The Current Economic
Situation And The Challenges 

• The fiscal deficit for
  2013-14 contained at 4.6 percent.

• The current account deficit
  projected to be at USD 45 billion in 2013-14 down from USD 88 billion in
  2012-13.

• Foreign exchange reserve to
  grow by USD 15 billion in this Financial Year

• No more talk of down grade of
  Indian Economy by Rating Agencies.

• Fiscal stability at the top
  of the Agenda.

• Government and RBI have acted
  in tandem to bring down inflation.

• WPI inflation down to 5.05
  percent and core inflation down to 3.0 percent in January 2014.

• Food inflation down to 6.2
  percent from a high of 13.8 per cent.

• Agricultural sector has
  performed remarkably well.

• Food grain production
  estimated for the current year is 263 million tonnes compared to 255.36
  million tonnes in 2012-13.

• Agriculture export likely to
  cross USD 45 billion higher from USD 41 billion in 2012-13.

• Agricultural credit to exceed
  the target of Rs. 7 lakh crores.

• Agricultural GDP growth for
  the current year estimated at 4.6 percent compared to 4.0 percent in the
  last four years.

• Savings rate at 30.1 percent
  and investment rate of 34.8 percent in 2012-13.

• Government set up a Cabinate
  Committee on investment and the Project Monitoring Group to boost
  investment. By end of January 2014, Projects numbering 296 with an estimated
  project cost of Rs. 660,000 crore cleared.

• Despite a decline in growth
  of global trade, our export have recovered sharply.

• The estimated merchandise
  export is estimated to reach USD 326 billion indicating a growth rate of
  6.3 percent in comparison to the previous year.

•  The sluggish import is a matter of
  concern for manufacturing and domestic trade sector.

• Due to deceleration in
  investment, the manufacturing sector has witnessed a sluggish growth.

• The National Manufacturing
  Policy has set the goal of increasing the share of manufacturing in
  GDP to 25 percent and to create 100 million jobs over a decade.

• 8 National Investment and
  Manufacturing Zones (NIMZ) along Delhi Mumbai Industrial Corridor (DMIC)
  have been announced. 9 Projects had been approved by the DMIC trust.

• 3 more Industrial Corridors
  connecting Chennai and Bengaluru, Bengaluru and Mumbai & Amritsar and
  Kolkata are under different stages of preparatory works.

• Additional capacities are
  being installed in major manufacturing industries.

• Notification of a public
  procurement policy, establishing technology and common facility centres,
  and launching the Khadi Mark are steps taken to promote Micro Small and Medium
  Enterprises.

• In 2012-13 and in nine months
  of the current financial year, 29, 350 MW of power capacity, 3, 928 Kms of
  National Highways, 39, 144 Kms of Rural Roads, 3,343 Kms of New Railway
  track and 217.5 milliion tonnes of capacity per annum in our ports have
  been created to give a big boost to infrastructure industries.

• 19 Oil and Gas blocks were
  given out for exploration and 7 new Air ports are under construction.

• Infrastructure debt funds
  have been promoted to provide finances for infrastructure Projects.

• Rupee came under pressure
  following indications by US Federal Reserve of reduction in asset
  purchases in May 2013.

• Government, RBI and SEBI
  undertook a number of measures to facilitate capital inflows and stablize
  the foreign exchange markets. As a result among emerging economy currencies
  rupee was least affected when actual reduction took place in December 2013.

• The GDP slow-down which
  began in 2011-12 reaching 4.4 percent in Q1 of 2013-14 from 7.5 percent in
  the corresponding period in 2011-12 has been controlled by numerous
  measures taken by the Government. Growth in the third and fourth quarter
  of the current year is expected to be 5.2 percent and that for the whole
  year has been estimated at 4.9 percent.

• The declining fiscal
  deficit, stable Exchange Rate and reducing Current Account Deficit, moderation
  in inflation, increasing exports are reflection of a more stable economy today.

• In India
  growth is an imperative but sustainable and inclusive growth model must address
  the concerns of environment, inter generational equity, indebtedness etc.

• Unparalleled record of
  growth in 10 years of UPA Government.

