Finance Minister P Chidambaram to present interim budget today

Discussion in 'Economy & Infrastructure' started by feathers, Feb 17, 2014.

  1. feathers

    feathers Tihar Jail Banned

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    Finance Minister P Chidambaram to present interim budget today | NDTV.com

    Finance Minister P Chidambaram may dole out some sops while doing a tightrope walk to keep the fiscal deficit under check when he presents the interim budget for 2014-15 in Parliament on Monday ahead of the Lok Sabha election.

    Along with the Budget, he will present a vote-on-account to seek Parliament's sanction for spending till July.

    By tradition, the interim budget does not contain proposals seeking to tinker with direct taxes, nor are there any policy announcements, although there may be some sops for the common man and sectors that need help.

    Earlier, Mr Chidambaram had indicated he may tweak excise duties and service tax rates in the interim budget in an apparent bid to boost the economy, but he may not pursue key reform legislation due to lack of political consensus.

    "In 2004, Mr Jaswant Singh made a 12-page speech. In 2009, Mr Mukherjee made an 18-page speech. So I have two numbers to choose from between 12 to 18. We can make any proposal short of amending any law.

    "We cannot propose amendments to the Income Tax Act, Customs Act or the Excise Act. But any proposal short of amending a law can be made. We can also outline a vision for the future," he had said.

    It would be interesting to see if Mr Chidambaram continues with the super-rich tax in 2014-15 as well, but indications are he may choose not to since it would need amendment of the law.

    In the last Budget, the government imposed a 10 per cent surcharge for a year (2013-14 fiscal) on people earning income above Rs. 1 crore. It covered 42,800 individuals and entities.

    The minister is expected to use the opportunity to highlight the achievements of the UPA-II government and focus on how the government has been able to contain the fiscal deficit and the current account deficit (CAD), notwithstanding the difficult global situation.

    The full Budget for 2014-15 will be presented by the new government in June-July.

    Chidambaram may explain why economic growth slowed to a decade's low of 4.5 per cent in 2012-13 and outline steps taken by the government to put India back on a high-growth trajectory.

    Although the Central Statistics Office (CSO) has estimated a growth rate at 4.9 per cent in this financial year, Prime Minister Manmohan Singh had said it would exceed 5 per cent once the figures were revised.

    Key reform measures such as the insurance bill, the goods and services tax (GST) and the direct tax code (DTC) are not likely to be taken up by the outgoing UPA government for want of political consensus.

    In an election year, governments have traditionally presented an interim budget or vote-on-account, a shorter version of the budget.

    The government, sources said, will come out with revised estimates for tax collection in 2013-14 and projections for the next financial year.

    As per current indications, the fiscal deficit this financial year is expected to be less than 4.8 per cent of GDP estimated in the budget, mainly on account of expenditure compression and higher realisation from the 2G spectrum auction.

    The fiscal consolidation road map requires the government to contain the fiscal deficit at 4.2 per cent of GDP in 2014-15.

    Chidambaram had on several occasions said he had drawn a red line for the fiscal deficit and it would not be breached.

    The gap could be 4.6-4.7 per cent of GDP.

    The CAD, which was a major concern last year, is likely to narrow to below USD 50 billion, or 2.5 per cent of GDP. It had touched a record high of USD 88.2 billion, or 4.8 per cent of GDP, in 2012-13.
     
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  3. feathers

    feathers Tihar Jail Banned

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    Interim Budget 2014: Chidambaram woos middle class with duty sops on automobiles | The Indian Express

    In sops to middle-class ahead of the elections and to boost manufacturing, the Interim Budget Monday slashed excise duty on cars and two- wheelers, capital goods and consumer non durables and acceptance of long standing demand of one-rank-one-pension for ex-servicemen.

    Presenting the Budget in the Lok Sabha, Finance Minister P Chidambaram did not propose to make changes in the tax laws except to continue the 10 per cent income tax surcharge on ‘super-rich’ individuals and up to 5 per cent on corporates.

    “In keeping with the conventions, I do not propose to make any announcements regarding changes to tax laws,” he said in UPA-II’s last budget that sought to provide sops in indirect taxes including reliefs in service tax to storage and warehousing of rice and blood banks.

