Presented By:-

Gaurav Varshney
Vasantha Gandi
Akshay Jain
Sajid Baksh
Aman Dassani
Saumya Khare
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Contents
FOREWARD ................................................................................................................................................... 3
ECONOMIC INDICATORS ............................................................................................................................... 5
Budget at a Glance ...................................................................................................................................... 13
Key Features of Budget 2014-2015 ............................................................................................................. 15
THE CURRENT ECONOMIC SITUATION AND THE CHALLENGES .............................................................. 15
Deficit and Inflation ................................................................................................................................ 15
Key Features of Budget 2014-2015 ......................................................................................................... 16
ECONOMIC INITIATIVES .......................................................................................................................... 17
CRITICAL SECTORAL IMPACT ASSESSMENT ................................................................................................ 50
AUTOMOTIVE .......................................................................................................................................... 50
AVIATION ................................................................................................................................................ 50
BANKING ................................................................................................................................................. 51
HEALTHCARE ........................................................................................................................................... 51
INSURANCE ............................................................................................................................................. 52
METALS & MINING .................................................................................................................................. 52
POWER SECTOR....................................................................................................................................... 53
REAL ESTATE............................................................................................................................................ 53
SUGAR ..................................................................................................................................................... 54
TEXTILES .................................................................................................................................................. 55
TOBACCO ................................................................................................................................................ 55
Expert Opinions ........................................................................................................................................... 56
ACKNOWLEDGEMNT ................................................................................................................................... 60








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FOREWARD

The newly elected government presented its first union budget in the backdrop of huge
expectations, given the thumping mandate given by the people of India. The economic survey
highlighted the challenges: Lower than 5 per cent GDP growth for two consecutive years;
persistent uncertainty in global outlook, caused by the crisis in the euro-area; general
slowdown in the economy the demand for exports; domestic constraints such as low
manufacturing base, delays in project approvals and persisting high inflation, particularly in
food items had made the fiscal situation worse than it appeared.


Given these factors and considering that the new government had less than 45 days to present
the budget, the Finance Minister recognising limited room for fiscal manoeuvrability, has
chosen to present a working budget, perhaps as an interim measure and as a prelude to
concrete bold steps which India requires to take. He has however spoken of a lot of measures
that he intends to take, for example on Indias most awaited tax reform the uniform GST, for
which he hopes to approve a legislative scheme enabling its introduction this year. Similar
promises made in his speech but currently not forming part of his tax proposals include setting
up a high level committee to scrutinise all fresh tax cases arising from the retrospective
amendments of 2012 in respect of indirect transfers, extending the facility of advance ruling to
residents, strengthening the authority for advance rulings by constituting additional benches
and promising changes in Indias Transfer Pricing regulations to bring them in line with the
leading practices.


Direct tax rates remained unchanged for all taxpayers with recalibration of tax slabs for
Individuals to provide a higher threshold of exemption with corresponding increases in all slabs
and higher amounts provided for eligible investments which give tax breaks. The DDT however
goes up by about 3 percentage points due to change in the manner in which its computation
will now have to be done. Encouragement is sought to be provided to real estate and
infrastructure sector funds by clarifying the basis of taxation in the hands of the Trusts/Funds
and investors; however provisions relating to charitable trusts have been tightened to curb
abuse. Investment allowance has been continued as an incentive for manufacturing companies
to encourage investment in plant and machinery and also by pegging a lower qualifying
threshold. FII get clarity on the characterisation of their income and the government has
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signalled its intention to tap overseas securities markets by keeping out transfers of such
securities between non-residents out of the tax net.


On the indirect taxes front, besides the much awaited clarity on GST, there were high
expectations which do not seem to have materialised. Some provisions appear retrograde and
counterproductive to the promise of igniting growth or simplifying compliance requirements.
Proposals like restricting the time limit to claim CENVAT credit, increasing interest rate up to 30
per cent, penalty for delayed payments in addition to interest and mandatory duty and penalty
deposit to admit appeals are certainly not good tidings. However there are a few bright sparks
such as neutralizing the impact of FIAT judgement and rationalisation of the customs duty rates
on import of coal will indeed benefit the industry.

There is a lot of thrust which the government intends giving to the infrastructure sector
through the Public Private Partnership route to channel funds for investment and FDI. Raising
the ceiling limits from 26 per cent to 49 per cent in the insurance and defence manufacturing
sectors and reducing the mandatory requirements of built up area and capital conditions in the
development of smart cities are much awaited steps in the right direction. The budget speech
covers vast swathes of the economy including agriculture, financial sector, health and family
welfare, rural development education, SEZ, industry including MSME, and infrastructure in all
its avatars, giving a prima facie impression of resources being spread too thinly. The proof of
the pudding will be in the action that the government actually takes in the days ahead to
ensure that peoples expectations and hopes of India regaining her high and more inclusive
growth status are met with.




















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ECONOMIC INDICATORS



When the Finance Minister Mr. Arun Jaitley assumed office earlier this year, he had his task cut
out for him. The country was slowly descending towards the Hindu rate of growth (3.5%) over
the past two years. Fiscal numbers were amiss, indecisiveness and red tape had affected
government operations, supply side bottlenecks were creating stagflation, and business
sentiment was in doldrums.

In interviews leading to the budget, Mr. Jaitley indicated that he was cognizant of the countrys
economic woes. He had suggested the steps that would be implemented in the short term
fiscal consolidation, investment cycle revival, driving the manufacturing sector, supporting
agriculture and restore business sentiment to rekindle growth. Presenting the first budget of
his political career, the Finance Minister stuck to his game plan, delivering a document aimed at
bringing the acche din back.

Fiscal prudence continues to be at the forefront of the governments
economic agenda

To begin with, the fiscal deficit for the year has been pegged at 4.1% of GDP in 201415;this
would be reduced further to 3% by 201617. Despite the steep target and sluggish
macroeconomic conditions, the Finance Minister has decided to dig his heels in and work on
this admittedly hard task. Though he has not outlined how he would go about achieving these
targets, the Finance Minister has stated that tax buoyancy (rather than curbing essential
expenditure) would be the way forward. The establishment of the Expenditure Management
Commission and the introduction of the Goods and Service Tax could be the first steps.
However, this would evidently not be enough and would need to be complemented by
efficiency in tax collection and structural reforms (read land and labour laws reform), which are
outside the purview of the budget document.

Banking on investments in infrastructure to improve Indias
investability

Significant infrastructure outlays (road, power, ports and airports) have been planned to revive
the investment cycle and unclog infrastructural bottlenecks. The government has earmarked
INR 37,887 crore (a little over USD6 bn) for the NHAI and state highways, INR11,600 crore
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(USD2 bn) to develop outer harbour projects, INR4,200 crore (USD700 mn) for Allahabad-Haldia
inland waterways, besides awarding 16 new airport projects this fiscal, and allocating INR1,000
crore (little over USD150 mn) to the solar power sector. This will send a strong signal to both
domestic and foreign enterprises that India means business. The scale of these investments is
also expected to buoy private sector sentiment and drive investments that have been lagging in
recent years. However, the devil is in the details and the timely implementation of these
projects would be key if the country is to reap externalities from these projects in the long run.
Enhancing private sector participation has also been an important budget theme. Key
announcements include the increase in FDI within the ecommerce, defence and insurance
sectors as well as public private partnerships (PPPs) for development of gas pipelines, airports
and metro rail (in Ahmedabad and Lucknow). These decisions were complemented by
assurances that retrospective tax amendments would be undertaken with caution, and that the
economy would not be hostage to indecisiveness and populism.

Not forgetting the farmer

Promoting agriculture was important as it still comprises the backbone of the economy; almost
50% of the population depend on this sector for their livelihood. The government is targeting
4% sector growth through farm loan subsidies, additional funds for farm credit, rebuilding rural
infrastructure and creating a growing knowledge base through Kisan Television (which will
provide real time information on various farming and agriculture issues). A big planned reform
would be the tweaking of the MNREGA scheme, which will be modified to make it more asset
creation oriented.

Reviving manufacturing was a priority for the government as this sector could emerge as a
viable way to accelerate economic growth and create jobs. Having missed the bus twice, the
budget has laid down some concrete steps that include allocations for industrial corridors to
help manufacturing, proposing the establishment of six new textile clusters and allowing
manufacturing units to sell their products through retail and e-commerce channels. Allocating
up to INR 1000 crore (USD170 mn) for start-ups that dominate manufacturing and are
perennially starved of funds would also be a pivotal step.

A vote-of-thanks to the electorate?

Last but not the least, the budget did not forget the aam aadmi who voted on its feet and
gave an overwhelming majority to the government. As a sign of thanks there were a number of
benefits in the form of tax concessions (rise in tax exemption, easier norms for student loans,
allocations for low-cost housing and rise in investment limits).

The NDA government has projected this budget has the first step in returning the country to 7
8% growth. Given the short time frame, numerous problems at hand and limited fiscal
bandwidth, the Finance Minister unveiled a pragmatic budget which takes into account ground
realities and suggests some quick fixes. It would be too early to pronounce judgment on this
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budget and the government would face its real test in 2015-16, when the honourable Finance
Minister rises to present his second budget.

