February 10, 2012

What India expects from Union Budget 2012

Tax-payers of India expect a lot of modifications in the economic sector in the Union Budget 2012 because the last financial year was not an inspiring one.

When the inflation was imbalanced, the unlikely hike in price of fuel and general commodities was the main reasons for this failure.

Although the Union Budget is fixed to be presented on the last working day of February, this year it will be presented on March 16 because of the assembly elections in five states — Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur.

As the Budget day comes closer, everybody starting from ‘aam aadmi’ to the ‘corporate bulls’ wait for the event and being a rational man and abiding the economic Law of Equimarginal utility, of course they expect maximum fiscal benefit.

This year the expectation includes relaxation in service taxes, subsidy in FDI norms in sectors like Banking, financial services, Media and Insurance, tax reforms in Goods and Services Taxes and subsidy on Gas, Oil, foods etc. Let us discuss it categorically.


Budget 2012 is expected to provide more support to increase the production of food and commodities akin to daily need items like vegetables, milk etc. so as to curb the inflation, which was a great failure last year.

Tax Exemptions

The personal Income tax exemption limit is expected to be raised to 2, 00,000. The service tax is also expected to be reduced from 10 percent.

Hike in Gold Import Duty

Despite the rise in price of gold there was an incessant swell in the demand for the purchase of the yellow metal. Hence Gold import duty or import duty on metals is expected to be increased in this budget.


The Indian economy hangs on primarily on the infrastructure investment and timely execution of the projects. Hence through dedicated debt funds the budget is expected to focus on infrastructure development.


Lalu had proved himself by achieving a huge financial success from the railway without hiking passenger fares. However the pace could not be maintained. Also Railway’s earnings have suffered a huge loss due to enhancement of Naxal activities in some states. Hence the upcoming budget is expected to give utmost priority to the railway.

Fuel Price

Not only fiscal the hyper hike in petrol price had brought even a political turmoil last year. Hence Union finance Minister Pranab Mukherjee is not going to leave any stone unturned to deal with this subject properly in the coming budget.

Social Sector

Last year the government earned a substantial income from this sector. Hence this year, most of these funds should be up for utilization for grass-root social development programs in areas such as primary health, primary education, law and order, family welfare etc.

FDI in Retail

This was the hottest debate last year in the context of economic reform. With an intention to do away with the hindrance in the supply chain which is obstructed by ineffective distribution channels the UPA govt. is expected to take a firm step in this context also in the 2012 budget.

After 1992-93 India entered into a different status quo in terms of investment and Economics when the then finance Minister Dr. Manmohan Singh adopted the liberalization policy. He encouraged foreign investments and reduced peak import duty from 300 plus percent to 50 percent.

Also the introduction of public-private partnership (PPP) model in different sectors is quiet encouraging. Hence, finally it can be expected that the 2012 budget will be presented keeping in view all the above points.

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