Budget 2014-15: Defence budget up by 10%, No major change in tax laws

New Delhi:  New Delhi: Presenting the Interim Budget 2014 in Parliament Finance Minister P Chidambaram on Monday proposed no major changes in tax laws. However, he slashed the excise duty from 12 percent to 10 percent on capital goods and consumer durables.

The Finance Minister said GDP growth has improved and will be 4.9 percent for the current financial year. Economic growth had slowed to a decade’s low of 4.5 percent in 2012-13.  India’s current account deficit (CAD) will be contained at USD 45 billion this financial year, well below the record high level of 2012-13, Finance Minister P Chidambaram said.

P Chidambaram has begun his interim Budget speech in the Lok Sabha while Seemandhra MPs continue to protest inside the House. Finance Minister P Chidambaram has tabled the interim Budget 2014 in the Lok Sabha, but is unlikely deliver the speech in the House as Seemandhra MPs continue to disrupt proceedings.

The full Budget for 2014-15 will be presented by the new government in June-July

Taxation

• No changes proposed in the tax laws
• Excise duty on consumer durables and capital goods cut from 12% to 10%
• Rice transport and process exempted from service tax
• Reduction in excise duty for auto sector
• Excise duty reduced for small cars from 12% to 8%
• Excise duty reduced for SUVs from 30% to 24% 
• Excise duty on medium cars reduced from 24% to 20%
• Excise duties on bikes/2 wheelers down to 8%
• Blood banks to be exempt from service tax

Others

• World economy has witnessed slowdown
• Global economic growth seen at 3%
• India one of the few countries that kept head above water during turbulent economic times
• I shall give you an account of how we navigated the turbulent waters of the Indian economy
• Objectives to revive growth cycle and enhancing manufacturing
• We shall not do anything that will affect the foundation of India’s economy
• India not facing a ratings downgrade from agencies
• Agriculture looking up
• Fiscal consolidation main aim
• Fiscal deficit of FY 2013-14 will be contained at 4.6%
• Current Account Deficit will be contained at USD 45 billion
• USD 15 billion will be added to forex
• Agriculture GDP growth is estimated at 4.6%
• Even after the slowdown the savings rate was 31% in 2012-13
• No steep decline in investment except in mining and manufacturing
• Food inflation worrying but falling
• Govt, RBI working in tandem to contain inflation
• Slowdown in manufacturing sector a worry area
• Exports have recovered sharply
• Govt sees investment rate at 34.8%; saving rate at 30.1%
• Food production estimated at 263 million tones
• Rupee has come under pressure
• Govt took several measures to encourage capital inflows
• Economy in better shape than 2 years ago
• My mother and Harvard taught me value of hard work
• Agricultural credit in FY14 at 7.35 lakh crore Vs 7 lakh crore aim
• Exports are pegged to grow to $326 bn; up 6.4%
• Cabinet panel cleared 296 projects by end of January
• Aim to create 1 million jobs
• 7 new airports under construction
• UPA I and UPA II delivered over trend rates
• Eased rules governing infra projects’ funding
• GDP fell to 4.4% from 7.9% in nine quarters
• GDP growth in Q3, Q4 FY14 seen at 5.2%; FY14: 4.9%
• Food Security Act ensures food to 67% of population
• PSU Capex seen at Rs 2.6 lakh cr in FY 14
• FY 15 investment rate target at 34.8%
• 29350 mw off power capacity added.
• 3343 km on new rail tracks
• 19 oil blocks were given out for exploration and 7 new airports are under construction
• Cabinet panel cleared 296 projects by end of January
• Several steps being taken to promote medium and small manufacturing units
  Food grain production stands at 263 MT
• Risks to capital flows have been accentuated due to global volatile conditions; the rupee came under pressure
• All this is because of hard work thanks Harvard and his mother for it
• FY’14 GDP growth seen at 4.9%
• FY 15 central assistance to sates at Rs 3.38 lakh crore
• FY 15 Agri GDP at 4.6%
• Proposal to star mega solar power projects in FY 15
• FDI norms liberalised in telecom, retail, aviation and pharma
• New Land Act notified
• Three more industrial corridors
• Chennai-Bangalore, Bangalore-Mumbai an Amritsar-Kolkata the stalled power capacity has been augmented
• I reject the argument of policy paralysis. UPA growth record is unparalleled. let history judge the last 10yrs
• Sugar sector was fully freed; Diesel was partially freed
• The new Land Act was notified to put to rest the oppressive colonial Land Act of 1894
• UPA took courageous and long overdue economic reforms
• We have approved two proposals that have received from the Nirbhaya fund
• The grant of rs 1000 crore for the fund is non lapsable, the fund will get another 1000 cr in the coming year
• Central assistance to states will increase from 1.36 lakh crore in 2013-14 to 3.38 lkah crore
• 100 crore for community radio, rs 1200 cr additional assistance to NE, himchal, Uttarakhand
• Govt fully committed to Aadhar
• Exports have recovered sharply, Exports are expected to grow to $326 billion, up by 6.4%
• Manufacturing is India’s Achilles Heel
• 10 crore Jobs will be created in next 10 years through industrial corridors
• Among emerging economy currencies, the rupee was affected least:
• Growth for the whole year will be at least 5.2%.
• I reject argument of policy paralysis, just like business cyclone there is also trend growth rate
• UPA 1 and UPA2 have delivered above the trend rate, let history judge our performance we are not looking back and are looking forward
• Power sector to add 50,000 MW
• Rs 200 crore Venture Fund with IFCI
• Committed to rolling out Aadhar cards
• 57 crore Aadhar cards given out
• Planned expenditure FY 13-14 kept same as proposed earlier of Rs 5.55 lakh crore
• Merchandise export to grow by 6.8 pc to $326 billion
• Coal production grew to 554 million tonnes Vs 361 mn tonnes over the decade
• Railways to get budgetary support of Rs 29,000 crore
• GDP growth rate in Q3 and Q4 of 2013-14 will be at least 5.2 %
• Food, fuel subsidy at Rs 2.46 lakh crore
• More than 54 lakhs transactions have been put through with DBT scheme
• FY 15 non-planned expenditure at Rs 12.07 lakh crore
• Defence allocation raised by 10%
• Govt has approved the National Agro Forestry Policy which will enhance employment

