A guest lecture was organized for all the students of MITSOT on the topic: “Analysis of Union Budget: 2011” on 1st of March 2011 at 12pm.The eminent guest for the lecture was Mr. Sumedh Gupte, Manager, Market Development, Business Standard.
Mr. Sumedh Gupte with his varied experience in the field of marketing and finance analyzed the budget comprehensively. The issues discussed during the interaction with students were as follows:
1) Food items: The government is very keen on ensuring that inflation is curbed and food security is ensured for all citizens. Since inefficient distribution has been found to be the culprit for the sky rocketing of food prices, the FM has proposed to focus on reducing Production and Distributions bottlenecks. Food, vegetables, Meat etc will show an easing of prices in the medium term future.
2) Education: A higher allotment of funds in the form of over 24% hike as compared to last year for the Education Sector.
3) Income tax: More modernization of the taxation system is being mooted. A new form called “SUGAM” will make it easier for small tax payers to file their returns. A miniscule hike of Rs 20000 in the exemption limit for tax payers has been introduced. The older citizens can feel happy as the FM has decrease the income tax “senior citizen” definition from age 65 to age 60 thus giving a big benefit to those born between 1946-1951. And for those who survive all the hardships of life and live to be over 80 they get a higher limit!!
4) Selling off PSU’s: Continuing the focus on divesting government stakes in Public Sector Undertakings the FM has proposed to look at raising Rs 40000 Crores from divestment in 11-12
5) Foreign Investment: The business environment is set to improve for Foreign companies as the government is looking at further liberalizing the FDI policy. More Foreign Direct Investment can only be good for the economy.
6) Infrastructure is King: Rs 214000 Crores has been allotted for infrastructure for 2011-12. An increase of over 23% over the last year. We can see better highways and transport systems in the near future which could lead to reduction in inflation in the longer term.
7) Bring the money back: As expected the FM has taken note of the hue and cry over Black Money. Many new initiatives have been mooted to bring back black money in circulation.
8) Air travel and Medical aid to cost more: Service tax on air travel has been hiked. Hospitals with over 25 beds will have to pay tax on all services. So those posh hospitals could be giving you higher bills in the coming year.
9) Housing Loan: Loan limit has been enhanced to Rs 25 Lakh for housing under priority sector lending. Interest subsidy (subvention) of 1% on housing loan has been liberalized. People in the lower financial spectrum to get benefit from Mortgage Risk Guarantee Fund.
10) Agriculture: Higher allotment under Rashtriya Krishi Vikas Yojana of Rs 7860 Crores could see more support for the agriculture sector. Special focus on Vegetables in the form of Rs 300 crore for Vegetable initiative. Agriculture credit too raised to Rs 475, 000/- Crores. Happier farmers could mean lower prices for the common man. Focus on Cold Chains and Storage could also lead to efficiency and in return reduction in prices and better quality vegetables reaching our kitchens.
Bottom line: Overall a very low key budget that has not given great cheer to any particular sector except for Agriculture and Infrastructure. But to give credit to the FM, this focus on these two most critical sectors will only mean that in the longer term all of us get to benefit from better Food stability and Better infrastructure.