The Union Finance Minister Shri P. Chidambaram today sought to present UPA Government’s ‘unparalleled’ growth record, rejecting the argument of policy paralysis. He also outlined a vision for the future with ten major tasks that must be undertaken by the Government of the day. Keeping the fiscal deficit at 4.1 percent of GDP and acceding to the long-pending demand of one rank one pension amongdefence personnel were other key highlights of the Interim Budget presented by him.
The Minister enumerated path-breaking decisions taken by the Government in 2013-14. These include decontrol of sugar, gradual correction of diesel prices, rationalization of railway fare, starting the process for issue of new bank licenses and restructuring of DISCOMS.
Asserting that the economy is more stable today than what it was two years ago, the Minister said that the fiscal deficit is declining, the current account deficit has been contained, inflation has moderated, the quarterly growth rate is on the rise, the exchange rate is stable, exports have increased, and hundreds of projects have been unblocked.
The Cabinet Committee on Investment (CCI) and the Project Monitoring Group were setup. Thanks to the swift decisions taken by them, by the end of January, 2014, the way was cleared for completing 296 projects with an estimated project cost of Rs. 660,000 crore.
Shri Chidambaram stated that decline in GDP observed in the first quarter of 2013-14 will be arrested and the growth cycle will turn in the second quarter. He expressed the confidence that growth in Q3 and Q4 of 2013-14 will be at least 5.2 percent.
The Finance Minister stated that the annual GDP growth in the last ten years of UPA Government has been above the growth rate of 6.2 percent for the last 33 years. While it was 8.4 percent during UPA-I, it was 6.6 percent during UPA-II.
The Interim Budget estimates the plan expenditure in 2014-15 at Rs. 555,322crore, almost the same as in the previous year. The non-plan expenditure has been raised slightly to Rs. 12,07,892 crore. Fiscal deficit for 2013-14 is likely to be contained at 4.6 percent of GDP and for 2014-15 at 4.1 percent.
PERFORMANCE
The Finance Minister Shri Chidambaram gave examples of fast growth in various sectors in the last ten years. India produces 263 million tonnes of foodgrains now as compare to 213 million tonnes ten years ago. Similar fast growths have taken place in coal production, power capacity and rural roads. Central Government’s expenditure on education has risen to Rs. 79,451 crore as compared to Rs. 10,145crore ten years back. Expenditure on health has risen to Rs. 36,322 crore from Rs. 7,248 crore in a decade, the Minister said.
Agriculture sector has shown ‘stellar performance’ in 2013-14. Foodgrainproduction is estimated 263 million tonnes. Production of sugarcane, cotton, pulses, oilseeds and quality seeds has reached new records. Agricultural exports are likely to cross $ 45 billion. Agricultural credit is likely to touch 7,35,000 crore, exceeding the target of Rs. 7,00,000 crore. In the current year, agricultural GDP growth is estimated at 4.6 percent.
Merchandise exports rose by 6.3 percent in 2013-14 to $326 billion.
Eight National Investment and Manufacturing Zones (NIMZ) have been announced and another 5 NIMZ approved in-principle.
Infrastructure has grown by valuable addition to national highways, rural roads, railway tracks and port capacity. Besides, 19 oil and gas blocks were given out for exploration in 2013-14 and 7 new airports are under construction.
MAJOR PROPOSALS
Defence allocation has been enhanced by 10 percent to Rs. 2,24,000 crore. A moratorium period for all education loans taken upto 31.3.2009 has been proposed. It will benefit nearly nine lakh students borrowers by way of reduced interest burden. Rs. 2,600 crore have been allocated for this purpose.
A venture capital fund for Scheduled Castes is proposed to be set up with an initial capital of Rs. 200 crore.
The restructured ICDS, which is being implemented in 400 districts, will be rolled out in the remaining districts.Rs. 1000 crore is being proposed to the National Skill Development Cooperation in view of its success in providing skills to the youth.
A VISION FOR THE FUTURE
Among the tasks identified for the health of the economy in the years to come, the Minister called for keeping the fiscal deficit at 3 percent of GDP, promoting foreign investment, keeping inflation at a moderate level, and time- bound implementation of financial sector reforms. He also emphasized the need to rebuild infrastructure and promote manufacturing. Keeping subsidies under check, addressing the decay in cities and skill development will need to be given emphasis. States must share costs of flagship programmes so that more resources can be allocated to defence, railways etc.
REVENUE PROPOSALS
To give relief to automobile industry which is registering unprecedented negative growth, it is proposed to reduce the excise duty for the small cars, motor cycles, scooters and commercial vehicles by 4 percent. It will be cut from 12 percent to 8 percent.
The excise duty on SUVs is proposed to be reduced by 6 percent. From 30 percent to 24 percent.
To stimulate growth in capital goods and consumer non-durable, it is proposed to reduce the excise duty from 12 to 10 percent on all goods for a period up to June 30, 2014. It is applicable to all goods falling under Chapter 84 and 85 of the Schedule to the Central Excise Act.
To encourage the domestic production of mobile handsets and reduce the dependence on imports, it is proposed to restructure the excise duty for category of mobile handsets. The rates will be 6 percent with CENVAT credit or 1 percent without CENVAT credit.
To boost domestic production of soaps and oleo chemicals, it is proposed to rationalize the customs duty structure on non-edible grade industrial oils and fractions, fatty acids and fatty alcohols at 7.5 percent.
It is proposed to withdraw the exemption from CVD on similar imported machinery to encourage domestic production of the specified road construction machinery.
Setting-up a Research Funding Organization that will fund research projects selected through a competitive process. Contributions to that organization will be eligible for tax benefit.
The Direct Taxes code (DTC) is ready and it will be placed on the website for a public discussion. The Finance Minister appeals to all political parties to resolve to pass the GST laws and the DTC in 2014-15
