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Analysis of Budget 2013-2014
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Linkedin ?
Connect the Dots
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Pandora of Problems
Helpless and Cornered Similar to Sivaji
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Data
Category
2008-09 2009-10 2010-11 2011-12 2012-13
GDP Growth
Rate
6.7 8.6 9.3 6.2 5.0
Savings Rate 32.0 33.7 34.0 30.8 na
Capital
Formation
rate
34.3 36.5 36.8 35.0 na
Inflation CPI 9.1 12.4 10.4 8.4 10.0d
Gross Fiscal
Deficit
6.0 6.5 4.8 5.7i 5.1j
Revenue
Deficit
4.5 5.2 3.2 4.3i
3.5j
Snapshot of Economy
Solve the
Sudoku
Source :Economic Survey
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Concerns over Growth
GDP Growth has
declined from
about 8% in 2011
to about 5.4% in
2013
The Industrial
growth has
declined more than
Agriculture and
Service
Impact?
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Source : Kelkar Committee
GDP Growth 8% 7% 6% 5%
Elasticity of
Employment
0.4% 0.4% 0.4%
0.4%
Employment
Rate
3.2% 2.8%
2.4%
2.0%
Labour Force
Growth Rate
2.5% 2.5% 2.5% 2.5%
Surplus/Deficit 0.7% 0.3% -0.1% -0.5%
Economic survey – good job is the best form of inclusion.
IAMR study indicts UPA policies for jobless growth.
In search of Inclusive Growth?
Impact Jobless Growth
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Sectors 2010-11 2011-12 2012-13 (AE) Reasons
Agriculture, Forestry and
Fishing 7.9 3.6 1.8
Decline due to
deficient rainfall
Manufacturing 4.9 (0.6) 0.4
Regulatory hurdles and
decline in mining
Trade, Hotels, Restaurants,
Transports and
Communication(around
30.0% of Service Sector
GDP )
12.3 7.0 5.2
Slackening growth due
to slowdown of
economic activity in
the industry and
agriculture sectors
Concerns over Growth
Growth in GDP at Factor Cost at 2004-05 prices (per cent)
Sectors 2010-11 2011-12 2012-13 (AE) Reasons
Agriculture, Forestry
and Fishing (less than
15% of GDP) 7.9 3.6 1.8
Decline due to
deficient rainfall
Manufacturing (16% -
20% of GDP) 4.9 (0.6) 0.4
Regulatory hurdles
and decline in
mining
Trade, Hotels,
Restaurants, Transports
and
Communication(around
30.0% of Service Sector
GDP )
12.3 7.0 5.2
Slackening growth
due to slowdown of
economic activity in
the industry and
agriculture sectors
Sectors 2010-11 2011-12 2012-13 (AE) Reasons
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Skyfall in Manufacturing
Six sectors namely electricity, roads, telecommunication services, steel, real estate and
mining accounted 80% of stalled projects.
Source : CMIE
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Fiscal Deficit (FD) and Revenue Deficit (RD)
Expenditure Budget Receipts Budget
FD = Total Expenditure (1000) – Total Receipts (750) = 250
RD = Revenue Expenditure (800) – Revenue Receipts (700) = 100
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Fiscal Deficit
Fiscal Deficit went up from 2.5% of GDP in 2007-08 to 5.7% of GDP in 2011-12
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Stimulus or Giveaway
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As a % of GDP F2008 F2009 Post Change F2008 and
2009
Revenue Receipts 10.9% 9.7% -1.2%
Capital Receipts 0.2% 0.1% -0.1%
Expenditure 13.6% 15.8% 2.2%
Revenue Expenditure 11.9% 14.2% 2.3%
Wages, Salaries and Pension 1.5% 2.0% 0.5%
Subsidy 1.4% 2.2% 0.9%
MGNREGS 0.3% 0.6% 0.3%
Fiscal Stimulus
Source :MSCO
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% Expenditure
on wages
% Expenditure
on Materials
F2009 68.4% 31.6%
F2010
69.8% 30.2%
F2011
69.2% 30.8%
F2012
72.8% 27.2%
MNREGA, Farm loan waiver and Sixth pay commission led to increase in FD.
UPA adopted the policy of “Distribute to Grow”
Kanna Laddu Thina Asaiya
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Sare Jahan se Mehnga
Source – Economic times
Moola Mantra – Fiscal
Stimulus + Global Food Price
Inflation + Farm Wage Index
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Hungry hey Kya?
Food Inflation is driven by increase in Cereals, Milk, Pulses and Egg.
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Current Account Deficit
Higher Inflation had led to more Investment in Gold and Real Estate
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Revenue Statement of the Budget
Source – E&Y
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Source – E&Y
Expenditure
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Fiscal Cliff
Source : Kotak Mahindra
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History repeats itself
Source : Kotak Mahindra
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Consumption Expenditure
Leading to High Inflation
Current Account Deficit
High Fiscal Deficit
Chakravyuh
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Women Youth and Poor
As a % of GDP 2011-12
(Actuals)
2012-13
(BE)
2012-13
(RE)
2013-14
(BE)
Health and Family Welfare
0.30 0.34 0.29 0.33
Human Resource Development
0.67 0.74 0.67 0.70
Women and Child Development
0.17 0.19 0.17 0.18
Youth Affairs and Sports
0.01 0.01
0.01
0.01
Even Nirbhaya could have Bhaya over this allocation
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?
“Annual income twenty pounds, annual expenditure nineteen six, result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six,
result misery”
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Thank You