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Indias Union Budget 2014-15

Indias Finance Minister Arun Jaitley presented his maiden Union Budget on July 10. The
Budget, which had been eagerly awaited from a new government that is widely
considered to be industry-friendly and pro-reform, was the first glimpse into the mindset
of the Narendra Modi regime. Here are the highlights of the Budget and its implications:
Growth
With growth stagnating over the past three years, the economy was thought to be in a precarious
position.
The Economic Survey (2014-2015) has pegged GDP growth at 5.4%-5.9% in 2014-15, overcoming the
sub-5% growth of the past two years.
Jaitley has now set an ambitious growth target of 7%-8% over the next three years.
Fiscal Deficit
As % of GDP
2014-15 2015-16*
2016-17*
4.1% 3.6%
3%

Spending
In Rs trillion 2014-15
Total expenditure 17.94
Plan expenditure 5.75
Non-plan expenditure
(with additional provisions for
fertiliser subsidies and capital
expenditure for armed forces)
12.19

Direct Taxes
Income slab Tax rate
Up to Rs 250,000 Nil
Rs 250,000 lakh
Rs 500,000 10%
Rs 500,000
Rs 10,00,000 20%
Rs 10,00,000+ 30%

No revision of tax rates.
Personal income-tax exemption limit for senior citizens (above 60 years) increased from Rs 250,000
to Rs 300,000.
Personal income-tax limit raised from Rs 200,000 to Rs 250,000 for all others.
No change in rate of surcharge for corporations and individuals.
Tax deduction limit on housing loan interest in case of self-occupied property raised to Rs 200,000
from Rs 150,000 lakh.
Education cess for all taxpayers remains 3%.
Investment limit under section 80C raised to Rs 150,000 from Rs 100,000.
Corporate and Indirect Taxes
Investment allowance of 15% to manufacturing companies that invest more than Rs 25 crore in a
year in new plants and machinery. This benefit will be available for three years that is, for
investments up to March 31, 2017.
Income for foreign portfolio investors from transaction in securities to be treated as capital gains.
Colour picture tubes exempted from basic customs duty to make cathode ray TVs more affordable.
Increase in basic customs duty on imported flat-rolled products of stainless steel from 5% to 7.5%.
Concessional basic customs duty of 5% extended to machinery and equipment required for setting
up solar energy production projects.
Reduction in basic customs duty from 10% to 5% on forged steel rings used in the manufacturing of
bearings of wind-operated electricity generators.
Basic customs duty on metallurgical coke raised from nil to 2.5%, in line with the duty on coking coal.
Duty on ship-breaking scrap and melting scrap of iron or steel rationalised by reducing the basic
customs duty on ships imported for breaking from 5% to 2.5%.
Export duty on bauxite raised from 10% to 20%.
Excise duty on footwear of retail price between Rs 500-Rs 1,000 per pair reduced from 12% to 6%.
Specific rates of excise increased on cigarettes in the range of 11% to 72%.
Excise duty on paan masala increased from 12% to 16%, on unmanufactured tobacco from 50% to
55% and on gutkha and chewing tobacco from 60% to 70%.
Additional excise duty of 5% on aerated waters containing added sugar.
Goods and Services Tax
Jaitley committed to rolling out the Goods and Services Tax (GST) in the current year to streamline
tax administration.
Manufacturing
Jaitley has pushed for the setting up of 100 smart industrial cities.
Six textile clusters at a cost of Rs 200 crore in Rae Bareli, Lucknow, Surat and Bhagalpur.
Rs 100 crore for a National Industrial Corridor Authority.
Utilities
Rs 500 crore for ultra-mega solar power projects in Gujarat, Rajasthan, Tamil Nadu, Andhra Pradesh
and Ladakh.
10-year tax holiday extended to undertakings which begin generation, distribution and transmission
of power by March 31, 2017.
Rs 100 crore initially provided for the Ultra-Modern Super Critical Coal Based Thermal Power
Technology scheme.
Rs 200 crore for power and Rs 500 crore for water reforms in Delhi.
15,000 km of additional gas transport infrastructure to be introduced under the public-private-
partnership mode.
Transportation and tourism
Rs 100 crore for metro rail services in Lucknow and Ahmedabad.
Rs 4,200 crore for the Jal Marg Vikas project on the Ganga, connecting Allahabad to Haldia across
1,620 km.
E-visa facility at nine airports.

