Union budget 2014-15 Edelman
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Transcript of Union budget 2014-15 Edelman
Union Budget2014-15
make a strong effort towards building exports. This can be a major platform to create employment and growth.
Faster clearance and simpler procedures for export and import will help companies become part of global value chains or build their own. However, it will be important to see how these proposed changes will be implemented.
The tax holiday for power and the benefits for renewable energy should also help address to some extent the power issues that are faced by industry and also provides a good investment opportunity in renewable energy for global and Indian investors.
The Finance Minister had a tough act to meet the targets set by his predecessor on fiscal prudence while at the same time balancing the measures to keep the Budget inclusive in its approach. He also had to send a strong message to investors that his government would remain transparent and predictable. In the process he has stayed away from making any big ticket changes but has tinkered with different policy measures available to him. There are several announcements ranging from skill development to a targeted approach to subsidies that give a positive feel to the Budget.
Growth and fiscal prudence has, as expected, been the underpinning sentiment in the Union Budget presented by Finance Minister Arun Jaitley. The focus on foreign direct investment is a welcome step as also is the stress on the introduction of the goods and services tax this year. Duty concessions and removal of inverted duty structures should also help some important sectors.
The intent of the government to bring the focus back on growth of over 5 per cent is good though the stock markets initially failed to recognise the intent and lost ground, subsequently gaining after tax proposals were announced. Industry has remained positive though cautious. The devil, they understand, will lie in the details. It is also important to note that intent alone will not help in resurrecting the manufacturing sector, which is important for growth.
Importantly, the Minister has addressed the
issue of retrospective taxation, though industry and investors may feel that more could have been achieved and would have hoped from some stronger words to give solace to distressed investors. However, it is important that he has been categorical about making the tax regime transparent and predictable for investors.
The increase in FDI limits for sectors has been a good indicator of how the government views foreign investment.
The reliance on the PPP model for infrastructure, which was evident across the speech, is a good step towards fiscal prudence. The emphasis on PPP model to create a strong manufacturing base would benefit investors.
Manufacturing has rightly received a lot of attention. The decision to place importance on industrial corridors and building smart cities will also help in building a strong base for investment and should provide a wider base for investment for Indian and foreign players.
On the export front it is important that the Minister has shifted some of the responsibility to the states by establishing the export promotion mission that will bring state and central efforts under one umbrella. It is time that the states also
Major Administrative Announcements
New Urea Policy would be formulated.
Introduction of GST to be given thrust
High Level Committee to be constituted by the CBDT before taking any decision retrospective taxation
Sort out pending tax demands of more than Rs. 4 lakh crore under dispute and litigation
Income-tax Settlement Commission scope to be enlarged
New Indian Accounting Standards to be adopted by Indian Companies
New Expenditure Management Commission to look into expenditure reforms
Shyama Prasad Mukherji Rurban Mission for integrated project based infrastructure
Foreign Direct Investments
4.5
Fiscal Deficit
2013-14Actual
2014-15Target
% of GDP
4.1 2015-163.6 2016-17
3
Estimated Revenue De�cit
2.9
3.3
% %
DefenceInsurance
T. S. VishwanathSenior Advisor - Public Affairs
Fiscal prudence takes priority
Highlights
To roll out by the end of this �scalGST
200 crores for the statue of Sardar Patel in Gujarat
2.29 lakh crore for Defence sector
One Uniform KYCDemat Account,
FDI in manufacturing to be given a thrust
Incentives for Real Estate Investment Trusts
3,600 crore under National Rural Drinking Water Programme
Individual tax payers will get exemptions of Rs 2.5 lakh
4AIIMS
5IITs
5IIMs
The Finance Minister, Mr.Arun Jaitley's task was extremely onerous. On the one hand, he had inherited an economy that is in anything but the pink of health. On the other, the expectations roused by Prime Minister Modi's election campaign, at once epic and epochal, have been such that it would be an extremely challenging task to satisfy those who expect his Government to transform the country by the wave of his magic wand. There have been many who seem to expect the new Government to work wonders in no time. Additionally, the latest crisis in the Middle East and the prospects of a weak monsoon have made his task even more dif�cult.
Viewed against such a backdrop, the Union Budget is creditable. Mr. Jaitley has ful�lled many electoral promises and addressed many
constituencies. Breaks in direct taxes that, by one reckoning, can save individual taxpayers up to Rs. 36,000 a year, are directed at the middle classes. There are proposals galore to help rural India, women & the girl child, and the people of backward & border regions.
The many proposals to revive manufacturing, help domestic industry and give a �llip to skills development are heartening. These should also go a long way in creating jobs and increasing job-worthiness in the youth � both thrust areas for Mr. Modi. In his campaign speeches, Mr. Modi accused the previous UPA Government as being negligent of the nation's defence needs. Mr. Jaitley has sought to address this by hiking the defence budget, paying attention to the special needs of border states in infrastructure and other areas, and allowing for increased foreign direct investment (FDI) in defence manufacturing.
Besides defence manufacturing, Mr.Jaitley has given the green signal to increased FDI in insurance. He has eased the requirements for allowing FDI in the housing sector. He has also begun the process of shutting the door on
retrospective taxation, an ill-advised move of the previous regime that had rung alarm bells in the global investor community. These measures will go a long way in improving the investment climate.
