Union budget 2014
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Transcript of Union budget 2014
- 1. TAME HIGH INFLATION
2. 9.33 % Indias average monthly retail inflation in the last 12 months. Sharply rising food prices have hit family budgets. For the same money fever goods are available. Most services have also turned dearer. 3. ACTION TAKEN 500 crore price stabilization fund to subsidize retail food prices in times of high volatility. Food corporation of India will be broken up for more efficient food grain management. Plans announced to stitch together a National Agricultural Market for easier movement of staples from surplus to deficit areas. 4. INTENDED IMPACT Break the cabal of middlemen to ensure greater profits over the cost of production for farmers. Narrow down the difference between retail prices and prices that farmer get. Cushion the impact of costly raw material, high borrowing rates & falling rupee. Signal to RBI to cut loan rates after inflation start falling on budgets proposals. 5. ECONOMY 6. ANNUAL GROWTH RATE (%) 8.1 7 9.5 9.6 9.3 6.7 8.6 8.9 6.7 4.5 4.7 0 2 4 6 8 10 12 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 ANNUALRATE FINANCIAL YEAR 7. ACTION TAKEN Form expenditure management commission. 6,500 crore from shares held by SUUTI. Revamp FCI, make PDS more efficient. 5,000 crore from RBI from governments SDR holding. Minimum 1 k/m pension to subscribers & increase in PF wage ceiling to 15,000. New Indian accounting standards. Government to move to e-biz portal by Dec 31. Set up National Industrial Corridor Authority. 8. INTENDED IMPACT Shift from government non-productive spending to create space for development spending. Investors will have one more opportunity to pick up equity in this blue chip. It will make entire food procurement and distribution more efficient. Through this swap of the government holdings of IMFS SDRs, the country entire reserves will be housed with RBI. Ensure a minimum pension for subscribers and PF savings will rise. Converge Indias accounting with International Financial Reporting Standards. 9. CREATE JOBS, IMPART SKILLS 10. 33% proportion of unemployed persons who are graduates or above, compared to the total, as of 2012-13. Of the total population of 1.2 billion, 60% are in the working age group. Of the 12 million individuals who join the pipeline of job seekers. Only 3% undergo vocational training. In villages the unemployment rate among graduates and above for the age group 15-29 years is estimated to be 36.6%, it is 26.5% in cities. 11. ACTION TAKEN Launch National Multi-skill Mission. The mission would impart training and support to traditional professional such as welders, carpenters, cobblers, masons, blacksmiths, weavers etc. Specific schemes announces on developing labour-intensive sectors such as textiles, infrastructure, housing & tourism. 12. INTENDED IMPACT Leverage Indias demographic dividend & shift the focus to employability. Encourage small enterprise through tax breaks to add capacities & hire more people. Remove people from unproductive farm work in villages to skill-based jobs in semi-urban areas. 13. BUILDING INFRASTRUCTURE 14. 762,451 cr estimated investments in about 100 major infrastructure projects as of Dec,12 that are behind running schedule. Around 11 km per day of highways were constructed during 2013-14 against the government target of 20 km the worst ever performance since 2008-09. Restrictive land condition hurting expansion. 15. 14 Railways 10 Road transport & highways 33 Power 18 Petroleum 3 Shipping & ports 5 Steel 3 Atomic Energy 3 Coal NUMBER OF DELAYED PROJECTS 16. ACTION TAKEN A target to build an additional 23 km a day of highways has been set. Building 100 new cities, priority development of 100 most backward districts. Rules to be changed to make it easier to hasten infrastructure and industrial projects such as Special Economic Zones. 17. INTENDED IMPACT Reduce time & cost run that have been the major bane of Indias infrastructure projects. Construction in highways, railways, airports, power and other projects help create additional jobs. Easier land acquisition rules will enable companies to set up factories, new capacity lines, create jobs and hire more people. 18. REVIVE INDUSTRY 19. 28.3% of GDP, Indias gross fixed capital formation (GFCF) in 2013- 14, a proxy for investment activity the lowest in five years. Higher prices and need to find additional money for EMIs have forced cuts on purchase of televisions & cars. The resultant fall in demand have hit companies. High loan rates have also hit investment. 20. 7.7 11 12.3 0.8 -0.1 -2 0 2 4 6 8 10 12 14 2010 2011 2012 2013 2014 Financial Year GROSS FIXED CAPITAL FORMATION (%) 21. ACTION TAKEN The government has clarified its position on retrospective tax provisions. FDI in Insurance and Defense sector raised to 49% from 26%. A venture capital fund for micro small and medium enterprises will be established with corpus of 10,000 crore to act as a catalyst to attract private capital. 22. INTENDED IMPACT Clarifications on retrospective tax will soothe frayed nerves of anxious investors. Electronic goods manufacturing hubs to boost hiring, investment and eventually, reduce dependents on imports. Mega industry zones such as the DMIC will add jobs and boost sectors such as steel and cement. 23. BOOSTING SPENDIND 24. 57.1% the proportion of GDP that Indias house holds spent in 13-14, the same as previous year. Raising peoples spending ability on goods is critical to push demand & investment. In a year of flat income, it becomes difficult to raise spending without tax breaks. High loan rates have also prompted people to defer purchases. 25. ACTION TAKEN Tax breaks on income and saving to raise peoples disposable income. Tax cuts will bring down prices of a host of consumer products like footwear and LED TV panels prompting people to spend more. The excise duty cuts announced in the interim budget will continue till December. 26. INTENDED IMPACT Greater disposable income will goad people to save and spend more. More spending will increase sales of goods such as cars. Greater purchases means goods will move out of shop-selves faster prompting companies to produce more to meet the additional demand. 27. SOCIAL SECTOR 28. ACTION TAKEN Free drugs, free diagnosis for everyone under HEALTH FOR ALL. Interest subvention to women self-help groups. Price stabilization fund for farmers. Minimum pension of 1,000 and mandatory wage ceiling for EPF raised to 15,000. A house for everyone, a toilet for every house. Slew of measures to clean up and conserve Ganga. 29. INTENDED IMPACT It will reduce out-of-pocket expenditure on healthcare in the country. More women in additional 100 districts will get bank loan at 4% on prompt repayment as against the rate of 7%. Will insulate farmers from fluctuation in prices. About 20 lakh people, including five lakh widows, will benefit from the higher minimum pension while 50 lakh people will come under the EPF. It will help 78 million homeless people and 600 million people who practice open defecation. The rivers ghats would be beautiful. 30. CLOSING THE DEFICIT 31. 4.1% of GDP Indias budgeted fiscal deficit for 2014-15, down from previous years 4.5 %. Fiscal deficit the amount of money that the government borrows - in the first two months of the 2014-15 financial year touched 2.40 lakh crore or 45.6% of the full year target. Low income level limits tax revenue collections. 32. ACTION TAKEN Petroleum subsidy bill to brought down to 64,426.95 crore from 84,480 crore last year. Total subsidy bill kept at 260,657.62 crore, marginally up from 255,516.25 crore in 2013-14. Budget for MNREGA raised by 100 crore to 34,100 crore. 33. INTENDED IMPACT Manageable fiscal deficit will lower the threat of a sovereign downgrade. A lower fiscal deficit this year will give the government elbow room to introduce tax breaks next year. Consistently lower deficit will enable early adoption of direct & indirect tax reforms.