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UNION BUDGET 2013-14

Union Finance Minister P Chidambaram presented his 8th Union Budget and India's 82nd. This is the last Union Budget before the 2014 Lok Sabha elections. The Union Budget for 2013-14 aims at 'higher growth leading to inclusive and sustainable development.' Government believes in inclusive development with emphasis on improving human development indicators especially of women, the scheduled castes, the scheduled tribes, the minorities and some backward classes. The Economy and the Challenges India facing Global economic growth has been slowed from 3.9 percent in 2011 to 3.2 percent in 2012 and as India is part of the global economy: Indian exports and imports amount to 43 percent of GDP and two-way external sector transactions have raised to 108 percent of GDP.

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The Plan and Budgetary Allocations Between 2004 and 2008 and again in 200910 and 2010-11 the growth rate was over 8 per cent and crossed 9 per cent in four of those six years. In the current year, the CSO has estimated growth at 5 percent while the RBI has estimated growth at 5.5 percent and getting back to that growth rate of 8 percent is the challenge that faces the country. Tax proposals Fiscal Deficit, Current Account Deficit and Inflation situation India economy is constrained due to high fiscal deficit; reliance on foreign inflows to finance the current account deficit; lower savings and lower investment; a tight monetary policy to contain inflation; and strong external headwinds. In September, 2012, Government accepted the main recommendations of the Dr. Vijay Kelkar Committee. A new fiscal consolidation path was announced. Fiscal Deficit for 2013-14 is pegged at 4.8 percent of GDP. The Revenue Deficit will be 3.3 percent for the same period.
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The CAD continues to be high mainly because of our excessive dependence on oil imports, the high volume of coal imports, our passion for gold, and the slowdown in exports. Headline WPI inflation has been brought down to about 7.0 percent and core inflation to about 4.2 percent but food inflation is the main reason for worry, which can be reduced by taking all possible steps to augment the supply side to meet the growing demand for food items.

Total expenditure had been fixed at Rs 14,90,925 crore. Due to the slowdown and the austerity measures, the revised estimate is Rs 14,30,825 crore or 96 percent of the budget estimate. Plan Expenditure placed at Rs. 5,55,322 crore. It is 33.3 percent of the total expenditure while Non Plan Expenditure is estimated at Rs. 11,09,975 crore. The plan expenditure in 2013-14 will be 29.4 percent more than the RE of the year 2012-13.

Clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution and independent judiciary for greater assurance is underlying theme of tax proposals. Tax Administration Reforms Commission to be set up. However, relief for Tax Payers in the first bracket of 2 lakhs to 5 lakhs. A tax credit of 2000 to every person with total income upto 5 lakhs. Surcharge of 10 percent on persons (other than companies) whose taxable income exceed 1 crore to augment revenues. Increase surcharge from 5 to 10 percent on domestic companies whose taxable income exceed 10 crore.
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In case of foreign companies who pay a higher rate of corporate tax, surcharge to increase from 2 to 5 percent, if the taxabale income exceeds ` 10 crore. In all other cases such as dividend distribution tax or tax on distributed income, current surcharge increased from 5 to 10 percent. Additional surcharges to be in force for only one year. Education cess to continue at 3 percent. Permissible premium rate increased from 10 percent to 15 percent of the sum assured by relaxing eligibility conditions of life insurance policies for persons suffering from disability and certain ailments. Donations made to National Children Fund eligible for 100 percent deduction.

Duty on Set Top Boxes increased from 5 to10 percent. Duty on raw silk increased from 5 to 15 percent. Duties on Steam Coal and Bituminous Coal equalised and 2 percent custom duty and 2 percent CVD levied on both kinds coal. Duty on imported luxury goods such as high end motor vehicles, motor cycles, yachts and similar vessels increased.

