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HindustanTimes Fri,01 Aug 2014
Budget is pragmatic and credible
First Published: 00:13 IST(1/3/2013)
Last Updated: 10:02 IST(1/3/2013)
Opposition parties slam FM’s ‘lollypop’ budget

The macroeconomic context to this year's Union Budget was very challenging. Earlier, the Prime Minister had reminded us about our predicament in 1991. While the present situation is not as dire, the challenge of the twin deficits loomed large. High oil prices caused current account to widen, and in turn caused fiscal deficit to worsen. Growth had dropped from a high of 9.3% a few years ago to barely 5%. To top it all, rating agencies threatened a downgrade, especially due to the fiscal situation. The finance minister's challenge was thus to walk a tightrope between collecting higher tax revenues, reviving growth and increasing social sector spends. 

This is, after all, the last pre-election budget for the government. Considering all these constraints, the FM has given us a pragmatic and credible budget.

It comes in the wake of several reform-oriented decisions already taken by the government since the FM assumed office in August. These included capping subsidies on fuel, and enabling FDI in several sectors. The FM has sought to provide a growth impetus in this budget through a variety of measures. These include investment allowances, funding for infrastructure, private public partnerships, and focus and boost to housing. The tax holiday of section 80IA is an example which will bolster infrastructure. The port sector and inland waterways are but two examples of several initiatives in infrastructure, which will bear fruit in the medium term. The new funding for infrastructure bonds also augur well. Housing is a sector which has a huge multiplier effect, because of a direct impact on construction, as well as an indirect impact on demand for consumer goods. It is also crucial for job creation. Hence, focus on housing is well timed.

The FM's emphasis on education and human capital mirrors what was described in great detail in the Economic Survey. India's demographic dividend gives it a unique structural advantage. In the next 10 years we will add almost 20 million young workers to the labour force each year. For such large scale quality job creation, we need to improve the business climate, especially for SMEs, and also increase the skills and human capital of the youth entering the labour force.

The SME sector gets an opportunity to raise capital with a lighter regulatory burden. The FM has also outlined several ways to revive financial savings through bond and equity markets, and also inflation indexed bonds. This raising of the domestic savings rate will have an impact on the current account.

This budget has hugely stressed the human capital aspect. Even though the overall projected spending growth is more than 16%, the mix is much more toward Plan spending, i.e. capital items.

On the revenue side, keeping excise and service tax rates unchanged is welcome, especially in the current slowdown phase. The surcharge on high-income bracket was perhaps inevitable, but should also be accompanied with continuing effort to widen the tax net. 

Overall, the budget maintains extreme fidelity to the vision of inclusive and sustainable growth.


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Highlights: Budget 2013  »

