P Chidambaram to present Union Budget 2014-15 today | Interim budget 2014-15: Excise duty cut likely, fiscal deficit eyed | Interim budget: 10 numbers that will influence stock markets | Finance Minister presents Interim budget in parliament on 17-02-2014 (Monday)
Finance Minister P Chidambaram will present an interim budget for the coming fiscal year on Monday. He will also seek Parliament's approval for expenditure through vote-on-account, which will allow the government to cover its expenditure beyond the current fiscal. By tradition, the interim budget does not contain proposals seeking to tinker with direct taxes, nor are there any policy announcements, although there may be some sops for the common man and sectors that need help.
Here are ten things to expect from the Interim Budget:
1. Mr. Chidambaram's budget speech ran into 30 pages last year, but the interim budget speech will be short, between 12 and 18 pages, on which the government would prefer a debate.
2. The government cannot propose amendments to direct taxes such as income tax, customs tax, excise act, but any proposal short of amending a law can be made.
3. Mr. Chidambaram is expected to cut excise duties on products like autos to support the manufacturing sector, extend an interest subsidy on bank loans to exporters, farmers, and offer tax concessions for poorer regions. Service tax can also be tinkered with. Excise duty and service tax currently stand at 12 per cent.
4. He may announce more funds for the healthcare and infrastructure sectors, more rural jobs as well as outline the government's stance on food subsidies.
5. Mr. Chidambaram may cut duty on gold imports, which were hiked to 10 per cent last year to rein in high current account deficit. UPA chairman Sonia Gandhi had written to the central government in January to ask for a cut in the record import duty on gold and for other restrictions to be eased.
6. He is also expected to speak about the government's achievements in the last 10 years.
7. India's deficit is the highest among the BRIC nations and a breach of the red line (4.8 per cent of GDP) may lead to a downgrade by ratings agencies, which Indian cannot afford. The finance minister is expected to report a fiscal deficit of nearly 4.8 per cent of GDP for the current fiscal year. For the next fiscal year 2014-15, the government is likely to announce a deficit target of 4.2 per cent.
8. Mr Chidambaram is likely to project near 6 per cent GDP growth for coming 2014-15 fiscal year. The economy is projected to grow by 4.9 per cent for the current fiscal year ending in March.
9. The subsidy bill - mainly for selling oil, fertiliser and food at cheaper rates - is likely to touch near Rs. 3 trillion (1 trillion=1 lakh crore) in 2013-14, against a budgeted target of Rs. 2.21 trillion. The government may defer oil, fertilizer and other subsidies worth nearly Rs. 1 lakh crore to the next fiscal year.
10. Gross borrowing, which is important from markets' point of view, is likely to be around Rs. 6 lakh crore for 2014-15 assuming 12 per cent nominal GDP growth.
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