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Duty free gold limit increased to 50,000 in case of male passenger and `1,00,000 in case of a female passenger subject to conditions. Agriculture and Rural Development Concessional rate of tax of 15 percent on dividend received by an Indian company from its foreign subsidiary proposed to continue for one more year. Securitisation Trust to be exempted from Income Tax. Tax to be levied at specified rates only at the time of distribution of income for companies, individual or HUF etc. No further tax on income received by investors from the Trust. TDS at the rate of 1 percent on the value of the transfer of immovable properties where consideration exceeds 50 lakhs. Agricultural land to be exempted. Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. Agricultural commodities will be exempted. Modified provisions of GAAR will come into effect from 1.4.2016. The average annual growth rate of agriculture and allied sector during the 11th Plan was 3.6 percent as against 2.5 percent and 2.4 percent, respectively, in the 9th and 10th Plans. In 2012-13, total foodgrain production will be over 250 million tonnes. Agricultural exports from April to December, 2012 have crossed Rs 138,403 crore. GOI to allocate Rs 27,049 crore to the Ministry of Agriculture, an increase of 22 percent over the RE of the current year. Of this, agricultural research will be provided Rs 3,415 crore. No change in the normal rates of 12 percent for excise duty and service tax. No change in the peak rate of basic customs duty of 10 perent for non-agricultural products. Excise duty on SUVs to be increased to 30 per cent from 27 per cent, SUVs registered as taxis exempted. The interest subvention scheme for shortterm crop loans will be continued and a farmer who repays the loan on time will be able to get credit at 4 percent per annum. So far, the scheme has been applied to loans extended by public sector banks, RRBs and cooperative banks. Now it has been extended to crop loans borrowed from private sector scheduled commercial banks in respect of loans given within the service area of the branch concerned. Bringing green revolution to eastern India a remarkable success. 1,000 crore allocated in 2013-14. 500 crore allocated to start a programme of crop diversification that would promote technological innovation and encourage farmers to choose crop alternatives. Rashtriya Krishi Vikas Yojana and National Food Security Mission provided 9,954 crore and 2,250 crore respectively.
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18% rise in excise duty on Cigarattes, cigars and cheerots. Service tax on all A/C restaurants. Royalty tax hiked from 10% to 25%.
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Allocation for integrated watershed programme increased from 3,050 crore in 2012-13 (BE) to ` 5,387 crore. Allocation made for pilots programme on Nutri-Farms for introducing new crop varieties that are rich in micro-nutrients. National Institute of Biotic Stress Management for addressing plant protection issues will be established at Raipur, Chhattisgarh. The Indian Institute of Agricultural Bio-technology will be established at Ranchi, Jharkhand. Credit Guarantee Fund to be created in the Small Farmers'Agri Business Corporation with an initial corpus of 100 crore. National Livestock Mission to be set up. A provision of 307 crore made for the Mission.

lected districts of 21 States. Eight regional geriatric centres are being funded for the development of dedicated geriatric departments. I propose to provide Rs 150 crore for this programme. Ayurveda, Unani, Siddha and Homoeopathy are being mainstreamed through the National Health Mission. I propose to allocate Rs 1,069 crore to the Department of AYUSH. GOI to allocate Rs 65,867 crore to the Ministry of Human Resource Development, which is an increase of 17 percent over the RE of the previous year. The Sarva Shiksha Abhiyan (SSA) and the Right to Education Act are firmly in place. An increase of 25.6 per cent over RE of the current year for investments in Rashtriya Madhyamik Shiksha Abhiyan (RMSA). 5,284 crore allocated to Ministries/Departments in 2013-14 for scholarships to students belonging to SC, ST, OBC, Minorities and girl children. Mid Day Meal Scheme (MDM) to be provided 13,215 crore. Government committed to the creation of Nalanda University as a centre of educational excellence.

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Rs 80,194 crore allocation for Ministry of Rural Development in 2013-14. About Rs 33,000 crore for MGNREGA. Rs. 5,000 crore for NABARD for agri storage facilities. Godowns to be constructed with help of panchayats. Food grain productions have been raised drastically and only increase with each year. Allocation of ` 80,194 crore in 2013-14 for Ministry of Rural Development marking an increase of 46% over RE 2012-13. Investment, Infrastructure and Industry Proposal to carve out PMGSY-II and allocate a portion of the funds to the new programme that will benefit States such as Andhra Pradesh, Haryana, Karnataka, Maharashtra, Punjab and Rajasthan. New criteria for determining backwardness to be evolved and reflect them in future planning and devolution of funds. Health and Education GOI to allocate Rs 37,330 crore to the Ministry of Health and Family Welfare. Of this, the new National Health Mission that combines the rural mission and the proposed urban mission will get Rs 21,239 crore, an increase of 24.3 percent over the RE. GOI to provide Rs 4,727 crore for medical education, training and research. The National Programme for the Health Care of Elderly is being implemented in 100 seCHRONICLE IAS ACADEMY

A number of steps to mobilize investment have been announced in the Budget keeping in view that as per 12th Plan. The 12th Plan projects an investment of USD 1 trillion or Rs 55,00,000 crore in infrastructure. The Plan envisages that the private sector will share 47 percent of the investment. The private sector will share 47 percent of Rs 55,00,000 crore investment in infrastructure. Infrastructure Debt Funds (IDF) will be encouraged. hese funds will raise resources and, through take-out finance, credit enhancement and other innovative means, provide long-term low-cost debt for infrastructure projects. India Infrastructure Finance Corporation (IIFCL) will offer credit enhancement to infrastructure companies that wish to access the bond market to tap long term funds.
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Some institutions will be allowed to issue tax - free bonds up a total sum of Rs 50,000 crore (as against Rs 25,000 crore in 2012-13). Assistance of the World Bank and Asian Development Bank will be sought to build roads in the North Eastern States and connect them to Myanmar. The corpus of Rural Infrastructure Development Funds (RIDF) is proposed to be raised to Rs. 20,000 crore. A sum of Rs 5,000 crore will be made available to NABARD to finance construction of warehouses, godowns, silos and cold storage units designed to store agricultural produce. The road construction sector faces challenges as financial stress, enhanced construction risk and contract management issues that are best addressed by an independent authority. Hence, Government has decided to constitute a regulatory authority for the road sector.

