2. Union budget of India
The Union Budget of India, referred to as the
Annual Financial Statement in Article 112 of
the Constitution of India, is the annual budget
of the Republic of India, presented each year
on the last working day of February by
the Finance Minister of India in Parliament.
The budget, which is presented by means of
the Financial Bill and the Appropriation bill has
to be passed by the House before it can come
into effect on April 1, the start of India's
financial year.
3. Definition of 'Budget'
An estimation of the revenue and expenses
over a specified future period of time. A budget
can be made for a person, family, group of
people, business, government, country,
multinational organization or just about
anything else that makes and spends money.
A budget is a microeconomic concept that
shows the tradeoff made when one good is
exchanged for another.
4. About 2014-15 Budget
The incumbent Government presented the Union
Budget for FY14-15 on 10th JULY, 2014.
Indian Government having attained a full majority after
30 years.
The Priorities before the Government in the FY14-15 is
more challenging as the country is caught between low
growth, high inflation particularly food inflation,
deteriorating employment conditions, diminishing
energy security, slowdown in manufacturing activities,
vulnerability of currency fluctuations and not to mention
the fiscal and current account imbalances. Social issues
like women safety and lack of sanitation and corruption
calls for immediate attention.
5. The main themes for the FY15
budget:
Invoke measures to revive GDP growth.
Striking a balance between fiscal consolidation &
public spending while maintaining sustainable
inclusive growth.
In particular take stance on subsidies and hence
indicate policy relating to fuel pricing. The ultimate
targeted number will be indicative of the policy that
will be followed during the year on calibrating
prices of diesel, LPG and kerosene to the market.
Focusing on increasing infrastructure investment
which can provide a big push to the economy.
6. Cont…
Moving towards implementation of GST and
DTC.
Measures to revive financial savings which have
been declining in the last couple of years and
also getting reflected in pressure on CAD.
Improving investor confidence by addressing
issues that have caused apprehension in the
past.
7.
8. Budget at Glance
2012-13
Actual
2013-14 BE 2013-14RE 2014-15BE
Revenue
Receipts
879232 1056331 1029252 1189763
Tax Revenue 741877 884078 836026 977258
Non-Tax
Revenue
137355 172252 193226 212505
Capital
Receipts
531140 608967 561182 605129
Recoveries of
Loans
15060 10654 10802 10527
Other Receipts 25890 55814 25841 63425
Borrowings,
other liabilities
490190 542499 524539 531177
9. Cont…
2012-13
Actual
2013-14 BE 2013-14RE 2014-15BE
Non-Plan
Expenditure
996747 1109975 1114902 1219892
On Revenue
Account
914306 992908 1027689 1114609
Interest Payments 313170 370684 380066 427011
On Capital Account 82441 117067 87214 105283
Plan Expenditure 413625 555322 475532 575000
On Revenue
Account
329208 443260 371851 453503
On Capital Account 84417 112062 103681 121497
Total Expenditure 1410372 1665297 1590434 1794892
Revenue
Expenditure
1243514 1436169 1399540 1568111
11. REVENUE RECEIPTS(TAX) (Rs.
In Crore)
Corporation Tax 451005 33.05%
Taxes on Income 284266 20.83%
Wealth Tax 950 0.07%
Customs 201819 14.79%
Union Excise Duties 207110 15.18%
Service Tax 215973 15.83%
Taxes of Union Territories 3401 0.25%
Total 1364524 100%
12. REVENUE RECEIPTS(Non-TAX)
(Rs. In Crore)
Interest receipts 19751 9.29%
Dividend and Profits 90229 42.46%
External Grants 2405 1.13%
Other Non Tax
Revenue
99009 46.59%
Receipts of Union
Territories
1111 0.53%
Total 212505 100%
13. Total Expenditure (Rs. In Crore)
Total Non-plan
Expenditure
1219892 (67.96%)
Total Plan Expenditure 575000 (32.04%)
Total 1794892 (100%)
19. Ratio of taxes to GDP
9.9
11
11.9
10.8
9.6
10.2
9.9
10.2 10.2
10.6
10.9
11.2
9
10
11
12
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* 2016* 2017*
Column1
20. Analysis of Tax and non-tax
Revenue receipts
0
200000
400000
600000
800000
1000000
1200000
In Rs. Crore
TAX Revenue
Non-Tax Revenue
21. TAX REVENUE EXPECTED TO
GROW MOST SINCE 2010-11
28.86
25.27
2.05 3.18
26.99
12.12
16.54
11.84
17.74
(Y-o-Y in %)
22. SPURT IN SERVICE TAX
COLLECTION TO FUEL
GROWTH
63.08
36.45
18.79
-4.13
21.56
37.31 35.99
24.38
30.95
Y-o-Y in %
23. OPTIMISM ON DIRECT TAX
GROWTH AS WELL…
38.36
34.68
8.08
14.92
19.24
11.31
13.45 13.93 15.78
Y-o-Y in %
24. …BUT MOST OPTIMISTIC
OUTLOOK IS FOR INDIRECT
TAXES
21.64
17.13
-3.94
-9.95
38.03
13.11
20.29
9.45
20.08
Y-o-Y in %
25.