The Union Finance Ministers cautious tone in addressing economic issues underlines the
difficult task ahead of the newly formed NDA government. A slowing economic growth rate,
high inflation and an uncomfortable fiscal and current account situation are issues that need to
be addressed simultaneously. As such, the FinMins tone is understandable, given that the NDA
government is only 45 days old.


Challenging targets but effort on taking the right steps

While it is early to critically view the governments ambitious target of achieving 7-8% economic
growth over the next 3-4 years, we expect the effort, in the immediate term, would be more
towards correcting the countrys fiscal situation, inflation and improving the overall investment
sentiment, both from within and outside the country. The government hopes to bring the fiscal
deficit down to 4.1% in FY2015, 3.6% in FY16 and 3.0% in FY17; from 4.5% in FY14. In this
regard, the government has decided to create an Expenditure Management Commission to
review efficiencies in government expenditure and flag areas of concern.

Getting closer to GST but not without negotiations

That said, the budget reflected the governments preference for revenue growth ahead of
expenditure cuts. For this, both the Tax to GDP ratio and other non-tax revenue sources must
be explored. The biggest step through the course of the current fiscal year would probably be
the implementation of the goods and services tax (GST). Although the budget did not lay down
a concrete roadmap and timeline, the finance minister was clear in expressing the
governments strong desire to achieve GST. We believe better clarity on GST would emerge
only towards the end of the current fiscal year, and could positively impact the fiscal situation
for FY16 and FY17.Also, the finance minister ruled out any major retrospective tax changes
without considering its 325impact on the concerned parties and the investment sentiment in
general.

The budget focused heavily on increasing investments, domestic as well as international, across
various industries and sectors with an aim to improve the output. A significant step towards
that was increasing the FDI limit in the defence manufacturing sector. The finance minister has
proposed increasing the FDI limit to 49% from the current 26%. However, the management and
control would remain with an Indian entity through the FIPB route. This would not only bring
down the governments defence purchases in the international market but also open up the
sector to opportunities abroad. The other major FDI announcement has come in the insurance
sector, where the cap has been raised to 49% from 26%. Again, the management and control
would rest with an Indian entity through the FIPB route. We believe penetration of insurance
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products still remains relatively low in at least the semi-urban and rural areas and this is likely
to act as a catalyst.










The Indian economy gained momentum in FY14, but it registered sub-5 per cent growth;
though GDP growth in FY15 is projected to improve, it is likely to remain under 6 per cent

In FY14, Indias GDP grew by 4.7 per cent, as compared to 4.5 per cent in FY13. Though this was
the second consecutive year of sub-5 per cent growth, India is believed to have passed its
trough in FY13. This is evident from the high GDP growth projections for FY15 both by the RBI
and the Economic Survey of India, 201314 that estimate GDP growth rate in the range of
56 per cent (as of 3 June 2014) and 5.45.9 per cent (as of 9 July 2014), respectively.

However, sustained economic growth can be ensured only by addressing structural constraints
due to low manufacturing base, delay in project approvals and insufficient complementary
investments, agricultural productions high dependence on the monsoon and high food
inflation.


Improved economic growth during FY14 has been contributed by agriculture; sustainability,
however, remains a challenge especially in light of poor industrial performance

Concerns over Indias economic performance grew when, for the first time in 25 years (since
FY88), India witnessed a sub-5 per cent growth for the second consecutive year in FY14. On the
bright side, GDP growth in FY14 improved marginally due to high growth in the agriculture
sector, which grew at 4.7 per cent from 1.4 per cent in FY13 on account of favourable monsoon.
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The services sector, which accounted for about 60 per cent of GDP in FY14, grew at 6.8 per
cent, as compared to about 7 per cent in FY13 due to less growth in transportation and
communication, which offset the high growth recorded in the financial services and real estate
sectors.

Industry, on the other hand, was the worst performing sector with a meager growth of 0.4 per
cent, as compared to about 1 per cent last year. This was on account of contraction in
manufacturing, partially due to less investment, considering high interest costs. Mining
continued to pose challenges due to stagnation in crude petroleum and coal (in part due to
regulatory issues).
Though inflation eased, industrial production wasdismal due to a contractionary monetary
policy

The easing of the Wholesale Price Index (WPI) based inflation to 6 per cent in FY14, as
compared to 7.4 per cent in FY13, partially contributed to improved economic growth this
fiscal. However, it still remains above the RBIs comfort zone of 55.5 per cent. Moreover,
increased food prices continue to pose upside risks. In FY15 so far, the average WPI-based
inflation at 5.6 per cent is less than the RBIs January projection of 7.1 per cent for 1Q15 and is
expected to remain within RBIs comfort zone for the entire year. On the other hand, retail
inflation based on CPI averaged at 9.7 per cent during FY14, as compared to 10.4 per cent in
FY13. Though it demonstrated some improvement, it is still hovering around the 10 per cent
mark supporting the RBIs concern over upside risks to prices.

On the other hand, despite easing inflation, there was no improvement in industrial production,
possibly due to high interest rates. The IIP contracted 0.3 per cent in FY14, compared to a
growth of 1.2 per cent in FY13, due to manufacturing and mining, offsetting the growth
recorded by the electricity sector. Poor IIP performance continues to pose a serious concern, as
it can hamper sustainable economic growth.

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High interest rates and tight liquidity, more than 6 per cent inflation, dampened business
sentiment and political uncertainty prior to the general elections and dampened investment.
Consumption, however, was low on account of reduction in government spending

A stringent monetary policy to control inflation led to high interest cost, which dampened
private corporate investment. This was accompanied with low liquidity and lack of policy
direction amid the general elections that took place in May 2014. Thus, in FY14, investment
growth contracted due to low fixed investment. This was evident from the negative growth of
3.7 per cent in the production of capital goods in FY14. On the other hand, consumption
decreased to 4.7 per cent in FY14, as compared to 5.2 per cent in FY13. This was on account of
reduced spending by the government (accounted for about 16 per cent of consumption in FY14,
in line with its objective to control fiscal deficit. Private consumption plummeted marginally in
line with other economic indicators after being impacted by high retail inflation and interest
rates.

Slow recovery, uncertainty over the next government in India (prior to the 2014 general
elections) and expectations on the withdrawal of QE in the U.S. resulted in volatility in FII
inflow and domestic currency

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FII investment inflow was slow during the first half of FY14, as investors turned toward the U.S.
dollar amid the news on the withdrawal of QE. Though policy announcements such as increased
FDI caps for some sectors and consolidation of current account deficit and fiscal deficit helped
in improving inflow, the overall investment was a mere USD8.9 billion in FY14 compared to
USD29.6 billion in FY13. Lower FII inflows led to about 11 per cent depreciation of the rupee to
60.3 in FY14 to a US dollar, as compared to 54.4 in FY13.

Improved net exports growth led to the narrowing of trade and CAD14

High exports due to improved global demand and reduced imports, owing to RBI restrictions
and a depreciated rupee led to the narrowing of Indias trade deficit to USD137.5 billion in
FY14 from USD190.3 billion in FY13.15 The reduction in CAD to 1.7 per cent of GDP in FY14 from
4.7 per cent in FY13 was a result of RBIs proactive measures towards controlling the rupees
depreciation, on the one hand, and curbing imports, on the other.

Given that Indias GDP growth rate declined substantially from its previously recorded 9 per
centplus rate, GOI and RBI were constantly on the edge to introduce measures aimed at
reviving growth Following are some of the measures:

The previous government cleared a roadmap for addressing issues such as pool pricing of
coal; formation of regulatory bodies for coal, roads and railways; and the establishment of an
infrastructure investment fund.
In July 2013, FDI limits were revised for about 12 sectors and 100 per cent FDI was allowed in
sectors such as asset reconstruction, telecom, courier services and single-brand Retail relaxed
ECB norms to assist entities in production by allowing them to use funds raised from foreign
partners for general corporate purposes
The government permitted sovereign wealth funds to invest in the bonds of public sector
infrastructure finance companies
The term infrastructure was redefined to raise external commercial borrowings to include
mobile telephony and companies operating in the fixed network, cellular services and telecom
towers18 domains
In June 2014, the RBI released approximately INR400 billion by reducing deposits that the
banks are mandated to place in government securities
Additionally, a special term repo facility of 0.25 per cent of the net demand and time liabilities
had been introduced to offset the decline in liquidity access under export credit refinance
As per the 80:20 rule for gold import, announced in August 2013, the nominated agencies
were required to export finished products of at least 20 per cent of the total gold imported.
Also, the RBI had restricted trading houses from importing gold, allowing only selected banks to
import gold Though the 80:20 ratio remains unchanged, some relaxations have been
introduced.
In May 2014, the RBI also amended some regulations of the Foreign Exchange Management
(Export of Goods and Services) Regulations 2000, under which the AD category 1 banks have
been allowed to let exporters receive advance payment for exporting goods that take over a
year to manufacture and ship.
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The pace of economic recovery during FY15 is expected to be better than the pace during
FY14. However, it will depend on a variety of factors with the performance of agriculture and
industry, inflation rate, and policy support being of critical importance.

