Implications Of The Union Budget Of India Economics Essay

Implications Of The Union reckon Of India Economics EssayThis article starts with full(prenominal)lighting about the basics of the Union Budget 2013-14. It further looks in enlarge at the intend and non-planned using up patterns. A detailed look has been taken at the tax proposals and its advert on individuals and different heavenss. A peculiar(prenominal) mention has been break of the views of the Confederation of Indian Industry (CII). The article past concludes by saying that overall it is a lukewarm reckon.IMPLICATIONS OF THE UNION figure OF INDIA 2013-14AbstractThis article starts with highlighting some the basics of the Union Budget 2013-14. It further looks in detail at the planned and non-planned use of goods and services patterns. A detailed look has been taken at the tax proposals and its impact on individuals and different arenas. A special mention has been made of the views of the Confederation of Indian Industry (CII). The article then concludes by say ing that overall it is a lukewarm reckon.KEYWORDS -Union budget India, 2013, highlights , impact, individual, sectorsIntroductionThe Union Budget 2013-14 was presentedadmist huge challenges represent by the macro- economic environment both in the domestic and globular scenario. A majority feel that the Finance Minister (FM) Mr. P. Chidambram has d wiz a commendable job by adhering to many of the public committals he made in the recent past regarding the level of monetary famine in India.The FM did not announce drastic changes in the tax social structure which could dedicate brought in more resources. But effrontery this moderate finish off up he has cast upd outlays on many of the key sectors of the providence like education, health and social sector. Yet he has managed to curtail the fiscal deficit at 4.8 % of the GDP. He has withal committed to decreasing subsidies given the near familys estimate for combined food, fertilizer and rock oil w atomic deed 18 subsi dies is at almost Rs 27,000 crore less than the revised estimates for 2012-13.Some Important Highlights* fiscal deficit seen at 4.8 maculation of GDP in 2013/14* face up with huge fiscal deficit, India had no choice but to rationalize expenditureBorrowing* Gross market borrowing seen at 6.29 one thousand million rupees in 2013/14* Net market borrowing seen at 4.84 trillion rupees in 2013/14* Short-term borrowing seen at 198.44 trillion rupees in 2013/14* To buy back 500 gazillion rupees worth of bonds in 2013/14Subsidies* 2013/14 major subsidies bill estimated at 2.48 trillion rupees from 1.82 trillion rupees* oil colour subsidy seen at 650 billion rupees in 2013/14* rewrite petroleum subsidy for 2012/13 at 968.8 billion rupees* Estimated 900 billion rupees outgo 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 rupeesExpenditure* 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* Indias 2013/14 plan expenditure seen at 5.55 trillion rupees* Revised estimate for tote up 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 2013/14Revenue* tolerate 133 billion rupees through direct tax proposals in 2013/14* Expect 47 billion rupees through validating tax proposals in 2013/14* grade 558.14 billion rupees from stake sales in state-run firms in 2013/14* Expect revenue of 408.5 bln rupees from airwave surcharges, auction of telecom spectrum, licence fees in 2013/14Current Account DeficitIndias greater worry is the current cypher deficit ordain need more than $75 billion this year and next year to fund deficitInflationFood puffiness is worrying, but all steps will be taken to sum up the supply side. devise and Non-Plan ExpendituresPlanned expenditures have been lessen by 20% fro m that budgeted for FY 2013 in to attain the intercommunicate deficit number of 5.1%. This is giving some jitters to the investor community. Planned expenditures in Indias budget refer to discretionary expenditures which batch increase the productive capacity of the economy for example, public infra spending, roof expenditure programs of public sector units and neat expenditures in the agriculture sector such as strengthening irrigation facilities/ dry land farming etceteraOn the contrary in the view of many economists curtailment of planned expenditures muckle have an adverse impact on long-term bully asset creation in the economy. On the different hand non-plan expenditure has not been reduced at all. It has actually been increased by 5% on the revenue account. It is slated for a further 10% increase in FY 2014.This brings us to question of what non-plan expenditure is. It primarily comprises of subsidies food, fertilizer and petroleum and an separate(prenominal) transf er payments, salaries, pensions etc. The 10% increase in non-plan expenditure projected for FY 2014 appears optimistic and quite on the get side. A matter of lodge in is however the fact that the three critical areas of food, fertilizer and petroleum subsidies have not seen any determined attempts at long-term reduction.Budget Proposals and the Implications for