• Production of food grains up
  from 213 million tonnes to 263 million tonnes, installed power capacity up
  to 2,34,600 MW from 1,12,700 MW, coal production 554 million tonnes from
  361 million tonnes, 3,89,578 Kms of Rural Roads under PMGSY from 51,511
  Kms, over a period of 10 years.

• The expenditure on Health
  & Family Welfare has reached Rs. 36,322 crore from Rs. 7,248 ten years ago.

• The expenditure on Education
  has reached Rs. 79,451 crore from Rs. 10,145 ten years ago.

• UPA-I & UPA-II
  Governments have delivered above the trend growth of 6.2 percent, which
  prevailed over a period of 33 years.

• De-controlling sugar,
  gradual correction of diesel prices, rationalization of railway fares, were
  some of the courageous and long over due decisions taken by the
  Government.

• Applications were invited
  for issue of new bank licenses.

• DISCOMS, mostly sick are
  being restructured with generous central assistance.

• 12.8 lakhs land titles
  covering 18.80 lakh hectare were distributed under the Scheduled

• Tribes and Other traditional
  Forest Dwellers Act.

• The oppressive colonial law
  of 1894 was substituted with the Right to Fair Compensation and
  Transparency in Land Acquisition Rehabilitation and Resettlement Act.

• National Food Security Act
  was passed assuring food to 67 percent of the population/ households.

• The new companies Act
  replaced a law of 1956 vintage.

• The PFRDA Act was passed to
  establish a statutory regulator for the New Pension Scheme.

• Centrally Sponsored Schemes
  were restructured into 66 Programs for greater Synergy.

• Funds under these programs
  will be released as Central assistance to State Plan, thus giving greater
  authority and responsibility. As a result, Central assistance to plans of States
  & UTs will rise substantially from Rs. 36,254 crore in BE 2013-14 to
  Rs. 338,562 crore in 2014-15.

• Record Capital expenditure
  of Rs. 257,641 crores in 2013-14 by public sector enterprises.

.

• About 50,000 MW of Thermal
  and Hydel Power capacity is under construction after receiving all
  clearances and approvals. 78,000 MW of power capacity have been assured
  coal supply.

• Liberalised FDI policy in
  tele-communication, pharmaceuticals, civil aviation, power trading
  exchange, and multi brand retail to attract large investment.

• Approval to establish 2 semi
  conductor wafer fab units.

• Approval of IT modernization
  project of Department of Post.

• Kudankulam Nuclear Power
  Plant Unit-I achieved criticality and is generating 180 Milliion Units of
  power.

• Fast breeder Reactor at
  Kalpakkam and 7 Nuclear Power Reactors under construction.

• National Solar Mission to
  add 4 Ultra Mega Solar Power Projects each with the capacity of over 500
  MW in 2014-15.

• Ministry of MSME will create
  the ‘India Inclusive Innovation Fund’ to promote grass root innovations
  with social returns to support enterprises in the MSME sector with an initial
  contribution of Rs. 100 crore to the corpus of the fund.

• A Venture Capital Fund to
  provide concessional finance to Scheduled Caste will be set up by IFCI
  with an initial capital of Rs. 200 crore which can be supplemented every year.

• The restructured ICDS, under
  implementation in 400 districts, will be rolled out in remaining districts
  from 1.4.2014

• A National Agro-Forestry
  Policy 2014 has been approved.

• A mechanism for marketing
  minor Forest produce has been introduced and an
  allocation of Rs. 444.59 crore has been made to continue the Scheme in
  2014-15.

• A new Plan Scheme with an
  allocation of Rs.100 crore has been approved to promote community radio
  station

• New technologies such as JE
  vaccine, a diagnostic test for Thalassaemia and Magnivisualizer for
  detection of Cervical cancer have been delivered to people.

• A sum of Rs. 1200 crore as
  additional central assistance to North Eastern states, Himachal Pradesh
  and Uttarakhand in this financial year.

• India
  joined a handful of countries when it launched the Mars Orbiter Mission.

• The Country has acquired
  capability in launch vehicle technology, cryogenics and navigation ,
  meteorological and communication satellites.

