Union budget 2014-15 Key Highlights from the Budget Speech made by Finance Minister Mr. P. Chidambaram
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The interim Union Budget for 2014-15 presented by Finance Minister P. Chidambaram outlines a fiscal deficit target of 4.1% and a revenue deficit target of 3.0%. Key announcements include increased support for agriculture, railways, and defense, alongside exemptions in excise and service tax, while maintaining corporate tax rates. Additionally, various social sector initiatives and funding for housing and education loans have been proposed to stimulate growth and address socio-economic challenges.
Union budget 2014-15 Key Highlights from the Budget Speech made by Finance Minister Mr. P. Chidambaram
- 1. Union Budget (Interim) 2014-15 – A snapshot Union Finance Minister P Chidambaram presented the interim budget for the fiscal year 2014-15 today to cover expenditure until the government's term ends in May. The following is a snapshot of the interim Union Budget for 2014-15: The current financial year will end with the fiscal deficit at 4.6 percent (which is below the red line of 4.8 percent) and the revenue deficit at 3.3 percent. The fiscal deficit in 2014-15 is estimated to be 4.1 percent which will be below the target set by new Fiscal Consolidation Path and the revenue deficit is estimated at 3.0 percent. The estimate of Plan Expenditure is Rs 555,322 Crores, while the Non Plan expenditure is estimated at Rs 12, 07,892 Crores. Sr. No. 1. Particulars Current Deficit (CAD) Announcements Account CAD will be contained at USD 45 billion as of now and will continue for some more years which can be financed only by foreign investment. Hence, there is no room for any aversion to foreign investment. Price Stability and Growth: In a developing economy, a high growth target entails a moderate level of inflation. RBI must strike a balance between price stability and growth while formulating the monetary policy. 1|P a g e
- 2. 2. Agriculture Food grain production estimated for the current year is 263 million tonnes compared to 255.36 million tonnes in 2012-13. Agriculture export is likely to cross USD 45 billion, higher from USD 41 billion in 2012-13. Agricultural credit to exceed the target of Rs. 7 lakh Crores. Percentage Agricultural GDP growth for the current year estimated at 4.6 percent compared to 4.0 percent in the last four years. Investment Savings rate at 30.1 percent and investment rate of 34.8 percent in 2012-13. 3. Railways Railways Budgetary support to Railways has been increased from Rs. 26,000 Crores in BE 2013-14 to Rs. 29,000 Crores in 2014-15. 6 It is proposed to indentify new instruments and new mechanisms to raise funds for Railway Projects 4. Defence The Government has decided to increase 10 per cent towards Defence expenditure raising the amount to Rs. 2.24 lakh crore. Government has accepted the principle of one rank one pension for the Defence Forces which will be implemented prospectively from the FY 2014-15. A sum of Rs. 500 Crores is proposed to be transferred to the Defence Pension Account in the current Financial Year itself. 5. Central Armed Police A modernization Plan at a cost of Rs11, 009 Crores has Forces been approved to strengthen the capacity of Central Armed Police Forces and to provide them the state-ofart, equipment and technology. 6. Financial Banking Sector/ Rs. 11,200 Crores is proposed to be provided for Capital infusion in Public Sector Banks. 5,207 new branches have been opened against the target of 8,023. Bhartia Mahila Bank has been established. Rs. 6,000 2|P a g e
- 3. Crores and Rs. 2,000 Crores have been provided to Rural and Urban Housing Funds respectively. The target of Rs. 700,000 Crores of Agricultural Credit is likely to be exceeded by the Banks. The target for 2014-15 is Rs. 800,000 Crores. Rs. 23,924 Crores has been released under the Interest Subvention Scheme on farm loans, with effective rate of interest on farm loans at 4 percent including subvention of 2 percent and incentive of 3 percent for prompt payment. 7. Financial Markets Financial Markets Steps envisaged to deepen the Indian Financial Market : ADR/GDR Scheme revamp, an enlargement of the scope of depository receipt, Liberalization of rupee denominated corporate bond market, Currency Derivatives Market to be deepened and strengthened to enable Indian Companies to fully hedge against foreign currency risk, to create one record for all financial assets of every individual, to enable smoother clearing and settlement for international investors looking to invest in Indian bonds. 8. Duties and Taxes Excise duty has been reduced from 12% to 10% on capital goods and consumer durables falling under Chapter 84 and 85 of the Central Excise Tariff Act. Further, the Government has restructured the excise duty for all categories fixing at 6 % with CENVAT credit or 1% without CENVAT credit. Small cars, scooters and motorcycles will attract a lower excise duty of 8 % from the current 12%, while SUVs will see a reduction of 6 % on duty from 30 % to 24 %. And the middle segment car will enjoy an excise duty of 20-24 % down from the current 24-27%. 3|P a g e
