BUDGET 2013-2014

PRESENTED BY : REHA VASHIST VARINDER SINGH JASMEET KAUR SUDHANSHU VARMA

“Not so long ago, India appeared to be cruising towards superpower Dom . The bad weather Struck, at home and abroad. With elections looming on the horizon , Chidambaram faces a Twin challenge : “Keep Congress hopes afloat while steering the economy out of choppy waters”. He’s soaked the rich , made a splash for women, and sought to shore up investments .

“I acknowledge that the Indian economy is challenged, but I am absolutely confident that with your Cooperation, we will get out of the trough and get on to the high growth path.”

National Budget Cycle

Preparation (Stage 1)

Approval (Stage 2)

Implementation(Stage 3)

Control/ Monitoring &

Evaluation(Stage 4)

4

MACRO ECONOMIC FACTORS

A general government operating surplus (i.e. a surplus on the day-to-day or recurrent operations of thegeneral government sector) of $196 million is forecast for 2012-13. This is the difference betweenforecast revenue of $25.5 billion, and recurrent spending (or expenses) of $25.3 billion. Combined withan affordable level of borrowings, the operating surplus helps fund the Government’s investment ineconomic and social infrastructure, which in 2012-13 totals $7.6 billion.

Divestment target of Rs 40k Cr laid out in the budget.

Tough Targets

TO ACHIEVE THIS IT IS RELYING ON• Higher GDP growth

expectation• Revenues from 10%

surcharge on the super rich and companies

• Direct taxes growth of 18.2%

• Indirect taxes growth of 20.1%

RISKS TO FISCAL NUMBERS• Assumption of nominal GDP

growth of 13.4% in 2013-2014 against the CSO estimate of 11.7% for FY13.

• Government expects moderation in Inflation to boost growth, but it may remain sticky

• Revenues of 40k Cr from Telecom sector may be difficult due to state of Industry.

• 40k Cr from stake sales in PSUs may be difficult if Stock markets remain choppy.

BUDGET HIGHLIGHTS

Fiscal Consolidation

2010/11 2011/12 2012/13 2013/14 2014/15

-20,000,000

-10,000,000

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

Revenue and Grants

Total Expen-diture

Budget Balance

N$ 000

13

Set Top BoxesImport Duty on set top boxes hiked to 10% from 5%. This will increase cost of set top boxes.Impact :- Spur local manufacturing of set top boxes, one of fast moving electronic goods that represent a market of $2 billion over the next two years.

Eating out in AC restaurantsEating out will cost more. Service tax will be levied on all air-conditioned restaurants.Impact:- Expect to pay Rs 120 more on a bill of Rs 1000

HomesAbatement in service tax for 1 Cr-plus or 2000 sq.ft. plus homes reduced from 75% to 70%.Impact :- Cost of such luxury homes will go up as your service tax component will go up.Raw silkDuty on raw silk has been increased from 5% to 15%. Use of raw silk as dress material will hence cost more.

• .

Mobiles phonesExcise duty on mobile phones costing more than Rs 2000 raised to 6%. As a result, mobile phones will cost more.Impact:- Cost of smart mobile phone rises Excise duty on marbles from Rs 30 per square metre to Rs 60 per square metre. Cost of marbles when used in households will increase.

Handmade carpetsThe Union Budget exempted handmade carpets and textile floor coverings of coir or jute from excise duty. This makes handmade carpets and coir jute textile floor coverings cheaper for the housewife.Leather and leather goods including footwearThe Union Budget reduced customs duty on specified machinery for manufacture of leather and leather goods, including footwear, from 7.5% to 5%. Prices of leather goods and leather footwear will come down.

Precious and Semi Precious stonesHousewives can now purchase precious and semi precious stones without guilt. The Budget reduced customs duty on precious and semi-precious stones from 10% to 2%.Limits on Personal import of jewellery relaxedImpact:- Male passengers can now bring in jewellery worth Rs 50,000 and women up to Rs 1 lakh.

IMPACT ON INVESTORS

Proposal

Tax benefit for new stock, MF investors extended for two more years.

The govt. to issue inflation linked bonds and national security certificates.

Impact

Investors will get a tax benefit of up to Rs 25k, first timers will have taste of equity and mutual funds.

Hit by Inflation, investors look for safe returns may be attracted towards the new product and buy less gold.

FOR WOMENOne of recurring themes of this Budget was women. FM announced the setting up of a Rs 1000 Cr “Nirbhaya Fund” for the “Dignity and

Safety of women” and will lend to businesses that are run by women, employ women, support livelihood.

Rs 200 Cr to end “gender discrimination” to help “Vulnerable groups” like single women & widows.

SKILL DEVELOPMENTTarget of skilling 50 million people in the 12th Plan period, including 9 million in 2013-14. allocated Rs 1,000 crore for skill development.

IPO Measure:- SMEs, including start ups, permitted to list on the SME exchange sans IPImpact:- Will allow greater liquidity, and bring down listing costs

GOOD NEWS FOR GARMET MAKERSMeasure:-Zero duty regime brought back for branded ready made garmentsImpact:- Ready made garments price to fall by about 3%. A branded shirt priced at Rs 1250, will now cost around 1200 .

IMPACT OF BUDGET ON VARIOUS

SECTORS

AIRLINES

BANKING AND FINANCE

AUTOMOBILE SECTOR

ASTON MARTIN

REAL ESTATE

IMPACTFMCG

CONSTRUCTION

HOSPITALITY

OIL & GAS

POWER

TEXTILES

SURVEY RESEARCH

1.HOW DO YOU FEEL ABOUT BUDGET?

21%

77%

2%

OPINION ABOUT BUDGETBAD GOOD VERY GOOD

2.RANK BUDGET ON THE SCALE OF 1 T0 10?

1 2 3 4 5 6 7 8 9 10

0 0

2

6

7

13

10

6

3

0

RATINGSNO OF RESPONDENTS

3.DO YOU THINK BUDGET WILL CONTRIBUTE TO GDP GROWTH?

YES65%

NO35%

CONTRIBUTION TO GDP GROWTH

4.BANK FOR WOMEN ,IS IT A GOOD IDEA OR BAD?

GOOD 80%

BAD20%

BANK FOR WOMEN

5.10% SURCHARGE ON INCOME ABOVE 1 CRORE JUSTIFIED?

GOOD55%

BAD45%

10% SURCHARGE ON INCOME ABOVE 1 CRORE

6.SALES TAX INCREASED BY 6% ON MOBILES ABOVE RS 2000 JUSTIFIED OR NOT?

YES 47%

NO53%

SALES TAX INCREASED BY 6% ON MOBILES

7.IMPORT DUTY ON SET UP BOX APPRICIATED OR NOT?

YES55%

NO45%

IMPORT DUTY ON SET UP BOX

8.WILL BUDGET INCREASE INVESTORS CONFIDENCE?

YES 45%

NO55%

INVESTORS CONFIDENCE

9.CAN WE MOVE TO DOUBLE DIGIT GROWTH RATE WITH THIS BUDGET?

YES32%

NO68%

DOUBLE DIGIT GROWTH RATE

10.IS IT A POPULIST BUDGET OR ECONOMICALLY BALANCED BUDGET?

49%51%

BUDGETPOPULIST BALANCED