Union Budget Summary 2013
The Union Budget for 2013-14 aims at ‘higher growth leading to
inclusive and sustainable development.’ With this as mool mantra, the
Finance Minister Shri P Chidambaram has sought to increase allocation to
key areas and provide incentives for investments and savings while
containing the fiscal deficit to 4.8% of GDP.
Presenting the
Union Budget in Parliament today, the Finance Minister expressed the
hope that the India would achieve high economic growth despite slowdown
in the global economic growth.
The Minister said that his
government has been able to contain the fiscal deficit at 5.2% in
2012-13 by following the path of fiscal consolidation. But the current
account deficit (CAD) is a greater worry, the Minister added. He,
therefore, proposes to encourage foreign investment that is consistent
with India’s economic objectives.
The Finance Minister said
that the other areas of concern addressed by his Government are
inflation and government expenditure. “Our efforts in the past few
months have brought down headline WPI inflation to about 7.0 percent and
core inflation to about 4.2 percent. It is food inflation that is
worrying, and we shall take all possible steps to augment the supply
side to meet the growing demand for food items,” he said. The Minister
further said that he had no choice but to rationalize government
expenditure in view of huge fiscal deficit in 2012-13. “We also took
some policy decisions that had been deferred for too long, corrected
some prices, and undertook a review of certain tax policies.”
THREE PROMISES: TO WOMEN, YOUTH AND THE POORShri
Chidambaram made promises to the women, the youth and the poor - the
three faces that represent the majority of the people of India. Stating
that the government pledges to do everything possible to empower the
women and to keep them safe and secure, he said that a number of
initiatives were underway and many more would be taken by the Government
as well as non-government organizations. He announced the setting up of
a fund - Nirbhaya Fund - with the Government contributing Rs. 1000
crore.
The Minister also announced a Rs. 1,000
crore scheme for training youth to boost their employability and
productivity. The National Skill Development Corporation will be asked
to set the curriculum and standards for training different skills.
Trained youth who pass a test at the end of training will get a monetary
reward of Rs.10000 on an average. This initiative is likely to motivate
10 lakh youth.
For the benefit of the poor, the
Minister assured that Direct Benefit Transfer (DBT) schemes will be
rolled out throughout the country during the term of the UPA Government.
“We are redoubling out efforts to ensure that the digitized beneficiary
lists are available; that a bank account is opened for each
beneficiary; and that the bank account is seeded with Aadhaar in due
course,” he said.
RURAL DEVELOPMENT, AGRICULTURE AND FOOD SECURITYThe allocation for Rural Development Ministry has been raised by 46 percent to Rs 80,194 crore in 2013-14.
Pradham
Mantri Gram Sadak Yojana (PMGSY)-II has been carved out to benefit
States that have substantially fulfilled the objectives of PMGSY. This
will benefit states such as Andhra Pradesh, Haryana, Karnataka,
Maharashtra, Punjab and Rajasthan.
Ministry of Agriculture
gets a rise of 22 per cent over the revised estimates (RE) for 2012-13,
at Rs 27,049 crore. Rs 500 crore is being allocated to start a programme
on crop diversification. It will encourage farmers in the original
green revolution states to choose alternative crops. A pilot programme
on Nutri-Farms will be started for introducing new crop varieties that
are rich in micro nutrients, such as iron-rich bajra. A sum of up to Rs
200 crore is to be provided to start the pilots.
The Budget
seeks to support Farmer Producer Organizations (FPO), including Farmer
Producer Companies (FPC) which have emerged as aggregators of farm
produce and link farmers directly to markets.
The target of
agricultural credit for 2012-13 (Rs. 5,75,000 crore) is likely to be
exceeded, and a target of Rs 7,00,000 crore farm credit has been fixed
for the next year.
The interest subvention scheme for
short-term crop loans is proposed to be continued for loans by public
sector banks, RRBs and Cooperative banks, and expanded to private
scheduled commercial banks. Under the scheme, a farmer who repays the
loan on time is able to get credit at 4 cent per year.
Rs.307
crore have been provided for setting up of the National Livestock
Mission. This will attract investment and enhance livestock
productivity. A sub-mission of this Mission seeks to increase the
availability of feed and fodder.
