Budget Proposals: Deutche Bank suggests 5 strategies to usher in Budget 13

A Deutsche Bank report suggests the finance minister five strategic threads around which FY13 Budget can be woven:

1. Fiscal consolidation through subsidy rationalization: The report says the UPA government can take a bold step by raising diesel, kerosene and LPG prices as well as go for partial decontrol of urea prices. "Food subsidy however may be raised as government introduces food security bill" the report says.
2. Withdrawal of fiscal stimulus: This can be done by raising rates of excise and service tax by 200 bps across board. It goes on to say the government can widen the service tax net to include more.
3. Budget can offer ways to stimulating investment environment.
4. The report proposes lowering of short term capital gains tax on equities that will help accelerating retail investment in equity markets. It also suggests an increase in tax allowances for retail investment in equity mutual funds, which will channelize personal savings from real assets to equities.
5. Raising maximum income tax exemption limit and reintroduce personal tax surcharge on high tax bracket assesses, the report says. "This may probably be the last opportunity for Finance Minister to present an economic Budget in the current term of UPA, as FY14 Union Budget (being last full-fledged Budget before General Elections in 2014) will likely be guided by the imperatives of a popular democracy," reads the report.