New Delhi, Feb 17 (IANS): Seizing the limited elbow room in an election year, Finance Minister P. Chidambaram presented the interim budget for the next fiscal Monday saying the Indian economy was more stable today than two years ago and sought to win over key sections like scheduled castes, minorities, women, farmers and army personnel with more money for their welfare while pleasing the middle class with excise cuts to make cars, mobile phones and items of daily consumption cheaper.
The finance minister could not change the tax regime vastly, as it required legislative approvals and is generally left for the next government in an election year. The direct tax rates were left unaltered. But that did not stop him from indulging in some self-acclamation for meeting key targets while highlighting achievements of his government.
In his largely uninterrupted 56-minute speech, which many feared would get disrupted by the volatile Telangana issue that has not let the last session of the 15th Lok Sabha function properly, he sought to drive home the point that the government did not spend recklesly and more than met the targets for fiscal deficit set for 2013-14.
At the same time, farm credit disbursals and public investments, notably on infrastructure, were met despite challenges, he said, and added concerns over food inflation and current account deficit were also adequately addressed.
"No one is speaking about downgrades now," said Chidambaram, referring to the threats given by some global credit rating agencies to lower India's economic outlook that could have rendered junk status to Indian bonds and triggered a flight of capital.
"The economy is more stable today than it was two years ago," said the minister, tabling India's 83rd national budget and the 9th such personal exercise for him. India's growth, he said, will be 4.9 percent this fiscal, against 4.5 percent in 2012-13.
"I wonder how many have noted the fact that India’s economy, in terms of the size of its GDP (gross domestic product), is the 11th largest in the world. There are great things in store."
The main budget for the financial year 2014-15 will be presented by the new government that will come to power after the general elections, the schedule for which is likely to be announced by the Election Commission soon.
Prime Minister Manmohan Singh, who had earlier presided over the cabinet meeting where the interim budget was approved, congratulated Chidambaram for a "well balanced" budget, one that portrayed a "realistic picture" of the economic situation in the country.
"The finance minister has aptly summarised the economic and social achievements of the last 10 years which our government is proud of," Manmohan Singh said, as the opposition parties said it had nothing new and only listed past achievements with an eye on polls.
The markets, which briefly slid immediately after the budget speech began, was otherwise positive. The sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ended the day at 20,464.06 points with a gain of 97.24 points or 0.48 percent.
Industry also welcomed Chidambaram's resolve to stay on the fiscal discipline course, while addressing the requirements of sectors such as automobiles, capital goods and consumer electronics in the limited scope that he had at his disposal.
During his speech, the finance minister also rubbished arguments of "policy paralysis" and said the economy was more stable than it was two years ago after steps taken by the government and that the growth would be higher in the second half of the fiscal.
Giving specific numbers, Chidambaram said fiscal deficit for 2013-14 would be contained at 4.6 percent of GDP, against the target of 4.8 percent, and the current account deficit was lower at $45 billion, compared with $88 billion for the previous fiscal.
He said fiscal deficit target for the next fiscal has been cut further to 4.1 percent of GDP with a plan expenditure of Rs.5,55,322 crore (Rs.5.55 trillion/$88 billion) and non-plan expenditure of Rs.12,07,892 crore (Rs.12.07 trillion/$192 billion).
For defence, he proposed a 10-percent higher allocation from Rs.203,672 crore(Rs.2.03 trillion/$32 billion) to Rs.224,000 crore (Rs.2.24 trillion/$35.5 billion), while for other ministries allocations have been either kept the same as this fiscal or enhanced.
He also conceded to the long-pending demand for one-rank-one-pension scheme to benefit more than 2.4 million ex-defence personnel from April 1, entitling them to equal post-retirement benefits notwithstanding the year of superannuation.
The finance minister said interventions by his government and the central bank had led to the inflation to come down to 5.05 percent now against 7.3 percent when the budget was presented last year. Core inflation, which excludes items that see volatility in prices, was also down at 3 percent from 4.2 percent, he added.
Chidambaram said the government had made large investments on the infrastructure and energy front, with seven new airports under construction, 19 oil blocks alloted and 50,000 MW of conventional power and 500 MW of solar energy added.
He proposed to lower excise duty on a host of items of daily consumption from 12 percent to 10 percent. He also proposed to reduce the levy on small cars, motor cycles, scooters and commercial vehicles from 12 percent to 8 percent, for sports utility vehicles from 30 percent to 24 percent and for large and mid-segment cars from 27/24 percent to 24/20percent.
In the financial sector, he proposed capital infusion of Rs.11,200 crore (Rs.112 billion or $1.77 billion) in public sector banks and said a venture capital fund will be set up to promote entrepreneurship among scheduled castes.
