UNION BUDGET FY15 - NO BIG BANG, GOVT SHOWS INTENT

By Research Desk

about 11 years ago

By Ruma Dubey

For most part of the Budget, it sounded almost like a Congress Budget, except that the speech was longer, Mr.Arun Jaitley took a five minute break and there were so many micro issues in the Budget that one minister was actually caught on TV with a huge yawn!

It would be really unfair for us to expect this 6 week old Govt to announce huge Big Bang measures in this Budget. Yet, in the short span of time, the Govt did announce a lot of sops. REITs, FDI in defence and insurance, investment allowance of 15% for Rs.25 crore manufacturing units spend on plant & machinery, Rs.10,000 crore allocation for start-ups were all good things. The Budget was a long statement of all things which Modi has been mouthing – smart cities, good roads, sanitation, cleaning the Ganga.

Yet, there was a sense of irritation, almost embarrassment when Rs.200 crore was announced for the Sardar Patel statue in Gujarat, which is lesser than the allocation of Rs.150 crore for protection of women and half of that, Rs.100 crore was allocated for metros in two cities and Rs.100 crore industrial corridor in Pune. At this juncture, such things, especially building of statues and memorials is frowned upon and in that context, this struck a wrong note.

The market was surely disappointed that there was no clarity on the retrospective tax issue and as against expectations, laid out no road map for GST. There are tonnes and tonnes of schemes announced and all with a token allocation of Rs.100 crore. And throughout the Budget, one thing which ran through was PPP – almost everything is via PPP. During the first part of the Budget, when Jaitley spent too much time on silly schemes, like increasing AIIMS, upgrading status of film institute’s and so many such things made one wonder if this was the FM of the Govt which promised us growth and a governance which was so bold and different from the previous one. The Govt has announced schemes all over- transport, road, waterways, coal, ports, harbours, sanitation but as of now, there is no timeline yet. All these seem more like a preview of what could later, once the Govt settles down.

The market was initially down in the dumps, extremely disappointed because Jaitley was sounding more and more like Congress but in the latter half, once the tax announcements began, the market recouped and it showed an almost 500 points movement. The Govt struck the right cord, with the common man and India Inc. The hike in PPF limit and tax exemption was welcome and it has made the wrong things costly – pan masala, aerated waters, cigarette and all tobacco products.

The detailed speech is not yet out but how was the overall budget? Well, it was too micro and too many sector specific sops with token allocation of funds. The arbitration on Vodafone will continue. Sops for middle class are there but few; that is understandable given the fiscal constraints. It has few negatives but at the same time, few negatives too.

It ticks all the boxes, the Govt has showed that it has the intent and hopefully we will see the action in the next 6 months.

BUDGET HIGHLIGHTS

Fiscal deficit at 5.31 lakh crore for FY15
Divestment target at Rs.63,425 crore for FY15
Gross Borrowing at Rs.6 lakh crore for FY15
Net Borrowing at Rs.4.61 lakh crore for FY15
FY15 Revenue deficit at 2.9%
Retrospective tax to be retained, but to be exercised judiciously, with clearance form a high-level committee; no new retrospective taxes announced
To meet FY15 fiscal deficit target of 4.1%
Fiscal tightening to continue, to reach 3% by FY17, FY 16 fiscal deficit target @ 3,6%
Rs.2.29 lakh crore allocation for defence sector – Rs.5000 crore more over interim Budget of Chidambaram
Composite cap of FDI in insurance and defence to 49% and to retain Indian control
To sell shares in PSU banks to retail investors, Govt to retain majority stake
Uniform KYC norms for entire financial sector
To Introduce Single Demat A/c For All Financial Transactions
To Liberalise ADR, GDR Regime For All Permissible Securities
To set up 6 debt recovery tribunals
PPF upper ceiling hiked from Rs.1 lakh to Rs.1.5 lakh

SUBSIDY FOR FY15

Food subsidy at Rs.1.15 lakh crore
Petroleum subsidy at Rs.63,427 crore
Fertiliser subsidy at Rs.72,970 crore
Total subsidy at Rs.2.51 lakh crore

TAXES IN FY14

No changes in personal income tax rates
Change in personal income tax slab – tax exemption increased to Rs.3 lakh for senior citizens and Rs.2.5 lakh for salaried employees.
No change in surcharge
Education cess to continue at 3%
Home loan interest rate exemption increased to Rs.2 lakh
Benefits under 80/c increased from Rs.1 lakh to Rs.1.5 lakh
To extend 10-year tax holiday for power
Exemption for self occupied homes raised to Rs.2 lakh
Investment allowance at 15% for 3 yrs to manufacturing company which invest more than Rs 25 crore in plant and machinery
To Retain 15% Tax Rate On Intl Dividend Income
No change in tax laws for Hindu Undivided Families
To review Direct Tax code
Impact of direct tax proposals at Rs.22,200 crore
Income from portfolio investments to be treated as Capital Gains
Retains tax rebate on dividend by foreign companies
To change tax laws governing FIIs, whose managers based abroad.
Tax-Pass through status for REITs to avoid double taxation
Witholding tax on corporate bonds issued overseas extended
FII income to be treated as capital gains