    The revenue sacrifice on account of indirect tax concessions would be Rs 300 to Rs 400 crore in the 40 days remaining in the current fiscal. But a pick up in the demand and sale of products in these sectors would make up for the loss of revenue, he said in his post-Budget press briefing.

    On continuance of the tax on ‘super-rich’ and corporates, he said he has left it to the new government to review the impost that was slapped in the last budget.

    The concessions will be valid up to June 30 and can be reviewed by the new Government.

    In a major relief to ex-servicemen who have been demanding one-rank-one-pension for long, the Minister announced that the government has accepted it in principle for which an allocation of Rs 500 crore has been made.

    The concessions aimed at the middle-class and to boost the automobile sector that has been registering a negative growth, include a slashing of excise duty from 12 to 8 per cent on small cars, motor cycles, scooters and commercial vehicles and 6 per cent cut to 24 per cent on SUVs.

    Large and middle segment cars will attract an excise duty of 24/20 per cent, reduced from 27/24 per cent. Appropriate reductions will also be made in the excise duty on chassis and trailers.

    To stimulate growth in capital goods and consumer non-durables, the Budget proposed to reduce the excise duty from 12 to 10 per cent on all goods falling under Chapter 84 and 85 of the Schedule to the Central Excise Tariff Act.

    The other populist measures include continuation of interest subvention scheme for farm loans and a moratorium period for education loans taken before March 31, 2009 to benefit 9 lakh students. The interest moratorium for students will amount to Rs 2,600 crore.

    Asked whether the sops were intended to be populist ahead of the elections, Chidambaram said, “My intention was not to please anyone. I wanted to talk to the people directly that we are going through a turbulent phase in the economy.”

    The allocation for Defence for the coming year has been enhanced by 10 per cent from Rs 2,03,672 crore in Budget estimate of 2013-14 to Rs 2,24,000 crore in 2014-15.

    Non-plan expenditure estimated at Rs 12,07,892 crore. Of this expenditure on food, fertiliser and fuel subsidy will be Rs 2,46,397 crore, which will be slightly more than the revised estimate of Rs 2,45,452 crore in 2013-14.

    Giving Budget estimates, the Minister said the current financial year will end on a satisfactory note with the fiscal deficit at 4.6 per cent, below the red line of 4.8 per cent, and the revenue deficit at 3.3 per cent.

    The fiscal deficit for 2014-15 has been pegged at 4.1 per cent, which will be below the target of 4.2 per cent set by the new fiscal consolidation path. Revenue deficit is estimated at 3 per cent.

    With the economy reviving, Chidambaram expressed confidence of achieving a 6 per cent GDP growth next fiscal.

    Justifying the excise duty reliefs, Chidambaram said, “The current economic situation demands some interventions that cannot wait for the regular Budget. In particular, the manufacturing sector needs an immediate boost.”

    To encourage domestic production of mobile handsets, he restructured the excise duty for all categories fixing it at 6 per cent with CENVAT credit or 1 per cent without CENVAT credit.

    Customs duty structure on non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols has been pegged at 7.5 per cent to encourage to domestic production of soaps and oleo chemicals.
     
  4. feathers

    feathers Tihar Jail Banned

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    Budget 2014: Chidambaram's 10-point agenda to make India 3rd largest economy - The Times of India

    IANS | Feb 17, 2014, 05.56PM IST
    NEW DELHI: Finance minister P Chidambaram on Monday unveiled a 10-point agenda that would help make India the third largest economy by 2043 only behind the US and China.

    While presenting the interim budget for the fiscal 2014-15 in the Lok Sabha, the finance minister said the size of Indian economy is the 11th largest in the world.

    "I wonder how many have noted the fact that India's economy, in terms of the size of its GDP, is the 11th largest in the world. There are great things in store," he said.

    "There is a well-argued view that in the next three decades India's nominal GDP will take the country to the third rank after the US and China," the finance minister said.

    "Just as the fortunes of the developed countries affect the emerging economies today, the fortunes of China and India will, in the future, have a significant impact on the rest of the world. We, therefore, owe a responsibility not only to ourselves but to the whole world to keep our economy in robust health," he added.

    He listed 10 tasks that the government need to focus on to achieve the target of making the economy third largest.

