+

Union Budget 2015

VistaMind Education

+What will we cover?

Economic Overview

Context for the Policy decisions

Vision and Objective:

How various parts fit together

What could go wrong?

+Overview

GDP Growth

Expected to be 7.4% and between 8.1 to 8.5%

Fiscal Deficit at 4.1% and then 3.9% (plan 3.6%)

Current Account Deficit under control, Forex Reserves High

Inflation 5-6%

8.8 Lakh Crores worth of Infrastructure projects stalled

Bank balance sheets stressed (esp PSU Banks)

Private sector lacks funds/desire to invest

Taxation policy is major impediment to growth

India ranked 142/189 in terms of ease of business ranking

+Theme 1: Fiscal Consolidation

High Fiscal Deficit

Higher Borrowings

Inflation High Interest rates

Poor International Ratings

Need for Public Investment

Fiscal Deficit

2014-15 at 4.1%, 2015-16 to 3.9%, 3% by 2017/18.

Higher devolution to states around 40,000 Cr.

70,000 Cr Investment into infrastructure

+Theme 2: Infrastructure

Infrastructure Vs Subsidies and Schemes

70,000 Crore direct investment

Roads, Railways, Power and Irrigation

20,000 Crore seed fund for NIIF

Tax free infra bonds for Rails/Roads/Irrigation

Solving the Infrastructure traffic jam

Dispute resolution law for public contracts

Plug and play approach

Reworking the PPP model

JAM approach to subsidies

JDY – Aadhar Card – Mobile Transfers

Subsidy leakage and Admin costs

+Theme 3: Ease of Doing Business

Stable and predictable policy environment

Jaitley spells out what to expect in next 5 years

Tax reform

GAAR deferred, No retrospective taxation

Clarity in tax laws: Transfer pricing, PE, REITs, InvITs etc

GST from April 2016

Low stable Tax with minimum exemptions

Regulatory Environment

Lower regulations, Single window, Faster clearances

Exit Policy: Bankruptcy law

SEBI reforms

Public Debt Management Agency, Autonomous Bank Board etc

+Theme 4: Agriculture

Three pronged Approach

Rural credit expansion

Refinancing Cooperative banks, RRBs Rs 60,000 crore

Long term credit fund of Rs 15,000 Crore

Rural Infrastructure

Soil Testing, Micro irrigation

Power and Roads (Market Connectivity)

+Theme 5: Social Security

Creating a Social security Net

Encouraging Pension plans

Government contribute 50% of premium (Atal Pension plans)

Low cost Life and Health Insurance products (JAM)

Direct Cash Transfers

Autonomy for beneficiary

Low transaction costs and low losses

1 Crore to 10.5 Crore

Skill Enhancement

National Skills Mission. Skills integrated into schools from XI

Linked to Make in India

+Theme 6: Entrepreneurship/Make in

India

Job seekers to Job creators

Swach Bharat, Soil Testing, Tourism etc create opportunities

10,000 Crore fund for Tech start ups

Mudra

New bank for SME’s

Electronic Trade receivables discounting system

Tariff rationalization

Raw material and Intermediates made cheaper

Fully finished imports costlier

+Theme 7: Cooperative Federalism

Centre & State relations

Greater share of funds 32% to 42% to states

Coal Auction proceeds to go to states

Reduction in Central Sponsored schemes

What does it Mean?

State autonomy in use of funds

States to focus on Capital expenditure/Infra building

Decentralized decision making

Niti Aayog: To become a coordinating agency