Feb 28, 2013, 11.50 AM IST
As the Finance Minister P Chidambaram announces the Union Budget 2013, all eyes are on his focus on taxes and if he will revive growth. CNBC-TV18's Aakansha Sethi reports on what can be expected out of the Union Budget.
Catch all the Budget action here .
Economic growth and fiscal consolidations are likely to be the corner stones of this Budget. The Finance Minister has said that the 4.8 percent fiscal deficit target for next year will be met. However, this is going to be a challenge because in the expenditure side the big Budget idea for the election of 2014 is the food subsidy bill and that will cost the government close to Rs 1 lakh crore.
However, across other schemes you are likely to see expenditure cuts. For instance National Rural Employment Guarantee Act (NREGA) is likely to see an expenditure cut up to almost 30 percent on the receipt side. Sources say that as per the final figures you are likely to see a shortfall of Rs 1,50,000 on the tax front and an overshooting on the expenditure account of about Rs 50,000 crore in FY13.
So, considering that tax collections have fallen and next year too growth is not likely to surprise much there will have to be measures for additional revenue mobilisation. Sources say that the tax on the super rich has been considered but no clarity right now on whether we are actually going to see that.
Also, the commodities transaction tax has been considered, apart from this minimum alternate tax (MAT) maybe hiked to 20 percent. However, you are likely to see something for the capital markets in form a cut in the securities transaction tax (STT) or the short-term capital gains tax.
Sources in the finance ministry are suggesting that it could be in the form of the STT. Also some easing of Foreign Institutional Investor (FII) limits on G-Secs and corporate bonds is likely. Infact the economic survey today has suggested this too.
On the tax front again, you may see a hike in indirect tax rates whether it is just luxury goods or sin goods or service tax and excise to 14 percent will have to be seen tomorrow.
The economic survey today also has recommended that ratio of tax-to-gross domestic product (GDP) has to be improved inorder to stick to that fiscal consolidation roadmap.
So on the receipt side you will see measures for additional revenue mobilisation. On the expenditure food is going to be the major expenditure. Oil subsidies more realistic than last year's Rs 45,000 crore. So that could be around Rs 60,000 crore, but all in all a Budget that will meet the 4.8 percent fiscal deficit target.
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