    Fiscal consolidation: A target of fiscal deficit of 3 percent of GDP must be achieved by 2016-17 and must always be kept below that level.

    Current account deficit: Since the economy will run a Current Account Deficit every year for some more years, it can be financed only by foreign investment, whether it is FDI (foreign direct investment), or FII (foreign institutional investment), or ECB (external commercial borrowings) or any other kind of foreign inflow. Therefore, foreign investment must be encouraged.

    Price stability and growth: In a developing economy where the aim is high growth, a moderate level of inflation will have to be accepted. The RBI must strike a balance between price stability and growth while formulating monetary policy.

    Financial sector reforms: The recommendations of the Financial Sector Legislative Reforms Commission must be implemented immediately as they do not require any change in legislation. Also, a timetable must be drawn for other recommendations that require legislation.

    Infrastructure: The country must rebuild its infrastructure and add a huge quantity of new infrastructure. Every proven model must be adopted but the PPP model must be more widely used. New financing structures must be created for long term funds and pooling of investments.

    Manufacturing: The government must focus on manufacturing and especially on manufacturing for export. The minister proposed that all taxes, central and of states, that go into an exported product should be waived or rebated. He also proposed that there should be a minimum tariff protection so that there is an incentive to manufacture goods in India rather than import them into India.

    Subsidies: Given the limited resources, and the many claims on the resources, the government must choose the subsidies that are absolutely necessary and give them only to the absolutely deserving.

    Urbanization: The country's cities will become ungovernable, and perhaps unliveable, if attention is not paid to the decay in these cities. Cities have wealth and also create wealth. But that wealth should be tapped for resources to rebuild the cities with a new model of governance.

    Skill development: Skill development must rank alongside secondary education, university education, total sanitation and universal health care in the priorities of the government.

    Sharing responsibility between states and the centre: States have the fiscal space to bear a reasonable proportion of the financial costs of implementing flagship programmes and must willingly do so, so that the central government can allocate more resources for subjects such as defence, railways, national highways and telecommunications that are its exclusive responsibility.
     
  5. Ray

    Ray The Chairman Defence Professionals Moderator

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    It is Vote on Account.

    Please check the debate going on, on TimesNow.

    It is being stated that the figures of Chidsmbaram are fudged since the fuel subdidy has been rolled over, food security not catered for & something sbout capital ecprnditure.

    Csn someone see it & explain?
     
  6. arnabmit

    arnabmit Homo Communis Indus Senior Member

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    [tweet]435328622685999105[/tweet]

     
  7. feathers

    feathers Tihar Jail Banned

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    have anyone in opposition opposed the budget ?
     
  8. rajsking

    rajsking Regular Member

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    How Chidambaram, UPA have turned India into a ponzi scheme | Firstpost

    The Congress led United Progressive Alliance (UPA) government has turned India into a big Ponzi scheme. Allow me to explain. 
Most governments all over the world spend more than they earn. This difference is referred to as the fiscal deficit and is financed through borrowing. Any government borrows by selling bonds. AFP On these bonds a certain rate of interest is paid every year by the government to the investor who has bought these bonds. The bonds also have a certain maturity period and once they mature the money invested in the bonds needs to be repaid by the government to the investor who had bought these bonds. The trouble is that India has reached a stage where the sum of the interest that the government needs to pay on the existing bonds along with the money the government requires to repay the maturing bonds is greater than the value of fresh bonds being issued (which is equal to the value of the fiscal deficit).
    Take the current financial year 2013-2014 (i.e. the period between April 2013 and March 2014). The interest to be paid on existing bonds amounts to Rs 3,80,067 crore. The amount that needs to be paid to investors who hold bonds that are maturing is Rs 1,63,200 crore. This total, referred to as the debt servicing cost, comes to Rs 5,43,267 crore (as can be seen in the following table): The ratio of the debt servicing cost divided by fiscal deficit (referred to as the Ponzi ratio in the above table) for the year 2013-2014 comes to 1.04 (Rs 5,43,267 crore/ Rs 5,24,539 crore).

