Interim Budget: Cars, phones cheaper; Chidambaram rejects policy paralysis

mangaloretoday.com / NDTV

New Delhi, Feb 17: The Interim Budget of UPA-II has an election tinge to it, with Lok Sabha polls coming up later in the year. Finance Minister P Chidambaram’s speech was like an election campaign speech, as he listed the achievements of 10 years of UPA rule in areas such as food security, agriculture, and other welfare schemes. He also announced excise cuts to help the consumer durables and automobile industries do better in these challenging times. No changes were announced in direct taxes.

 

He announced a cut in excise duty on small cars and two-wheelers from 12 to eight per cent, and on SUVs from 30 to 24 per cent. Excise duty on consumer durables has been reduced to 10 per cent from 12 per cent. In order to encourage domestic production of mobile handsets, he announced an excise duty reduction to six per cent with CENVAT (Central Value Added Tax) credit or one per cent without CENVAT. In the last Budget, excise on all mobile handsets was raised from one to six per cent.

All these changes will be valid till June 2014, and will be reviewed when the regular Budget is presented by the next government.

Following are the highlights of his speech:

Global cues not to overly hit India, India held its head above water during global crisis

Fiscal deficit for 2013-14 will be contained at 4.6%

Export seen at $326 billion showing 6.3 per cent year-on-year growth

Growth for FY14 estimated at 4.9%; Q3, Q4 growth seen at 5.2%

I reject the argument of policy paralysis. Let history be the judge of last 10 years
Economy in much better shape now than it was two years ago. 10-year trend growth rate at 6.2 per cent, UPA I and II delivered above trend rate
Fiscal deficit down, CAD down, inflation moderated and growth picking up
Merchandise export to grow by 6.8% to USD 326 billion

3 more industrial corridors - Chennai-Bangalore, Bangalore-Mumbai, Amritsar-Kolkata - under various stages of implementation

GDP growth rate in Q3 and Q4 of 2013-14 will be at least 5.2%

Power capacity rises to 234,600 MW in 10 years

Expenditure on education has risen from Rs 10,145 crore 10 years ago to Rs 79,251 crore this year

Sugar decontrol, gradual correction of diesel prices, application for new bank licenses, sick electricity distribution companies restructured

Plan expenditure to remain unchanged at 5.55 lakh crore in 2014-15

Government fully committed to Aadhaar project. Even critics of the project will realise it’s a tool of empowerment

Budgetary support to Railways increased

PSUs to achieve record capex of Rs 2,57,645 crore in 2013-14

500 MW fast breeder nuclear reaction in Kalpakkam to be ready shortly; 7 nuclear power reactors under construction

National Solar Mission to undertake 4 ultra mega solar power projects in 2014-15
Rs 1,200 crore additional assistance to N-E states to be released before end of the year

Rs 1,000 crore grant for Nirbhaya Fund will be non-lapsable; another Rs 1,000 crore to be given next fiscal

Non planned expenditure at 12.7 lakh crore

Fuel subsidy pegged at Rs 65,000 crore, food subsidy at Rs 1.15 lakh crore in 2014-15

Fuel subsidy worth Rs 35,000 crore to be rolled over in 2014-15

Rs 3,370 crore to transferred to 2.1 crore LPG users; Government committed to Aadhaar-based LPG transfer but scheme on hold temporarily

Defence allocation up 10% at Rs 2.24 lakh crore

Government has accepted principle of one rank, one pay for defence forces. Rs 500 crore estimated requirement for implementing one-rank-one-pay scheme for armed forces in 2014-15

Food subsidy will be Rs 1,15,000 crore for implementation of National Food Security Act

Budgetary support to Railways increased from Rs 26,000 crore to Rs 29,000 crore 2014-15

Rs 2,46,397 crore allocated for food, fertilizer and fuel subsidy

I have kept Rs 5,55,322 crore for plan expenditure

Re-capitalise public sector banks

Fortunes of China and India has an impact on the whole world

UPA government has clear line of sight to the goals we have set for ourselves
Fiscal consolidation - achieve target of 3% deficit

In a developing economy, we must accept that when our aim is high growth there will be moderate inflation

In next three decades, India’s nominal will be on third rank after US and China
RBI must strike a balance between price stability and growth

States have the fiscal space to bear a reasonable proportion for allocation of flagship programmes

Disappointed that we have not been able to implement GST (goods and services tax)

To place DTC Bill for public comments

Minority bank accounts have swelled to 43,53,000 by 2013-14 from 14,15,000 bank accounts 10 years ago

Rs 6000 crore to rural housing fund, Rs 2000 crore for urban housing fund
Moratorium on interest on student loans taken before March 31, 2009; to benefit 9 lakh borrowers

Excise duty on small cars, motorcycles, scooters reduced from 12 to 8 per cent till 30.06.2014.

Excise duty on consumer durables  cut from 12 to 10 per cent till 30.6.2014.
Cut excise duty on mid segment cars to 20% from 24%

Duty cut on SUV cars from 30% to 24%