sugam' to be introduced for small tax papers.
• raise minimum alternate tax to 18.5 percent from 18 percent.
• Iron ore export duty raised to 20 percent
• Nominal one per cent central excise duty on 130 items entering the tax net. Peak rate of customs duty maintained at 10 per cent in view of the global economic situation.
• Service tax widened to cover hotel accommodation above Rs 1,000 per day, A/C restaurants serving liquor, some category of hospitals, diagnostic tests.
• Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international travel in economy class. On higher classes, it will be ten per cent flat.
• Works of art exempt from customs when imported for exhibition in state-run institutions; this now extended to private institutions.

• Subsidy bill in 2011-12 seen at 1.44 trillion rupees.
• Food subsidy bill in 2011-12 seen at 605.7 billion rupees.
• Revised food subsidy bill for 2010-11 at 606 billion rupees.
• Revised fertilizer subsidy bill for 2010-11 at 550 billion rupees.
• Revised petroleum subsidy bill in 2010-11 at 384 billion rupees.
• State-run oil retailers to be provided with 200 billion rupee cash subsidy in 2011-12.

• Fiscal deficit seen at 5.1 percent of GDP in 2010-11.
• Fiscal deficit seen at 4.6 percent of GDP in 2011-12.

• Total expenditure in 2011-12 seen at 12.58 trillion rupees.
• Plan expenditure seen at 4.41 trillion rupees in 2011-12, up 18.3 percent.

• Gross tax receipts seen at 9.32 trillion rupees in 2011-12.
• Non-tax revenue seen at 1.25 trillion rupees in 2011-12.
• Corporate tax receipts seen at 3.6 trillion rupees in 2011-12.
• Tax-to-GDP ratio seen at 10.4 percent in 2011-12; seen at 10.8 percent in 2012-13.
• Customs revenue seen at 1.52 trillion rupees in 2011-12.
• Service tax receipts seen at 820 billion rupees in 2011-12.

• Economy expected to grow at 9 percent in 2012, plus or minus 0.25 percent.
• Inflation seen lower in the financial year 2011-12.

• Disinvestment in 2011-12 seen at 400 billion rupees.
• Government committed to retaining 51 percent stake in public sector enterprises.

• Net market borrowing for 2011-12 seen at 3.43 trillion rupees, down from 3.45 trillion rupees in 2010-11.
• Gross market borrowing for 2011-12 seen at 4.17 trillion rupees.
• Revised gross market borrowing for 2010-11 at 4.47 trillion rupees.

• To create infrastructure debt funds.
• FDI policy being liberalized.
• To boost infrastructure development with tax-free bonds of 300 billion rupees.
• Food security bill to be introduced.
• To permit SEBI registered mutual funds to access subscriptions from foreign investments.
• Raised foreign institutional investor limit in 5-year corporate bonds for investment in infrastructure by $20 billion.
• Setting up independent debt management office; Public debt bill to be introduced in parliament soon.
• Bills on insurance, pension funds, banking to be introduced.

• To allocate more than 1.64 trillion rupees to defence sector in 2011-12.
• Corpus of rural infrastructure development fund raised to 180 billion rupees in 2011-12.
• To provide 201.5 billion rupees capital infusion in state-run banks in 2011-12.
• To allocate 520.5 billion rupees for the education sector. Rs.21,000 crore for Sarva Shiksha Abhiyan.
• To raise health sector allocation to 267.6 billion rupees.
• Rs.500 crore more for national skill development fund.
• Rs.54 crore each for AMU (Aligarh Muslim University) centres at Murshidabad and Mallapuram.
• Rs.58,000 crore for Bharat Nirman; increase of Rs.10,000 crore.
• Mahatma Gandhi National Rural Employment Guarantee Scheme wage rates linked to consumer price index; will rise from existing Rs.100 per day.
• Infrastructure critical for development; 23 percent higher allocation in 2011-12.