Expressing the hope that
the National Food Security Bill will be passed by Parliament as early as
possible, the Finance Minister has set apart Rs. 10,000 crore towards
the incremental cost that is likely under the Act.
OTHER MAJOR ALLOCATIONSEducation has been allocated Rs. 65,867 crore, an increase of 17 per cent over the RE for 2012-13.ICDS
gets Rs. 17,700 crore representing an increase of 11.7 per cent. A
multi-sectoral programme to tackle maternal and child malnutrition that
was announced last year will be implemented in 100 districts during
2013-14. It will be further scaled up to cover 200 districts the year
after.
Ministry of Health and Family Welfare has been
allocated Rs. 37,330 crore. Of this, the new National Health Mission
that combines the rural mission and the proposed urban mission will get
Rs. 21,239 crore - an increase of 24.3 percent over the RE.
The
Backward Regions Grant Fund (BRGF) has been allocated Rs. 11,500 crore
and will include a State component for Bihar, the Bundelkhand region,
West Bengal, the KBK districts of Odisha and the 82 districts under the
Integrated Action Plan.
Science and Technology related Departments have been allocated funds with substantial enhancements.
A
National Institute of Sports Coaching is proposed to be set up at
Patiala at a cost of Rs. 250 crore over a period of three years.
Drinking
water and sanitation will receive Rs. 15,260 crore. Rs. 1,400 crore is
being provided for setting up water purification plants to cover arsenic
and fluoride effected rural habitations.
The Jawaharlal
Nehru National Urban Renewal Mission (JNNURM) will receive Rs. 14,873
crore as against RE of Rs. 7,383 crore in the current year. Out of this,
a significant portion will be used to support the purchase of upto
10,000 buses, especially by hill States.
Defence gets an
allocation of Rs. 2,03,672 crore and the assurance that constraints will
not come in the way of providing any additional requirement for the
security of the nation.
Stating that adequate funds must be
provided for programmes that benefit women, children and minorities, as
also the scheduled castes and scheduled tribes, the Finance Minister
proposed to allocate Rs 41,561 crore to the scheduled caste sub-plan and
Rs 24,598 crore to the tribal sub-plan. The programmes relating to
women get Rs. 97,134 crore and child budget, Rs. 77,236 crore. The
Ministry of Women and Child and Development has been asked to design a
scheme that will address women’s concerns, and an additional sum of Rs.
2,000 crore has been provided to the Ministry to began work in this
regard. Ministry of Minority affairs has been allocated Rs. 3,511 crore
and the Department of Disability Affairs, Rs. 110 crore.
INVESTMENT AND INFRASTRUCTUREThe
Finance Minister stated that the key to restart the growth engine was
to attract more investment, and that the government will improve
communication of its policies to remove any apprehension or distrust in
the minds of investors.
A number of steps to mobilize
investment have been announced in the Budget keeping in view that as per
12th Plan the private sector will share 47 percent of Rs 55,00,000
crore investment in infrastructure. Infrastructure Debt Funds (IDF) will
be encouraged. India Infrastructure Finance Corporation (IIFCL) will
offer credit enhancement to infrastructure companies that wish to access
the bond market to tap long term funds. Some institutions will be
allowed to issue tax - free bonds up a total sum of Rs 50,000 crore (as
against Rs 25,000 crore in 2012-13). Assistance of the World Bank and
Asian Development Bank will be sought to build roads in the North
Eastern States and connect them to Myanmar. The corpus of Rural
Infrastructure Development Funds (RIDF) is proposed to be raised to Rs.
20,000 crore. A sum of Rs 5,000 crore will be made available to NABARD
to finance construction of warehouses, godowns, silos and cold storage
units designed to store agricultural produce.
Shri
Chidambaram informed that the newly set-up Cabinet Committee on
Investment has held two meetings and taken decisions in respect of a
number of oil and gas, power and coal projects. CCI will take up some
more projects shortly, he said. The Minister also informed that a
regulatory authority is being constituted for the road sector.
Bottlenecks stalling road projects have been addressed and 3,000 km of
road projects in Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and
Uttar Pradesh will be awarded in the first six months of 2013-14.
The
Budget introduces an investment allowance for new high value
investment. A company investing Rs. 100 crore or more in plant and
machinery during the period 1.4.2013 to 31.3.2015 will be entitled to
deduct an investment allowance of 15 percent of the investment (in
addition to depreciation).