He said major subsidies will be slightly higher at Rs.246,397 crore (Rs.2.46 trillion or $39.1 billion) of which Rs.115,000 crore (Rs.1.15 trillion or $18.25 billion) is on food, Rs.65,000 crore (Rs.650 billion or $10.3 billion) is on fuel and Rs.68,000 crore (Rs.680 billion or $10.8 billion) is on fertilisers.
Budget highlights
The following are the consolidated highlights of the interim budget for 2014-15 presented in the Lok Sabha by Finance Minister P. Chidambaram on Monday:
* No change in income tax rates
* Rs.3,370 crore transferred to 2.1 crore LPG beneficiaries
* 57 crore Aadhaar cards issued so far
* Allocation of Rs.115,000 crore for food subsidy
* Rs.65,000 crore for fuel subsidies
* Defence expenditure enhanced 10 percent to Rs.224,000 crore
* One rank one pension demand accepted; to be implemented with Rs.500 crore in 2014-15
* Excise on small cars/two-wheelers lowered to 8 percent, on SUVs to 24 percent, on large cars to 20 percent
* Excise duty on mobile handsets to be restructured
* Plan expenditure in 2014-15 at Rs.555,322 crore; non-plan expenditure at Rs.12,07,892 crore.
* WPI inflation at 5.05 percent in January
* Core inflation at 3 percent
* Fiscal deficit at 4.6 percent in 2013-14, to be at 4.1 percent in 2014-15
* Current account deficit at $45 billion
* Growth estimated at 4.9 percent in 2013-14
* India's economy at 11th globally; aiming to be third
* More than 41 lakh women's self-help groups provided credit of Rs 36,893 crore by December 2013
* Major relief for education loan borrowers, 900,000 student borrowers to benefit
* Modernization plan of over Rs.11,000 crore for Central Armed Police Forces.
* Ministry-wise allocations for flagship schemes: Rs.82,200 crore rural development, Rs.67,398 crore for human resource development, Rs.33,725 crore for health and family welfare, Rs.21,000 crore for women and child development, Rs.15,260 crore drinking water and sanitation
* Government succeeds in obtaining information in 67 cases of illegal offshore accounts; prosecution launched in 17 cases
* Capital infusion of Rs.11,200 crore in public sector banks
* Public sector general insurance companies opened 1,849 offices in towns with population of 10,000 or more in 2013-14
* Lending to minority communities soars to Rs.66,500 crore in 2013-14; minorities have 43,52,000 accounts in areas where there is concentration of minorities; loans to minorities stood at Rs.211,451 crore at the end of December 2013
* Additional assistance of Rs.1,200 crore to northeastern states, Himachal Pradesh and Uttarakhand
* Allocation of Rs.48,638 crore for Scheduled Castes sub-plan, Rs.30,726 crore for tribal sub-plan
* To promote entrepreneurship among the Scheduled Castes and to provide concessional finance to them, IFCI to set-up venture capital fund of Rs.200 crore, which can be supplemented every year
* 100 million jobs to be created in a decade
* During 2013-14, 68,043 youth enrolled and 77,710 completed their training under National Skill Certification and Monetary Reward Scheme
* Target of agriculture credit of Rs.800,000 crore for 2014-15
* Steps to deepen Indian financial market: To liberalise the rupee-denominated corporate bond market; to deepen and strengthen the currency derivatives market to enable Indian companies to fully hedge against foreign currency risks; to create one record for all financial assets of every individual; to enable smoother clearing and settlement for international investors looking to invest in Indian bonds; Forward Contracts (Regulation) Act (FCRA) be amended to strengthen the regulatory framework of the commodity derivatives market.
* No policy paralysis
* Budgetary support to railways at Rs.29,000 crore in 2014-15
* Central assistance of Rs.338,562 crore in 2014-15
* Over 29,000 MW of power capacity added during 2013-14
* Construction underway for 50,000MW of conventional power
* Four solar generation plants of 500 MW each to be constructed in 2014-15
* Direct Taxes Code (DTC) to be posted on finance ministry website for public discussion
* Duties cut to revive economy
* All taxes on exports to be waived for manufacturing sector
* Exports estimated at $326 billion in current fiscal
* Two projects sanctioned under Nirbhaya Fund; original Rs.1,000 crore made non-lapsable; another Rs.1,000 crore granted
* Blood banks exempted from service tax
* Research funding organisation to be created to promote scientific R&D
* PPP model to be increasingly viewed
* Community radio to be promoted with Rs.100 crore
* 19 oil blocks allocated in 2013-14
* Seven new airports under construction
* Food grain production in 2013-14 estimated at 263 million tonnes
* Hope to add $15 billion to forex reserves
* Challenges we face common to emerging economies
* India not unaffected by events in global economy