Two new major ports will be established in Sagar, West Bengal and in Andhra Pradesh to add 100 million tonnes of capacity. In addition, a new outer harbour will be developed in the VOC port at Thoothukkudi, Tamil Nadu through PPP at an estimated cost of Rs 7,500 crore. When completed, this will add 42 million tonnes of capacity. The oil and gas exploration policy will be reviewed to move from profit sharing to revenue sharing contracts. A policy to encourage exploration and production of shale gas will be announced. The natural gas pricing policy will be reviewed and uncertainties regarding pricing will be removed. NELP blocks that were awarded but are stalled will be cleared. The 5 MMTPA LNG terminal in Dabhol, Maharashtra will be fully operational in 2013-14. On coal, the Budget proposes adoption of a policy of pooled pricing. Benefits or preferences enjoyed by MSME to continue upto three years after they grow out of this category. Refinancing capacity of SIDBI raised to Rs. 10,000 crore.

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To attract new investment and to quicken the implementation of projects, GOI proposes an investment allowance for new high value investments. Companies investing ` 100 crore or more in plant and machinery during the period 1.4.2013 to 31.3.2015 will be entitled to deduct an investment allowance of 15 per cent of the investment. Incentives to semiconductor wafer fabric manufacturing facilities, including zero customs duty for plant and machinery. The Rajiv Gandhi Equity Savings Scheme will be liberalised to enable the first time investor to invest in mutual funds as well as listed shares and she can do so, not in one year alone, but in three successive years. The income limit will be raised from Rs 10,00,000 to Rs 12,00,000; Technology Upgradation Fund Scheme (TUFS) for textile to continue in 12th Plan with an investment target of Rs. 1,51,000 crore. Insurance and Banking Rs. 14,000 crore will be provided to public sector banks for capital infusion in 2013-14. A multi-pronged approach will be followed to increase the penetration of insurance, both life and general, in the country. Insurance companies will be empowered to open branches in Tier II cities and below without prior approval of IRDA. A person taking a loan for his first home from a bank or a housing finance corporation upto Rs 25,00,000 during the period 1.4.2013 to 31.3.2014 will be entitled to an additional deduction of interest of upto Rs 100,000. This will promote home ownership and give a fillip to a number of industries like steel, cement, brick, wood, glass etc. besides jobs to thousands of construction workers. All towns of India with a population of 10,000 or more will have an office of LIC and an office of at least one public sector general insurance company. YC of banks will be sufficient to acquire insurance policies. Banks will be permitted to act as insurance brokers so that the entire network of bank branches will be utilised to increase penetration.
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Banking correspondents will be allowed to sell micro-insurance products. Group insurance products will now be offered to homogenous groups such as SHGs, domestic workers associations, anganwadi workers, teachers in schools, nurses in hospitals etc. The Rashtriya Swasthiya Bima Yojana covers 34 million families below the poverty line. It will now be extended to other categories such as rickshaw, auto-rickshaw and taxi drivers, sanitation workers, rag pickers and mine workers. A comprehensive and integrated social security package for the unorganised sector is a measure that will benefit the poorest and most vulnerable sections of society. The package should include life-cum-disability cover, health cover, maternity assistance and pension benefits. The present schemes such as AABY, JSBY, RSBY, JSY and IGMSY are run by different ministries and departments.

Skill Development Corporation to set the curriculum and standards for training in different skills. 1000 crore set apart for this scheme. To the poor of India direct benefit transfer scheme will be rolled out throughout the country during the term of the UPA Government with the motive "apka paisa aapke haath". An ambitious IT driven project to modernise the postal network at a cost of Rs. 4,909 crore. Post offices to become part of the core banking solution and offer real time banking services. Government to fund the conversion of the Ghadar Memorial in San Francisco into a museum and library. All cities having a population of more than 1,00,000 will be covered by private FM radio services. National Institute of Sports Coaching to be set up at Patiala at a cost of 250 crore over a period of three years. A grant of Rs. 100 crore each has been made to 4 institutions of excellence including Aligarh Muslim University, Banaras Hindu University, Tata Institute of Social Sciences, Guwahati and Indian National Trust for Art and Cultural Heritage (INTACH). Allocation for Defence increased to 2,03,672 crore including 86,741 crore for capital expenditure.

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Some other allocations GOI proposes to set up a fund - Nirbhaya Fund under which Government will contribute Rs 1,000 crore. Ministry of Women and Child Development and other ministries concerned will be requested to work out the details of the structure, scope and application of the fund. Youth to be motivated to voluntarily join skill development programmes. National
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