Interim Budget: Excise duties cut; FY14 fisc at 4.6%, FY15 seen at 4.1%

Direct taxes was remained unchanged as an outgoing budget usually refrains from pushing through too many budgets before its term's expiry.

The next government's finance minister is expected to present a full budget for the year in July this year.

That's it for today.

5.15 pm: Is the FM's achievement of achieving -- and bettering -- the FY14 fiscal deficit target of 4.8 percent creative math or poor accounting? Watch this take of CNBC-TV18's Latha Venkatesh.

4.40 pm: "The FM was too obsessed with meeting the 4.8 percent fisacal deficit target," says BJP leader Arun Jaitley, adding that the way the fiscal deficit was brought down would hurt the economy. "Capex was cut by Rs 91,000 crore to meet the target. Such expenditure cuts are not an optimum exercise."

The BJP leader also attacked the FM's claim that the opposition party was responsible for the delay in the implementation of the goods and services tax. "The FM would realise that his government had blocked GST. The 'big brother' attitude of the Centre led to GST's failure. Most states didn't trust the FM as guardian of revenues."

Dismissing the Vote on Account speech as merely a "farewell election speech", he said the FM's 10 point economic vision is abstract and a propaganda. "The same FM gives loan waivers and talks of fiscal consolidation."

4.20 pm: Here's some non-budget news: The Aam Aadmi Party is outlining its economic agenda at a CII conference. Often accused of being "leftist" in his economic approach, convener Arvind Kejriwal says the AAP is not "against business or capitalism" but only against "crony capitalism".

"99 percent of people want to do clean business but are looked with suspicion and are scared of the taxman. Hence they misrepresent their actual turnovers," he says.

Kejriwal says we need policies that encourage business, tax regime needs to be stable and there need to be more judges to ensure speedy justice. "The removal of corruption cost will cut cost of production."

There is a need to define the role of the government, he says, adding that while AAP did not endorse Prashant Bhushan's view that key sectors should be nationalised, privatisation cannot "substitute good governance". "I believe the agriculture sector should be deregulated. I propose privatisation where competition among companies is possible."

Inviting businessmen to "part of the AAP revolution", Kejriwal says AAP's policies by now might have been flawed but his party was honest and open to change. "My technical knowledge could be weak but we are open to ideas."

3.55 pm: The finance minister answers what every economist is asking. When asked if the projection he has made to work up his 4.1 percent fiscal deficit number for FY15 is too "optimistic" -- since most projections on expenditure and revenue have been dismissed as unachievable -- he says finance ministers should set "ambitious" targets. "If you set low targets, you achieve even lower."

"Your reach must be beyond your grasp," he says. "I set high targets and push to achieve them. The tax-to-GDP-ratio is only 10.2 percent. The boards will be pushed to collect more taxes."

3.50 pm: 'Gold import restrictions were necessary'

Chidambaram defends his move to hike import duty on gold. "In April-May last year, India imported 302 million tonne. We can't afford that as a country. At that rate, we would have imported 1800 million tonne, or 50 percent higher than China," he says, adding that the current account deficit halving to USD 45 billion was partly because of the efforts to curb imports.

3.45 pm: At a press conference, Chidambaram touts UPA's economic growth record and says he believes India will become the world's third-largest economy over the long term after US and China "should there be a resolute government."

Economic activity is seeing a mild uptick, he says. "The full year growth forecast is 4.9 percent. And for that, the second half will have to grow by over 5.2 percent, after 4.4 percent and 4.8 percent in the first and second quarters."

3.35 pm: Congress Vice President Rahul Gandhi lauds the Finance Minister's move to introduce the one-rank-one-pension move for the defence forces.

"I thank the FM for doing it. We need to help our defence forces as much as we can," Gandhi says, who had reportedly last week demanded its introduction.

3.30 pm: The market has closed. Both the Sensex and the Nifty were up about 0.5 percent, closing provisionally at 20,477 and 6079 points, respectively. Overall a decent budget day.

For the technically-minded short-term traders, "the current rally could take you to 6140-6150 where long positions should be liquidated or even short positions could be initiated," says analyst Sudarshan Sukhani. "We don't see new lifetime highs for the market."

