The following are the key highlights of the interim Union Budget for 2014-15.
The current financial year will end with the fiscal deficit at 4.6 percent (below the red line of 4.8 percent) and the revenue deficit at 3.3 percent. Fiscal Deficit in 2014-15 estimated to be 4.1 percent which will be below the target set by new Fiscal Consolidation Path and Revenue Deficit is estimated at 3.0 percent. The estimate of Plan Expenditure is Rs555,322 crore. Non Plan expenditure is estimated at Rs12,07,892 crore.
The fiscal deficit for 2013-14 contained at 4.6 percent. The currect account deficit projected to be at USD 45 billion in 2013-14 down from USD 88 billion in 2012-13.
Foreign exchange reserve to grow by USD 15 billion in this Financial Year No more talk of down grade of Indian Economy by Rating Agencies.
Current Account Deficit:
CAD will be inevitable for some more years which can be financed only by foriegn investment. Hence, there is no room for any aversion to foreign investment.
Price Stability and Growth : In a developing economy, a high growth target entails a moderate level of inflation. RBI must strike a balance between price stability and growth while formulating the monetary policy.
Food grain production estimated for the current year is 263 million tonnes compared to 255.36 million tonnes in 2012-13. 2 Agriculture export likely to cross USD 45 billion higher from USD 41 billion in 2012-13.
Agricultural credit to exceed the target of Rs7 lakh crores. ‰Agricultural GDP growth for the current year estimated at 4.6 percent compared to 4.0 percent in the last four years.
Investment Savings rate at 30.1 percent and investment rate of 34.8 percent in 2012-13.
Forex and Foreign Trade:
Rupee came under pressure following indications by US Federal Reserve of reduction in asset purchases in May 2013. Government, RBI and SEBI undertook a number of measures to facilitate capital inflows and stablize the foriegn exchange markets. As a result among emerging economy currencies rupee was least affected when actual reduction took place in December 2013.
Government set up a Cabinet Committee on investment and the Project Monitoring Group to boost investment.
By end of January 2014, Projects numbering 296 with an estimated project cost of Rs660,000 crore cleared. Foreign Trade Despite a decline in growth of global trade, our export have recovered sharply. The estimated merchandise export is estimated to reach USD 326 billion indicating a growth rate of 6.3 percent in comparison to the previous year.
The sluggish import is a matter of concern for manufacturing and domestic trade sector.
Due to deceleration in investment, the manufacturing sector has witnessed a sluggish growth. The National Manufacturing Policy has set the goal of increasing the share of manufacturing in GDP to 25 percent and to create 100 million jobs over a decade. 8 National Investment and Manufacturing Zones (NIMZ) along Delhi Mumbai Industrial Corridor (DMIC) have been announced. 9 Projects had been approved by the DMIC trust. 3 more Industrial Corridors connecting Chennai and Bengaluru, Bengaluru and Mumbai & Amritsar and Kolkata are under different stages of preparatory works.
Additional capacities are being installed in major manufacturing industries. Notification of a public procurement policy, establishing technology and common facility centres, and launching the Khadi Mark are steps taken to promote Micro Small and Medium Enterprises.
All taxes, Central and State that go into an exported product should be waived or rebated. There should be a minimum tariff protection to incentiwise domestic manufacturing.
In 2012-13 and in nine months of the current financial year, 29, 350 MW of power capacity, 3, 928 Kms of National Highways, 39, 144 Kms of Rural Roads, 3,343 Kms of New Railway track and 217.5 milliion tonnes of capacity per annum in our ports have been created to give a big boost to infrastructure industries. 19 Oil and Gas blocks were given out for exploration and 7 new Air ports are under construction. Infrastructure debt funds have been promoted to provide finances for infrastructure Projects.
GDP Growth The GDP slow-down which began in 2011-12 reaching 4.4 percent in Q1 of 2013-14 from 7.5 percent in the corresponding period in 2011-12 has been controlled by numerous measures taken by the Government. Growth in the third and fourth quarter of the current year is expected to be 5.2 percent and that for the whole year has been estimated at 4.9 percent.‰ The declining fiscal deficit, stable Exchange Rate and reducing Current Account Deficit, moderation in inflation, increasing exports are reflection of a more stable economy today.
About 50,000 MW of Thermal and Hydel Power capacity is under construction after receiving all clearances and approvals. 78,000 MW of power capacity have been assured coal supply.
Kudankulam Nuclear Power Plant Unit-I achieved criticality and is generating 180 Milliion Units of power. Fast breeder Reactor at Kalpakkam and 7 Nuclear Power Reactors under construction. National Solar Mission to add 4 Ultra Mega Solar Power Projects each with the capacity of over 500 MW in 2014-15.
Space India joined a handful of countries when it launched the Mars Orbiter Mission. The Country has acquired capability in launch vehicle technology, cryogenics and navigation , meteorological and communication satellites. Several flight tests, navigational satellites and space missions are planned for 2014-15.
Ministry of MSME will create the ‘India Inclusive Innovation Fund’ to promote grass root innovations with social returns to support enterprises in the MSME sector with an initial contribution of Rs100 crore to the corpus of the fund.
