Indian Budget: Highlights, Reactions, and where your money is going

Yet another budget has come out.  This time by P. Chidambaram.  I still remember people rushing home and sitting very meaningfully in front of the TV to see the budget being presented.  The Accounting, Economics and Finance professionals trying to analyze and debate the budgets.  I am not sure how it happens now, but there was a time when Indian Budget presentation was almost like a “Super Bowl” even in many homes.  Professional friends would come over and there would intellectual debates and discussions over tea and snacks etc.

Within a few months, the futility of all the discussions would be very apparent.  Because, except for the tax repurcussions, actually nothing else really impacts.  Most of the other stuff is just a big drama to siphon money by the politicians and their sideys.  Look at this year’s budget.  Some figures – as to how much is being invested in different areas:


So, in a country where Farmers are dying due to high debt, we have investments of $129 billion in Agricultural Credit Schemes.  Really??!!  Then why the heck are the farmers dying?  If such money was being really used to alleviate the credit situation of the farmers, India would have been the country of highest productivity.

Similar is the story of other ministries and efforts.  Is this $200 bn being really invested in the schemes and ministries’ work as is being made out in the budget?  One doubts that.  In fact, instead of representing Government investment in a certain field, the budget breakup represents to the parasites of Indian economy where to focus on for the loot that year.  For example, this year the flavor are the Tribals.  They will be getting roughly $10 billion in two different ways.  You go and visit the tribals today and after a year.  You will know exactly where this money did NOT go!

The less said about MNREGA, the better.

Here are some reactions – rhetorical, plain wisdom, or ignorant banter.  You decide.  Also check out the main highlights of the budget in the end.

Budget Highlights (link)