The Economic Survey of India, 201314, outlines a few priority areas for the GOI such as
reviving investments, strengthening macro-economic stability, creating non-agricultural jobs,
and developing infrastructure and agriculture.
Moreover, the formation of a new government at the centre after 10 years seems to have has
increased everyones expectations, especially those of investors, which can be gauged from the
31 per cent rise in the Sensex to 25,413.8 mark in June 2014 from the 19,395.8 mark in June
2013.21 The nation expects the new government to bring about a positive change, especially
in the form of checking high inflation and interest rates, and reviving economic growth.

Fiscal deficit of 4.5 per cent of GDP in FY14 is lower than the budgeted target of 4.8 per cent
of GDP
While increased government spending is necessary in troubled times to support economic
growth, it also becomes a challenge as fiscal deficit rises. Thus, the GOI announced a fiscal
consolidation roadmap that aims to reduce Indias fiscal deficit to 4.8 per cent in FY14, 4.2 per
cent in FY15, 3.6 per cent in FY16 and to 3 per cent by FY17. To comply with this, the
government reduced its expenditure during FY14, which translated into lower fiscal deficit for
the year.


To conclude, the positive momentum in FY14 is likely to continue in FY15, as several measures
are expected to be undertaken, especially those aimed at boosting investment and further
reducing inflation and fiscal deficit to expedite economic growth. The government endeavour is
to provide a stable, predictable and consistent policy framework to facilitate long-term
investment decisions.








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Budget at a Glance

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Key Features of Budget 2014-2015

THE CURRENT ECONOMIC SITUATION AND THE CHALLENGES

Decisive vote for change represents the desire of the people to grow, free themselves
from the curse of poverty and use the opportunity provided by the society. Country in
no mood to suffer unemployment, inadequate basic amenities, lack of infrastructure
and apathetic governance.

Challenging situation due to Sub five per cent growth and double digit inflation.

Continued slow-down in many emerging economies a threat to sustained global
recovery.

Recovery seen with the growth rate of world economy projected at 3.6 per cent in 2014
vis--vis in 2013.

First budget of this NDA government to lay down a broad policy indicator of the
direction in which we wish to take this country.

Steps announced are only the beginning of the journey towards a sustained growth of 7-
8 per cent or above within the next 3-4 years along with macro-economic stabilization.

Growing aspirations of people will be reflected in the development strategy of the
Government led by the Prime Minister Shri Narendra Modi and its mandate of Sab ka
Saath Sab ka Vikas.

Need to revive growth in manufacturing and infrastructure sectors.

Tax to GDP ratio must be improved and Non-tax revenues increased.
Deficit and Inflation

Decline in fiscal deficit from 5.7% in 2011-12 to 4.5% in 2013-14 mainly achieved by
reduction in expenditure rather than by way of realization of higher revenue.
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Improvement in current account deficit from 4.7 % in 2012-13 to year end level of 1.7%
mainly achieved through restriction on non-essential import and slow-down in overall
aggregate demand. Need to keep watch on CAD.

4.1 per cent fiscal deficit a daunting task in the backdrop of two years of low GDP
growth, static industrial growth, moderate increase in indirect taxes, subsidy burden
and not so encouraging tax buoyancy.
Key Features of Budget 2014-2015

The government is committed to achieve this target. Road map for fiscal consolidation
outlines fiscal deficit of 3.6 % for 2015-16 and 3 % for 2016-17.

Inflation has remained at elevated level with gradual moderation in WPI recently.

The problem of black money must be fully addressed.

Bold steps required to enhance economic activities and spur growth in the economy.
Administrative Initiatives

Sovereign right of the Government to undertake retrospective legislation to be
exercised with extreme caution and judiciousness keeping in mind the impact of each
such measure on the economy and the overall investment climate.

A stable and predictable taxation regime which will be investor friendly and spur
growth.

Legislative and administrative changes to sort out pending tax demands of more than ` 4
lakh crore under dispute and litigation.

Resident tax payers enabled to obtain on advance ruling in respect of their income-tax
liability above a defined threshold.

Measures for strengthening the Authority for Advance Rulings.

Income-tax Settlement Commission scope to be enlarged.

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National Academy for Customs & Excise at Hindupur in Andhra Pradesh.

The subsidy regime to be made more targeted for full protection to the
marginalized,poor and SC/ST.

New Urea Policy would be formulated.

Introduction of GST to be given thrust.

High level committee to interact with trade and industry on regular basis to ascertain
areas requiring clarity in tax laws is required to be set up.

Convergance with International Financial Reporting Standard (IFRS) by Adoption of the
new Indian Accounting Standards (2nd AS) by Indian Companies.

Setting up of Expenditure Management Commission to look into expenditure reforms.

Employment exchanges to be transformed into career centres. A sum of ` 100 crore
provided .

ECONOMIC INITIATIVES
Foreign Direct Investment (FDI)
Government to promote FDI selectively in sectors.

The composite cap of foreign investment to be raised to 49 per cent with full Indian
management and control through the FIPB route.

The composite cap in the insurance sector to be increased up to 49 per cent from 26per
cent with full Indian management and control through the FIPB route.

Requirement of the built up area and capital conditions for FDI to be reduced
from50,000 square metres to 20,000 square metres and from USD 10 million to USD
5million respectively for development of smart cities.

The manufacturing units to be allowed to sell its products through retail including
Ecommerce platforms.
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Bank Capitalization
Requirement to infuse `.2,40,000 crore as equity by 2018 in our banks to be in line with
Basel-III norms

Capital of banks to be raised by increasing the shareholding of the people in a phased
manner.


PSU Capital Expenditure
PSUs will invest through capital investment a total sum of ` 2,47,941 crores in the
current financial year.
Smart Cities
A sum of ` 7060 crore is provided in the current fiscal for the project of developing one
hundred Smart Cities
Real Estate
Incentives for Real Estate Investment Trusts (REITS). Complete pass through for the
purpose of taxation.

A modified REITS type structure for infrastructure projects as the Infrastructure
Investment Trusts (INVITS).
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These two instruments to attract long term finance from foreign and domestic sources
including the NRIs.


Irrigation
` 1000 crore provided for Pradhan Mantri Krishi Sinchayee Yojna for assured irrigation.
Rural Development
Shyama Prasad Mukherji Rurban Mission for integrated project based infrastructure in
the rural areas.

` 500 crore for Deen Dayal Upadhyaya Gram Jyoti Yojana for feeder separation to
augment power supply to the rural areas.

` 14,389 crore provided for Pradhan Mantri Gram Sadak Yojna(PMGSY) .

More productive, asset creating and with linkages to agriculture and allied activities
wage employment would to be provided under MGNREGA.

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Under Ajeevika, the provision of bank loan for women SHGs at 4% to be extended
toanother 100 districts.

Initial sum of ` 100 crore for Start Up Village Entrepreneurship Programme
forencouraging rural youth to take up local entrepreneurship programs .

Allocation for National Housing Bank increased to ` 8000 crore to support Ruralhousing.

New programme Neeranchal to give impetus to watershed development in the
country with an initial outlay of ` 2142 crores.

Backward Region Grant Fund (BRGF) to be restructured to address intra-district
inequalities.


Scheduled Caste/Scheduled Tribe
An amount of ` 50,548 crore is proposed under the SC Plan and ` 32,387 crore under
TSP.

For the welfare of the tribals Van Bandhu Kalyan Yojna launched with an initial
allocation of ` 100 crore.

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Senior Citizen & Differently Abled Persons
Varishtha Pension Bima Yojana (VPBY) to be revived for a limited period from 15
August, 2014 to 14 August, 2015 for the benefit of citizens aged 60 years and above.

A committee will to examine and recommend how unclaimed amounts with PPF, Post
Office, saving schemes etc. can be used to protect and further financial interests of the
senior citizens.

Government notified a minimum pension of ` 1000 per month to all subscriber
members of EP Scheme. Initial provision of ` 250 crore.

Increase in mandatory wage ceiling of subscription to ` 15000. A provision of ` 250 crore
in the current budget.

EPFO to launch the Uniform Account Number Service for contributing members.

Scheme for Assistance to Disabled Persons for purchase/fitting of Aids and
Appliances(ADIP) extended to include contemporary aids and assistive devices.

National level institutes for Universal Inclusive Design , Mental Health Rehabilitation
and a Centre for Disability Sports to be established.

Assistance to State Governments to establish fifteen new Braille Presses and modernize
ten existing Braille Presses.

Government to print currency notes with Braille like signs for visibly challenged
persons.
Women & Child Development
Outlay of ` 50 crores for pilot testing a scheme on Safety for Women on Public Road
Transport.

Sum of ` 150 crores on a scheme to increase the safety of women in large cities.

