Union Budget 2013 - 14: Budget focuses on fiscal amid revenue challenges: D&B
Union Budget FY14: The Finance minister has articulated a Fiscal Deficit (FD) target of 4.8% of GDP during FY14 with a commitment to bring down the FD, Revenue Deficit and the Effective Revenue Deficit to 3.0%, 1.5% and zero, respectively by FY17, says D&B.
March 01, 2013 / 17:48 IST
D&B has come out with its special release on Union Budget 2013-14.
Get full Budget coverageThe Union Budget for FY14 is presented at a time when the Indian economy is faced with various challenges posed by domestic and global issues. The budget was expected to implement fiscal prudence on one hand and support growth on the other. The Finance minister has articulated a Fiscal Deficit (FD) target of 4.8% of GDP during FY14 with a commitment to bring down the FD, Revenue Deficit and the Effective Revenue Deficit to 3.0%, 1.5% and zero, respectively by FY17. What is commendable is the fact that the fiscal deficit for FY13 at 5.2% has been marginally higher than the budgeted estimate of 5.1%.While fiscal deficit has been targeted to be lower than the previous year, total expenditure has been budgeted at ` 16,652.97 bn, a 16% increase as compared to the revised estimates (RE) of FY13. Besides, there has been a significant hike in plan expenditure which is likely to boost rural demand and support inclusive growth. Concerns do arise on whether the government would be able to generate the requisite revenue to finance the total expenditure laid out in the budget. If revenue generation falters owing to failure of revival of economic growth or due to difficulties in implementing the revenue generating measures, either fiscal consolidation will have to be foregone or expenditure will need to be curtailed.Even though moderation in growth might pose difficulties in revenue generation, the government is hopeful of raising adequate revenue through various measures. The budget estimates a higher collection of tax and non tax revenue. However, the disinvestment target for FY14 which has been more than doubled from the revised estimates in the current fiscal seems to be a tad ambitious. Besides reiterating its commitment towards fiscal consolidation, the budget has tried to address various crucial issues i.e. promoting investments, encouraging infrastructure activities, boosting rural demand through enhanced social sector spending, initiating measures to boost savings, besides giving a thrust to capital markets including developing the debt market and so on.The focus of the government towards increasing investment in infrastructure, creating a regulatory authority for the road sector, introducing investment allowance for attracting new high value investments, creating industrial corridors besides announcement of projects in National Waterways, Road and Ports sectors, devising a PPP policy framework in the coal sector to some extent would boost infrastructure activities. Besides, a number of initiatives in the Oil & Gas sector is also commendable.However, measures directed towards easing the structural bottlenecks needed more focus. Moreover, no specific action has been presented to curb the current account deficit which poses a significant downside risk to the overall growth. Though the measures announced are good on intent they would yield the desired results only on effective and timely execution. The policy initiatives that the government has been taking since Sept-12 has to continue in future and the allocation announced in the budget also needs to be effectively utilised to help the economy revive from the slowdown.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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