• Removal of supply bottlenecks in the food sector will be in focus in 2011-12.
• To raise target of credit flow to agriculture sector to 4.75 trillion rupees.
• 3 percent interest subsidy to farmers in 2011-12.
• Cold storage chains to be given infrastructure status.
• Capitalisation of National Bank for Agriculture and Rural Development (NABARD) of 30 billion rupees in a phased manner.
• To provide 3 billion rupees for 60,000 hectares under palm oil plantation.
• Food storage capacity to be augmented; 15 more mega food parks to be set up in 2011-12; of 30 sanctioned in previous fiscal, 15 set up.
• Comprehensive policy on further developing PPP (public-private-partnership) model.

• To move towards direct transfer of cash subsidy for kerosene, LPG and fertilizers.
• Financial Sector Legislative Reforms Commission, headed by former Supreme Court judge B. Srikrishna, to complete its work in 24 months; to overhaul financial regulations.
• Five-fold strategy against black money; 13 new double taxation avoidance agreements; foreign tax division of CTBT strengthened; strength of Enforcement Directorate increased three-fold.
• Bill to be introduced to review Indian Stamp Act.
• New coins carrying new rupee symbol to be issued.
• Anganwadi workers salary raised from Rs.1,500 to Rs.3,000.
• Housing loan limit for priority sector lending raised to Rs.25 lakh.

Railway Budget, 2011
For the third year in a row, Railway Minister Mamata Banerjee made an attempt to come out with the “aam aadmi” budget sparing the passengers and industry from fare and freight hikes and announcing the highest ever investment of Rs 57,630 crore, with 68 new trains.

On February 25, 2011, presenting her third Railway Budget in UPA-II in the Lok Sabha, Mamata vowed to build a stronger railroad infrastructure based on the Vision 2020 document while announcing a slew of concessions, including reducing the eligibility age of senior women citizens from 60 to 58 years and raising the fare concession for senior citizens (above 60) from 30 to 40 per cent.

The budget estimates for 2011-12 project a freight loading of 993 million tonne and a passenger growth of 6.4 per cent. Ordinary working expenses have been estimated at Rs 73,650 crore and appropriation to depreciation reserve fund pegged at Rs 7,000 crore.

A provision of Rs 6,735 crore has been made for dividend payment and the excess for railways for the new fiscal has been projected at Rs 5,258 crore, with an operating ratio of 98.1 per cent.

Gross traffic receipts have been fixed at Rs 94,840 crore, which is higher by Rs 75 crore over budget estimates. The ordinary working expenses have been fixed at Rs 67,000 crore. A target of 1,300 km of new lines, 867 km of doubling of lines and 1,017 km of gauge conversion has been set.

Indian Railways, the world’s second largest under a single management, has a network of 64,099 km to ferry as many as 18.9 million passengers on 7,000 trains daily, from 6,906 stations. It also runs 4,000 freight trains to carry 850 million tonne of cargo.

Highlights

• No hike in passenger fare and freight rates.
• Highest ever plan outlay of Rs 57,630 crore proposed.
• Rs 9,583 crore provided for new lines.
• 1,300 km new lines, 867 km doubling of lines and 1,017 km gauge conversion targeted in 2011-12.
• 56 new Express Trains, 3 new Shatabdis and 9 Durontos to be introduced.
• 16,000 ex-servicemen to be given jobs in railways.
• Ten-year backlog of 1.75 lakh jobs to be addressed.
• Durontos on the Allahabad-Mumbai, Pune-Ahmedabad, Sealdah-Puri, Secunderabad-Visakhapatnam, Madurai-Chennai routes.
• Integrated suburban network to be set up in Mumbai, Chennai, Ahmedabad.
• A bridge factory in Jammu & Kashmir and a state-of-art institute for tunnel and bridge engineering proposed at Jammu.
• New Shatabadi to link Ludhiana with New Delhi.
• New weekly train, "Vivek Express", on Bandra (T)-Jammu Tawi Express route via Marwar-Degana- Ratangarh -Jakhal-Ludhiana.
• Industrial park in Nandigram, Metro coach factory for Singur.
• Centre for excellence in software at Darjeeling.
• Concession for senior citizens increased from 30% to 40%.
• Age for senior women citizens’ concession reduced to 58 from 60.
• Pradhan Mantri Rail Vikas Yojana to be launched.
• Student special .trains to be started; start of Rajrani Express.
• Multi-purpose smart card to be introduced for all-India travel.