26. Budget in Detail
Non-plan Expenditure of Rs.12,19,892cr.
with additional provision for fertilizer subsidy
and Capital expenditure for Armed forces.
Rs.5,75,000cr. Plan expenditure – increase
of 26.9 per cent over actual of 2013-14.
Total expenditure of Rs.17,94,892cr.
estimated.
Gross Tax receipts of Rs.13,64,524cr.
estimated.
Net to centre of Rs.9,77,258cr. estimated.
27. Cont…
Current Year Fiscal Deficit is 4.1% and Road
map for fiscal consolidation outlines fiscal
deficit of 3.6 % for 2015-16 and 3 % for
2016-17.
Revenue Deficit is Rs.378348cr. And Primary
deficit is Rs.104166cr.
31. Automobile
Positive
Announcement Impact
Increase in exemption limit for direct
tax by Rs.50,000 to Rs.2,50,000 for
individuals and to Rs.3,00,000 for
senior citizens. Exemption under
section 80C raised by Rs.50,000 to
Rs.1,50,000 for individuals.
Agricultural growth maintained at
4%; allocation of Rs.8lakh cr for
agricultural credit in FY2015 and
Rs.25,000cr for increasing
warehousing capacity.
Positive for the sector as it will
increase the disposable income of
individuals, thereby boosting demand
in personal mobility segments like
two-wheelers and hatchbacks.
Agricultural reforms will drive
demand for tractors. Demand for two-
wheelers in non urban areas will likely
get a boost. Thus, a positive for
companies like Mahindra & Mahindra,
Hero MotoCorp, VST Tillers, and
Kirloskar Oil Engines.
32. Banking
Positive
Announcement Impact
The composite cap in the insurance
sector is to be increased to 49% from
26% earlier with full Indian
management and control through the
FIPB route.
Allocation for National Housing
Bank increased to Rs.8,000cr to
support rural housing and Rs.4,000cr
for urban housing.
Tax on long term capital gains
increased from 10% to 20% for Debt
Mutual Funds and eligibility for LTCG
indexation benefit increased to 3 year
tenure.
Interest on loan in respect of self
occupied house property raised from
Rs.1.5 lakh to Rs.2 lakh.
Increase in cap to 49% will enable
insurance firms to get capital from
overseas players and this will lead to
value unlocking.
Positive for housing finance
compnies like Repco Home Finance
and Can Fin Homes.
This will reduce tax arbitrage as
compared to bank FDs thereby
affecting mutual fund industry
including companies like Reliance
Capital.
Positive for all the banks.
33. Capital Goods
Positive
Announcement Impact
The government has increased the
composite cap of foreign investment
in the defense sector from 26% to
49%. This would be applicable for
companies with full Indian
management and control.
Allocation of Rs.1,000cr for
development of rail connectivity in the
North East region.
Positive for the sector as it will
accelerate investments in the defense
sector. Defense equipment
manufacturing companies like Bharat
Forge, Astra Microwave Products,
Pipavav Defence etc. will be
beneficiaries.
Positive for companies involved in
manufacturing signals, locomotives
and also contractors. KEC
international, BHEL, ABB etc would
stand to benefit.
34. Consumer Goods
Mixed
Announcement Impact
An increase in the specific excise
duty on cigarettes has been proposed,
which will be in the range of 11% to
72%.
Reduction in excise duty on
footwear from 12% earlier to 6%.
