Budget assumptions

• Real GDP growth is forecast at 9% (plus or minus 0.25 percentage points)
• Wholesale price inflation is forecast at 5%
• The central government fiscal deficit is forecast at 4.6% of GDP, narrowing from an estimated 5.1% in 2010/11. The deficit is projected to shrink to 4.1% in 2012/13 and 3.5% in 2013/14
• Disinvestment proceeds are expected to rise by 76%, to Rs400bn (US$9bn)
• The tax to GDP ratio is projected to rise to 10.4% in 2011/12 and 10.8% in 2012/13

Spending proposals

• Infrastructure spending is to rise by 23.3%, to Rs2.1trn (US$46.7bn)
• Defence spending is to be increased by 12%, to Rs1.6trn
• The rural infrastructure development fund is to be raised to Rs180bn
• Social sector spending is to increase by 17%, to Rs1.6trn
• A raft of measures are to be introduced to boost the agricultural sector

Tax policy

• The personal income tax exemption limit is raised from Rs160,000 (around US$3,500) to Rs180,000
• The standard rate of excise duty and services tax is held at 10%
• The scope of services tax is to be widened
• The main corporate taxes are unchanged, but the minimum alternate tax on book profits is raised from 18% to 18.5%

Reform proposals

• A food security bill is to be introduced in 2011/12
• Infrastructure debt funds are to be created
• Infrastructure growth is to be boosted with tax-free bonds of Rs300bn
• The foreign institutional investor limit in five-year corporate bonds for investment in infrastructure is to be raised by US$20bn
• There are plans to permit mutual funds registered with the Securities and Exchange Board of India to access subscriptions from foreign investments
• A public-debt bill is to be introduced in parliament