Budget lacks grand plan to put economy back on track: HDFC

Abheek Barua
HDFC Bank

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In putting together Budget 2013-14, the finance minister seems to have gone through a laundry list of different challenges facing the economy and done a little to address each of them. This effort to fit everything somewhat scrappily into an omnibus policy document has resulted in the lack of a cohesive grand plan to put the economy and public finances back on track. Individual measures seem timid and inadequate in relation to the enormity of the problems they are designed to address. Besides, there are clear dampeners for investment sentiment such as the new surcharge on the so-called 'super-rich' and the imposition of a commodity tax. Thus for those who expected Mr.Chidambaram to produce the cliched game-changer, today's budget has  been disappointing to say the least.

Highlights:

• The government aims to reduce the fiscal deficit to 4.8% of GDP  in FY14 from 5.2% in FY13
• Plan Expenditure in FY14 to grow at 29.4% over Revised Estimates for FY13
• Overall expenditure to grow by 16.4% yoy to Rs 16,65,297 crore
  Net market borrowings estimated to be around Rs  4.84 lakh crore for FY14
• The government has sought to bring down its subsidy bill to under 2% of GDP in FY14 from the 2.6% in FY13
• Food subsidy bill budgeted at Rs  90,000 crore while fuel subsidies have been budgeted at  Rs 65,000 crore
• Government asset sales are expected to fetch around  Rs 59,000 crore in FY14
• Government aims to inject Rs  14,000 crore to capitalise public sector banks and ensure compliance with Basel III regulations.
  Target for lending to the agricultural sector raised to Rs 7 lakh crore in FY14 from Rs 5.75 lakh crore in FY13
• The government has proposed to introduce an investment allowance of 15% for companies investing  Rs 100 crore or more in plant and machinery from 1st April 2013 to 31st March 2015.
• Government has asked SEBI to simplify procedures and prescribe uniform registration and other norms for entry for foreign portfolio investors.
• Foreign investor stake of 10% or less to be treated as FII and more than 10% stake to be treated as FDI
• Government has introduced a surcharge of 10% on people whose taxable income exceeds Rs 1 crore
• The government has  reduced the Securities transactions tax and introduced the Commodities Transaction Tax on agricultural commodities.