    What this means in simple English is that the government is issuing fresh bonds and raising money to repay maturing bonds as well as to pay interest on the existing bonds. This is akin to a Ponzi scheme, in which money brought in by new investors is used to redeem the payment that is due to existing investors. So investors buying new bonds issued by the government are providing it with money, to repay the older investors, whose interest is due and whose bonds are maturing. The Ponzi scheme runs till the money being brought in by the new investors is greater than the money being paid out by the existing investors. In the Indian case, the Ponziness has gone up over the years. In 2009-2010, the Ponzi ratio was at 0.70. This means that money raised by 70 percent of the new bonds issued by the government went towards meeting the debt servicing cost. In 2013-2014, the Ponzi ratio touched 1.04. This means that the money raised through all the fresh bonds issued were used to pay for the interest on existing bonds and repay the maturing bonds. 
In fact, the projection for 2014-2015 (i.e. the period between April 2014 and March 31, 2015) puts the Ponzi ratio at 1.28. This means that all the money collected through issuing fresh bonds will go towards debt servicing. But over and above that a certain portion of the government earnings will also go towards meeting the debt servicing cost. The increasing level of the Ponzi ratio from 0.70 in 2009-2010 to 1.28 in 2014-2015, is a clear indication of the fiscal profligacy that the Congress led UPA government has indulged in over the last few years. This has led to a situation where the expenditure of the government has shot up much faster than its earnings.
    This difference has been financed by the government issuing more bonds. Now its gradually reached a stage wherein the government needs to issue more and more new bonds to pay interest on the existing bonds and repay the maturing bonds. This is nothing but a giant Ponzi scheme. To unravel this Ponzi scheme, the next government will have to cut down on expenditure dramatically. At the same time it will have to look at various ways of increasing its earnings.
     
  9. Kshatriya87

    Kshatriya87 Senior Member Senior Member

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    I am happy that they will be increasing the defence budget by 24 billion. But most of the other budgets remain more or less unchanged. Something needs to be done about the service tax, VAT and fuel prices.
     
  10. SajeevJino

    SajeevJino Long walk Elite Member

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  11. Srinivas_K

    Srinivas_K Senior Member Senior Member

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    India announces tax breaks for manufacturers
    [​IMG]

    NEW DELHI: India's finance minister on Monday boasted he had slashed the fiscal deficit lower than his target, while unveiling a pre-election budget that political
    opponents and analysts said contained unrealistic calculations.
    Amid uproar in parliament as lawmakers shouted him down, Finance Minister P. Chidambaram also announced tax breaks for struggling manufacturers and more money for defense.
    He said he would contain the deficit for the current fiscal year (April-March) at 4.6 percent of gross domestic product (GDP), below his target of 4.8 percent.
    Monday's budget was an interim exercise ahead of the election due by May which the government looks sets to lose. Mps will be asked to approve only the period until the new administration takes charge.
    The Bharatiya Janata Party, which polls say is best placed to lead a new coalition government after the election, criticized Chidambaram for cutting spending on public investment while increasing outlay on subsidies and pushing Rs.350 billion ($5.64 billion) of oil subsidy spending onto the next administration.
    Party president Rajnath Singh warned that cuts of some Rs.798 billion ($12.85 billion) to public investment spending announced for the current fiscal would hurt the economy.
    Chidambaram also unveiled lower factory duties for passenger vehicles, washing machines, TVs and mobile phones in a bid to breathe life into spending and the manufacturing sector, which is contracting despite signs of a slow recovery in the wider economy.
    Analysts watching the speech welcomed the progress on the fiscal deficit, including his estimate that it would shrink further to 4.1 percent in 2014/15, which would be the lowest since 2007/08. But they voiced concern about a lack of details.
    Indian markets were largely unmoved by the speech, with the rupee at 61.93/94 against its close of 61.9250/9350 on Friday, but auto stocks responded to the excise cut, leading a 0.48 percent rise in the benchmark BSE index.
    Chidambaram predicted the current account deficit would be contained at $45 billion at the end of March, around half the level at the start of the fiscal year, thanks largely to tight restrictions on gold imports and a recovery in exports.
    He said the government was looking into the pros and cons of easing controls on gold imports, but would not let the current account deficit balloon again. To reach his deficit target, Chidambaram this year squeezed higher dividends from cash-rich state-run companies as well as rolling over oil subsidies into next year's accounts.
    Revised major subsidies for 2013/14 will be Rs.2.56 trillion ($41.2 billion), Chidambaram said. For the coming year, he estimated total spending of Rs.17.63 trillion, up 10.9 percent against revised expenditure for the current year. Within that, projected capital spending was flat.
    Chidambaram said India's economy, the 11th largest in the world, would recover to at least 5.2 percent growth in the second of 2013/14 from 4.6 percent in the first half.

