UNION BUDGET 2014-15 : HIGHLIGHTS !!!

GROSS DOMESTIC PRODUCT ESTIMATED TO GROW AT FY15 at 5.4 % - 5.90 %

AT CURRENT PRICES THE ADVANCE GDP ESTIMATE OF 2013 - 14 IS ₹ Rs. 105,39,605 LAKHS CR AND AT 2004-05 PRICES ITS AT Rs. 57,48,564 LAKHS CR.

FY15 FISCAL DEFICIT AT Rs. 5,31,177 CR.
FY15 TOTAL SUBSIDES AT Rs. 2,51,397 CR.

FY15 FERTILIZER SUBSIDIES AT  Rs. 72,970 CR,

FY15 FOOD SUBSIDIES AT  Rs. 1,15,000 CR

FY15 OIL & PETROLUEM SUBSIDIES AT  Rs. 63,427 CR.

FY15 NET MARKET LOANS = Rs. 4,61,205 CR

FY15 STATE PF = Rs. 12,000 CR.

FY15 EXTERNAL AID = Rs. 5,734 CR.

FY15 LESS OTHERS = Rs. 7,704 CR.

THE CENTER'S EXPENDITURE 2014-15 IS PROJECTED AT Rs. 17,94,892 Cr.

IN FLOW (Rs. in Cr)
TAX RECEIPTS	9,77,258
CORPORATE TAX	4,51,005
INCOME TAX	2,84,266
CUSTOMS DUTY	2,01,819
EXCISE DUTY	2,07,110
SERVICE TAX	2,15,973
TAX OF UNION TERRITORY	3,401

NON TAX RECEIPTS	AMOUNT
INTEREST RECEIPTS	19,751
DIVIDENDS & PROFITS	90,229
EXTERNAL GRANTS	2,405
OTHER NON TAX RECEIPTS	99,009
RECEIPTS OF UNION TERRITORY	1,111
TOTAL	2,12,505

NON DEBT CAPITAL RECEIPTS	73,952
RECOVERY OF LOANS & ADVANCES	10,527
MISC. CAPITAL RECEIPTS	63,425

* Out of the Tax Receipts the Center has to keep aside States share of Rs. 3,82,216 cr & for Calamity & Contingency Fund of Rs. 5,050 crs.

OUT FLOW (Rs. in Cr)
PLAN EXPENDITURE	5,75,000
NON PLAN EXPENDITURE	12,19,892
OR
REVENUE EXPENDITURE	15,68,111
CAPITAL EXPENDITURE	2,26,781
DEFENCE	2,29,000
SUBSIDIES	2,51,397
GRANTS TO STATES & UTs	69,084
PENSIONS	81,963
INTEREST PAYMENTS	4,27,011
LOANS TO PSUs	653
OTHER GENERAL SERVICES	36,569
Subsidity to Railway towards Dividend	4,059
CENTRAL PLAN	2,36,592
POSTAL DEFICIT	6,908
EXPENSES of UTs with out Legislature	4,402
NON PLAN CAPITAL OUTLAY	10,039
ECONOMIC SERVICES	22,075
GRANTS TO FOREIGN GOVT.	4,478
CENTRAL PLAN AID TO STATES	3,38,408
SOCIAL SERVICES	25,324
POLICE SERVICE	46,930

SOME MORE POINTS FROM BUDGET

®  Tax to GDP ratio to be at 10.60 % in FY15, and must be improved & Non-tax revenues should be increased.

®  Govt. committed to achieve Fiscal deficit target of 4.1 % of GDP followed by fiscal deficit of 3.6 % for 2015-16 and 3.00 % for 2016-17.  

®    Rs. 2,29,000 Cr allocated to Defence sector.

®    PSU Banks to be capitalized Rs. 2,40,000 Cr by 2018.

®    No Changes in Tax Rates for Individuals.

®   Personal Income Tax exemption limit raised by Rs. 50,000 from Rs.2,00,000 to Rs. 2,50,000 for people below 60 years.

®    Investment limit Under Section 80C raised from Rs. 1 lakh to Rs. 1,50,000.
®   Annual PPF ceiling to be raised to Rs. 1,50,000 from Rs. 1,00,000.

®    Housing Loan Rebate to raise from Rs. 1,50,000 to Rs. 2,00,000.