polar SectorsIndividualsIncome Tax SlabsIncome Tax RatesWhere the come in income does not exceed Rs. 2,00,000/-. zilchWhere the total income exceeds Rs. 2,00,000/- but does not exceed Rs. 5,00,000/-.10% of center by which the total income exceeds Rs. 2,00,000/-Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-.Rs. 30,000/- + 20% of the amount by which the total income exceeds Rs. 5,00,000Where the total income exceeds Rs. 10,00,000/-.Rs. 130,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/- statement Cess 3% of the Income-tax.A tax rebate of Rs 2,000 is proposed to be allowed for taxpayers earning total income of up to Rs 5 lakh. This increases the basic threshold limit for tax activate at Rs 2.2 lakh for taxpayers with income up to Rs 5 lakh. However there was no relief for taxpayers earning total income above Rs 5 lakh. Simultaneously the FM compel a 10% surcharge on income tax for those earning above Rs 1 crore. This is a mere 42,800 in number.Those taking new home loans of up to Rs 25 lakh during 2013-14 for purchase of their first residential property not worth above 40 lakhs will be eligible for an surplus deductive reasoning of 1 lakh on interest payable The unutilized deduction amount can be carried forward to the next year.Women EmpowermentThe governing has we had seen all along above adopted a pro-poor, anti-rich stance. In assenting the FM in the budget 2013 showed a lot of concern for women. Among the many proposals notable was the Nirbhaya fund with an allocation of 1000crores. It is aimed at protecting women. He alike an nounce the starting of a all-women public sector blaspheme with n allocation of 1000 crores.CorporatesThere is a reason for corporates to cheer. There is an incentive for them to invest as 15% of spending of over Rs 100 crore on new whole kit and boodle and machinery in the next two years loss for a deduction.Securities MarketThe markets had some standing operating procedure too. This was in the form of lower tax on securities transactions and easier procedures for foreign portfolio investors. But on the other hand there was a fresh levy, equivalent to the tax on securities transactions, on non-agricultural commodity futures. touch on on BanksThe budget proposals will proceeds government banks through equity infusion and gradual easing in stress on infrastructure loans. However, the level of non-performing loans (NPL) might be high because of the continued focus on agricultural credit. An equity injection of Rs 14000 crores in FY 2014 was planned. This was to maintain the momen tum of all initiatives proposed since FY 09. The FM further pledged commitment when he said banks will always meet the Basel III capital norms. Private sector banks were encouraged to become competitive by creating a level playing field for them by extending them the interest subvention scheme.Impact on HealthcareThe FM pledged that the government was hell-bent on providing Health for All or Universal Health Coverage and promised Rs 37,330 crore, an increase from Rs 30,702 coating year, for the health ministry to achieve this. Here are some are some highlights of the sopsThe Ministry of Health and Family Welfare got an allocation of Rs 37,330 croresThere is a proposal to create a National Health Mission and this NHM will be given Rs 21,200 crore.The FM allocated Rs 4,721 crores to improve medical education,An allocation of Rs ccc crores was made to alleviate child malnutrition. The Ministry of Women and Child Development was asked to frame a better for the improvement of the condi tion of women in the country. He allocated Rs 97,000 crores for womens developmentTo improve the childcare health and education facilities, the FM made an allocation of Rs 76,000 crores.The FM attempts to create a comprehensive social security package to make insurance more accessible to Below-Poverty Line families.The FM added with a atomic number 82 of humour that tobacco, the Governments favourite taxable product would attract a supernumerary Excise Duty (SED) of 18%. This would apply to all tobacco products like cigarettes, cigars, cheerots.Auto IndustryThe Union Budget has received a heterogeneous response from the Indian auto industry. Some called it the worst-ever and some called it fair or even neutral. The budget was not well received because of its hike in the expunge duty on Sports Utility Vehicle (SUV) and luxury models.Joginder Singh, hot seat and Managing Director (MD), Ford India Private Limited (FIPL), said, As we all spot the automotive industry has been going through very challenging times, we are disappointed with the increase in the excise duty for SUVs.TextilesThe budget announced a zero excise duty on cotton textiles at the fibre, yarn, fabric and garment stage. This will help reduce prices of end products. The reduced prices will further boost garment demand amid weak consumer sentiment. This yarn-dye will undoubtedly promote revenue growth and improve operating(a) profit and cash flows of the textile sector. The budget in continuation of the engine room Up-gradation