• Several flight tests,
  navigational satellites and space missions are planned for 2014-15

• A Corpus has been created
  for ‘Nirbhaya Fund’ with a non lapsable grant of Rs. 1000 crore. 2
  Proposals to ensure the dignity and safety of women have been approved
  which will be funded from the Nirbhaya Fund. A sum of Rs. 1000 crore has again
  been provided in FY 2014-15

• The National Skill
  Certification and monetary reward schemes launched in August 2013 with an
  allocation of Rs. 1000 crore has been widely hailed as a success. A sum of
  Rs. 1000 crore is proposed to be transferred to the NSD Trust to scale up
  its programme rapidly.

• Government remains fully
  committed to Aadhar under which 57 crore Unique Numbers have been issued
  so far and to opening bank accounts for all Aadhar holders to promote financial
  inclusion.

• Through the Direct Benefic
  Transfer (DBT) Scheme, a total of Rs. 628 crore (54, 20,114 transactions)
  has been transferred directly to the beneficiaries till 31st January 2014 under 27
  Schemes.

• In order to sustain the pace
  of plan expenditure, it has been kept at the same level in 2014-15 at
  which, it was budgeted in 2013-14.

• Ministries/Departments which
  run key flagship programmes have been provided adequate funds in 2014-15
  either equal to or higher than in the BE 2013-14. These include Ministries
  namely, Minority Affairs, Tribal Affairs, Housing & Poverty Alleviation,
  Social Justice & Empowerment, Panchayat Raj, Drinking Water and Sanitation,
  Women & Child Development, Health & Family Welfare, Human Resource
  Development and Rural Development.

Budget at a Glance
						(In crore of Rupees)
				2012-2013	2013-2014	2013-2014	2014-2015
				Actuals	Budget Estimates	Revised Estimates	Budget Estimates
1	Revenue Receipts			877613	1056331	1029252	1167131
	2	Tax Revenue
		(net to centre)		740256	884078	836026	986417
	3	Non-Tax Revenue		137357	172252	193226	180714
4	Capital Receipts (5+6+7)$			532754	608967	561182	596083
	5	Recoveries of Loans		16267	10654	10802	10527
	6	Other Receipts		25890	55814	25841	56925
	7	Borrowings and other liabilities *		490597	542499	524539	528631
8	Total Receipts (1+4)$			1410367	1665297	1590434	1763214
9	Non-Plan Expenditure			996742	1109975	1114902	1207892
	10	On Revenue Account of which,		914301	992908	1027689	1107781
	11	Interest Payments		313169	370684	380066	427011
	12	On Capital Account		82441	117067	87214	100111
13	Plan Expenditure			413625	555322	475532	555322
	14	On Revenue Account		329208	443260	371851	442273
	15	On Capital Account		84417	112062	103681	113049
16	Total Expenditure (9+13)			1410367	1665297	1590434	1763214
	17	Revenue Expenditure (10+14)		1243509	1436169	1399540	1550054
	18	Of Which, Grants for creation of Capital Assets		115513	174656	121283	146581
	19	Capital Expenditure (12+15)		166858	229129	190894	213160
20	Revenue Deficit (17-1)			365896	379838	370288	382923
				-3.6	-3.3	-3.3	-3
21	Effective Revenue			250383	205182	249005	236342
		Deficit (20-18)		-2.5	-1.8	-2.2	-1.8
22	Fiscal Deficit			490597	542499	524539	528631
		{16-(1+5+6)}		-4.9	-4.8	-4.6	-4.1
23	Primary Deficit (22-11)			177428	171814	144473	101620
				-1.8	-1.5	-1.3	-0.8

1. GDP for BE 2014-2015 has been projected at Rs. 12839952 crore assuming 13.4% growth over the advance estimates of 2013-2014 (Rs. 11320463 crore) released by CSO.

2. Individual items in this document may not sum up to the totals due to rounding off.

Railways

• Budgetary support to
  Railways has been increased from Rs. 26,000 crore in BE 2013-14 to Rs.  29,000 crore in 2014-15.

• It is proposed to identify
  new instruments and new mechanisms to raise funds for Railway Projects.

SC Sub-Plan and Tribal Sub-Plan, Gender Budget and
Child Budget

• Rs. 48,638 crore and Rs.
  30,726 crore are allocated to the SC Sub-Plan and Tribal Sub- Plan
  respectively.

• Gender Budget and Child
  Budget has Rs.  97,533 crore and Rs.
  81,024 crore respectively.