®    PSUs will invest through Capital Investment a total sum of Rs. 2,47,941 Cr in current financial year. 

®    Provided Rs. 7,060 Cr in the current fiscal for the project of developing "One Hundred Smart Cities".

®    E- Visas to be introduced at 9 airports and to facilitate visas on arrivals.

®   New Airports to be developed through PPP mode in tier -II and tier-III , 16 new          ports to be set up and Rs. 11,000 Cr to be allocated to that.

®    Retrospective Tax Amendment to be undertaken with extreme caution.

®  Incentives for Real Estate Investment Trusts (REITS) and will be given complete pass through for the purpose of taxation. A modified REITS type of structure for infrastructure projects as Infrastructure Investment Trusts (INVITS), the REITS & INVITS will attract long term finance from foreign and domestic sources including NRIs.

®    Govt. to provide investment allowance at 15 % for 3 years to manufacturing company which invest more than Rs. 25 Cr in plant and machinery.

®  A sum of Rs. 100 Cr provided to transform Employment exchanges into Career Centres.

®  The composite cap of Foreign Investment to be raised to 49 % with full Indian management & Control through the FIPB route this includes Insurance sector where the limit is raised from 26 % to 49 %. And the requirement of the built up area and capital conditions for FDI to be reduce from 50,000 Sq. meters to 20,000 Sq. meters and from $10 million to $5 million respectively for development of smart cities.

®    The Manufacturing Units to be allowed to sell its products through retail including E- Commerce platforms.

®   PSUs will invest through capital investment to a tune of Rs. 2,47,941 Cr in current  financial year.    

®    FY15 disinvestment target Rs. 63,425 Crs and 43,425 Cr through disinvestments in  PSUs.

®   For assured irrigation a sum of Rs. 1000 Cr provided for 'Pradhan Mantri Krishi  Sinchayee Yojna".

®     To provide Rs. 14,389 Cr for Pradhan Mantri Gram Sadak Yojna.

®      Bank loans for women Self Help Groups at 4% to be extended to another 100 districts   under Ajeevika scheme. 

®   Initial sum of Rs. 100 Cr for Start-up Village Entrepreneurship Programme for     encouragement of rural youth to take up local entrepreneurship programmes.

®  EPFO to launch the Uniform Account Number service for contributing members.  Government notified a minimum pension of Rs. 1000 per month to all subscribers’  members of EP Scheme for that initial provision of Rs. 250 Cr is made. Also another  Rs. 250 Cr provision is made for the increase in mandatory wage ceiling of  subscription to Rs. 15,000 Cr.

®   A sum of Rs. 500 Cr to be allotted to Pan India programme "Digital India" and a       programme for promoting Good Governance to be launched with a sum of Rs. 100 Cr.

®  A tune of Rs. 100 Cr to be allocated for 600 new and existing Community Radio Stations. Rs. 100 Cr is provided for Kisan TV to disseminate real time information to farmers on issues like farming techniques, water conservation, organic farming etc.

®   Allocation of Rs. 8000 Cr to National Housing Bank to support Rural Housing. And slum development to be included in the list of Corporate Social Responsibility activates to encourage the private sector to contribute more.

®   A sustainable growth of 4 % in Agriculture will be achieved, to mitigate the risk of Price volatility in the agri produce a sum of Rs. 500 Cr is provided for establishing a Price Stabilization Fund. A target of Rs. 8 lakh Cr has been set for agriculture credit during 2014-15. Allocation of Rs. 5,000 Cr provided for the Warehouse Infrastructure Fund.

®   Allocation of Rs. 100 Cr to be provided for setting up National Industrial Corridor  Authority.

®    Fund of Funds with a corpus of Rs. 10,000 Cr for providing equity through venture  capital funds, quasi equity, soft loans and other risk capital specially to encourage new  start-ups by youth to be set up. Entrepreneur friendly legal bankruptcy framework  will be developed for SMEs to enable easy exit.

®    A sum of Rs. 500 Cr for developing a textile mega cluster at Varanasi and six more at Bareilly, Lucknow, Surat, Kutch, Bhagalpur and Mysore.

®    A sum of Rs. 11,653 Cr will be allocated for the development of outer harbour Project  in Tuticorin for Phase I. SEZs will be developed in Kandla and JNPT.

®    An investment of an amount of Rs. 37,880 Cr in NHAI and State Roads is proposed  which includes Rs. 3,000 Cr of North East.

