VOTE-ON-ACCOUNT - A REPORT CARD, A ROAD MAP AND A SANGUINE BUDGET

By Ruma Dubey

Touted to be a non-event, well, the Vote-of-account has become an event after all! The BSE is up in the green and the few sops given in indirect taxes has enthused the market.

No Big bang announcements as expected and also more waxing eloquent about his Govt’s achievements; so overall it was more or less exactly what was expected but the market, desperately looking out for reasons to celebrate is happy with the cut in the excise duties on small cars, two-wheelers and SUVs. The biggest credible factor which actually cheered up the market was the fact that the FM managed to meet the target of fiscal deficit for current fiscal. For FY15, the target has been lowered to 4.2% and FY14 fiscal deficit is set at 4.6%.  He has well protected and burnished his legacy of last 10 years and that is what essentially, this Budget was all about.  The way the facts were presented, the UPA did achieve a lot over the past 10 years but it is the sheer paralysis and laxity over the past 3 years which washed away all that which it had managed to achieve earlier. And the FM did not disappoint; he kept up with the tradition and quoted his favourite poet – Thiruvalluvar.

This is the event of the day and tomorrow, the market will start scouting for new events. So that will be short sustainability of this ‘interim budget’ – you blink and it is all over!

Highlights of the Budget

INDIRECT TAXES

• Excise duty for large and mid-segment cars cut to 20%
• Excise duty cut for small cars and two-wheelers to 8%, SUVs to 24% from 30%, effective till June 30,2014.
• Excise duty cut from 12% to 10% for capital goods and consumer durables
• Service tax exemption on loading, unloading, storage of rice
• Blood banks to be exempt from service tax
• No changes in direct tax laws.
• Excise duty on mobile handset to be 6% on CENVAT credit; mainly to give impetus to domestic production

REPORT CARD

• 140 million moved out of poverty during UPA-I and UPA-II regime
•  57 crore UID numbers have been created so far
• Expect to add $ 15 billion to foreign exchange reserve in this fiscal
• Fiscal deficit has been contained at 4.6%
• Exchange rate has stabilised
• Agriculture credit is seen surpassing the earlier estimates for the current fiscal.
• India’s road network jumps over 7-fold in 10 years
• Power generation capacity doubles to 2.34 lakh MW
• Declining fiscal deficit, moderation of CAD, stable exchange rate and increase in project implementation result of hard work
• Totally 54 lakh transactions completed under direct benefit transfer
• Rs.1200 crore additional funds allocated to North-East states

EXPENSE SHEET

• Moratorium on interest on student loans taken before March 31, 2009,  to benefit 9 lakh borrowers.
• Defence budget has been increased by 10% to Rs 2.24 lakh crore.
• One rank one pension scheme for the defence forces; Rs 500 crore will be transferred in 2014-15 for implementing this.
• FY15 plan expenditure has been kept at Rs 5.55 lakh crore.
• Total spending on food, fertilisers and fuel at Rs.2.5 trillion
• Rs 200 crore Venture Capital fund for Scheduled Caste entrepreneurs.
• Contribution of another Rs 1,000 crore for Nirbhaya fund for women safety.
• Seeks Parliament's nod for supplementary spending of Rs 46,227.57 crore in 2013-14

ROAD MAP AHEAD

• Ready with public debt management agency plan.
• FY15 capital infusion in PSU banks will be Rs 11,200 crore.
• Banks to lend Rs 8 lakh crore to the agricultural sector in FY15
• Proposed three more industrial corridors - Chennai-Bangalore, Bangalore-Mumbai, Amritsar-Kolkata.
• Pegged growth rate for FY 2014-15 at 5%
• Pegged investment rate at 34.8% and saving rate at 30.1%
• Current account deficit for Fy14 projected at $45 billion
• Exports seen at $326 billion in FY14, up 6.3% (YoY)
• Agriculture exports expected to touch $45 billion in FY14, up from $41 billion in FY13.
• Lowers disinvestment target to Rs 16,027 crore from Rs 40,000 crore for FY14; estimating Rs.36,925 crore for FY15.