Non Plan Expenditure

• Non Plan expenditure is
  estimated at Rs. 12, 07,892 crore.

• The expenditure on subsidies
  for food, fertilizer & fuel will be Rs. 246,472 crore slightly higher
  than the revised estimates of Rs. 245,453 crore in 2013-14.

• Rs. 15,000 crore has been
  allocated for food subsidies taking in to account, Government‘s firm and
  irrevocable commitment to implement the National Food Security Act
  throughout the country.

Defence

• 10 per cent hike in Defence
  allocation has been given in comparison to BE 2013-14.

• Government has accepted the
  principle of one rank one pension for the Defence Forces which will be
  implemented prospectively from the FY 2014-15. A sum of Rs. 500 crore is
  proposed to be transferred to the Defence Pension Account in the current Financial
  Year itself.

Central Armed Police Forces

           

• A modernization Plan at a
  cost of Rs. 11,009 crore has been approved to strengthen the capacity of
  Central Armed Police Forces and to provide them the state-of-art,
  equipment and technology.

Financial Sector

• All the announcements
  concerning the financial sector made in the Budget Speech of February 2013
  have been implemented.

• Rs. 11,300 crore is
  proposed to be provided for Capital infusion in Public Sector Banks.

• 5,207 new branches have
  been opened against the target of 8,023.

• Bhartia Mahila Bank has
  been established.

• Rs. 6,000 crore and Rs.
  2,000 crore have been provided to Rural and Urban Housing Funds
  respectively.

• The target of Rs. 700,000
  crore of Agricultural Credit is likely to be exceeded by the Banks. The
  target for 2014-15 is Rs. 800,000 Crore.

• Rs. 23,924 crore has been
  released under the Interest Subvention Scheme on farm loans, with
  effective rate of interest on farm loans at 4 percent including subvention
  of 2 percent and incentive of 3 percent for prompt payment.

  Credit to Minority Communities

• The number of bank accounts
  of minorities has increased to 43,52,000 at the end of March 2013 from
  14,15,000 ten years ago. The volume of lending has soared to Rs. 66,500
  crore from Rs. 4,000 crore in the same period.

• Loans to minorities stood
  at Rs. 211,451 crore at the end of December 2013.

Self-Help Groups (SHGs) Loans

• Ten years ago, only
  9,71,182 women Self-Help Groups (SHGs) had been credit linked to banks. At
  the end of December 2013, 4,11,6000 women SHGs had been provided credit
  and the outstanding amount of credit was Rs. 36,893 crore

Education Loans

• A moratorium period is
  proposed for all education loans taken up to 31.3.2009 and outstanding on
  31.12.2013. Government will take over the liability for outstanding interest
  as on 31.12.2013 but the borrower would have to pay interest for the
  period after 1.1.2014. An amount of Rs. 2,600 crore has been provided this
  year and it will benefit nearly 9 lakh student borrowers.

Insurance

• LIC and the four public sectors
  general insurance companies have opened around 3000 offices in towns with
  a population of 10,000 or more to serve peri-urban and rural areas.

Financial Markets

• Steps envisaged to deepen
  the Indian Financial Market :

• ADR/GDR Scheme revamp, an
  enlargement of the scope of depository receipt

• Liberalization of rupee
  denominated corporate bond market.

• Currency Derivatives Market
  to be deepened and strengthened to enable Indian Companies to fully hedge
  against foreign currency risk

• To create one record for
  all financial assets of every individual

• To enable smoother clearing
  and settlement for international investors looking to invest in Indian
  bonds.

Commodity Derivatives Markets

• Swift action taken to
  sequester National Spot Exchange Limited (NSEL) after the payment crisis
  in the NSEL, this prevented spill over of the crisis to the other regulated
  segment of the financial markets.

• Proposal to amend the
  Forward Contracts (Regulation) Act.

Key Pending Bills

• The Insurance Laws
  (Amendment) Bill and the Securities Laws (Amendment) Bill have not been
  passed by Parliament for reasons that have nothing to do with the merits of
  the Bills.

Public Debt Management Agency

• Public Debt Management
  Agency Bill is ready with the Government. It is proposed to establish a
  non statutory PDMA that can begin work in 2014-15.

Vision for Future

• India
  poised to be third largest economy along with US and China,
  to play a leading an important role in global economy.