Crisis Management Centres in all the districts of NCT of Delhi this year governmentand
private hospitals.

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A sum of ` 100 crore is provided for Beti Bachao, Beti Padhao Yojana, a focused
scheme to generate awareness and help in improving the efficiency of delivery of
welfare services meant for women.

School curriculum to have a separate chapter on gender mainstreaming.


Drinking Water & Sanitation
20,000 habitations affected with arsenic, fluoride, heavy/ toxic elements, pesticides/
fertilizers to be provided safe drinking water through community water purification
plants in next 3 years
Swachh Bharat Abhiyan to cover every household with sanitation facility by the
year2019.

Health and Family Welfare
Free Drug Service and Free Diagnosis Service to achieve Health For All

Two National Institutes of Ageing to be set up at AIIMS, New Delhi and MadrasMedical
College, Chennai.

A national level research and referral Institute for higher dental studies to be set up.

AIIMS like institutions in Andhra Pradesh, West Bengal, Vidarbha in Maharashtra
andPoorvanchal in UP. A provision of ` 500 crores made.

12 new government medical colleges to be set up.

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States Drug Regulatory and Food Regulatory Systems to be strengthened by creating
new drug testing laboratories and strengthening the 31 existing State laboratories.

15 Model Rural Health Research Centres to be set up for research on local healthissues
concerning rural population.

A national programme in Mission Mode to halt the deteriorating malnutrition situation
in India to be put in place within six months.
EDUCATION
School Education
Government would strive to provide toilets and drinking water in all the girls school in
first phase. An amount of ` 28635 crore is being funded for Sarv Shiksha Abhiyan(SSA)
and ` 4966 crore for Rashtriya madhyamic Shiksha Abhiyan (RMSA).

A School Assessment Programme is being initiated at a cost of ` 30 crore.

` 500 crore provided for Pandit Madan Mohan Malviya New Teachers Training
Programme to infuse new training tools and motivate teachers.

` 100 crore provided for setting up virtual classrooms as Communication Linked Interface for
Cultivating Knowledge (CLICK) and online courses.

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Higher Education
Jai Prakash Narayan National Centre for Excellence in Humanities to be set up in MP.

` 500 crore provided for setting up 5 more IITs in the Jammu, Chhattisgarh, Goa, Andhra
Pradesh and Kerala.

5 IIMs in the States of HP, Punjab, Bihar, Odisha and Rajasthan.

Simplification of norms to facilitate education loans for higher studies.
Information Technology
Pan India programme Digital India to with an outlay of ` 500 crore to be launched.

Programme for promoting Good Governance to be launched .A sum of ` 100 crore
provided.



Information and Broadcasting
` 100 crore allocated for 600 new and existing Community Radio Stations.

Film & Television Institute, Pune and Satyajit Ray Film & Television Institute, Kolkata are
proposed to be accorded status of Institutes of national importance and a National
Centre for Excellence in Animation, Gaming and Special Effects to be set up.
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` 100 crore is provided for Kisan TV, to disseminate real time information to the farmers
on issues such as new farming techniques, water conservation, organic farming etc.
Urban Development
Vision of the Government is that 500 urban habitations to be provided support for
renewal of infrastructure and services in next 10 years through PPPs.

Present corpus of Pooled Municipal Debt Obligation Facility facility to be enlarged to `
50,000 Crore from ` 5000 crore.
` 100 crore provided for Metro Projects in Lucknow and Ahemdabad.
Housing
Extended additional tax incentive on home loans shall be provided to encourage
people,especially the young, to own houses.

Mission on Low Cost Affordable Housing anchored in the National Housing Bank to be
set up.

A sum of ` 4000 crores for NHB from the priority sector lending shortfall with a view to
increase the flow of cheaper credit for affordable housing to the urban poor/EWS/ LIG
segment is provided

Slum development to be included in the list of Corporate Social Responsibility (CSR)
activities to encourage the private sector to contribute more.
Minorities
A programme for the up gradation of skills and training in ancestral arts for
development for the minorities Up gradation of Traditional Skills in Arts, Resources
and Goods to be launched.

An additional amount of ` 100 crores for Modernization of Madarsas .



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AGRICULTURE
Government to establish two more Agricultural Research Institute of excellence in
Assam and Jharkhand with an initial sum of ` 100 crore.

An amount of ` 100 crores set aside for Agri-tech Infrastructure Fund.

` 200 crore provided to open Agriculture Universities in Andhra Pradesh and Rajasthan
and Horticulture Universities in Telangana and Haryana.

A scheme to provide every farmer a soil health card in a Mission mode will be launched.
` 100 crore has been provided for this purpose and additional ` 56 crores to set up 100
Mobile Soil Testing Laboratories across the country.

To meet the vagaries of climate change a National Adaptation Fund with an initial
sum an amount of ` 100 crore will be set up.



A sustainable growth of 4% in Agriculture will be achieved.

Technology driven second green revolution with focus on higher productivity and
including Protein revolution will be area of major focus.

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To mitigate the risk of Price volatility in the agriculture produce, a sum of ` 500 crore is
provided for establishing a Price Stabilization Fund.

Central Government to work closely with the State Governments to re-orient their
respective APMC Acts.

Sum of ` 50 crores provided for the development of indigenous cattle breeds and an
equal amount for starting a blue revolution in inland fisheries.

Transformation plan to invigorate the warehousing sector and significantly improve
post-harvest lending to farmers.
Agriculture Credit
To provide institutional finance to landless farmers, it is proposed to provide finance to
5 lakh joint farming groups of Bhoomi Heen Kisan through NABARD.

A target of ` 8 lakh crore has been set for agriculture credit during 2014-15.

Corpus of Rural Infrastructure Development Fund (RIDF) raised by an additional `5000
crores from the target given in the Interim Budget to ` 25000 crores .

Allocation of ` 5,000 crore provided for the Warehouse Infrastructure Fund.

Long Term Rural Credit Fund to set up for the purpose of providing refinance support
to Cooperative Banks and Regional Rural Banks with an initial corpus of ` 5,000 crore.

Amount of ` 50,000 crore allocated for Short Term Cooperative Rural Credit.

Sum of ` 200 crore for NABARDs Producers Development and Upliftment Corpus
(PRODUCE) for building 2,000 producers organizations over the next two years.
Food Security
Restructuring FCI, reducing transportation and distribution losses and efficacy of PDS to
be taken up on priority.

Government committed to provide wheat and rice at reasonable prices to the weaker
sections of the society.
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Government when required will undertake open market sales to keep prices under
control.
INDUSTRY
Central Government Departments and Ministries to integrate their services with the e-
Biz -a single window IT platform- for services on priority by 31 December this year.

` 100 crore provided for setting up a National Industrial Corridor Authority.

Amritsar Kolkata Industrial master planning to be completed expeditiously.

Master planning of 3 new smart cities in the Chennai-Bengaluru Industrial Corridor
region, viz., Ponneri in Tamil Nadu, Krishnapatnam in Andhra Pradesh and Tumkur in
Karnataka to be completed.

Perspective plan for the Bengaluru Mumbai Economic corridor (BMEC) and Vizag-
Chennai corridor to be completed with the provision for 20 new industrial clusters.

Development of industrial corridors with emphasis on Smart Cities linked to transport
connectivity to spur growth in manufacturing and urbanization will be accelerated.

Proposed to establish an Export promotion Mission to bring all stakeholders under one
umbrella.

Apprenticeship Act to be suitably amended to make it more responsive to industry and
youth.

Micro Small and Medium Enterprises (MSME) Sector
Skill India to be launched to skill the youth with an emphasis on employability and
entrepreneur skills.

Committee to examine the financial architecture for MSME Sector, remove bottlenecks
and create new rules and structures to be set up and give concrete suggestions in three
months.

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Fund of Funds with a corpus of `.10,000 crore for providing equity through venture
capital funds, quasi equity, soft loans and other risk capital specially to encourage new
startups by youth to be set up.

Corpus of ` 200 crore to be set up to establish Technology Centre Network .

Definition of MSME to be reviewed to provide for a higher capital ceiling.

Programme to facilitate forward and backward linkages with multiple value chain of
manufacturing and service delivery to be put in place.

Entrepreneur friendly legal bankruptcy framework will be developed for SMEs to enable
easy exit.

A nationwide District level Incubation and Accelerator Programme to be taken up for
incubation of new ideas and necessary support for accelerating entrepreneurship.



Textiles
` 50 crore is provided to set up a Trade Facilitation Centre and a Crafts Museum to
develop and promote handloom products and carry forward the rich tradition of
handlooms of Varanasi.

Sum of ` 500 crore for developing a Textile mega-cluster at Varanasi and six more at
Bareilly, Lucknow, Surat, Kutch, Bhagalpur and Mysore.
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` 20 crore to set up a Hastkala Academy for the preservation, revival, and
documentation of the handloom/handicraft sector in PPP mode in Delhi.

` 50 crore is provided to start a Pashmina Promotion Programme (P-3) and development
of other crafts of Jammu & Kashmir.
INFRASTRUCTURE
An institution to provide support to mainstreaming PPPPs called 4PIndia to be set up
with a corpus of ` 500 crores.