®  Allocation of Rs. 100 Cr for new scheme Ultra-Modern Super Critical Coal Based Thermal Power Technology.

®   Ultra-modern power project to be taken up in Rajasthan, Tamil Nadu, Ladakh with Rs. 500 Cr.

®  Rs. 3600 Cr set aside for National Rural Drinking Water. Rs. 2,037 Cr set aside for integration of Ganga Development Project under name Namami Ganga.

® Uniform KYC across the financial sector with single Demat for all the financial transactions.

®  Banks to be permitted to raise long term funds for lending to infrastructure sector with minimum regulatory pre-emption such as CRR, SLR and priority sector lending (PSL).

®    Service Tax exempt on loading, unloading, storage, warehousing and transportation of cotton, whether ginned or baled.

®    To promote tourism, services provided by Indian tour operators to foreign tourists in relation to a tour wholly conducted outside India to be taken out of tax net and Cenvat credit for services of rent-a-cab and tour operators to be allowed.

®  Sale of space or time for advertisement in broadcast media, extended to cover such sales on other segments like Online and Mobile advertising will now come under service tax, Sale of space in Print media however remains excluded. Services provided by Radio-Taxis brought under service tax.

®   Net effect of Direct Tax proposals is Revenue Loss of Rs. 22,200 Cr.  

®  Personal Computers, Electronic goods to be Cheaper, CRT TVs to be cheaper. Basic custom duty on LED panel below 19 inch made NIL.

® Excise duty on footwear reduced from 12 % to 6 %. Footwear below Rs. 500 is exempt, 6 % duty on footwear above Rs. 500 but below Rs. 1000.

®    Duty on packaging Machinery to be at 4 %; Specified Food Processing machinery to 6 %, Cigarettes at 22 %.

®    Clean Energy cess increased from Rs.0.50/ tonne to Re. 1/tonne. 

®    Tax proposals on Indirect tax front would yield Rs. 7,525 Cr.

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UNION BUDGET 2014-15 : HIGHLIGHTS OF INTERIM BUDGET !!!

India's Interim Budget or VOTE ON ACCOUNT....(Full Year Budget on JUNE -JULY 2014.)

GROSS DOMESTIC PRODUCT ESTIMATED TO GROW AT 4.9 %, +/- 0.5 % IN FY14 - 15. 

AT CURRENT PRICES THE ADVANCE GDP ESTIMATE OF 2013 - 14 IS ₹ Rs. 105,39,605 LAKHS CR AND AT 2004-05 PRICES ITS AT Rs. 57,48,564 LAKHS CR.

FY15 TOTAL SUBSIDES AT Rs. 2,46,397 CR.

FY15 FERTILIZER SUBSIDIES AT  Rs. 67,971 CR.

FY15 FOOD SUBSIDIES AT  Rs. 1,15,000 CR.

FY15 OIL & PETROL SUBSIDIES AT  Rs. 63,427 CR.

FY15 FISCAL DEFICIT AT Rs. 5,28,631 CR.

THE CENTER'S EXPENDITURE 2014 - 15 PROJECTED AT Rs. 17,63,214 Cr.

BUDGET AT GLANCE (₹. in Cr) - 2014-15
1) REVENUE RECEIPTS	11,67,131
2) Tax Revenue (net to Centre)	9,86,417
3) Non- Tax Revenue (net to Centre)	1,80,714
4) CAPITAL RECEIPTS (5+6+7)	5,96,083
5) Recoviers of Loans	10,527
6) Other Receipts	56,925
7) Borrowings & other liabilities	5,28,631
8) TOTAL RECEIPTS (1+4)	17,63,214
9) NON PLAN RECEIPTS	12,07,892
10) On Revenue account  of which	11,07,781
11) Interest Payments	4,27,011
12) On Capital Account	1,00,111
13) PLAN EXPENDITURE	5,55,322
14) On Revenue account	4,42,273
15) On Capital Account	1,13,049
16) PLAN EXPENDITURE (9+13)	17,63,214
17) Revenue Expenditure (10+14)	15,50,054
18) Of which Grants for creation of Capital Assets	1,46,581
19) Capital Expenditure (12+15)	2,13,160
20) REVENUE DEFICIT (17-1)	3,82,923
21) EFFECTIVE REVENUE DEFICIT (20-18)	2,36,342