Fund Scheme in the Twelfth Five Year Plan allocated Rs2,400 crore for technology up-gradation. This is likely to encourage investments power loom modernisation.Impact on InfrastructureThe Union Budget 2013-14 addressed some of the many challenges set about by the infrastructure sector. However the solutions for some of the problems have to necessarily be found outside the framework of the annual budget.The budget announced the mise en scene up of a regulatory autho rity for roads. This was long pending. If the board can be constituted quickly vested with enough powers it has the potential to address many of Indias highways development programmes. There was an promulgation that 3,000km of road projects will be awarded in the first six months of FY14. This seems ambitious given that less than one-fourth of that number was achieved in the first eight months of FY13. However the target could be achieved if this is sought-after(a) to be done on the engineering, procurement and construction (EPC) alley, rather than the build-operate-transfer (BOT) model. The EPC route will avoid some of the challenges in the BOT model viz., developer apathy, commercial bank aversion to funding toll road projects and over-optimistic traffic forecasts, the latter adversely affecting credit profiles of many projects in the past.Impact on the telecom sectorThe budget did not offer did any special sops for the struggling telecom industry in India. Just one announcemen t was made that duty would increase on mobile phones priced above Rs 2000. It also announced a 5 percent duty hike on STB (set up boxes), and zero customs duty on import of plant and machinery for the semiconductor industry. The FM did nothing to boost telecom sector investors confidence.EducationThe budgetary allocation to Ministry of HRD for various schemes has been increased by 17% to Rs.65, 877 crore. A service tax exemption has been granted for institutes offering vocational courses. downstairs the total budgetary allocation, Rs 272.58 billion has been allocated for Sarva Shiksha Abhiyan. Sum of Rs 39.83 billion for Rashtriya Madhyamik Shiksha Abhiyan has been allocated. Further a sum Rs 52.84 billion has been allocated for scholarships and remaining for up-gradation of existing universities and other education schemes. Companies move in providing education and allied education services stand to gain.FMCG Consumer durable goodsAs mentioned earlier the Union Budget 2013-14 h as proposed to raise specific excise duty on cigarettes by about 18 percent. There is to be a similar increase on other tobacco items such as cigars, cheroots and cigarillos. This rise in the excise duty would negatively impact the demand of the entire tobacco industry.ManufacturingAs a measure to incentivise large players in the manufacturing sector, an investment allowance of 15 per cent in auxiliary to depreciation shall be provided for any fresh investment of a minimal of Rs. 100 crores in plant and machinery for the period April 2013 to March 2015. On the other hand, there are no such incentives for the Micro, Small and Medium Enterprises (MSME) sector except for the non-tax benefits made available for an extended period of three years even after they lose their MSME status.The Confederation of Indian Industry ( CII ) ViewsThe budget was acceptabled by the Confederation of Indian Industry (CII). They felt it was a growth-oriented budget, and it would kick-start the next cyc le of investment in the country. The CII president Adi Godrej said the budget makes commendable efforts to optimise growth drivers while addressing inclusive and sustained development. The budget meets most of our concerns regarding fiscal consolidation, investment incentives, and inclusive growth. These are in alignment with CIIs submissions in its pre-Budget Memorandum to the Finance Ministry, said Godrej. Budget 2013-14 promises to adhere to the fiscal deficit roadmap as lay out by the Finance Minister last year. This will boost growth, curtail inflation and help in ratings. tension on agriculture, technology and innovation and science and technology is very welcome as it adds to future growth prospects, he added. CII particularly welcomed the stress fixed on inclusive growth and development. He was happy that the budget go away untouched the indirect taxes, which if imposed would have led to a slowness in the industry.ConclusionThe budget overall is a pragmatic arrange thou gh it did not contain any big-bang reforms . It failed to excite all. This was because the budget had some drawbacks. There have been no relaxations as regards to retrospective law introduced on taxing software and the expected clarifications or guidelines as regards the scope of indirect transfers involving substantial assets located in India have not come. No roadmap was laid for the implementation of the Shome committee recommendations like the postponement of the General Anti-Avoidance Rules (GAAR). But one must admit it is not a negative one either. In short the budget 2013-14 can be called as a blow-hot, blow-cold budget