Custom duty on fatty acids, crude
palm stearin, RBD and other palm
stearin, and specified industrial grade
crude oils reduced from 7.5% earlier
to Nil.
It is a negative for cigarette
manufacturing companies like ITC,
Godfrey Phillips and VST Industries.
It is a positive for footwear
manufacturing companies like Bata
India and Relaxo Footwear.
Positive for soap and Oleo
manufacturers. This is Could benefit
Adi-Finechem, HUL, GCPL.
35. Infrastructure Positive
Announcement Impact
Rs.14,389cr has been provided
for the Pradhan Mantri Gram
Sadak Yojna(PMGSY).
An investment of Rs.37,880cr in
national highways and state roads
has been proposed which
includes an allocation of Rs.3
000cr for the North East. A target
of national highway construction
of 8,500km has been announced
(vs 4,000km in the 2013-14
budget)
National Building Construction
Corporation would be a
beneficiary since it draws
construction orders from the
government.
Positive for companies which
are into
engineering procurement and
construction (EPC) of roads IRB
Infrastructure Developers, IL&FS
Transportation Networks &
Ashoka
Buildcon would be beneficiaries.
36.
37. TAX PROPOSALS
Direct Taxes
Personal Income-tax exemption limit raised by
Rs.50,000/- that is, from Rs.2lakh to Rs.2.5lakh in the
case of individual taxpayers, below the age of 60 years.
Exemption limit raised from Rs.2.5lakh to Rs.3lakh in the
case of senior citizens.
No change in the rate of surcharge either for the
corporats or the individuals, HUFs, firms etc.
The education cess to continue at 3 percent.
Investment limit under section 80C of the Income-tax Act
raised from Rs.1lakh to Rs.1.5lakh.
38. Cont…
Deduction limit on account of interest on loan in
respect of self occupied house property raised from
Rs.1.5lakh to Rs.2lakh.
Income arising to foreign portfolio investors from
transaction in securities to be treated as capital
gains.
Concessional rate of 15 percent on foreign
dividends without any sunset date to be continued.
Government to review the DTC in its present shape
and take a view in the whole matter.
39. Cont…
To remove tax arbitrage, rate of tax on long term
capital gains increased from 10 percent to 20
percent on transfer of units of Mutual Funds, other
than equity oriented funds.
Income and dividend distribution tax to be levied
on gross amount instead of amount paid net of
taxes.
Net Effect of the direct tax proposals to result in
revenue loss of Rs.22,200 crore.
40. THE CURRENT ECONOMIC
SITUATION AND THE
CHALLENGES
Decisive vote for change represents the desire of the
people to grow, free themselves from the curse of
poverty and use the opportunity provided by the society.
Country in no mood to suffer unemployment, inadequate
basic amenities, lack of infrastructure and apathetic
governance.
Challenging situation due to Sub five per cent growth
and double digit inflation.
Continued slow-down in many emerging economies a
threat to sustained global recovery.
First budget of this NDA government to lay down a
broad policy indicator of the direction in which we wish
to take this country.
41. Cont…
Recovery seen with the growth rate of world economy
projected at 3.6 per cent in 2014 vis-à-vis in 2013.
Steps announced are only the beginning of the journey
towards a sustained growth of 7-8 per cent or above
within the next 3-4 years along with macro-economic
stabilization.
Growing aspirations of people will be reflected in the
development strategy of the Government led by the
Prime minister Shri Narendra Modi and its mandate of
“Sab ka Saath Sab ka Vikas”.
Need to revive growth in manufacturing and
infrastructure sectors.
Tax to GDP ratio must be improved and Non-tax
revenues increased.
42. FLUCUATION OF MARKET ON
DAY OF BUDGET
DATES BUDGET DAY 1 WEEK LATER YEAR END
2/28/2005 2.12 2.46 39.98
2/28/2006 0.86 3.43 32.95
2/28/2007 -4.01 -2.77 56.8
2/29/2008 -1.38 -9.12 -45.12
2/16/2009 -3.42 -5.19 87.68
7/6/2009 -5.83 -4.58 24.36
2/26/2010 1.08 3.44 24.83
2/28/2011 0.69 2.24 -13.29
3/16/2012 -1.19 -0.6 11.22
2/28/2013 -1.52 2.93 12.24
7/10/2014 -0.28
