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The expectations of the various parts of society from Budget 2013!
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Budget 2013: Expectations

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The expectations of the various parts of society from Budget 2013!

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India must make tough spending choices, finance minister P Chidambaram said on Thursday, even as he unveiled a bigger-than-expected outlay for the coming fiscal year in one of the most highly anticipated Indian budgets of recent years.

Following are highlights of the Budget:

Fiscal Deficit

  • Fiscal deficit seen at 5.2 point of GDP in 2012/13
  • Fiscal deficit seen at 4.8 point of GDP in 2013/14
  • Faced with huge fiscal deficit, India had no choice but to rationalize expenditure

Borrowing

  • Gross market borrowing seen at 6.29 trillion rupees in 2013/14
  • Net market borrowing seen at 4.84 trillion rupees in 2013/14
  • Short-term borrowing seen at 198.44 billion rupees in 2013/14
  • To buy back 500 billion rupees worth of bonds in 2013/14

Subsidies

  • 2013/14 major subsidies bill estimated at 2.48 trillion rupees from 1.82 trillion rupees
  • Petroleum subsidy seen at 650 billion rupees in 2013/14
  • Revised petroleum subsidy for 2012/13 at 968.8 billion rupees
  • Estimated 900 billion rupees spending on food subsidies in 2013/14
  • Revised food subsidies at 850 billion rupees in 2012/13
  • Revised 2012/13 fertiliser subsidy at 659.7 billion rupees

Growth

  • India faces challenge of getting back to its potential growth rate of 8 point
  • India must unhesitatingly embrace growth as highest goal

Spending

  • Total budget expenditure seen at 16.65 trillion rupees in 2013/14
  • Non-plan expenditure estimated at about 11.1 trillion rupees in 2013/14
  • India’s 2013/14 plan expenditure seen at 5.55 trillion rupees
  • Revised estimate for total expenditure is 14.3 trillion rupees in 2012/13, which is 96 point of budget estimate
  • Set aside 100 billion rupees towards spending on food subsidies in 2013/14

Revenue 

  • Expect 133 billion rupees through direct tax proposals in 2013/14
  • Expect 47 billion rupees through indirect tax proposals in 2013/14
  • Target 558.14 billion rupees from stake sales in state-run firms in 2013/14
  • Expect revenue of 408.5 bn rupees from airwave surcharges, auction of telecom spectrum, licence fees in 2013/14

Current Account Deficit 

  • India’s greater worry is the current account deficit – will need more than $75 billion this year and next year to fund deficit

Inflation 

  • Food inflation is worrying, will take all steps to augment supply side

Tax

  • Proposes surcharge of 10 point on rich taxpayers with annual income of more than 10 million rupees a year
  • To increase surcharge to 10 point on domestic companies with annual income of more than 100 million rupees
  • For foreign companies, who pay the higher rate of corporate tax, the surcharge will increase from 2 pct to 5 per cent.
  • To continue 15 point tax concession on dividend received by India companies from foreign units for one more year
  • Propose to impose withholding tax of 20 point on profit distribution to shareholders
  • Amnesty on service tax non-compliance from 2007
  • 10 billion rupees for first installment of balance of GST (Goods and Services Tax) payment
  • Propose to reduce securities transaction tax on equity futures to 0.01 point from 0.017 point
  • Time to introduce commodities transaction tax (CTT)
  • CTT on non-agriculture futures contracts at 0.01 point

Corporate Sector & Markets

  • To issue inflation-indexed bonds
  • Proposes capital allowance of 15 point to companies on investments of more than 1 billion rupees
  • Foreign institutional investors (FIIs) can use investments in corporate, government bonds as collateral to meet margin requirements
  • Insurance, provident funds can trade directly in debt segments of stock exchanges
  • FIIs can hedge forex exposure through exchange-traded derivatives
  • Investor with less than 10 point stake in a company will be regarded as FII, more than 10 point stake as FDI (foreign direct investment)
  • Stock exchange regulator will simplify know-your-customer norms for foreign portfolio investors
  • To implement quickly recommendations of financial sector legislative reforms commission
  • To cut factory gate duty on trucks to 13 pct from 14 pct

Power & Energy Sector

  • Zero customs duty for electrical plants and machinery
  • Move to revenue-sharing from profit-sharing policy in oil and gas sector
  • To equalize duties on steam and bituminous coal to 2 point customs duty and 2 point cvd (countervailing duty)

Foreign Trade

  • To cut duty on exports of precious and semi-precious stones to 2 point from 10 point
  • No duty on import of ships, vessels

Banking

  • To provide 140 billion rupees capital infusion in state-run banks in 2013/14

Defence

  • To allocate 2.03 trillion rupees to defence in 2013/14

Agriculture

  • To allocate 801.94 billion rupees to rural development in 2013/14
  • Plan to allocate 270.49 billion rupees for agriculture in 2013/14

Finance Minister Comments
 “Faced with a huge fiscal deficit, I have no choice but to rationalize expenditure. We took a dose of bitter medicine. It seems to be working.”

 

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