Shipping
` 11635 crore will be allocated for the development of Outer Harbour Project in
Tuticorin for phase I.

SEZs will be developed in Kandla and JNPT.
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Comprehensive policy to be announced to promote Indian ship building industry.
Inland Navigation
Project on Ganges called Jal Marg Vikas to be developed between Allahabad and
Haldia.
New Airports
Scheme for development of new airports in Tier I and Tier II Cities to be launched.
Roads sector

Sector needs huge amount of investment along with debottlenecking from maze of
clearances.

An investment of an amount of ` 37,880 crores in NHAI and State Roads is proposed
which includes ` 3000 crores for the North East.

Target of NH construction of 8500 km will be achieved in current financial year.

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Work on select expressways in parallel to the development of the Industrial Corridors
will be initiated. For project preparation NHAI shall set aside a sum of ` 500 crore.
Energy

` 100 crore is allocated for a new scheme Ultra-Modern Super Critical Coal Based
Thermal Power Technology.

Comprehensive measures for enhancing domestic coal production are being put in
place.

Adequate quantity of coal will be provided to power plants which are already
commissioned or would be commissioned by March 2015.

An exercise to rationalize coal linkages to optimize transport of coal and reduce cost of
power is underway.
New & Renewable Energy
` 500 crores provided for Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil
Nadu, Andhra Pradesh and Laddakh.

` 400 crores provided for a scheme for solar power driven agricultural pump sets and
water pumping stations.

` 100 crore provided for the development of 1 MW Solar Parks on the banks of canals.

A Green Energy Corridor Project is being implemented to facilitate evacuation of
renewable energy across the country.
Petroleum & Natural Gas
Production and exploitation of Coal Bed Methane reserves will be accelerated.

Possibility of using modern technology to revive old or closed wells to be explored.

Usage of PNG to be rapidly scaled up in a Mission mode.

Proposal to develop pipelines using appropriate PPP models.

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Mining
Changes, if necessary, in the MMDR Act, 1957 to be introduced to encourage
investment in mining sector and promote sustainable mining practices.

FINANCIAL SECTOR
Capital Market
Ongoing process of consultations with all the stakeholders on the enactment of the
Indian Financial Code and reports of the Financial Sector Legislative Reforms
Commission (FSLRC) to be completed.

Government in close consultation with the RBI to put in place a modern monetary policy
framework.

Following measures will be taken to energize Capital markets:

Introduction of uniform KYC norms and inter-usability of the KYC records across the
entire financial sector.

Introduce one single operating demat account.

Uniform tax treatment for pension fund and mutual fund linked retirement plan


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BANKING AND INSURANCE SECTOR
Banking
Time bound programme as Financial Inclusion Mission to be launched on 15 August this
year with focus on the weaker sections of the society.

Banks to be encouraged to extend long term loans to infrastructure sector with flexible
structuring.

Banks to be permitted to raise long term funds for lending to infrastructure sector with
minimum regulatory pre-emption such as CRR, SLR and Priority Sector Lending (PSL).

RBI to create a framework for licensing small banks and other differentiated banks.

Differentiated banks serving niche interests, local area banks, payment banks etc. are
contemplated to meet credit and remittance needs of small businesses, unorganized
sector, low income households, farmers and migrant work force.

Six new Debt Recovery Tribunals to be set up.

For venture capital in the MSME sector, a ` 10,000 crore fund to act as a catalyst to
attract private Capital by way of providing equity , quasi equity, soft loans and other risk
capital for start-up companies with suitable tax incentives to participating private funds
to be established.


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Insurance Sector
The pending insurance laws (amendment) Bill to be immediately brought for
consideration of the Parliament.

The regulatory gap under the Prize Chits and Money Circulation Scheme (Banking) Act,
1978 will be bridged.
Small Savings
Kissan Vikas Patra (KVP) to be reintroduced.

A special small savings instrument to cater to the requirements of educating and
marriage of the Girl Child to be introduced.

A National Savings Certificate with insurance cover to provide additional benefits for
the small saver.

In the PPF Scheme, annual ceiling will be enhanced to `.1.5 lakh p.a. from `.1 lakh at
present.
DEFENCE & INTERNAL SECURITY
A further sum of ` 1000 crore to meet requirement for One Rank One Pension.

Capital outlay for Defence increased by ` 5000 crore including a sum of ` 1000 crore for
accelerating the development of the Railway system in the border areas.

Urgent steps would also be taken to streamline the procurement process to make it
speedy and more efficient.

` 100 crore is provided for construction of a war memorial in the Princes Park, which will
be supplemented by a War Museum. I am allocating a sum of ` 100 crore for this
purpose.

` 100 crore is provided to set up a Technology Development Fund for Defence.


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Internal Security
` 3000 crore is provided in the current financial year for modernization of state police
forces.

Adequate allocation for Additional Central Assistance for Left Wing Extremist Affected
districts.

` 2250 crore provided to strengthen and modernize border infrastructure.

` 990 crore allocated for the socio economic development of the villages along the
borders.

A sum of ` 150 crore ear-marked for the construction of Marine Police Station, Jetties
and for the purchase of boats etc.

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` 50 crores provided for construction of National Police Memorial.
CULTURE & TOURISM
` 200 crore provided to build the Statue of unity(National project).

Facility of Electronic Travel Authorization (e-Visa) to be introduced in phased manner at
nine airports in India.

Countries to which the Electronic Travel authorisation facility would be extended would
be identified in a phased manner.

` 500 crore provided for developing 5 tourist circuits around specific themes.

` 100 crore provided for National Mission on Pilgrimage Rejuvenation and Spiritual
Augmentation Drive (PRASAD).

` 200 crore provided for National Heritage City Development and Augmentation Yojana
(HRIDAY).



` 100 crore provided for Archaeological sites preservation.
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Sarnath-Gaya-Varanasi Buddhist circuit to be developed with world class tourist
amenities to attract tourists from all over the world.
Water Resources and cleaning of Ganga
` 100 crore provided for Detailed Project Reports for linking of rivers.

` 2037 crores provided for Integrated Ganga Conservation Mission NAMAMI GANGE.

` 100 crore provided for Ghat development and beautification at Kedarnath, Haridwar,
Kanpur, Varanasi, Allahabad, Patna and Delhi.

NRI Fund for Ganga will be set up.
Science and Technology
Government to strengthen at least five institutions as Technical Research Centres.

Development of Biotech clusters in Faridabad and Bengaluru.



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Nascent agri-biotech cluster in Mohali to be scaled up. In addition, two new clusters, in
Pune and Kolkata to be established.

Global partnerships will be developed under Indias leadership to transform the Delhi
component of the International Centre for Genetic Engineering and Biotechnology
(ICGEB) into a world-leader in life sciences and biotechnology.

Several major space missions planned for 2014-15.
Sports and Youth Affairs

` 200 crore provided for upgrading the indoor and outdoor sports stadiums in Jammu
and Kashmir Valley to international standards.

` 100 crore provided for sports university in Manipur.

India to start an annual event to promote Unique sports traditions in the Himalayan
region games.

` 100 crore provided for the training of sports women and men for forthcoming Asian
games.

A Young Leaders Programme with an initial allocation of ` 100 crore to be set up.
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North Eastern States
` 100 crore provided for development of organic farming in North Eastern States.

` 1000 crore provided for development of rail connectivity in the North Eastern Region.

To provide a strong platform to rich cultural and linguistic identity of the North-East, a
new 24x7 channel called Arun Prabha will be launched. Andhra Pradesh and
Telangana.

Government committed to addressing the issues relating to development of Andhra
Pradesh and Telangana in the AP Re-organization Act, 2014. Provision made by various
Ministries/Departments to fulfill the obligation of Union Government.
NCT of Delhi
` 200 crore for power reforms and ` 500 crore for water reforms to make Delhi a truly
World Class City.

` 50 crore provided to solve the long term water supply issues to the capital region.
Construction of long pending Renuka Dam to be taken up on priority.
Andaman and Nicobar Island and Puducherry
` 150 crore provided to tide over communication related problems of the Island.

` 188 crore to Puducherry for meeting commitments for Disaster preparedness.
Displaced Kashmiri Migrants
` 500 crore provided to support displaced Kashmiri migrants for rebuilding their lives.
Himalayan Studies

` 100 crore provided to set up a National Centre for Himalayan Studies in Uttarakhand.



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BUDGET ESTIMATES
Mandate to be fulfilled without compromising fiscal consolidation.

Non-plan Expenditure of ` 12,19,892 crore with additional provision for fertilizer
subsidy and Capital expenditure for Armed forces.

`.5,75,000 crore Plan expenditure increase of 26.9 per cent over actuals of 2013-14.

Plan increase targeted towards Agriculture, capacity creation in Health and Education,
Rural Roads and National Highways Infrastructure, Railways network expansion, clean
energy initiatives, development of water resources and river conservation plans.