SOCIAL WELFARE SCHEMES

Rs.50,500 crore for SC/ST schemes
Rs.3600 crore set aside for National Rural Drinking Water, total of Rs.6500 crore for safe drinking water
To Amend Apprenticeship Act
Allocate Rs 14,389 cr towards PMGSY

OTHER SCHEMES

Rs.150 crore set aside for safety of women across India
e-Visa to be issued across 9 airports, to facilitate visa on arrival for tourists
Need over Rs 2.4 lakh crore to fund PSU banks capex in FY15
Rs.7060 crore allocated for development of 100 Smart Cities
Extension of Senior Citizen Pension Plan scheme till August 2015
For girl child - announces Beti padhao, beti badhao yojana, allots Rs. 100 crore
Rs 14389 crore allocated for construction of village roads
Savings in Kisan Vikas Patra reintroduced
To print currency notes with Braille effects
All govt departments and ministries to be integrated through E-platform by 31
Rs.12,000 crore for National Housing Banking programme
Pt Madan Mohan Malaviya Teaching Programme to be started
To set up 5 new IIMs and 5 new IITs – budget is Rs.500 crore; 12 more Govt Medical colleges with dental facilities and 4 new AIIMS will be in AP, West Bengal, Vidarbha and Purvanchal for which Rs.500 crore allocated; Agriculture University to be set up in AP and Rajasthan, and Horticulture University in Haryana, Telangana for which Rs.200 crore allocated.

SCHEMES FOR FARMERS/ AGRICULTURE

To provide Rs.1000 crore for PM irrigation schemes
Maintain allocation for NREGA
To spend Rs 28,635 cr for Sarva Siksha Abhyaan
Propose to continue with interest subvention for farmers
To set aside Rs.8 lakh crore for Farm Credit in FY15
Rs.100 crore allocation for Agriculture fund
Propose 3% additional subsidy on farm loans
plan to provide finance 5 lakh landless farmers through NABARD
Rs.5000 crore for farm warehousing facility
Rs. 5000 crore short time rural credit refinance fund for 2014-15
Rs. 100 crore set aside for Kisan Television to provide real time information on various farming and agriculture issues

FOR INDIA INC

To allocate Rs.500 crore for new rural power plan power, aim to provide 24x7 power across India
Infra Invst Trusts To Be Set Up To Securitise Infra Projs
To allocate Rs.100 crore for metro in Lucknow and Ahmedabad, to be developed through PPP mode
Proposes National Rural Internet and Technology Mission; Rs. 500 crore set aside
Slum development to be included in Corporate Social Responsibility activities
Rs 50,000 Cr For Municipal Debt Management For Infra
Rs.10,000 crore fund for start-up firms
Plan 6 new textile clusters at a cost of Rs.200 crore in Rae Bareily, Lucknow,Surat, Bhagalpur
To revive SEZs
16 new port projects in FY15
Rs.11,635 crore for Harbour Projects in current fiscal
Rs.37,850 crore investment in NHAI and state roads in FY15
Propose scheme for development of airports in Tier I and II cities through PPP mode
NHAI to target 8000 kms of road in FY15
500 crore for Ultra Modern Solar Power Projects
PPP model to develop 15000 kms of Gas pipeline and restart mining operations
FM says banks will be allowed to give long-term loans to infrastructure
To bring out measures to relieve stressed assets of banks
Banks to be allowed to raise longer-term funds for infra with minimum rules
Rs.3000 crore for state police modernization
To create 5 tourist circuits with 500 cr corpus
Rs 990 Cr For Socio-economic Dvpt Of Villages Along Borders
Rs.1000 crore to improve rail connectivity in North East
Rs.200 crore and Rs.500 crore for power and water reforms respectively in Delhi
Biotech clusters to be set up in Bangaluru and Faridabad to take science and technology to new heights

SCHEMES FOR GANGA

Rs. 4200 cr set aside for Jal Marg Vikas project on river Ganga connecting Allahabad to Haldia,over 1620 km
Rs 100 cr set aside for project to link rivers.
NRI fund for conservation of river Ganga to be set up
"Namami Ganga", an integrated Ganga Development Project to be set up, Rs.2037 crore set aside for this

UNION BUDGET FY15 - NO BIG BANG, GOVT SHOWS INTENT

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