  • Expect higher revenue next year: Chidambaram
  • Unclear what the expense on food subsidies be at this stage: Chidambaram
  • Fuel subsidy likely to be lower this year: Chidambaram
  • Immediate goal is to achieve growth rate of 6%: Chidambaram
  • We have to be patient and wait for the economy to pick up: Chidambaram
  • We have not put impossible burdens on people: Chidambaram
  • The only way to contain current account deficit is to increase exports: Chidambaram
  • Confident that RBI will do it's part: Chidambaram
  • Economy is challenged in a number of ways: Chidambaram
  • This is a lollypop election budget: CPI leader Gurudas Dasgupta
  • Budget has ignored SC/ST: Mayawati
  • Budget will only benefit industrialists, not common man: Mayawati
  • Budget will give impetus to Bihar's demand for special status: Nitish Kumar
  • FM has taken important steps to reverse pessimistic mood with regard to our economy: PM
  • There is need to convert challenges into opportunities: PM
  • The Finance Minister has done a commendable job: PM
  • Direct Benefit Transfer scheme to be rolled out
  • Ships and vessels exempted from excise duty
  • Direct tax code to be introduced in budget session of the Parliament
  • Set-top box import duty hiked
  • Gold duty limit raised to Rs. 50,000 for men; Rs. 1 lakh for women
  • 100% customs duty on luxury cars
  • Increase in import duty on high end bikes from 75% to 100%
  • 6% duty on mobile phones worth more than Rs. 2000
  • Excise duty on cigarette, cigar and cheeroot increased by 18%
  • Import duty on raw silk hiked to 15%
  • Luxury imported items to cost more
  • Donations to National Children's fund will be eligible for 100% tax deduction
  • No plans to revise direct taxes
  • No change in customs and excise duty
  • Tax credit of Rs. 2000 for those with income upto Rs. 5 lakh
  • Education cess at 3%
  • donations to be tax free
  • Surcharge of 10% on individuals, companies whose income is above Rs. 1 crore per year
  • No revision in tax slabs
  • Planned expenditure to be 33% of total expenditure
  • Rs. 1,000 crore allocated to women safety fund
  • Defence budget allocation increased to Rs. 2 lakh crore
  • Insurance and pension funds can now directly invest in debt funds
  • Domestic workers, Anganwadi workers, others to get group insurance
  • 13 public sector banks to get Rs. 14,000 crore
  • Propose to provide Rs. 14,000 cr for capital infusion in public sector banks
  • Inflation indexed bonds and NSCs to be introduced
  • JNNURM is being continued in the 12th Plan; Rs. 14,873 cr to be provided to the Mission
  • Rs. 33,000 crore to be allocated to MNREGA
  • Rs. 6000 crore for rural housing fund, Rs. 2000 cr for urban housing fund
  • Two new ports to be built in West Bengal and Andhra Pradesh
  • All towns having population of 10,000 to get LIC office
  • Rashtriya Swasthya Bima Yojna to be extended to rickshaw pullers and rag pickers
  • List of eligible securities will be enlarged: Chidambaram
  • SEBI to simplify procedures for entry of foreign portfolio investors in India: Chidambaram
  • India's first all-women public sector bank to be set up
  • All public sector bank branches to have ATMs
  • Focus on modernisation of powerloom sector
  • Propose to continue with the technology upgradation, funds scheme for textile sector: Chidambaram
  • Rs. 1650 cr allocated for AIIMS like institutes
  • Natural gas pricing policy will be reviewed: Chidambaram
  • Person taking home loan for the first time to get tax cut of Rs. 1 lakh
  • Regulatory authority to be set up for road sector
  • Rs. 17,700 crore to be allocated for Integrated Child Development Scheme
  • Rs. 5000 cr allocated to NABARD
  • Income level of Rajiv Gandhi equity schemes increased by Rs. 2 lakh
  • Rs. 80, 194 crore allocated for rural development: Chidambaram
  • Rs. 25,000 cr to be raised through tax free bonds: Chidambaram
  • Rs. 10,000 crore for food security bill promised by UPA: Chidambaram
  • Infrastructure debt fund to be encouraged: Chidambaram
  • Rs. 37,330 cr allocated to ministry of health and family welfare: Chidambaram
  • Rs. 41,000 allocated for scheduled caste welfare: Chidambaram
  • Rs. 27,49 cr to be allocated to the agriculture ministry: Chidambaram
  • Plan expenditure in 12th Five Year Plan revised to Rs. 14,30,825 cr or 96% of budgeted expenditure
  • Scholarships for students from SC/ST, minority communities: Chidambaram
  • Rs. 110 cr to be allocated to department of disability: Chidambaram
  • Increased allocation for safe drinking water and sanitation: Chidambaram
  • Increased allocation for mid-day meal schemes: Chidambaram
  • Rs. 65,000 cr allocation for education schemes: Chidambaram
  • Rs. 110 cr to be allocated to department of disability: Chidambaram
  • Need $ 75 billion to bridge current account deficit: Chidambaram
  • 2013-14 budget has sub-plans for SC, ST, youth and women: Chidambaram
  • Foreign investment imperative for growth: Chidambaram
  • Our economy has slowed down after 2010: Chidambaram
  • No choice but to cut spendings to control inflation: Chidambaram
  • China and Indonesia are growing faster than India: Chidambaram
  • Getting back to 8% growth is a challenge for country: Chidambaram
  • Our goal is higher growth: Chidambaram
  • Between 2004-2008 and again in 2009-10, 2010-11 the growth rate was over 8%: Chidambaram
  • P Chidambaram begins budget address in Lok Sabha
  • Cabinet endorses Union Budget 2013-14, to be presented in Parliament shortly.
  • Finance minister P Chidambaram reaches North Block.
  • Chidambaram set to present India's 82nd national budget.
  • Today's Union Budget will be Chidambaram's eighth personal exercise.
  • It's two short of the record of 10 set by former PM Morarji Desai.
  • Since Independence, the country has seen a total of 25 ministers hold the finance portfolio.
  • India has also seen budgets - 65 normal annual budgets, 12 interim budgets and four mini-budgets.
  • Morarji Desai presented eight normal and two interim budgets.
  • Thursday will see Chidambaram equal the eight-budget track record of Pranab Mukherjee.
  • Chidambaram will surpass Yashwant Sinha, YB Chavan and CD Deshmukh who all presented seven budgets each.
  • PM Manmohan Singh and TT Krishnamachari have presented six budgets each.
  • Jawaharlal Nehru, Indira Gandhi, Rajiv Gandhi have presented one budget each.
  • Sensex closed up more than half a percent a day before the union budget 2013-14
  • It will be the eighth such personal exercise for him
  • Chidambaram set to present India's 82nd national budget in Lok Sabha

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