  • Custom duty on imported motor vehicles hiked; import duty on luxury cars increased to 100% from 75%
  • Cigarettes and SUVs to be costlier; excise duty on SUV’s increased from 27% to 30%
  • No change in peak rate of customs duty for non-agriculture products
  • No change in basic customs duty rate of 10% and service tax rate of 12 %
  • 20% final withholding tax on unlisted companies’ share buyback
  • 1 per cent TDS on sale of immovable property, which is not applicable to agricultural land
  • In 2011-12, tax-GDP ratio was 5.5 per cent for direct taxes and 4.6 per cent for indirect taxes
  • Lower securities transaction tax on mutual fund payouts
  • Surcharge on corporate taxes increased; 5 to 10 per cent surcharge on domestic companies whose taxable income exceeds Rs 10 crore
  • 10 per cent surcharge on those earning above Rs 1 crore
  • Tax credit of Rs 2000 to be provided to every person to having income of up to Rs 5 lakh, this will benefit 1.8 crore people
  • No changes in Income Tax rates or slabs, Rs 2000 credit for those earning up to Rs 5 lakh per annum
  • Gold duty free limit raised to Rs 50,000 for men and to Rs 1 lakh for women travellers
  • All AC restaurants will have to pay service tax whether or not they serve alcohol
  • Import duty raised on set-top boxes from 5 to 10% to safeguard interest of domestic producers
  • Tax holiday for power plants extended to March 2014
  • Investor with stake of 10 per cent or less will be treated as FII; any stake more than 10 per cent will be treated as FDI
  • ‘Nirbhaya Fund’ of Rs 1,000 crore to empower women and provide safety in the wake of the Delhi gangrape incident
  • Non plan expenditure pegged at Rs 11,09,975 crore for 2013-14
  • FY14 fiscal deficit seen at 4.8% vs 5.2% in FY13
  • Revenue deficit at 3.9% for FY13
  • Fiscal deficit for FY 13 at 5.2%
  • PSU banks to have ATMs at all their branches by March 31, 2014
  • Rs 5,80,000 crore to states and Union Territories
  • 289 FM radio channels to be auctioned in FY14
  • Rs 5,400 crore to department of space and Rs 5,600 crore to department of atomic energy
  • National Institute of Sports Coaching to be set up in Patiala at a cost of Rs 253 crore
  • FII participation in forex segment subject to FX exposure
  • Concessional 6% interest on loans to weavers
  • Rs 500 crore would be allocated for addressing environmental issues faced by textile industry
  • Defence allocated Rs 2.36 lakh crore with Rs 86,721 crore for capital expenditure
  • SIDBI’s re-financing facility to MSMEs to be doubled to Rs 10,000 crore
  • FII will be allowed to participate in currency derivatives segment: FM
  • FM asks state govts to prepare financial restructuring plan for power distribution companies at the earliest
  • All towns of India with a population of over 10,000 to have an LIC office
  • Insurance companies will be empowered to open branches in tier II cities without prior IRDA approval
  • KYC of banks will be sufficient to acquire insurance policies
  • Sincerely hope the PFRDA & Insurance bill can be passed
  • Proposal to amend SEBI Act under consideration
  • SEBI to simply procedures for FIIs, unify categories of FIIs
  • FM proposes to start a fund for urban housing
  • Rs 6,000 crore to be allocated for rural housing fund in 2013-14; Rs 2,000 crore for urban housing
  • Govt to set up India’s first women’s bank as a public sector bank by October; initial capital will be of Rs 1000 crore
  • Oil and gas exploration policy will be reviewed and moved from profit sharing to revenue sharing
  • Rs 14,000 cr for Public Sector Bank recap
  • Rs 14,000 crore capital infusion into public sector banks in 2013-14
  • Rajiv Gandhi Equity Scheme will be liberalised to allow first time investor to invest in Mutual Fund and equity
  • Many manufacturing projects stalled due to regulatory process: FM
  • Domestic workers, Anganwadi workers to get group insurance
  • Rashtriya Swasthya Bima Yojana to include rickshaw pullers, taxi drivers and ragpickers
  • DIPP and Japan’s JICA preparing plan for Chennai-Bengaluru Industrial corridor
  • Govt to construct power transmission system from Srinagar to Leh at the cost of Rs 1,840 crore, Rs 226 crore provided in current Budget
  • Two new ports in West Bengal and Andhra Pradesh
  • Tax free bonds issue to be allowed up to Rs 50,000 crore in 2013-14 strictly on capacity to raise funds from the market
  • A PPP project with Coal India in the pipeline to stem the outflow of forex
  • Coal imports to rise to 185 million tonnes from 100 million in four years
  • Government has decided to constitute a regulatory authority for the road sector: FM
  • A company investing Rs 100 crore or more in plant and machinery in April 1, 2013 to March 31, 2015 will be allowed 15% investment deduction allowance apart from depreciation
  • 3,000 km of road projects will be awarded in first 6 months of FY14
  • Zero custom duty for electrical machinery
  • Inflation indexed bonds and NSCs to be introduced
  • Income level for Rajiv Gandhi Equity Scheme raised by Rs 2 lakh
  • First housing loan up to Rs 25 lakh would get additional deduction of interest of up to Rs 1 lakh in 2013-14
  • Indian Institute of Agri-Biotechnology to be established at Ranchi, Jharkhand
  • 5 million tons Dabhol LNG import terminal to be operate at full capacity in 2013-14
  • CCI to take up more projects shortly
  • Rs 25,000 crore to be raised from four infrastructure bonds
  • Foodgrain production in 2012-13 will be over 250 million tons
  • Rs 80,194 crore allocated for rural development schemes
  • States which have completed Pradhan Mantri Gramin Sadak Yojana will be eligible for PMGSY-II, others will continue with PMGSY-I
  • Rs 5,000 crore will be made available to NABARD to finance construction of godowns and warehouses
  • Rs 17,700 crore provided for Integrated Child Development Scheme
  • Rs 5,284 crore to various Ministries for scholarships for SC/ST, OBC and minority students
  • Rs 7 lakh crore target fixed for agri credit for 2013-14 compared to Rs 5.75 lakh crore in the current year
  • Rs 27,049 crore allocation to the Agriculture Ministry in 2013-14
  • Rs 10,000 crore set aside for incremental cost for National Food Security Bill over and above food subsidy
  • National Livestock Mission launched with Rs 307 crore
  • Rs 15,260 crore to be allocated to Ministry of Drinking Water and Sanitation
  • Rs 1000 crore allotted to support increased rice production in Eastern Indian states
  • Rs 1069 crore allocated to Department of Aryush
  • Rs 14,873 crore allocated for JNNURM; JNNURM will help in purchase of 10,000 buses by hilly stations
  • 4% farm loan scheme extended to private sector banks
  • Rs 9,954 crore and Rs 2,250 crore for crop diversification under different schemes
  • Rs 7,00,000 crore for agricultural credit schemes
  • Rs 3,400 crore for agricultural research
  • Rs 80,194 crore allocation for Ministry of Rural Development in 2013-14; About Rs 33,000 crore for MGNREGA
  • Rs 13,215 crore to be provided for mid-day meal scheme
  • Rs 24,598 core allocatec to the tribal sub-plan
  • Rs 1,400 crore for water purification
  • Additional sum of Rs 200 crore to Women and Child Welfare Ministry to address issues of vulnerable women.
  • Rs 27,257 crore to Sarva Shiksha Aviyan
  • Rs. 65,867 crore allocated to Ministry of HRD in 2013-14
  • Rs 65,867 cr allocated to ministry of human resources
  • Medical colleges in six more AIIMS-like institutions to start functioning this year; Rs 1650 crore allocated for the purpose
  • Rs 4,727 crore for medical research
  • Rs 110 crore to dept of disability affairs under specific scheme
  • Rs 37,330 crore allocated for Ministry of Health & Family Welfare
  • Rs 3,511 crore to minority affairs
  • Rs 41,000 crore for Scheduled Caste and Rs 28,500 crore for tribal welfare
  • Battle against inflation must be fought at all fronts: FM
  • Budget expenditure is Rs 16,65,297 crore and Plan expenditure Rs 5,55, 322 crore
  • Plan expenditure in 12th Five Year Plan revised to Rs 14,30,825 crore or 96 per cent of budgeted expenditure.
  • We have brought down headline WPI inflation to 7 per cent and core inflation to 4.2 per cent
  • Economic space constrains due to high fiscal deficit, lower savings and investment and tight monetary policy, says minister
  • Average economic growth rate in 11th Plan period is 8%, highest ever in any Plan period: FM
  • Current year’s economic growth rate will be below India’s potential growth rate of 8 per cent: FM
  • FM: Food inflation remains a worry
  • Faced with huge fiscal deficit, I have no choice but to rationalise expenditure: FM
  • Core inflation is down to 4.2 per cent, says the minister
  • India does not have choice between welcoming and spurning foreign investment; it is an imperative: Chidambaram
  • FM: Encouragement of foreign investment in line with our economic objectives is a must
  • Current account deficit continues to be high due to excessive dependence on oil, coal and gold imports and slowdown in exports
  • FM: Current account deficit is a bigger worry and fuel and gold imports responsible
  • Without growth, there will be no inclusiveness and development, says Chidambaram
  • FM: Achieving high growth is not a novelty
  • Only China and Malayasia are the major countries that grew faster than India last year: FM

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