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INTERIM BUDGET

2014

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Presentation Agenda•Introduction

•The Twin Deficits

•Agriculture

•Investment

•Manufacturing

•Gross Domestic Product

•Financial Sector

•Changes in Tax Rates

•Economic & Social Initiatives

•Other Initiatives


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Introduction

A vote-on-account /interim budget was presented instead of a full budget because general elections will be conducted in May.

Vote-on-account deals only with the expenditure side of the government's budget. The government gives an estimate of funds it requires to meet the expenditure that it incurs during the first three to four months of an election financial year until a new government is in place.

A vote-on-account cannot alter direct taxes since they need to be passed through a finance bill.

The common feature is that both include the previous year's financial performance of the government.


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The Twin Deficits

Meaning• Fiscal Deficit - When a government's total expenditures exceed the revenue that it

generates (excluding money from borrowings). It is usually communicated as a percentage of its gross domestic product (GDP).

• CAD - A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services it exports.

• The current account also includes net income, such as interest and dividends, as well as transfers, such as foreign aid.


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The Twin Deficits - Figures

Fiscal deficit for 2013-14 is at 4.6% of the GDP, well below the target of 4.9%. It is estimated to be 4.1% for FY15.

Current Account Deficit stood at $45 billion dollars as against $88 billion dollars in FY14.

$15 billion dollars is expected to be added to the foreign exchange reserves by the end of this FY.


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Agriculture

The Foodgrain production stood at 263 million tonnes current year as against 255.36 million tonnes

last year.

Agriculture exports in FY14 is likely to cross USD 45 billion mark versus USD 41 billion last year.

Agriculture GDP growth is estimated at 4.6% this year as against 4% in the last four years.


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InvestmentDue to high interest cost

and stalled projects investments contracted in 1Q14 whereas improved

in 2Q14.

The savings rate was 31.3% in FY12 and 30.1% in FY13.


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Manufacturing

The National Manufacturing Policy has set the goal of increasing the share of manufacturing in GDP to 25% and create 100 million jobs over a decade.

8 National Investment and Manufacturing Zones along the Delhi-Mumbai Industrial Corridor and 5 outside it have been given approval.


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Gross Domestic ProductThe monetary value of all the finished goods and services

produced within a

country's borders in a specific time

period.

It includes all of private and

public consumption, government

outlays, investments and

exports less imports that

occur within a defined territory.

GDP = C + G + I +

NX"C" is equal to all private consumption, or consumer spending, in a nation's economy

"G" is the sum of government spending"I" is the sum of all the country's businesses spending on capital

"NX" is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)


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Gross Domestic Product - Figures

Growth in Q2 of FY4 has been placed at 4.8% and growth for the whole year has been estimated at 4.9%.

Some policy announcements pertaining to the curb on gold imports, quick clearance of investment proposals, relaxed ECB norms and relaxation in the FDI limit for asset reconstruction companies may have yielded some positive results.

India’s slow growth, however, is in sync with the pace of growth in other BRICS countries.


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Financial Sector

•Propose to provide Rs.14,000 crore for capital infusion in public sector banks.

•The Bharatiya Mahila Bank was inaugurated on 19.11.2013.

•Rs.6,000 & Rs.2,000 crores have been provided to Rural & Urban Housing Funds.

•LIC & 4 public sector general insurance companies have opened around 3000 offices in towns with a population of 10,000 or more to serve urban & rural areas.


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Changes in Tax RatesThere are no changes in personal and corporate income tax rates.

Excise duty rate structure on mobile handsets, including cellular phones has been restructured.

Excise duty rates on motor vehicles (motor cars, motor cycles, scooters, commercial vehicles, trailers etc) have been reduced by 3 per cent to 6 per cent, depending upon the nature and configuration of the motor vehicles.


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Other Initiatives


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ThankYou


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