INDUSTRIAL SECTORPlans
for seven new cities have been finalized for industrial corridors and
work on two new smart industrial cities at Dholera (Gujarat) and Shendra
Bidkin (Maharashtra) will start during 2013-14. A comprehensive plan is
being prepared for the Chennai Bengaluru industrial corridor.
Preparatory work has started for the next corridor - Bengaluru Mumbai
industrial corridor.
Two new ports will be established in
Sagar (West Bengal) and in Andhra Pradesh. In addition, a new outer
harbour will be developed in the VOC port at Thoothukkudi (Tamil Nadu)
through PPP at an estimated cost of Rs 7,500 crore.
A power transmission system will be constructed from Srinagar to Leh and for this Rs. 226 crore have been provided in 2013-14.
The
oil and gas exploration policy will be reviewed to move from profit
sharing to revenue sharing contracts. A policy to encourage exploration
and production of shale gas will be announced. The natural gas pricing
policy will be reviewed and uncertainties regarding pricing will be
removed.
To provide greater support to Micro, Small and
Medium Enterprises (MSMEs), the refinancing capability of SIDBI is
proposed to be enhanced from Rs. 5,000 crore to Rs. 10,000 crore per
year. SIDBI will also be provided a corpus of Rs 500 crore to set up a
Credit Guarantee Fund for factoring.
Apparel Parks are
proposed to be set up within the Integrated Textile Parks, to house
apparel manufacturing units. A new scheme, Integrated Processing
Developing Scheme, is being started to address to environmental concerns
of the textile industry. Working capital and term loans to the handloom
sector will be available at a concessional interest of 6 per cent. This
will benefit 1.5 lakh weavers and 1,800 primary co-operative societies.
SAVINGSThe
Budget proposes three measures to promote household savings. One, the
income limit for Rajiv Gandhi Equity Saving Scheme for first time
investors is being raised from Rs. 10 lakh to Rs. 12 lakh. Two, persons
taking loan for first home up to Rs 25 lakh will be entitled to an
additional deduction of interest of up to Rs 1 lakh. Three, instruments
such as Inflation Indexed Bonds will be introduced to protect savings
from inflation.
FINANCIAL SECTORShri
Chidambaram proposed to constitute a Standing Council of Experts in the
Ministry of Finance to analyse the international competitiveness of the
Indian financial sector.
The Finance Minister announced
that Rs. 14,000 crore worth of capital infusion will be made into public
sector banks. It will be ensured that these banks meet the Basel III
regulations.
India’s first women’s bank is proposed to be set up with Rs. 1,000 crore as initial capital.
The
government has finalized a number of proposals relating to the
insurance sector in consultation with IRDA. These include empowering
insurance companies to open branches in Tier II cities and below without
prior approval of IRDA, having an office of LIC and a public
general-insurance company in all towns with the population of 10,000,
and permitting banks to act as insurance broker.
The
Rashtriya Swasthiya Bima Yojana, which cover 34 million families below
the poverty line, will now be extended to other categories such as
rickshaw, auto-rickshaw and taxi-drivers, sanitation workers, rag
pickers and mine workers.
The Finance Minister proposes to
evolve a comprehensive social security package by converging various
schemes for life-cum-disability cover, health cover, maternity
assistance and pension benefits.
A number of proposals
relating to capital market have been finalized in consultation with
SEBI. These include simplification of procedure and uniforms norms for
foreign portfolio investors, clarity relating to FDI investment,
allowing FIIs to participate in new areas, etc.
BUDGET ESTIMATESThe
total expenditure in the Union Budget 2013-14 is pegged at Rs.
16,65,297 crore. Out of it Rs.5,55,322 crore (33%) is Plan expenditure.
The non-Plan expenditure is estimated at Rs 11,09,975 crore.
The
Plan expenditure in 2013-14 will be 29.4 per cent more than the revised
estimates of the current year. All flagship programmes have been fully
and adequately funded.