3.25 pm: For those who are looking for a quick sum-up of today's Vote on Account, head here: '7 things to know in FM's Interim Budget'.

3.15 pm: Auto sales could get lumpy going forward as customers advance their purchases given the uncertainty of whether a new government could roll back the excise duty cut in the July budget, says analyst SP Tulsian.

3.00 pm: Cheaper cars and students loans: Check out what's got cheaper in FY15 thanks to Chidambaram's Vote on Account.

2.50 pm: "The FM needed to communicate fiscal prudence to the market," says John Woods at Citi Private Bank, in his appraisal of today's Vote on Account. "We've seen a narrowing in the current account deficit. But the market is skeptical of the fiscal deficit target."

"But India has inspired my confidence compared to May last year when the CAD had shot through the roof. It is now up to the new government if it has ability and intent to help the economy further."

2.40 pm: "All budgets are more of a media event," Sandeep Bhatia of Kotak says matter-of-factly. "The market will look past one budget or one number and focus on the economic picture. And we believe this economy is not going back to a strong growth path before 12-18 months."

2.30 pm: FY15 GDP growth is not likely to breach 5 to 5.5 percent, says Harsh Mariwala of Marico, in an interview with CNBC-TV18.

2.25 pm: Here's some facts from the stock market: During UPA 2 (May 2009 to now), midcap stocks have outperformed frontline stocks. (Nifty is up 66 percent compared to 86 percent for the Midcap index).

Top gainers among sectors are the IT (up 238 percent), auto (227 percent), pharma (220 percent) and FMCG (219 percent) while sectors that lagged are metal (flat) while the PSU index is up only 10 percent.

Among top stocks were HCL Tech (up 910 percent), Tata Motors (633 percent), Lupin (up 477 percent) while top decliners include JP Associates and BHEL (down 55 each) while DLF is off 44 percent.

2.15 pm: Just in: Tata Motors has announced it will lower prices of passenger cars and SUVs. Effect of the duty cut in today's Vote on Account.

2.10 pm: Here's an update on the rupee. The currency had appreciated to a three-week high against the US dollar during the budget speech but is now flat.

Bond yields fell to 8.77 percent on the benchmark 10-year but have now hardened to 8.82 percent.

2.05 pm: Where does India stand at the end of P Chidambaram's vote-on-account budget speech? "Certainly better than before, as the worst in terms of populist giveaways did not happen. But we are not any better placed than before," writes R Jagannathan in the Firstpost as he outlines the six key takeouts from the Vote on Account.

2.00 pm: Here's a chance to win LED TVs from CNBC-TV. What did the finance minister do on income taxes in the interim budget today? Type '6A' for increased, '6B' for decreased, and '6C' (without quotes) if you think taxes were not changed, and send to '51818'

1.50 pm: Even as most experts are happy with the Vote on Account, CNBC-TV18's Banking Editor Latha Venkatesh has some negative marks to give to the FM.

"The 4.1 fiscal deficit target have been predicated upon some difficult-to-achieve numbers. The FM has outlined 19 percent FY15 revenue growth when in FY14, it was 11 percent. The nominal GDP growth is seen at 13.5 percent versus 11.5 percent in the previous year," she points out.

1.35 pm: For those who missed: During the speech, the FM had a retort for BJP's prime ministerial candidate Narendra Modi had said at a political "hard work" and not "Harvard" pays off.

Highlighting the achievement of the UPA regime, Chidambaram said today, "All this was a result of hard work. My mother and Harvard taught me the value of hard work," he said.

1.20 pm: Click here to read why the auto industry's prayers have been more than answered today.

1.15 pm: This just in in non-budget news: Airtel is expected to announce the acquisition of Mumbai telecom firm Loop in the next two days.

1.10 pm: Political sniping has begun in earnest. BJP spokesperson Prakash Javdekar tells CNBC-TV18: "It's a farewell speech by the FM. I won't even give three out of 10 to the Vote on Account. It won't promote growth or bring down inflation. The one-rank-one-pay announcement [in today's V-o-A] is the victory of BJP."

1.05 pm: Some views on the excise duty cut (10 percent from 12 percent earlier) for the capital goods sector:

Analysts say the move is being seen only as a mild positive, Excise is typically 5-6 percent of overall project cost, and a pass-through for most large contractors.

