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HindustanTimes Sat,26 Jul 2014
Responsible, but a thinly spread budget
First Published: 01:23 IST(1/3/2013)
Last Updated: 01:24 IST(1/3/2013)

The overall backdrop to this year's budget is one that any finance minister (FM) would wish to avoid. On the macroeconomic front, the FM needed to address the major challenges of dwindling growth, stubborn inflation, high fiscal and current account deficits and falling savings rate.

On the political front, he was expected to improve the mood of the electorate via populist moves. The FM has tried to meet all these, often conflicting, objectives by presenting a practical budget.

With the focus on cutting the deficit, the budget will not stimulate growth in the short run. But these steps will encourage domestic savings and boost the confidence and expectations of domestic and foreign investors. What does the budget mean for growth and inflation and interest rates?

High deficits indicate that the government is living beyond its means. The FM has tried to correct this imbalance by cutting expenditures and scouting for new sources of revenues. He plans to end 2013-14 with fiscal deficit at 4.8% of the GDP.

The budget is premised on an aggressive revenue growth of 23.4% along with expenditure growth of 16.4% in 2013-14 as compared to the revised estimates of 2012-13.

With the revenue collection falling below the budgeted revenue in four of the past five years, including the current fiscal, the revenue target for 2013-14 looks ambitious.

Therefore, we expect the fiscal deficit target to slip marginally.

When the government cuts fiscal deficit, it can dampen short-run growth prospects. Thus, the budget will not give a direct stimulus to GDP growth in 2013-14 via increased spending. But it does create a climate for interest rates to come down.

Taking cues from the fiscal consolidation effort of the government, we expect the RBI to cut interest rates by 50-75 basis points. Lower interest rates will be one of the drivers of GDP growth in 2013-14, which we expect at 6.4%.

An important push will come from agriculture, if monsoon stays normal. The improvement in global growth will also stimulate India's exports.

However, some of the announcements that would have a positive impact on private sector investment are - allowing deduction of an investment allowance of 15% on investment of Rs. 100 crore or more in plant and machinery, continuation of Technology Upgradation Funds Scheme for textile sector in 12th plan, setting up of two new industrial corridors, etc.

Allowing additional deduction of Rs. 1 lakh on interest up to a housing loan of Rs. 25 lakh is expected to spur housing construction activity.


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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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