Total expenditure of `.17,94,892 crore estimated.

Gross Tax receipts of ` 13,64,524 crore estimated.

Net to centre of ` 9,77,258 crore estimated.

Fiscal deficit of 4.1% of GDP and Revenue deficit of 2.9% estimated.

New Statement to separately show plan allocation made for North Eastern
Region.Allocation of ` 53,706 crore for North East Regions.

Allocation of ` 50,548 crore under SCSP and ` 32,387 under TSP.

Allocation for women at ` 98,030 crore and for children at ` 81,075 crore.
TAX PROPOSALS
Ambitious Revenue Collection Targets in Interim Budget. Proposed tax changes
factored in the Budget Estimates 2014-15

Measures to revive the economy, promote investment in manufacturing, rationalize tax
provisions to reduce litigation, address the problem of inverted duty structure in certain
areas. Tax reliefs to individual tax payers.


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DIRECT TAXES PROPOSALS
Personal Income-tax exemption limit raised by ` 50,000/- that is, from ` 2 lakh to ` 2.5
lakh in the case of individual taxpayers, below the age of 60 years. Exemption limit
raised from ` 2.5 lakh to ` 3 lakh in the case of senior citizens.

No change in the rate of surcharge either for the corporates or the individuals, HUFs,
firms etc.

The education cess to continue at 3 percent.

Investment limit under section 80C of the Income-tax Act raised from ` 1 lakh to ` 1.5
lakh.



Deduction limit on account of interest on loan in respect of self occupied house
property raised from `1.5 lakh to `2 lakh.

Conducive tax regime to Infrastructure Investment Trusts and Real Estate Investment
Trusts to be set up in accordance with regulations of the Securities and Exchange Board
of India.

Investment allowance at the rate of 15 percent to a manufacturing company that
invests more than ` 25 crore in any year in new plant and machinery. The benefit to be
available for three years i.e. for investments upto 31.03.2017.
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Investment linked deduction extended to two new sectors, namely, slurry pipelines for
the transportation of iron ore, and semi-conductor wafer fabrication manufacturing
units.

10 year tax holiday extended to the undertakings which begin generation, distribution
and transmission of power by 31.03.2017.

Income arising to foreign portfolio investors from transaction in securities to be treated
as capital gains.

Concessional rate of 15 percent on foreign dividends without any sunset date to be
continued.

The eligible date of borrowing in foreign currency extended from 30.06.2015 to
30.06.2017 for a concessional tax rate of 5 percent on interest payments. Tax incentive
extended to all types of bonds instead of only infrastructure bonds.

Introduction of a Roll Back provision in the Advanced Pricing Agreement (APA)
scheme so that an APA entered into for future transactions is also applicable to
international transactions undertaken in previous four years in specified circumstances.

Introduction of range concept for determination of arms length price in transfer pricing
regulations.

To allow use of multiple year data for comparability analysis under transfer pricing
regulations.

To remove tax arbitrage, rate of tax on long term capital gains increased from 10
percent to 20 percent on transfer of units of Mutual Funds, other than equity oriented
funds.

Income and dividend distribution tax to be levied on gross amount instead of amount
paid net of taxes.

In case of non deduction of tax on payments, 30% of such payments will be disallowed
instead of 100 percent.

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Government to review the DTC in its present shape and take a view in the whole
matter.

60 more Ayakar Seva Kendras to be opened during the current financial year to
promote excellence in service delivery.

Net Effect of the direct tax proposals to result in revenue loss of `.22,200 crore.
INDIRECT TAXES PROPOSALS
To boost domestic manufacture and to address the issue of inverted duties, basic
customs duty (BCD) reduced on certain items.

To encourage new investment and capacity addition in the chemicals and
petrochemicals sector, basic customs duty reduced on certain items.

Steps taken to boost domestic production of electronic items and reduce our
dependence on imports. These include imposition of basic customs duty on certain
items falling outside the purview of IT Agreement, exemption from SAD on inputs/
components for PC manufacturing, imposition of education cess on imported electronic
products for parity etc.

Colour picture tubes exempted from basic customs duty to make cathode ray TVs
cheaper and more affordable to weaker sections.



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To encourage production of LCD and LED TVs below 19 inches in India, basic customs
duty on LCD and LED TV panels of below 19 inches reduced from 10 percent to Nil.

To give an impetus to the stainless steel industry, increase in basic customs duty on
imported flat-rolled products of stainless steel from 5 percent to 7.5 percent.

Concessional basic customs duty of 5 percent extended to machinery and equipment
required for setting up of a project for solar energy production.

Specified inputs for use in the manufacture of EVA sheets and back sheets and flat
copper wire for the manufacture of PV ribbons exempted from basic customs duty.

Reduction in basic customs duty from 10 percent to 5 percent on forged steel rings used
in the manufacture of bearings of wind operated electricity generators. Exemption from
SAD of 4 percent on parts and raw materials required for the manufacture of wind
operated generators.

Concessional basic customs duty of 5 percent on machinery and equipment required for
setting up of compressed biogas plants (Bio-CNG).

Anthracite coal, bituminous coal, coking coal, steam coal and other coal to attract 2.5
per cent basic customs duty and 2 per cent CVD to eliminate all assessment disputes and
transaction costs associated with testing of various parameters of coal.

Basic customs duty on metallurgical coke increased from Nil to 2.5 percent in line with
the duty on coking coal.

Duty on ship breaking scrap and melting scrap of iron or steel rationalized by reducing
the basic customs duty on ships imported for breaking up from 5 percent to 2.5 percent.

To prevent mis-use and avoid assessment disputes, basic customs duty on
semiprocessed, half cut or broken diamonds, cut and polished diamonds and coloured
gemstones rationalized at 2.5 percent.

To encourage exports, pre-forms of precious and semi-precious stones exempted from
basic customs duty.

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Duty free entitlement for import of trimmings, embellishments and other specified
items increased from 3 percent to 5 percent of the value of their export, for readymade
garments.

Export duty on bauxite increased from 10 percent to 20 percent.

For passenger facilitation, free baggage allowance increased from `.35,000 to `.45,000.

To incentivize expansion of processing capacity, reduction in excise duty on specified
food processing and packaging machinery from 10 percent to 6 percent.

Reduction in the excise duty from 12 percent to 6 percent on footwear of retail price
exceeding ` 500 per pair but not exceeding ` 1,000 per pair.

Withdraw concessional excise duty (2 percent without Cenvat benefit and 6 percent
with Cenvat benefit) on smart cards and a uniform excise duty at 12 percent.

To develop renewable energy, various items exempted from excise duty.

Exemption to PSF and PFY manufactured from plastic waste and scrap including PET
bottles from excise duty with effect from 29th June, 2010 to 7th May, 2012.

Prospective levy of a nominal duty of 2 percent without Cenvat benefit and 6 percent
with Cenvat benefit on such PSF and PFY.

Concessional excise duty of 2 percent without Cenvat benefit and 6 percent with Cenvat
benefit on sports gloves.

Specific rates of excise duty increased on cigrettes in the range of 11 per cent to 72 per
cent.

Excise duty increased from 12 percent to 16 percent on pan masala, from 50 percent to
55 percent on unmanufactured tobacco and from 60 percent to 70 percent on gutkha
and chewing tobacco.

Levy of an additional duty of excise at 5 percent on aerated waters containing added
sugar.

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To finance Clean Environment initiatives, Clean Energy Cess increased from `.50 per
tonne to `.100 per tonne. Service tax.

To broaden the tax base in Service Tax, sale of space or time for advertisements in
broadcast media, extended to cover such sales on other segments like online and
mobile advertising. Sale of space for advertisements in print media however would
remain excluded from service tax. Service provided by radio-taxis brought under service
tax.

Services by air-conditioned contract carriages and technical testing of newly developed
drugs on human participants brought under service tax.

Provision of services rules to be amended and tax incidence to be reduced on transport
of goods through coastal vessels to promote Indian Shipping industry.

Services provided by Indian tour operators to foreign tourists in relation to a tour wholly
conducted outside India to be taken out of the tax net and Cenvat credit for services of
rent-a-cab and tour operators to be allowed to promote tourism.

Service tax exempted on loading, unloading, storage, warehousing and transportation
of cotton, whether ginned or baled.

Services provided by the Employees State Insurance Corporation for the period prior to
1st July 2012 exempted, from service tax.

Exemption available for specified micro insurance schemes expanded to cover all life
micro-insurance schemes where the sum assured does not exceed `.50, 000 per life
insured.

For safe disposal of medical and clinical wastes, services provided by common
biomedical waste treatment facilities exempted.

Tax proposals on the indirect taxes side are estimated to yield `.7525 crore.

24X7 customs clearance facility extended to 13 more airports in respect of all export
goods and to 14 more sea ports in respect of specified import and export goods to
facilitate cargo clearance.

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Indian Customs Single Window Project to facilitate trade, to be implemented.

The scheme of Advance Ruling in indirect taxes to be expanded to cover resident private
limited companies. The scope of Settlement Commission to be enlarged to facilitate
quick dispute resolution.