Thus, projects awarded are not expected to pick up in a significant way unless economic growth picks up and issues like fuel supply are resolved.

Plus there is a lingering chance a new government could roll back the excise cut.

1.00 pm: For those tuning in late. The FM presented the Vote on Account today. On average, most key numbers projected (expenditure, revenue, fiscal deficit, growth, etc) were pleasing for the markets though experts remained skeptical whether these could be achieved. The full budget in July would give greater clarity. Both the bond and stock markets did not react.

In a major step, the FM cut excise duties for some sectors but most significantly for auto. Said "the economy can't wait till July [for the full budget]". No changes in direct taxes.

12.55 pm: More fine print is coming in. The 10 percent additional surcharge on income tax for those earning above Rs 1 crore -- the "super-rich" tax -- has been extended from FY14 to FY15. This was announced as a one-year charge in last year's budget but it continues for another year.

12.50 pm: The auto sector, expectedly, is beaming. "The excise duty cut was significant," says Mahindra & Mahindra's Pawan Goenka. "Prices of SUVs could come down by Rs 40,000 per unit," he says in back-of-the-envelope calculations.

12.45 pm: More numbers are coming out as the Vote on Account document is made available. You may find more flashes here.

12.40 pm: "Amid the rosy projections for fiscal deficit, Mr Chidambaram has been optimistic on the revenue side and conservative on the expenditure side," says leading investment banker Ashok Wadhva of Ambit. "This is akin to M&A where if we aren't winning in buying a company, we at least make it difficult for the next guy to buy [by increasing our bids]. The next FM will similarly find it difficult work with the current math." Interesting analogy.

12.35 pm: Here's some quiz from CNBC-TV18. The Finance Minister today projected FY14 GDP growth at? SMS 4A for 4.9 percent, 4B for 5.9 percent, 4C for 6.9 percent to '51818'. Winners take home LED TVs.

12.31 pm: "The FM pulled the right levers in the Vote on Account," says L&T CFO Shankar Raman. "Some measures that were undertaken will help the economy."

12.28 pm: Back to the markets. Stocks have given up some gains. Ramesh Damani says given the continuing apathy with Indian stocks despite improving macros we are at the bottom of the cycle rather than at the top. "Technology, pharma look good ahead," he says. "E-commerce is coming of age in India. These sectors are also government-neutral and policies don't impact them much."

12.24 pm: Achieving 4.1 percent fiscal deficit in FY15 looks difficult, says former RBI governor C Rangarajan.

12.22 pm: The impact of the excise duty cut is seen at about Rs 10,000-Rs 12,000, according to analysts.

12.17 pm: "His speech was excellent. But I only wish the government had implemented what they did in the last year, a few years ago," says Adi Godrej.

12.12 pm: "I tend to be more optimistic on the market over the next quarter," Damani says.

12.08 pm: "The FM has done a great job, given the limitations he had, by staying away from populist measures. The auto sector was crying for help," says broker Ramesh Damani, in first reactions.

12.02 pm: To sum up: No big-bang budget. FY14 fiscal deficit target met. FY15 target lower than expected. Most expenditures largely in line with projections. Excise duties cut for several sectors such as auto, consumer durables and capital goods.

12.00 pm: THE VOTE ON ACCOUNT SPEECH HAS ENDED.

11.58 am: FY15 fiscal deficit seen at 4.1 percent of GDP (lower than market's expectation of 4.2 percent). Will it be doable, given the fact that some excise duties have been cut?

11.58 am: Duty for small cars cut to 8 percent (from 12 percent), cut to 20 percent for large and mid segment cars and 24 percent (from 30 percent) for SUVs. Market picks up slightly. Auto stocks jump.

11.55 am: Excise duty for capital goods and consumer durables has been cut from 12 percent to 10 percent.

11.52 am: No changes in direct tax.

11.50 am: Chatter among lawmakers has picked up significantly -- presumably protests over the Telangana issue. The FM's audibility has reduced.

11.48 am: Will amend the Forward Markets Commission Act to strengthen the commodities market regulation in the country, FM says. This is in the wake of the NSEL scandal.