    India announces tax breaks for manufacturers | Arab News — Saudi Arabia News, Middle East News, Opinion, Economy and more.
     
  12. Kshatriya87

    Kshatriya87 Senior Member Senior Member

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  13. feathers

    feathers Tihar Jail Banned

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    Security of borders should give top priority . If armed forces are strong then no one can create problems from outside.
     
  14. SajeevJino

    SajeevJino Long walk Elite Member

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    Terrorists are not only came via the Borders ..They came via VIP access trough Air Ports ..Strange But True

    and don't even think about our Armed forces capability specially in Foots ..They are the Masters to All other Army
     
  15. feathers

    feathers Tihar Jail Banned

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    Defence budget is mainly for the modernization of armed forces by which borders can be well guarded and what you are talking here is more linked to the work of intelligence agencies.

    Indian armed forces are courageous and they have always exhibited their bravery.
     
  16. Ray

    Ray The Chairman Defence Professionals Moderator

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    FANCY DRESSER

    It is not possible to look inside his heart, but the finance minister generally gives the impression that he thinks highly of his own performance. He did not let down the expectations of his audience. In particular, he tried to convince it that the Indian economy, whose growth rate has halved in the last five years, has done extremely well under his stewardship. He may well be right, since no one can know how well it would have done under a less accomplished dresser.

    But it must be admitted that the finance minister has a way of dressing up the figures. For instance, he skilfully avoided saying that net capital inflows in the current year would be $60 billion; he preferred to say that reserves would go up by $15 billion and the current account deficit would fall to $45 billion. Manufacturing has hardly grown for three years. His solution is a national manufacturing policy; we only have to wait for 10 years, and it will add a hundred million jobs. And then there will be eight national industrial manufacturing zones along the Delhi Mumbai industrial corridor. Just in case someone points out that a zone creates no jobs, he also announced nine projects in those zones. That is just the beginning; the government has already imagined three more corridors. And if some figures look too bad, the finance minister’s recipe is: just wait, things will improve some day. If this is all he learnt in Harvard, he would do well to take some years off and go to Hawaii. If these are the government’s ideas of a stimulus, another government would be a good idea.

    When it comes to the past, the finance minister’s boasts about what he has achieved and what the economy has achieved thanks to his presence in North Block may not be accurate, but they are comprehensible. After all, the vote on account is supposed only to present the accounting projection for the coming year on the assumption of no change in taxes. That is why it is a surprise that the finance minister has not left taxes untouched. He has reduced the excise on cars and two-wheelers, fats and oils, he has reduced taxes on cellphones to protect domestic production, and he has shown a special favour to Bank Note Paper Mill by reducing excise duty. These are all fiscal favours — and they are not the only ones he has showered — and some of them could conceivably be favours to voters or political financiers. It is surprising and improper that he should have done such favours in an election year. It is to be hoped that Parliament will disallow them on grounds of propriety. If it does not do so, the Election Commission should certainly question them; and if it forgets to do so, the courts should remind it.

    The Telegraph - Archives

    *****************************

    The editorial of The Telegraph.
     
  17. Ray

    Ray The Chairman Defence Professionals Moderator

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    Chidambaram is a mediocre economist with airs of sophistication and is a great PR man.

    He has presented some of the most stupid budgets and blamed all but himself.

    His fraudulent claims to 'greatness' lies exposed at each turn!

    As far as the sordid situation prevailing in our country, I am reminded of the speech of Oliver Cromwell on Dissolution of the Long Parliament by Oliver Cromwell given to the House of Commons, 20 April 1653

     
  18. feathers

    feathers Tihar Jail Banned

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    Mr Ray , you see everything in very critical way and i know you are a very responsible and cautious person.
     

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