HindustanTimes Thu,18 Dec 2014
Budget 2013: finance minister offers growth tablet
Gaurav Choudhury, Hindustan Times
New Delhi, March 01, 2013
First Published: 01:02 IST(1/3/2013)
Last Updated: 15:21 IST(1/3/2013)
A file photo of finance minister P Chidambaram.

Finance minister P Chidambaram delivered a carefully crafted budget on Thursday that sought growth and resisted the temptation to be populist ahead of looming state and general elections.

With the country still at risk of a debt downgrade, prudence unsurprisingly dominated the UPA II’s last budget before the 2014 polls, but there was something in it for three crucial constituencies: youth, women and people entering the ranks of the middle class.

Youth got a large allocation for improving skills, a new public sector bank was created for women and the emerging middle-class got breaks on income tax and home loans.  And industry, a group that likes Chidambaram, got reason to cheer: for the first time in nearly a quarter of a century, it was given a generous tax break on capital expenditure.

That said, at first flush, there appeared to be little that stood out in the budget, which was predictably panned by the Opposition and welcomed by business leaders. But a joining of the dots revealed a clear pattern to Chidambaram’s thinking: the first priority is growth and investment. Achieve this, and jobs and the ability to spend will follow.

“Getting back to that growth rate (8%) is the challenge that faces the country,” the Harvard-educated finance minister said during the course of a one-hour-and-45-minute speech in which he invoked Tamil saint Tiruvalluvar on the importance of being steadfast.

Noting that growth of an economy was correlated to the investment rate, Chidambaram said: “The key to restart the growth engine is to attract more investment both from domestic investors and foreign investors.”

The extent of the task was underlined hours after the budget speech, when data showed that the economy grew at a weak 4.5% in the third quarter, setting the country on course for its worst annual growth in a decade, crimped by poor factory output and patchy monsoons.  The Sensex stock benchmark ended 1.5% lower and the rupee fell.

To spur investment, Chidambaram introduced a 15% investment allowance for companies investing Rs. 100 crore in plant and machinery, over and above depreciation. And he unveiled other growth-oriented measures like industrial corridors between Chennai and Bengaluru and between Bengaluru and Mumbai.

With a view to leaving the emerging middle-class with a little more to spend, Chidambaram offered tax exemptions to those who earn between Rs. 2 lakh and Rs. 5 lakh a year, a move that will benefit 18 million taxpayers, or about half of the country's tax base.

"I propose to provide a tax credit of Rs. 2,000 to every person who has a total income up to Rs. 5 lakh," Chidambaram said. The measure will, in the final analysis, yield tax-payers a benefit of Rs. 3,600 crore.

First-time home buyers will get an additional deduction on interest of Rs. 1 lakh for home loans up to Rs. 25 lakh.

But "relatively prosperous" persons with a taxable income over Rs. 1 crore — and there are supposedly only 42,800 of them in India — will have to pay an additional surcharge of 10%.

Chidambaram also increased the excise duty on most sports utility vehicles (SUVs) and customs luxury cars, superbikes and yachts, making these goods costlier but earning the exchequer precious revenue.

The budget was not without a dose of populism.

The minister set aside ample resources to fund a proposed food scheme, which once voted into law, will entitle two out of three Indians to government-subsidised rice and wheat. The scheme will cost an additional Rs. 10,000 crore more to the exchequer.

It will be the latest addition to the UPA regime's welfare cupboard, joining the ranks of successful entitlement programmes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme.

Chidambaram, a 67-year-old lawyer-turned-politician in his third term as finance minister, has had to grapple with the impact of stalled reforms, policy missteps, high inflation and the perennial threat of a downgrade by credit rating agencies.

From a foreign investors' darling to a slowing economy, the deterioration in India's image has been rapid and demoralising.

Foremost among the worries over the economy has been the widening fiscal deficit, or the amount of money the government has to borrow to fund its expenses.  Chidambaram pledged a fiscal deficit of 4.8% of GDP in 2013-14, down from 5.2% this fiscal.

The minister raised the annual allocation for defence, a sector recently rocked by charges of kickbacks in a deal involving the purchase of luxury helicopters, by 14% to Rs. 2,03,672 crore for 2013-14. India is the world's biggest importer of arms.

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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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