Customs and Central Excise Acts to be amended to expedite the process of disposal of
appeals.
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CRITICAL SECTORAL IMPACT ASSESSMENT

AUTOMOTIVE

Expectation: It was expected that the budget would outline a new policy/incentive scheme
replace old vehicles (more than 15 years) and increase demand, increase depreciation
allowance (with product/ownership cycle becoming shorter) and lay a uniform excise duty
structure across passenger vehicles.
Budget Proposals: The current excise duty on automobiles will continue to be in force up to
December 2014.
Impact: Besides maintaining the excise duty, the union budget did not announce any measure
that would directly impact the automotive sector. However, more savings in the hands of
customers, steps to develop infrastructure and allocation for rural credit refinance fund are
likely to positively impact demand.
AVIATION

Expectation: The budget was expected to focus on taxes on fuels and custom duty on engines,
besides targeting new airport development, in order to boost growth in non-metro air traffic
infrastructure amid rising maintenance costs.
Budget Proposals: Allocation for the civil aviation sector has been increased by 11.4%, as the
government looks to improve connectivity by building airports in Tier II and III cities. These will
be built under the public private partnership (PPP) mode by the Airport Authority of India (AAI),
which has been given a grant of INR2,134 crore (USD350 mn). The budget also proposes that e-
visas be granted at nine ports in the country; this is likely to boost tourism and civil aviation.
Impact: Construction of airports in smaller cities would open up new routes and increase
passenger traffic. However, the industry is likely to continue facing challenges such as high fuel
costs, with the commodity being taxed as a finished product rather than raw material. Overall,
the budget carries mixed news for the aviation sector.



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BANKING

Expectations:The budget was expected to increase capital infusion to INR40,00050,000 crore
(USD6.7-8.3 bn) in PSU banks by FY15. Notably, INR11,200 crore (USD1.9 bn) has already been
disbursed to PSU banks in the FY15 interim budget. Also, it was expected to introduce a
prudent mechanism to reduce vulnerable advances of PS Bs (gross NPAs plus standard
restructured advances), which were relatively high at 10.6% as on March 31, 2014. State-run
banks were looking forward to a roadmap for the creation of a holding company. It was
expected to increase the housing loan interest limit beyond INR 150,000 for tax exemption and
promote affordable housing to fuel housing loan growth.
Budget Proposals: PSU banks would need INR2.4 lakh crore (USD40 bn) capital infusion by
2018; hence, the government proposed to sell banks shares to retail investors. Banks would be
allowed to raise long-term funds with minimum regulations. For the faster recovery of bad
loans, the government plans to set up 6 debt recovery tribunals. The government would
examine the proposal to give additional autonomy to banks. RBI would create a framework for
the licensing of differentiated banks. The government proposed additional 3% interest subsidy
on farm loans. Furthermore, it proposed to continue interest subvention for farmers. Banks
would be encouraged to give long-term loans for infrastructure developement Banks would be
given SOPs against long-term infrastructure loans. The government proposed INR4,000 crore
(USD670 mn) for affordable housing via NHB; also, it would allocate INR12,000 crore (USD2 bn)
to NHB.Tax exemption for self-occupied homes has been raised to INR200,000; also, the 80C
limit for individuals has been increased to INR150,000.
Impact: Capital infusion, giving further autonomy and faster recovery of bad debt would act
positively for the banking sector. Promoting affordable housing and increasing exemption limit
on home loans (both principal and interest via 80C) would promote home loan growth.
Promoting banks for infrastructure lending would boost banks loan growth. Increasing interest
subsidy on farm loans and interest subvention for farmers would act negatively for PSU banks
as it would hit their top and bottom lines.
HEALTHCARE

Expectation: The budget was expected to offer tax sops to boost investments and improve
infrastructure, in line with the long-term aim to double healthcare spending to 8% in next 5
years, as per a survey by Reuters.
Budget Proposals: The budget proposes to increase the composite cap on foreign direct
investment (FDI) to 49% in insurance sector from 26% currently. It also proposes to build 15
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model rural health research centres across the country to focus on rural healthcare, besides
setting up new drug testing laboratories and expanding the existing 31 state laboratories. The
government has allocated INR500 crore (USD83 mn) to add four new AIIMs like institutions, one
each in Andhra Pradesh, West Bengal, Maharashtra and Uttar Pradesh. Moreover, 58
government medical colleges have been approved, with a proposal for an additional 12.
Initiatives such as Free Drug Service and Free Diagnosis Service have been prioritized. Certain
exemptions for technical testing on humans related to newly developed drugs have been
withdrawn.
Impact: The budget proposes measures to boost healthcare in India, focusing on the rural
population. It also seeks to encourage public sector participation, which would increase
competition for private healthcare firms.
INSURANCE

Expectation: The budget was expected to attract higher investments from foreign investors and
offer tax sops to fuel long-term growth and expansion of the insurance sector.
Budget Proposals: The budget proposed to increase the composite cap on foreign direct
investment (FDI) to 49% from 26% currently. The government will take up the pending Laws
(Amendment) Bill in the Parliament soon. The budget also raised the investment limit under
Section 80(C) to INR150,000 from INR100,000.
Impact: The budget has met expectations and reforms are set to boost the sectors growth
prospects through capital infusion and higher demand.
METALS & MINING

Expectation: The sector expected measures to resolve issues pertaining to mining regulations
and adoption of reforms for raw material security. It was also looking forward to reforms to
reduce logistical bottlenecks in the transportation of raw materials to and from mines, and
finished products. In addition, metal producers and miners expected tax benefits on capital
expenditure would continue.
Budget Proposals: The budget proposes to double the export duty on bauxite to 20% and raise
the import duty on flat-rolled stainless steel to 7.5% from 5%. Furthermore, the basic customs
duty on metallurgical coke has been increased from zero to 2.5%, in line with the duty on
coking coal.

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Impact: The focus on infrastructure development is likely to revive demand in the sector. For
aluminium manufacturers, hiking the export duty on bauxite would constrain exports,
increasing the availability of the raw material. Similarly, raising the import duty on stainless
steel is expected to benefit stainless steel manufacturers that are currently facing intense
competition from their Chinese, Japanese and Korean counterparts. However, hiking the
customs duty on metallurgical coke is a negative for metal manufacturers as this would increase
manufacturing costs, denting profits.
POWER SECTOR

Expectation: The power sector is one of the most critical yet the most deprived sector inthe
country. The expectation was on kick-starting investment across the power value chain,from
generation to transmission and distribution, along with reforms for state electricity boards.
Announcement on boosting renewable power generation were also expected.
Budget Proposals: The budget was overall positive with multiple measures aimed at boosting
power generation and strengthening transmission & distribution. It allocates INR500 crore
(USD83 m) to boost rural infrastructure and proposes that adequate quantity of coal be
provided to power plants commissioned before March 2015; ultra-modern solar power projects
be taken up in Rajasthan, Tamil Nadu and Ladakh with INR500 crore (USD 83 m); allocates
INR200 crore (USD33 m) for power reforms in Delhi; extends the 10-year tax holiday on projects
(generation, T&D) that start operations by 2017; and earmarks INR100 crore (USD17 mn) for
preparatory work of clean thermal energy scheme.
Impact: Power projects across the country have suffered due to non-linkage with coal supplies
because of regulatory bottlenecks. Hence, end of the impasse on coal linkage is a much needed
relief. The 10 year tax holiday will primarily benefit independent power producers plagued with
issues such as fuel supply shortages. The higher allocation to renewable power projects is the
need of the hour.
REAL ESTATE

Expectation: The sector was looking to obtain infrastructure status to address poor liquidity,
implement pending legislations for policy improvements, establish a regulatory authority,
introduce a single window system for all clearances to fast-track the execution process and
streamline tax laws for the establishment of real estate investment trusts (REITs). The
affordable housing sector expected a reduction in home loan rates and tax benefits to improve
buyer sentiment.
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Budget Proposals: The budget proposes incentives for the establishment of REITs that will be
granted a tax-pass through status to avoid double taxation. It has also allocated INR40 bn for
affordable housing through National Housing Bank and increased the housing interest tax
deduction limit to INR200,000. Slum development has been made a part of CSR activities
INR70.6 bn has been earmarked to create 100 smart cities. In addition, the budget proposes a
reduction in the size of projects eligible for FDI in real estate under the automatic route (from
50,000 to 20,000 sq m) and minimum investment limit (from USD10mn to USD5mn).
Impact: Incentivizing REITs and granting pass-through status is expected to facilitate the
development of of REITs in India, which in turn will support the liquidity requirements of the
realty sector. The proposed spending on affordable housing, opening up of FDI for smaller
projects, and tax benefits are expected to boost the affordable urban housing market.
Budgetary allocation for smart cities and other urban infrastructure projects is expected to spur
commercial and housing demand. However, the lack of necessary initiatives on the policy front
will continue to be a bottleneck for the industry.
SUGAR

Expectation: There were no significant expectations from the budget as the government had
introduced various policy changes a few days before the budget that benefit both sugarcane
producers and mill owners. These included increase in import duty on sugar to 40% from 15%;
rise in ethanol blending with petrol to 10% from 5%; continuation of sugar export subsidy
(INR3,300 per tonne) until September 2014; and additional interest-free loans of up to INR44
billion for sugar mills over and above the INR66 billion interest free loans announced in
December 2013 to pay off mounting cane arrears.
A change in the cane pricing method with linkage of cane prices to sugar prices can be a
significant sweetener. However, with elections in Maharashtra in the near term, the probability
of pricing change is negligible.
Budget Proposals: In line with expectations, no proposals were made for the sugar sector in the
Union budget 2014-15.
Impact: While the sector remains buoyant on the pre-budget policy changes, their enforcement
would bring about the anticipated turnaround.