• 10 Tasks as part of the
  road map ahead include :

• Fiscal consolidation : We
  must achieve the target of fiscal deficit of 3 percent of GDP by 2016-17
  and remain below that level always.

• Current Account Deficit :
  CAD will be inevitable for some more years which can be financed only by
  foreign investment. Hence, there is no room for any aversion to foreign
  investment.

• Price Stability and Growth
  : In a developing economy, a high growth target entails a moderate level
  of inflation. RBI must strike a balance between price stability and growth
  while formulating the monetary policy.

• Financial Sector reforms to
  be completed as laid down by Financial Sector Legislative Reforms
  Commission.

• Massive investment in
  infrastructure : to be mobilized through the Public Private Partnership.

• Manufacturing sector to be
  the base of India’s
  development: All taxes, Central and State that go into an exported product
  should be waived or rebated. There should be a minimum tariff protection
  to incentiwise domestic manufacturing.

• Subsidies, which are
  absolutely necessary should be chosen and targeted only to the absolutely
  deserving.

• Urbanisation to be managed
  to make cities governable and livable.

• Skill development must be
  given priority at par with secondary and university education, sanitation
  and universal health care.

• States to partner in
  development so as to enable the Centre to focus on Defence, Railways,
  National Highways and Tele-communication.

GST and DTC

• Government appeals to all
  political parties to resolve to pass the GST Laws and the Direct Tax Code
  in 2014-15

Funding Scientific Research

• It is proposed to set up a
  Research Funding Orgnaisation that will fund Research Projects selected
  through a competitive process. Contribution to that organisation will be
  eligible for tax benefits. The required legislative changes can be
  introduced at the time of regular Budget.

Off-shore Accounts

• The Government has
  succeeded in obtaining information on illegal off-shore accounts held by Indians
  in 67 cases and action is under way. Prosecution for willful tax evasion have
  also been launched in 17 other cases. More enquiries have been initiated
  in to accounts reportedly held by Indian entities in no tax or low tax
  jurisdictions.

Changes in Tax Rates

Following
changes in some indirect tax rates are proposed:

• States to partner in
  development so as to enable the Centre to focus on Defence, Railways,
  National Highways and Tele-communication.

• The Excise Duty on all
  goods falling under Chapter 84 & 85 of the Schedule to the Central
  Excise Tariff Act is reduced from 12 percent to 10 percent for the period
  upto 30.06.2014. The rates can be reviewed at the time of regular Budget.

• To give relief to the
  Automobile Industry, the excise duty is reduced for the period up to
  30.06.2014 as follows:

    Small Cars,
Motorcycle, Scooters                  –         from 12 % to 8%

    and Commercial
Vehicles

    SUVs                                                             –
          from 30% to 24%

    Large and
Mid-segment Cars                          –         from 27/24% to 24/20%

• It is also proposed to make
  appropriate reductions in the excise duties on chassis and trailors – The
  rates can be reviewed at the time of regular Budget

• To encourage domestic
  production of mobile handsets, the excise duties for all categories of
  mobile handsets is restructured. The rates will be 6% with CENVAT credit
  or 1 percent without CENVAT credit.

• To encourage domestic
  production of soaps and oleo chemicals, the custom duty structure on
  non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols
  is rationalized at 7.5 percent.

• To encourage domestic
  production of specified road construction machinery, the exemption from
  CVD on similar imported machinery is withdrawn.

• A concessional custom duty
  5 percent on capital goods imported by the Bank Note Paper Mill India
  Private Limited is provided to encourage domestic production of security
  paper for printing currency notes.

• The loading and un-loading,
  packing, storage and warehousing of rice is exempted from Service Tax.

• The services provided by
  cord blood banks is exempted from Service Tax.

Budget Estimate

• The current financial year
  will end on a satisfactory note with the fiscal deficit at 4.6 percent
  (below the red line of 4.8 percent) and the revenue deficit at 3.3
  percent.

• Fiscal Deficit in 2014-15
  estimated to be 4.1 percent which will be below the target set by new
  Fiscal Consolidation Path and Revenue Deficit is estimated at 3.0 percent.

• The estimate of Plan
  Expenditure is Rs. 555,322 crore. Non Plan expenditure is estimated at Rs.
  12, 07,892 crore.

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