11.45 am: Banks will lend Rs 8 trillion to agri sector in FY15

11.40 am: FY15 fuel subsidy seen at Rs 65,000 crore. Rs 35,000 crore of subsidy has been rolled over from FY14 to FY15. Food subsidy for FY15 at Rs 1.15 trillion. This is significant in light of the Food Security Bill.

11.39 am: FY14 non plan expenditure will be higher than expected while that for FY15 is projected at Rs 12.07 trillion.

11.38 am: FY15 plan expenditure will be same as last year: Rs 5.55 trillion.

11.36 am: A word on Aadhar. 24.15 lakh transactions of direct subsidy transfers have taken place. LPG subsidy has been put on hold but will be restarted, FM says.

11.35 am: "Last year, I proposed the Nirbhaya fund for women safety for Rs 1,000 crore. Two projects have been shortlisted under the project. I intend to add another Rs 1,000 crore to the fund this year."

11.30 am: More stats: "29,300 MW of power capacity was added in FY13-14." Market still flat. We can imagine the word "non-event" already.

11.28 am: FM touts UPA's "reform record": "Fuel partly deregulated. Sick discoms restructured. Railway fares restructured. Transparency in land acquisition brought about. New Company Law brought in," among others.

11.26 am: The FM gives statistics on UPA's 10 years in office. PM Manmohan Singh looks on. "UPA 1 and UPA 2 delivered above trend line growth," he says. "History will be our judge."

11.25 am: Full year FY14 growth is seen at 4.9 percent. "For this, growth for the third and fourth quarters will have to be higher than 5 percent," Chidambaram says.

11.22 am: Food inflation continues to remain a challenge, the FM says.

11.20 am: FY14 current account deficit will be contained at USD 45 billion, or about about half of last year's.

11.15 am: Breaking: As reported by CNBC-TV18 earlier, FY14 fiscal deficit shall be contained at 4.65 percent. The market is not excited. Trading flat.

11.10 am: After a brief stoppage thanks to continuing noise, the FM restarts budget speech.

11.05 am: THE FM HAS STARTED THE SPEECH amid some noise. Some cries of "baith jaiiye" heard from speaker Meira Kumar.

11.00 am: Some minor chatter from MPs but nothing like the din witnessed during the rail budget.

10.58 am: The sports-oriented can also focus on the India versus New Zealand test where the NZ batsmen just had a field day before stumps. 571/6.

10.55 am: The FM has just walked into the Parliament with the budget documents in a red briefcase. One hopes the budget speech will be allowed to be read out with much disturbance. Railway Minister Mallikarjun Kharge had to cut short his speech on February 11 amid protests over the Telangana issue.

10.50 am: 10 minutes to go before Chidambaram walks out to present the last (interim) budget of the current UPA government. Stay tuned.

10.45 am: CNBC-TV18 is running a quiz. "Who was the finance minister before the P Chidambaram?" SMS 3A for Manmohan Singh, 3B for Pranab Mukherjee, 3C for Yashwant Sinha to '51818'. Correct answers get LED TVs. Go figure.

10.40 am: Here's an article that revisits Dr Manmohan Singh's legacy of nearly 10 years as prime minister. Superb stock market performance and above-average economic growth but still mixed at best?

10.35: Trivia: This is ninth budget of Chidambaram's career. He is one short of Morarji Desai's record of 10.

10.30 am: Here's an interview with well-known FII Adrian Mowat of JPMorgan on his expectations from the V o A.

10.25 am: An important statistic investors will be eyeing would be eyeing in the V o A will be the projection for FY15 fiscal deficit. A number between Rs 6 and Rs 6.5 trillion will be digested well. Anything higher than Rs 6.5 trillion may not go down too well with the stock or bond market.

10: 20 am: The most important reform Kris Gopalakrishnan is looking forward to is the goods and services tax (GST).

10.15 am: The chief of the Confederation of Indian Industry, Infosys' Kris Gopalakrishnan, says the FM will likely talk about the achievements of his party. Talk about the fiscal deficit control, economic growth of the past 10 years, etc, instead of making big-bang announcements.

10.10 am: In non-budget news, the Aam Aadmi, BJP and the Congress, will all present their economic agendas document. Left, right and centre?

The CII is also holding its national executive meeting today.

10.05 am: Here's an exclusive interview with Kaushik Basu, Chief Economist with the World Bank. The theme of fiscal consolidation will reign in the V o A, as well as the full budget in July, he says.