Review of economic growth story of India
As per the Economic Survey 2011, non-Congress States are scripting India’s economic growth story. The Survey places Bihar on top in terms of performance on growth, with the State posting a whopping 16.59 per cent growth in 2008-2009, the latest year for which the data
is available.

But Gujarat pips Bihar (which is followed by Orissa, Haryana and Uttrakhand) to the lead spot when the growth performance is measured from 2002-2003 onwards to 2009. Interesting to see is the fact that out of top five growing States in the country, four are ruled by non-Congress governments, with the exception of Haryana which stands fourth in this list.

The Economic Survey reveals that though Rajasthan, followed by Andhra Pradesh, UP, Madhya Pradesh, Tamil Nadu and Bihar, provided maximum employment under MNREGA in 2009-2010, it was Punjab (ruled by the Shorimani Akali Dal-BJP combine) which employed the maximum Scheduled Castes under the programme (Punjab also reports the lowest number of people below poverty line in India) while the BJP-ruled Madhya Pradesh employed the maximum STs, followed by Jharkhand, Gujarat and Chhattisgarh.

After Punjab, the maximum SC employment under MNREGA was reported from Tamil Nadu, UP, Haryana and Bihar.

On gross enrollment ratios in elementary education also, the Opposition-ruled States of Jharkhand (where the JMM and BJP are in coalition), Madhya Pradesh, Chhattisgarh and Gujarat rank the highest. So far as the progress under the National Rural Health Mission goes, the maximum health centers have come up in Tamil Nadu, followed by Karnataka, Andhra Pradesh, Maharashtra, Uttar Pradesh and Bihar.

Ironically, though they are doing well in terms of economic growth, non-Congress ruled states like Orissa and Bihar continue to perform poorly on poverty indicators. “The percentage of people below the poverty line is very high in Orissa, Bihar, Chhattisgarh, Jharkhand, Uttrakhand and Madhya Pradesh.

Rural income inequality is the highest in Haryana and urban income inequality is the highest in Madhya Pradesh.

Plan to deal with black money menace
Union Finance Minister Pranab Mukherjee has said that the government had adopted a five-fold strategy to deal with the problem of generation and circulation of black money. Presenting the Budget, he said: “The five-fold strategy consists of joining the global crusade against black money, creating an appropriate legislative framework, setting up institutions for dealing with illicit funds, developing systems for implementation and imparting skills to the manpower for effective action.”

He added that while the membership of the Financial Action Task Force was secured in June 2010, the government has also joined the Task Force on Financial Integrity and Economic Development, Eurasian Group and Global Forum on Transparency and Exchange of Information for Tax Purposes.

“Discussions have also been concluded for 11 Tax Information Exchange Agreements and 13 new Double Taxation Avoidance Agreements (DTAAs), along with revision of provisions of 10 existing DTAAs,” he said.

India, Japan sign free trade agreement
On February 16, 2011, India and Japan signed a comprehensive economic partnership agreement (CEPA) to open markets and reduce barriers on goods, services and movement of people between the two countries.

The pact was signed between Commerce and Industry Minister Anand Sharma and Japanese Foreign Affairs Minister Seiji Maehara in Tokyo.

Indian government has set a target of doubling bilateral trade to $25 billion by 2014, which is currently at $10.3 billion. CEPA will lead to a quantum increase in bilateral trade and investment flows, by relaxing barriers to trade in goods, services and movement of natural persons, besides enhanced cooperation on protection of intellectual property.

This agreement is the most ambitious agreement signed by India so far and covers trade in goods, services and investment under its ambit. This agreement follows from the commitment of the two Prime Ministers in October 2010. The agreement has ensured that the sensitive sectors for India are fully protected, including agriculture, fruits, spices, wheat, basmati rice, edible oils, wines and spirits and also certain categories of industrial products such as auto and auto parts.

India, Malaysia ink free trade pact
On February 18, 2011, India and Malaysia signed a comprehensive market opening pact that throws up myriad trade opportunities for both sides and give a boost to India's Look-East Policy and the prospects for its economic integration with South-East Asia.

India’s Commerce Minister Anand Sharma and his Malaysian counterpart Mustapa Mohamed, in the presence of Prime Minister Najib Razak and several leading captains of industry from both sides, signed the Comprehensive Economic Cooperation Agreement (CECA).

