UNION BUDGET 2013-14 -AN ANALYSIS Manuel M.Mathew III DC Economics ST.Thomas College Pala.
BACKDROP OF THE BUDGET SLOWING GLOBAL ECONOMY INCREASING FISCAL DEFICIT & CAD DARK SHADOW OF INFLATION TIGHTENING MONETARY POLICY QUEST FOR SUSTAINABLE AND INCLUSIVE DEVELOPMENT IMPENDING GENERAL ELECTION
FOCUS AREAS Additional Resource Mobilization Expenditure Compression Measures to Promote Socio-economic Growth Relief and Welfare Measures Widening of Tax Base and Anti Tax Avoidance Measures Rationalization Measures Fiscal Consolidation
FISCAL DEFICIT STABILITY IN THE MACRO ECONOMIC POLICIES ENHANCING THE CREDIBILITY OF THE ECONOMY
CURRENT ACCOUNT DEFICITCONTINUES TO BE HIGH……… Excessive dependence on oil Coal and gold imports Slowdown in exportsMEASURES TO CONTAIN CAD…….. FII FDI ECB
TWO SURPRISING ELEMENTS…….1. Proposed borrowing is mild.2. Increase in Expenditure.
THUMPS UP……Fuel subsidy comes down to the thirdpriority
THREE PROMISES…… TO WOMEN- NIRBHAYA, Women’s Bank YOUTH –Skill Development Mission THE POOR-Direct BenefitTransfer(DBT)
MAJOR EMPHASIS ON……. RURAL DEVELOPMENT AGRICULTURE FOOD SECURITY
TAX PROPOSALS SUR CHRGE IN INCOME TAXParticulars Existing ProposedIndividual /HUF/ Firm/ Co-op NA 10% If TI > 1 Cr.Soc./ Local Auth.Domestic Company 5% 10% If TI > 10 Cr 5% If TI > 1CrOther than Domestic Co. 2% 5% If TI > 10 Cr 2% If TI > 1CrNon-Resident Person NA 10% if TI > 1Cr Rebate of Rs. 2000 for individuals having total income up to Rs 5 lakh
SOME APPREHENTIONS….. Is food security allocation adequate?? Is Disinvestment target of 55814 achievable?? Foreign funded Infrastructural Development Neglected Higher Education
KEY RISKS TO INDIAS MACRO STORYUS policy: sequestrationEuro-zone issues• Realization of Fiscal Union • support of the ECBGlobal oil prices• the correlation with Current Account Deficit (CAD) remains high.• Geo-political tensions can push oil prices higher.
Domestic issues• Politics outweighs economics; General electionsin 2014 can create uncertainty• Reform progress to address India’s triple deficits(Fiscal, current account, governance)• Key constraints for infrastructure build-out: land,coal and declining domestic financial savings rate• Rising CAD and high gold imports weighing onexternal finances
WHAT THE BUDGET MISS…… An amnesty scheme allowing disclosure of illegal money…..of course with a penalty….. EXPERIENCE OF 1996 Scope of injecting Rs.75000 crores into the economy and to survive fiscally.
TO SUM UP….. FINANCIAL DISCIPLINE FORWARD LOOKING REASONABLE AND REALISTIC