Infrastructure
Rs 37,880 crore for road building through the National Highway Authority of India; the allocation
includes Rs 3,000 crore for the North-East.
The national highway construction target of 8,500 km for this fiscal to be achieved.
Rs 11,635 crore for Phase 1 of the Outer Harbour Project in Tuticorin.
Emphasis on new airports for Tier 2 cities.

Agriculture
Agricultural Research Institute of excellence to be launched in Assam and Jharkhand with an initial
sum of Rs 100 crore.
Rs 100 crore set aside for the Agri-Tech Infrastructure Fund.
Scheme to provide every farmer a soil health card in a mission mode; Rs 100 crore provided for
this. An additional Rs 56 crore to set up 100 mobile soil testing laboratories across India.
Rs 500 crore to establish a Price Stabilisation Fund to mitigate the risk of price volatility in
agricultural produce.
Rs 800,000 crore target for agriculture credit in 2014-15.
Rs 5,000 crore for the Warehouse Infrastructure Fund.
Rs 50,000 crore for short-term cooperative rural credit.
Rs 1,000 crore for the Pradhan Mantri Krishi Sinchayee Yojna for assured irrigation.
Rs 100 crore dedicated to Kisan TV will ensure price, weather and related information to farmers and
help them take timely decisions
Rural Development
Rs 14,389 crore for the Pradhan Mantri Gram Sadak Yojna.
Allocation for the National Housing Bank increased to Rs 8,000 crore to support rural housing.
Neeranchal programme to push watershed development with an initial outlay of Rs 2,142 crore.
Allocation of Rs 500 crore for Digital India, an initiative to set up a broadband network in villages
and to promote local manufacturing of hardware and Indian software products.
Defence
FDI in defence hiked to 49% from the present 26%.
Capital outlay increased by Rs 5,000, crore including Rs 1,000 crore for accelerating the development
of a railway system in border areas.
Rs 3,000 crore for modernisation of state police forces.
Rs 2,250 crore to strengthen and modernise border infrastructure.
Healthcare
AIIMS-like institutions to be introduced in Andhra Pradesh, West Bengal, Vidarbha and Poorvanchal
15 model rural health research centres to be set up for research on local health issues.
Education
Rs 28,635 crore for the Sarva Shiksha Abhiyan and Rs 4,966 crore for Rashtriya Madhyamic Shiksha
Abhiyan.
Rs 500 crore for the Pandit Madan Mohan Malviya New Teachers Training Programme to introduce
new training tools and to motivate teachers.
Rs 500 crore for five more IITs in Jammu, Chhattisgarh, Goa, Andhra Pradesh and Kerala.
IIMs to be introduced in Himachal Pradesh, Punjab, Bihar, Odisha and Rajasthan.
Womens empowerment
Rs 50 crore for pilot testing a scheme on safety of women in public road transport.
Rs 150 crore on a scheme to increase womens safety in large cities.
Crisis management centres to be introduced across the National Capital Territory in government and
private hospitals.
Rs 100 crore for the Beti Bachao, Beti Padhao Yojana, a focused scheme to generate awareness and
help in improving the efficiency of delivery of welfare services for women.
Capital Markets/Banking and Insurance
FDI in insurance increased to 49% from 26%, with full Indian management and control.
Uniform tax treatment for pension fund- and mutual fund-linked retirement plans.
Banks encouraged to extend long-term loans to the infrastructure sector with flexible structuring.
Six new debt recovery tribunals.
For venture capital for medium and small enterprises, a Rs 10,000-crore fund to act as a catalyst to
attract private capital by providing equity, quasi-equity, soft loans and other risk capital for start-
ups.