10.00 am: It is about an hour to go for V o A to be presented. The market has given up some of its gains and is about 0.2 percent higher.

9.55 am: The FM could announce excise cuts for select sectors, says tax expert Dinesh Kanabar of KPMG.

9.50 am: Overnight, US stock markets were between 0.4 percent and 0.8 percent higher. Key Asian markets are up about the same.

9.45 am: The market will approach the upcoming elections as a binary event, says Masha Gordon, VP & Head of Emerging Market Equities, Pimco. "The key thing to watch for will be the government’s commitment to fiscal consolidation," she says in an interview to CNBC-TV18.

Pimco has been adding to its India position, more from a fundamental perspective than as a bet on the election result, she says.

9.40 am: Veteran broker and value investor Raamdeo Agrawal of Motilal Oswal says investors should focus more on the economy's fundamentals, which have been improving, rather than V o A. On a day everyone is talking about the FM, Agrawal seems more enthused with the RBI governor and hails him for his inflation-fighting methods.

9.35 am: The new government will present a full budget in July. Hence most experts say today's V o A will likely not be any major trigger for the market.

9.30 am: Meanwhile, you can catch an exclusive interview with Planning Commission Deputy Governor Montek Singh Ahluwalia to know more about his thoughts on the economy.

9.25 am: Stocks globally are headed for a down year and developed markets, which have been leading stocks higher over the few year or so will now lose steam, Shankar Sharma of First Global says on CNBC-TV18.

On the political front, Sharma, who is believed to have a soft corner for the Congress, says the party will come back to power with the help of Third Front parties and that investors are "over-invested in the Modi trade" -- referring to the market's expectations about the perceived-to-be-pro-business BJP leader coming to power.

9.20 am: Stocks such as Titan are up over 1 percent amid buzz that the FM could relax curbs on gold import.

Over the past year, the FM increased duty on gold from 4 percent to a record 10 percent, to deter gold-loving Indians from buying the yellow metal -- much of which was being imported from abroad and taking a toll on the country's trade balance and consequently, the rupee.

But UBS Securities tells CNBC-TV18 that it it does not believe duty on gold will be cut and has a negative view on gold.

9.15 am: The market is now open. Both the Sensex and the Nifty are up 0.4 percent each. Coal India is down 1 percent while Bharti Airtel is up 1 percent.

9.10 am: Speaking of the fiscal deficit, while most market experts have come around to believe the FM will not breach the target (his self-titled "red line"), thanks to belt-tightening measures the government carried out in the last few months, along with the bumper spectrum auction, many believe the FM has done a lot of "creative accounting" to get to that number -- such as pushing some of this year's expenditures to the next year. So a closer look will be warranted into the maths of the budget.

9.05 am: The market is likely remain volatile today, believes CNBC-TV18's Udayan Mukherjee. One of the key elements that will be watched out for, he says, will be whether the government meets the fiscal deficit (the negative difference between government's yearly revenues and expenditures) target of 4.8 percent of GDP that the FM had outlined in the budget last year.

9.00 am: Here are eight things that the stock market is looking forward to in the V o A. Meanwhile, the market is slightly higher (0.3 percent on the frontline indexes) in pre-open. 

8:55 am: The FM will present a Vote on Account instead of a regular Budget. This is usually done when an incumbent government's tenure is about to end. If you don't the difference, read this here.

But in short, in a V o A, the FM traditionally stays away from big-bang announcements, either on the policy or tax front, and sticks to largely presenting the government's yearly account while making projections for the remaining months of its tenure.

8:50 am: We have a full-blown page dedicated to the V o A that you can find here. Here you will find breaking-news flashes, articles, videos, FAQs, stock recommendations, infographics, quizzes and more. Also remember to check out the special section there titled "10 years of UPA" in which we chronicle the economic hits and misses of the Manmohan Singh-led government over its two tenures.

Conversely, if you prefer the visual medium, watch CNBC-TV18 live here.

8:45 am: Good morning and welcome to live coverage of the Vote on Account. Finance Minister P Chidambaram will present the V o A in Parliament in a speech that is expected to start at 11 am. Here you can get news, views and real-time updates on the event. Stay tuned.