Social Sector Initiatives:
A Venture Capital Fund to provide concessional finance to Scheduled Caste will be set up by IFCI with an initial capital of Rs200 crore which can be supplemented every year. The restructured ICDS, under implementation in 400 districts, will be rolled out in remaining districts from 1.4.2014.
A National Agro-Forestry Policy 2014 has been approved. A mechanism for marketing minor Forest produce has been introduced and an allocation of Rs444.59 crore has been made to continue the Scheme in 2014-15.
A new Plan Scheme with an allocation of Rs100 crore has been approved to promote community radio station New technologies such as JE vaccine, a diagnostic test for Thalassaemia and Magnivisualizer for detection of Cervical cancer have been delivered to people.
Additional Central Assistance to some States A sum of Rs1200 crore as additional central assistance to North Eastern states, Himachal Pradesh and Uttarakhand in this financial year.
A Corpus has been created for ‘Nirbhaya Fund’ with a non lapsable grant of Rs 1000 crore. Proposals to ensure the dignity and safety of women have been approved which will be funded from the Nirbhaya Fund . A sum of Rs 1000 crore has again been provided in FY 2014-15 The National Skill Certification and monitary reward schemes launched in August 2013 with an allocation of Rs 1000 crore has been widely hailed as a success. A sum of Rs 1000 crore is proposed to be transferred to the NSD Trust to scale up its programme rapidly.
Government remains fully committed to Aadhar under which 57 crore Unique Numbers have been issued so far and to opening bank accounts for all Aadhar holders to promote financial inclusion. Through the Direct Benefic Transfer (DBT) Scheme, a total of Rs 628 crore (54,20,114 transactions) has been transferred directly to the beneficiaries till 31 st January 2014 under 27 Schemes.
In order to sustain the pace of plan expenditure, it has been kept at the same level in 2014-15 at which, it was budgeted in 2013-14. Ministries/Departments which run key flagship programmes have been provided adequate funds in 2014-15 either equal to or higher than in the BE 2013-14.
Railways Budgetary support to Railways has been increased from Rs26,000 crore in BE 2013-14 to Rs29,000 crore in 2014-15. 6 It is proposed to indentify new instruments and new mechanisms to raise funds for Railway Projects.
The expenditure on subsidies for food, fertilizer & fuel will be Rs246,472 crore slightly higher than the revised estimates of Rs245,453 crore in 2013-14. Rs115,000 crore has been allocated for food subsidies taking in to account, Government‘s firm and irrevocable committment to implement the National Food Security Act throughout the country.
Defence:‰ 10 per cent hike in Defence allocation has been given in comparison to BE 2013-14. ‰Government has accepted the principle of one rank one pension for the Defence Forces which will be implemented prospectively from the FY 2014-15. A sum of Rs500 crore is proposed to be transferred to the Defence Pension Account in the current Financial Year itself.
Central Armed Police Forces:
A modernization Plan at a cost of Rs11,009 crore has been approved to strengthen the capacity of Central Armed Police Forces and to provide them the state-of-art, equipment and technology.
Rs 11,300 crore is proposed to be provided for Capital infusion in Public Sector Banks. 5,207 new branches have been opened against the target of 8,023. Bhartia Mahila Bank has been established. Rs6,000 crore and Rs2,000 crore have been provided to Rural and Urban Housing Funds respectively. ‰The target of Rs700,000 crore of Agricultural Credit is likely to be exceeded by the Banks. The target for 2014-15 is Rs800,000 Crore.
Rs 23,924 crore has been released under the Interest Subvention Scheme on farm loans, with effective rate of interest on farm loans at 4 percent including subvention of 2 percent and incentive of 3 percent for prompt payment.
Minorities and Banking:
The number of bank accounts of minorities has increased to 43,52,000 at the end of March 2013 from 14,15,000 ten years ago. The volume of lending has soared to Rs66,500 crore from Rs4,000 crore in the same period. Loans to minorities stood at Rs211,451 crore at the end of Decemeber 2013. Self-Help Groups (SHGs) Loans Ten years ago, only 9,71,182 women Self-Help Groups (SHGs) had ben credit linked to banks.
At the end of December 2013, 4,11,6000 women SHGs had been provided credit and the outstanding amount of credit was Rs36,893 crore Education Loans
A moratorium period is proposed for all education loans taken up to 31.3.2009 and outstanding on 31.12.2013. Government will take over the liability for outstanding interest as on 31.12.2013 but the borrower would have to pay interest for the period after 1.1.2014. An amount of Rs2,600 crore has been provided this year and it will benefit nearly 9 lakh student borrowers.
Insurance LIC and the four public sector general insurance companies have opened arround 3000 offices in towns with a population of 10,000 or more to serve peri-urban and rural areas. Financial Markets Steps envisaged to deepen the Indian Financial Market : ADR/GDR Scheme revamp, an enlargement of the scope of depository receipt,
Liberalization of rupee denominated corporate bond market,
Currency Derivatives Market to be deepened and strengthened to enable Indian Companies to fully hedge against foriegn currency risk,
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.
Off-shore Accounts :
The Government has succeeded in obtaining information on illegal off-shore accounts held by indians in 67 cases and action is under way. Prosecution for wilful tax evasion have also been launched in 17 other cases. More enquiries have been initiated in to accounts reportedly held by Indian entities in no tax or low tax jurisdictions.