Juxtaposing economic welfare with the
economic policy, the Minister said that the link between policy and
welfare can be expressed in a few words: opportunities, education,
skills, jobs and incomes. The Budget has before it one overarching goal -
to create opportunities for the youth to acquire education and skills
that will get them decent jobs or self-employment that will bring them
adequate incomes that will enable them to live with their families in a
safe and secure environment. The Budget sets a target of skilling 90
lakh people in 2013-14, for which funds will be released by the National
Rural Livelihood Mission and National Urban Livelihood Mission.
TAXESThe
General Budget reiterates that clarity in tax laws, a stable tax
regime, a non-adversarial tax administration, a fair mechanism for
dispute resolution and independent judiciary for greater assurance is
underlying theme of tax proposals. It is proposed to set up the Tax
Administration Reforms Commission.
As regards Direct Taxes, a
relief of Rs. 2000 for the Tax Payers in the first bracket of Rs. 2
lakhs to Rs. 5 lakhs have been proposed. A surcharge of 10 percent on
persons (other than companies) whose taxable income exceeds Rs.1 crore
have been levied. Surcharge has been increased from 5 to 10 percent on
domestic companies whose taxable income exceed Rs. 10 crore. In case of
foreign companies, surcharge will increase from 2 to 5 percent, if the
taxable income exceeds Rs. 10 crore. Additional surcharges to be in
force for only one year. Mr. Chidambaram said, education cess to
continue at 3 percent.
The Finance Minister announced the
grant of investment allowance at the rate of 15 percent to manufacturing
companies that invest more than Rs. 100 crore in plant and machinery
during the period 1.4.2013 to 31.3.2015. Concessional rate of tax of 15
per cent on dividend received by the Indian companies from its foreign
subsidiary proposed to continue for one more year. It is proposed that
TDS at the rate of one percent on the value of the transfer of immovable
property where the consideration exceeds Rs. 50 lakhs to be levied.
Agricultural land to be exempted from TDS. Modified provisions of GAAR
will come into effect from 1.4.2016. It is also proposed to increase the
rate of tax on payments by way of royalty and fees for technical
services to non-residents from 10 percent to 25 percent. The Budget also
proposes to introduce Commodities Transaction Tax (CTT) in a limited
way. However, agricultural commodities will be exempted. A number of
administrative measures such as extension of refund banker system to
refund more than Rs. 50,000, technology based processing, extension of
e-payment through more banks and expansion of in the scope of annual
information returns by Income-tax Department.
With regards
to Indirect Taxes, the Finance Minister proposed no change in the normal
rates of 12 percent for excise duty and service tax. Similarly, no
change has been made in the peak rate of custom duty of 10 percent for
non-agricultural products. Custom duty on free gold limit increased to
Rs. 50,000 in case of male passenger and Rs. 1,00,000 in case of a
female passenger subject to conditions. Duty on imported luxury goods
such as high end motor vehicles, motor cycles, yachts and similar
vessels increased. Custom duty on Set Top Boxes increased from 5 to 10
percent while on raw silk increased from 5 to 15 percent to boost
domestic production. Custom duty on specified machinery for manufacture
of leather and leather goods including footwear reduced from 7.5 to 5
percent. The Budget also proposes that period of concession available
for specified part of electric and hybrid vehicles extended upto 31
March 2015.
Excise duty on SUVs increased from 27 to 30
percent. However, this will not apply to SUVs registered as taxies.
Cigarettes will cost more as specific excise duty increased by about 18
percent. Similar increases are proposed on cigars, cheroots and
cigarillos. Duty on mobile phones priced above Rs. 2000 has been raised
to 6 percent from the current one percent.
The Budget
proposes ‘Voluntary Compliance Encouragement Scheme’ where a defaulter
may avail of the scheme on condition that he files a truthful
declaration of Service Tax dues since 1.10.2007. It is a one-time scheme
in which interest, penalty and other consequences will be waived.
The
Budget proposes to mobilize Rs. 18,000 crore in which new proposals in
indirect taxes will yield Rs. 4,700 crore and direct taxes of Rs. 13,300
crore.
In a major step to rationalize taxation on goods and
services, the Budget has earmarked Rs. 9,000 crore towards the first
installment of the balance of CST compensation. The Minister said that
overwhelming majority States have agreed that there is a need for
Constitutional amendment to pass GST law. It will be drafted by the
State Finance Ministers and the GST Council, the Minister added.