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TEXTILES

Expectation: The budget was expected to reduce the basic custom duty on PTA, MEG, PSF, POY
and textile machinery. Allocation to Technology Up-gradation Fund Scheme (TUFS) was
expected to increase. The Scheme for Integrated Textile Parks (SITP) was expected to continue.
The excise duty on man-made-fibre (MMF) was expected to be reduced to 8% from 12%.
kBudget Proposals: Basic customs duties on specified inputs for manufacture of spandex yarn
were reduced from 5% to zero. Basic customs duty on few petrochemicals is proposed to be
reduced from 5%/10% to 2.5%/5%. The budget has allocated INR200 crore (USD34 mn) to set
up six more textile mega-clusters at Bareily, Lucknow, Surat, Kuttch, Bhagalpur and Mysore and
a seventh in Tamil Nadu. An export promotion commission is to be set up. The Indian Custom
Single Window Project is to be taken up for facilitating trade and online approval systems for
importers and exporters would be set up.
Impact: The reduction in custom duty for some inputs will help lower RM costs to some extent.
Setting up of 6 more textile clusters is a positive in terms of creating additional quality
manufacturing capacity. The single window project and online approval system would facilitate
textile export trade.
TOBACCO

Expectation: The market was expecting a hike in excise duty given that the health minister had
proposed a 100% hike on excise duty on cigarette.
Budget Proposal: In line with the expectation, Finance Minister Mr. Arun Jaitley hiked the
excise duty on cigarettes between 11% and 72%.
Impact: The hike will put additional volume and margin pressure on cigarette manufacturers.
The cigarette industry has already experienced two consecutive years of 20% + hike on excise
duty and an additional price hike would impact volumes negatively. Yet, it is believed that
players such as ITC (that holds 50% market share in India) would be able to pass on price
increases to consumers due to their brand power. Overall, the higher excise duty on cigarettes
would result in higher prices of cigarettes, relatively lower demand (compared to earlier years)
and higher revenues for the government.
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Expert Opinions

Budget strikes the right chord on reviving investment-
By Mukesh Agarwal JULY 15, 2014
Source-http://blogs.reuters.com/india-expertzone/2014/07/15/budget-strikes-the-right-chord-on-
reviving-investment/
Patient, consistent baseline play rather than aggressive serve and volley that about sums up
the Narendra Modi-led governments maiden budget.
Those expecting big bang announcements were left disappointed as Finance Minister Arun
Jaitley rattled off a long list of small steps on Thursday. But the government is on the right track
as it sets about the task of boosting investment and sentiment.
Certainly, India has pulled itself out of the tight corner it was in a year ago and started to regain
the trust of global investors. The proof at 23 percent, the CNX Niftys returns in the six
months to the Union Budget are the best among major global equity indices.
More importantly, the surge has been driven mainly by foreign institutional investors (FIIs), who
pumped in $6.3 billion in the quarter ended June and continue to hold a substantial portion of
the market. FIIs now own 22.6 percent of the CNX Nifty and 14.8 percent of the remaining
stocks in the CNX 500 pack.
In for the long haul, one could say.
Budget 2014/15 sets the stage for a re-rating in earnings over the next two to three years with
its focus on core sectors such as infrastructure, power and mining of coal and iron ore.
Measures such as correction of the inverted duty structure for industrial raw materials and
extension of deduction on investments in plant and machinery should help in resolving a few
immediate bottlenecks.
Steps towards job creation and the personal income tax sops given out should put more money
in the consumers wallet and help revive domestic demand.
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Increasing the foreign direct investment (FDI) limits in insurance and defence and allowing FDI
participation in smaller real estate projects are initiatives in the right direction, while the
assurance that the taxation regime will be stable and predictive will help soothe frayed nerves.
As an open invitation to FIIs for setting up base in India, the finance minister cleared the air on a
long-standing concern regarding the taxation of their holdings. Many FIIs operate from outside
India fearing that their holdings might be classified as business income and thereby attract
much higher tax than capital assets. The budget clarified that such holdings would be classified
as capital assets and will get the corresponding tax treatment.
But are these measures good enough to enthuse the investor community?
Rebooting India is an ongoing task and the budget is yet another step in this direction. The
world is awash with liquidity and any performing economy should be able to attract
investment. If anything, the measures outlined in the budget only increase Indias
attractiveness for emerging market investors.
At the one-year forward price to earnings (P/E) ratio of 15+, the Indian markets valuations are
definitely more expensive than those of other BRIC nations, but the relative attractiveness of
Indian markets justifies the premium.
Also, knowledge intensive sectors such as IT and pharmaceuticals comprise 23-24 percent of
the Indian blue-chip indices, whereas the contribution to these sectors is not more than 6-7
percent for other emerging economies.
As I mentioned in my earlier columns, we continue to expect IT, pharmaceuticals and financials
to drive the earnings momentum within the Nifty pack. Core, cyclical sectors will participate in
earnings only in two-three years. Until then, the risk-reward ratio remains tilted towards the
former ones.
We cant rule out any correction due to possible deficient monsoon rains or external risks such
as high oil prices. Such a correction should provide a good opportunity for investment in
fundamentally strong companies. While riding the India growth story, long-term investors cant
go very wrong by sticking to fundamentals.
Theres much left in this match. For now, its Advantage India.



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Budget 2014: Finance Minister Arun Jaitley has pulled off a
balancing act, says Sunil Bharti Mittal
Source-http://economictimes.indiatimes.com/opinion/comments-analysis/budget-2014-
finance-minister-arun-jaitley-has-pulled-off-a-balancing-act-says-sunil-bharti-
mittal/articleshow/38160795.cms?adcode=206
The first budget of a new government is invariably judged more on the direction it seeks to give
the economy than the specific numbers therein. Arun Jaitley's budget for 2014-15 clearly spells
out a vision that the new government will be committed to push the growth pedal by
encouraging investment in the economy in the coming years.

A clear commitment to rein in the fiscal deficit in line with the FRBM Act in a calibrated fashion,
implementing the long pending GST framework within FY14-15 and liberalizing FDI restrictions
in key sectors happened to be the most distinguishing elements of this year's budget at a macro
level.

The government's aim to keep the deficit at 4.1% of GDP in the current year appears eminently
achievable given the expected buoyancy in tax revenue as the economy recovers. Increasing FDI
limits to 49% in defence and insurance will bring in much-needed capital and technology to
these sectors, while giving a boost to manufacturing.

On the taxation front, there is a clear intent to ensure a stable and predictable taxation regime.
Though the finance minister has not abolished the retrospective taxation measure, he has
soothed the nerves of foreign investors to some extent by providing for reviews of such cases
by a high-level committee constituted by the Central Board of Direct Taxes.

The unambiguous push to strengthen investment in the infrastructure sector - road
development, power production and distribution - is a positive move given the importance of
these sectors in reviving the economy.

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Social inclusion remains a key underlying theme of the budget. The finance minister has not
only strengthened investment in healthcare, education and rural entrepreneurship
development but has also spelt out the launch of a Financial Inclusion Mission during the year.

The middle class clearly has something to cheer about. Though income tax rates remain
unchanged, by increasing the exemption limit on taxable income and the deduction on housing
loans, the finance minister seeks to put more money in the pocket of the average tax payer. He
has also smartly tweaked excise rates in some consumer items to give the sluggish
manufacturing sector a much-needed boost.

Given the severe constraints, the finance minister obviously had to perform a tightrope walk,
and I believe he has done a commendable job.















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ACKNOWLEDGEMNT

Efforts taken by us in this project would not have been possible without the kind support and
help of many individuals and organizations. I would like to extend my sincere thanks to all of
them. I am highly indebted to Mr. Jeevan Nagarkar (HOD,Finance Deptt.) for their guidance and
constant supervision as well as for providing necessary information regarding the project and
also for their support in completing the project. I would like to express my gratitude towards
my parents, friends and other members of Symbiosis Institute of International Business for their
kind co-operation and encouragement which helped me in completion of this project.

I would like to express my special gratitude and thanks to teachers for giving us such attention
and time. Our thanks and appreciations also go to our colleagues in developing the project and
people who have willingly helped me out with their abilities. Again big thanks to all above from
bottom layer of my heart.