22) FISCAL DEFICIT (16- (1+5+6))

5,28,631

23) PRIMARY DEFICIT (22-11)

1,01,620

SOME MORE POINTS FROM BUDGET:-

• No change in Income tax rates and slabs.
• Growth in Q3 and Q4 FY14 will be at least 5.2 %
• Fiscal Deficit to be contained at 4.6 %.
• Current Account Deficit will be contained at $45 million and can only be addressed by Foreign Investments.
• Core Inflation to be at 3 % but Food Inflation remains a Key worry.
• Agriculture GDP growth is expected at 4.6 % in current year.
• Exports have recovered sharply and is estimated at $ 326 billion in current fiscal.
• Gov to start 4 Ultra Mega Power Projects in FY15 and over 29,000 MW of power capacity to be added during the fiscal, there is a construction underway for 50,000 MW of conventional (thermal) Power.
• Two projects sanctioned under Nirbhaya Fund; orignal Rs. 1,000 Cr made non- lapsable; another Rs. 1000 Cr granted.
• There were 296 projects worth Rs. 6,60,000 Cr cleared by Cabinet Committee on investment by end of January 2014.
• Agriculture credit will cross $45 billion as against $41 billion in 2012-13.
• Food grain production estimated at $ 263 million tons in 2013-14.
• Foreign Exchange Reserves up by $ 15 billion.
• Over rs. 45,000 Cr allocated for scheduled caste sub-plan.
• Budgetary support to railway at Rs. 29,000 Cr in 2014-15.
• Plan Expenditure to be at Rs. 5,55,322 Cr in 2014-15.
• Non- Plan Expenditure in 2014-15 is estimated to be over Rs. 10 lakh Cr.
• Defence sector allocated Rs. 2.24 lakh Cr an increase of 10 % in the allocation inFY15.
• Govt approves 1 rank 1 pay for retired jawans.
• Proposes Rs. 11,200 Cr for Capital Infusion in Public Sector Banks.
• Budgetary support to railways raised to Rs. 29,000 Cr.
• All taxes on Eports to be waived for manufacturing sector.
• Community Radio to be promoted with Rs. 100 Cr.
• Excise duty on capital goods reduced from 12 % to 10 %.
• Cars to be cheaper as FM proposes to reduce excise duty on Automoblies. Excise duty on small cars.motorcycles reduced fom 12 % to 8 %.
• Excise duty onSUV's reduced to 24 % on large cars to 20 %.
• Excise duty for all mobiles phones to be 6 %.
• Saops, TV, Fridges to be cheaper now.
• Growth for next year should be 5 %.

India's Interim Budget or VOTE ON ACCOUNT..what it means ?

A national interim Budget refers to the budget of a government that is going through a transition period. These budgets are common in democracies where one political party or a coalition is voted out and another political party or a coalition is voted into office. The two governments often have different fiscal plans, so the old government budget is cut short and a new budget is created. The interim Budget helps span the transition time between the two governments so that the government can continue to function. Countries like India use the term interim Budget specifically to describe this period. A national interim Budget is created out of necessity. National governments require interim budgets to function in the months it takes for a new government to create its own budget plan.

A vote-on-account presents an estimate of expenditures to be sanctioned by the exchequer till the Budget is passed. The Budget announces new programmes and estimates the public expenditure for the fiscal year. A vote-on-account cannot alter direct taxes since they need to be passed through a finance bill. In the Budget, fresh taxes may be imposed, old ones may go. Direct taxes like income tax and indirect taxes are both open to change. The common feature is that both include the previous year's financial performance of the government.

The significance:

The government cannot present a full budget because in such a short session, there's no time to debate proposals in Parliament. Expenditure for new schemes will have to form part of the new budget, which can be approved only after April 1. Also, it is ideally the new government's prerogative to decide how it'll raise and spend money. The newly formed government cannot be burdened by the previous government's budgetary allocations. While these are the technicalities, many look upon the vote on account as election rhetoric. Many look at it as a window where the government highlights its achievements ahead of elections. Experts say voters reward you for what you did in the first four years rather than what you did in the last six months. Whether or not the government succeeds in wooing the voter, the fact is that India is battling an economic meltdown like 2009. The government will have to take steps to reboot the economy. What remains to be seen though is whether these steps will be a part of the vote-on-account.

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Best Regards,

BHAVIKK SHAH