union budget 2013-analysis
Post on 19-Oct-2014
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UNION BUDGET 2013-14 -AN ANALYSIS
Manuel M.MathewIII DC Economics
ST.Thomas College Pala.
BACKDROP OF THE BUDGET
SLOWING GLOBAL ECONOMY INCREASING FISCAL DEFICIT & CAD DARK SHADOW OF INFLATION TIGHTENING MONETARY POLICY QUEST FOR SUSTAINABLE AND INCLUSIVE DEVELOPMENT IMPENDING GENERAL ELECTION
FOCUS AREAS
Additional Resource Mobilization Expenditure Compression Measures to Promote Socio-economic
Growth Relief and Welfare Measures Widening of Tax Base and Anti Tax
Avoidance Measures Rationalization Measures Fiscal Consolidation
FISCAL DEFICIT
STABILITY IN THE MACRO ECONOMIC POLICIES
ENHANCING THE CREDIBILITY OF THE ECONOMY
CURRENT ACCOUNT DEFICIT
CONTINUES TO BE HIGH……… Excessive dependence on oil Coal and gold imports Slowdown in exports MEASURES TO CONTAIN CAD…….. FII FDI ECB
TWO SURPRISING ELEMENTS…….1. Proposed borrowing is mild.
2. Increase in Expenditure.
THUMPS UP……
Fuel subsidy comes down to the third priority
THREE PROMISES…… TO WOMEN- NIRBHAYA, Women’s Bank YOUTH –Skill Development Mission
THE POOR-Direct Benefit Transfer(DBT)
MAJOR EMPHASIS ON…….
RURAL DEVELOPMENT
AGRICULTURE
FOOD SECURITY
TAX PROPOSALS
Particulars Existing Proposed
Individual /HUF/ Firm/ Co-op Soc./ Local Auth.
NA 10% If TI > 1 Cr.
Domestic Company 5% 10% If TI > 10 Cr 5% If TI > 1Cr
Other than Domestic Co. 2% 5% If TI > 10 Cr 2% If TI > 1Cr
Non-Resident Person NA 10% if TI > 1Cr
SUR CHRGE IN INCOME TAX
Rebate of Rs. 2000 for individuals having total income up to Rs 5 lakh
SOME APPREHENTIONS….. Is food security allocation adequate??
Is Disinvestment target of 55814 achievable??
Foreign funded Infrastructural Development
Neglected Higher Education
KEY RISKS TO INDIA'S MACRO STORY US policy: sequestration Euro-zone issues • Realization of Fiscal Union • support of the ECB Global oil prices • the correlation with Current Account Deficit (CAD) remains high.• Geo-political tensions can push oil prices higher.
Domestic issues • Politics outweighs economics; General elections in 2014 can create uncertainty • Reform progress to address India’s triple deficits (Fiscal, current account, governance) • Key constraints for infrastructure build-out: land, coal and declining domestic financial savings rate • Rising CAD and high gold imports weighing on external finances
WHAT THE BUDGET MISS……
An amnesty scheme allowing disclosure of illegal money…..of course with a penalty…..
Scope of injecting Rs.75000 crores into the economy and to survive fiscally.
EXPERIENCE OF 1996
TO SUM UP….. FINANCIAL DISCIPLINE FORWARD LOOKING REASONABLE AND REALISTIC