- 4. Customs Duty on non-edible oil industry has been pegged at 7.5 %. Service Tax exemption has been provided for storage and warehousing of rice. Blood banks have also been exempted from the purview of Service Tax. However, there has been no change in Direct Tax rates this year. Previous year’s surcharge of 10 % on individuals whose annual income is more than 1 crore rupees and 5% on corporate bodies with annual turnover of above 10 crore rupees remain the same. Corporate tax rate for domestic and foreign companies remains unchanged at 33.99% and 43.26% respectively. Minimum Alternate Tax (MAT) rate stands at 20.96%. The Finance Minister further questioned those members who have been opposing the tax reforms relating to the enactment of Direct tax Code (DTC) and Goods and Service Tax (GST) and urged them to pass the bills by the end of January 2014. 9. Forex Reserves Government has decided to infuse USD 15 billion to Forex Reserves. 10. Foreign Trade With regard to Foreign Trade, despite a decline in growth of global trade, the Finance Minister claims that exports have recovered sharply. The estimated merchandise export is estimated to reach USD 326 billion indicating a growth rate of 6.3 percent in comparison to the previous year. The sluggish import is a matter of concern for manufacturing and domestic 4|P a g e
- 5. trade sector. 11. Gross Domestic The GDP slow-down which began in 2011-12 reaching Product (GDP) 4.4 percent in Q1 of 2013-14 from 7.5 percent in the corresponding period in 2011-12 has been controlled by numerous measures taken by the Government. Growth in the third and fourth quarter of the current year is expected to be 5.2 percent and that for the whole year has been estimated at 4.9 percent. 12. Power About 50,000 MW of Thermal and Hydel Power capacity is under construction after receiving all clearances and approvals. 78,000 MW of power capacity have been assured coal supply. Kudankulam Nuclear Power Plant Unit-I achieved criticality and is generating 180 Million Units of power. Fast breeder Reactor at Kalpakkam and 7 Nuclear Power Reactors under construction. National Solar Mission to add 4 Ultra Mega Solar Power Projects each with the capacity of over 500 MW in 2014-15. A total of 23950 MW of power capacity has been added. 13. Innovation Fund Ministry of MSME will create the ‘India Inclusive Innovation Fund’ to promote grass root innovations with social returns to support enterprises in the MSME sector with an initial contribution of Rs. 100 Crores to the corpus of the fund. 14. Social Sector Initiatives A Venture Capital Fund to provide concessional finance to Scheduled Caste will be set up by IFCI with an initial capital of Rs. 200 Crores which can be supplemented every year. The restructured ICDS, under implementation in 400 districts, will be rolled out in remaining districts from 1.4.2014. 5|P a g e
- 6. A National Agro-Forestry Policy 2014 has been approved. A mechanism for marketing minor Forest produce has been introduced and an allocation of Rs. 444.59 Crores has been made to continue the Scheme in 2014-15. A new Plan Scheme with an allocation of Rs. 100 Crores has been approved to promote community radio station New technologies such as JE vaccine, a diagnostic test for Thalassaemia and Magnivisualizer for detection of Cervical cancer have been delivered to people. Additional Central Assistance to some States - A sum of Rs. 1200 Crores as additional central assistance to North Eastern states, Himachal Pradesh and Uttarakhand in this financial year. A Corpus has been created for ‘Nirbhaya Fund’ with a non lapsable grant of Rs 1000 Crores. Proposals to ensure the dignity and safety of women have been approved which will be funded from the Nirbhaya Fund. A sum of Rs 1000 Crores has again been provided in FY 2014-15 The National Skill Certification and monetary reward schemes launched in August 2013 with an allocation of Rs 1000 Crores has been widely hailed as a success. A sum of Rs 1000 Crores is proposed to be transferred to the NSD Trust to scale up its programme rapidly. 15. Subsidies The expenditure on subsidies for food, fertilizer & fuel will be Rs. 246,472 Crores slightly higher than the 6|P a g e
- 7. revised estimates of Rs245,453 Crores in 2013-14. Rs. 115,000 Crores has been allocated for food subsidies taking in to account, Government‘s firm and irrevocable commitment to implement the National Food Security Act throughout the country. 16. Education loans A moratorium period is proposed for all education loans taken up to 31.3.2009 and outstanding on 31.12.2013. Government will take over the liability for outstanding interest as on 31.12.2013 but the borrower would have to pay interest for the period after 1.1.2014. An amount of Rs. 2,600 Crores has been provided this year and it will benefit nearly 9 lakh student borrowers. 17. Off-shore Accounts The Government has succeeded in obtaining information on illegal off-shore accounts held by Indians in 67 cases and action is under way. Prosecution for wilful tax evasion have also been launched in 17 other cases. More enquiries have been initiated in to accounts reportedly held by Indian entities in no tax or low tax jurisdictions. 18. Housing Funds Rs. 2,000 crore and Rs. 6,000 crore have been allocated towards urban and rural housing funds. 19. Public management debt The Government is ready with a Public Debt Management Agency Bill by virtue of which a nonstatutory Public Debt Management Agency will be operational by 2014-15. 20. Commodity Derivatives The government has proposed to amend the Forward market Contracts (Regulation Act) to strengthen regulatory framework of the commodities derivative market. 7|P a g e