On balance, Mr. Jaitley's instincts were right. He wanted to demonstrate his commitment to �scal responsibility. He wanted to revive growth by increas ing demand and boost ing investment. He wanted to battle in�ation. He w a n t e d t o h e l p t h e p o o r a n d t h e disadvantaged. In all four areas, there is much in the Budget proposals to show that he has done much. This is just the beginning of the process of smart economic management to revive the economy and place it on the high growth trajectory. It will take a lot more to rouse the economy from the slumber that it was lulled into by the previous regime. The new government will have to do more before the economy gets up and gets going. It is very encouraging that Mr. Jaitley has taken the �rst steps towards restoring investor con�dence and reviving animal spirits.
Vivek SenguptaSenior Advisor -Public Affairs & Advocacy
A good beginning
Market Reactions For women safety in large cities
For sports stadia in Jammu & Kashmir Deen Dayal Upadhyaya Gram Jyoti Yojana� to augment power supply in rural areas For an institution to provide support to mainstreaming PPPPs called 4PIndia
Pradhan Mantri Krishi Sinchayee Yojna for irrigationOne rank, one pension in Defence
Namami Gange for conservation of GangaNeeranchal for watershed development in the country
For modernisation of state policeWarehouse Infrastructure Fund
100 smart citiesNational Housing Bank for rural housing
To encourage Start-UpsOuter Harbour Project Pradhan Mantri Gram Sadak Yojna
Sarva Shiksha Abhiyan For investment in NHAI
Corpus for Urban DevelopmentScheduled Castes
Planned Allocation for North East RegionAgriculture credit
150 cr200 cr500 cr500 cr
1,000 cr
1000 cr2037 cr
2,142cr
3,000 cr5,000 cr
7,060 cr8,000 cr
10,000 cr11,635 cr14,389 cr28,635 cr
37,880 cr50,000 cr50,548 cr53,706 cr
800,000 cr
Allocations
Non Plan
Government Expenditure in FY14
12,19,892 crore
Plan Total
17,94,892 crore
+ =5,75,000 crore
Gross Tax Receipts
13,64,524 crore
Capital Receipts other than borrowing
73,952crore
Non TaxRevenues
2,12,505crore
Arun Jaitley Minister of Finance
Nirmala Sitharaman Minister of State,
Commerce & Finance
Arvind MayaramFinance Secretary
Shaktikanta Das Revenue Secretary
Ratan P WatalExpenditure Secretary
Nripendra MishraPS to Prime Minister
Ravi MathurDisinvestment
Secretary
Sindhushree Khullar Secretary, Planning
Commission
Rajat BhargavaJoint Secretary, Budget Division
G S Sandhu, Financial Services
Secretary
P K Mishra, Additional PS
to Prime Minister
Behind the Budget
focus have been?
Ans: I think he could have laid more emphasis on the power sector and made more speci�c announcements. There are some indications of reforms from the Budget speech but perhaps he could have looked more into speci�c issues such as avai labi l i ty of coal for power generation. Delivering the targets for �scal de�cit will be the biggest challenge and there is no clear indication as to how the new government will go about it.
How is this Budget different from the earlier Budgets presented by the UPA government?
Ans: One major difference is that there is less focus on entitlements and rights based approach. While the new government has continued with the schemes like MNREGA, the Finance Minister has proposed more emphasis on increasing productivity and employment generation. Possibly the instruments of this would be providing more skills and loans to the households for self-employment, emphasising on the urban development such as concept of 'smart cities' which could provide more jobs.
What are your views on Modi government's �rst Union Budget?
Ans: The industry was hoping for a bolder budget but there are no big bang reforms that the government has proposed in this budget. However, given the short time the new government had to present this Budget, I think it is a good pragmatic Budget, the Finance Minister has not set his targets very ambitiously. He is focusing on achieving the �scal de�cit targets set in the Interim Budget by UPA II.
Having said that, he has certainly laid down a roadmap for �scal consolidation and provided a direction on what policy measures the government will take to bring economic reforms. One major problem he has recognized and address is on the savings front which has gone below 31%. He has taken steps to increase individual savings which will positively
impact the economy and investments.
But in my view the Finance Minister could have given more emphasis on labour reforms. Large scale employment based manufacturing industries will not come up without relaxation of labour laws and he could have given some indication on of the government's intent on this front.
How do you this budget will impact the business sentiments?
Ans: We must realise that the Budget is not the only way to bring about economic reforms, it is just one of the tools. But the new government has certainly tried to project that this will be a stable regime and decisions will not be taken in a hurry such as in the case of retrospective tax. This is a good sign that due diligence would be done on critical policy decisions. Decisions to increase FDI in defence and insurance will give positive signals to the outside world from investment point of view. Other such announcements are on the roadmap for GST, expected legislative changes for quick settling of tax demand under disputes and emphasis on skill development.
Any key sector that you think should have been focussed on? And what should the
Professor Manoj Panda, Director, Institute of Economic Growth
Jaitley adopts a cautious approach