The agreement, which was reached after seven rounds of negotiation, will see Indian mangoes, cotton, motorcycles, trucks and basmati rice attract less duty in Malaysia, among other things.

As a quid pro quo, the South-East nation will face less barriers on the sale of its fruit, engineering goods and chemicals in India.

Shivraj V. Patil panel report on 2G scam
Unveiling the report of the Shivraj V Patil panel that went into the lapses made during the allocation of the 2G Spectrum, Telecom Minister Kapil Sibal said on February 4, 2011, the committee had concluded that all decisions on Spectrum allocation since 2003 by successive governments, including the UPA regime, were procedurally wrong.

In what could be a damning admission of Raja not following procedures despite advice from other ministries, the report says that the DoT did not follow the advice of the Law Ministry or the views of the Finance Ministry over Spectrum pricing.

The findings on procedural lapses are being sent to the CBI, which is looking into the criminal culpability in the scam.

ULFA agrees to unconditional talks
After three decades of armed conflict that cost thousands of lives in Assam, the outlawed United Liberation Front of Assam( ULFA) has finally decided to sit for “unconditional” talks with the Government of India.

On February 5, 2011, leaders of the outfit informed that ULFA had been invited by Union Home Minister P. Chidambaram for a preliminary round of talks in New Delhi, as a prelude to formal negotiations that would materialize once ULFA submitted its charter of demands.

With this ULFA has finally given up its earlier preconditions of, one, holding talks in a third country; two, including “sovereignty” as the core issue; three, of having a UN observer for the talks.

The ULFA foreign secretary, Sasadhar Choudhury, pointed out that preconditions set by both ULFA and the government had stood in the way of holding peace talks since 1992, the year ULFA leaders had met then Prime Minister P.V. Narasimha Rao only to renege on their promise to come forward for a dialogue on a later date.

On ULFA commander-in-chief Paresh Barua airing his opposition to dialogue, the outfit leaders said he had done it before the general council of ULFA decided on unconditional talks. “The decision of the general council is binding on everyone. Anyone defying it will face disciplinary action as per the provision of the ULFA’s constitution. Paresh Barua was invited to both the central executive committee and general council meeting, but he didn’t come. We have conveyed our decision for talks to him and are waiting for his response,” the ULFA leaders said.

ULFA claims to have been founded on April 7, 1979. It initiated major violent activities in 1990, which led the Union government banning the organisation. Military operations against it by the Army also began in 1990.

In the past two decades, some 10,000 people have died in clashes between the rebels and the government.

In December 2009, the chairman and the deputy commander-in-chief of ULFA were arrested. There has also been a large ULFA crackdown in Bangladesh in last one year, which significantly assisted India and led to ULFA softening its stand and dropping the demand for independence as a condition for talks.

Godhra Train Burning Case
On February 22, 2011, thirty one persons were convicted and 63 others, including the main accused Maulvi Umarji, were acquitted by a special court in the 2002 Godhra train burning incident that left 59 persons dead and triggered violence in Gujarat that claimed the lives of over 1200 people.

The trial, conducted inside the Sabarmati Central Jail, Ahmedabad, began in June 2009 with the framing of charges against 94 accused. The accused were charged with criminal conspiracy and murder in burning of the S-6 coach of the train on February 27, 2002, near Godhra, about 125 km from Ahmedabad, in which 59 people were killed.

As many as 253 witnesses were examined during the trial and over 1,500 documentary evidences were presented before the court by the Gujarat police.

There were a total of 134 accused in the case, out of which 14 were released due to lack of evidence, five were juvenile, five died during proceedings of over nine years, and 16 are absconding. Of the 94, against whom the trial was conducted, 80 are in jail and 14 are out on bail.

Two different panels appointed to inquire into the 2002 case had given different views on the Godhra train burning incident. The Nanavati Commission, appointed by the Gujarat government to probe the carnage, had in the first part of the report concluded that the fire in the S-6 coach was not an accident, but was caused by throwing petrol inside it. The one-man U.C. Banerjee Commission appointed by the Railway Ministry under Lalu Prasad Yadav had said that the fire was "accidental".  The Court accepted the conspiracy theory.