 

Budget allocations

• Minority affairs – Rs 3711 cr
• Tribal affairs – 4379 cr
• Housing and poverty alleviation – 6000 cr
• Social welfare- 6730 cr
• Panchayati raj – 7000 cr
• Drinking water and sanitaion – 15000 cr
• Women and child development – 21000 cr
• Human Resource Development – 67398 cr
• Rural development – 82202 crore
• Railways – 29000 cr
• More money for SC/ST subplan

 

Nonplan expenditure – 127892 cr

• Fuel subsidy – Rs 65000 cr
• GDP growth rate in Q3 and Q4 of 2013-14 will be at least 5.2%
• Food, fuel subsidy at Rs 2.46 lakh crore
• More than 54 lakhs transactions have been put through with DBT scheme
• FY 15 non-planned expenditure at Rs 12.07 lakh crore
• Defence allocation raised by 10%
• Urban Housing allocation Fund ay Rs 2000 crore
• No of bank accounts of minority community up to 42 lakh from 14 lakh 10 years ago
• Interest relief on students loans from PSU banks
• Government accepts in principle one rank one pension policy
• Govt liberalised Forex, ADR, GDR markets
• Defence allocation at Rs 2,24,000 crore
• Ministry of Health and Family Welfare gets Rs. 33,725 cr
• North East states to get Rs 1,200 cr this fiscal
• Rs 100 crore for community radio
• Banks to lend Rs 8 lakh crore
• FY15 PSU bank recapitalisation at Rs 11200 crore
• Rural Housing Fund at Rs 600 crore in FY 15
• Govt to strengthen regulatory laws governing commodities
• India’s economy at 11th position globally, aims to be third
• Aim at fiscal deficit of 3% by 2016-17
• Need foreign inflows to fund CAD
• PPP model needs to be used mire widely
• Regret that some insurance bills have not been passed by Parliament
• Govt needs to focus on building infra; building new cities and governance
• Skill development should be promoted
• FM questions about blocking of GST
• Govt should target subsidy on for needy: FM
• Disappointed that DTC not implemented
• Need for modern tax laws
• Time table should be there to pass new legislation
• Govt must focus on building up manufacturing capacity
• RBI must strike a balance between price stability and growth
• Proposal to amend the Forwards Contracts Regulation Act
• Govt liberalised Foreign investment rules in bond market
• 500 MW fast breeder test reactor in Kalpakkam to be ready shortly
• 7 nuclear power reactors under construction
• Fiscal deficit FY15 at 4.1%
• Rs 2,46,397 crore allocated for food, fertilizer and fuel subsidy
• Govt announces one rank-one pension scheme for retd defence personnel
• To be effective from 2014-2015
• 11009 cr for modernisation of central armed forces
• 5200 bank brnaches have been opendd so far against the target of over 8000
  banks will exceeded the target of 7 lkh crore target for agriculture loans, new target 8 lakh crore
• 66500 crore have been lending to minorities till march 2013
• 41600 women self groups extended loans
• PSU banks have 2505500 student loan accounts
• Govt will pay interest of the education loans till dece 2013 for loans taken before march 2009
• National Solar Mission to undertake 4 ultra mega solar power projects in 2014-15
• Govt was able to unearth 67 cases of Black Money
• Social Justice Ministry gets Rs 6730 crore; Panchayati Raj Ministry Rs 7000 crore
• Public Debt Management Bill ready
• FY15 interest subsidy pegged at Rs 8,463 cr
• Rs 3,370 crore to transferred to 2.1 crore LPG users

What to expect from the interim Budget

• The interim Budget essentially an economic report card of UPA-II
• Chidambaram will set the fiscal deficit target for FY15 and a roadmap for fiscal discipline
• A possible cut in indirect taxes for troubled sectors is indicated.
• An excise duty cut to revive manufacturing, specially the auto sector is also expected.
• In an election year, there could be more sops for health, food and rural jobs.
• Interest subsidy on bank loans to farmers and exporters could also be extended
• Tax concessions could be offered for some of the poorer regions in the country.
• The government could also defer oil, fertilizer and other subsidies to next year
• Revenues could include proceeds from the recently concluded spectrum auction.

Bureau Report