NDA Govt's Maiden Budget Thursday July 10,2014

In its first budget, the new government of Prime Minister Narendra Modi has promised a new era of fiscal prudence and greater opportunities for foreign investors in key sectors of the economy, including defense

Finance minister Arun Jaitley enters the Parliament House to present Union Budget 2014-15 in New Delhi

Finance Minister Arun Jaitley announced an increase in the permitted level of foreign direct investment in the defence sector to 49 % from 26 %

To ensure that the military, which has repeatedly warned  of outdated and inadequate equipment, has its way on the modernization drive, the government has budgeted Rs. 94,588  crores, Rs. 5000 crore more than what was sanctioned by the previous government in February in the interim budget this year. Overall defence spending has gone up by Rs. 26 lakh crores to Rs. 2.26 lakh crores.

Capital Market Impact
The Sensex ended 72 points, or 0.28 %, down to nearly a two-week low of 25,372.75 and the Nifty closed 0.23 % lower at 7,567.75

The first Budget of the new BJP-led government makes an attempt to revive the legacies of Hindutva icons like Syama Prasad Mookerjee and Deendayal Upadhyay.The two leaders were associated with Jan Sangh, which laid the foundations of the BJP

Various development programmes and schemes are named after Mookerjee and Upadhyay.

Another scheme has been named after Madan Mohan Malviya, a Congress leader who was associated with the Hindu Mahasabha in his early days.

Finance Minister Arun Jaitley announced that the Rozgaar Mission, named after Mookerjee would boost the development of rural India.

The scheme is based on Gujarat's Rurban development model of urbanisation of rural areas. 

"The Mission will be launched to deliver integrated project-based infrastructure in the rural areas, which will also include development of economic activities and skill development. The preferred mode of delivery would be through PPPs while using various scheme funds for financing," Jaitley said.

The Deendayal Upadhyay Gram Jyoti Yojna - a Rs 500 crore rural electrification programme - aims at augmenting power supply in rural area

A school assessment programme was announced at a cost of Rs 30 crore, called the 'Pandit Madan Mohan Malviya New Teachers Training Programme'. It is aimed at infusing new training tools and motivating teachers.

The naming of the new programmes was not restricted to Hindutva icons alone. 

The NDA Government named a centre for higher education after socialist icon Jai Prakash Narayan, who started the anti- Congress political movement in the 1970s.

2014-15 Budget Highlights

Income-Tax Relief 

The Finance Minister has -

• raised the exemption limit on income tax from Rs. 2 lakh to Rs. 2.5 lakh.
•  For senior citizens, the exemption on income has been raised to Rs. 3 lakh per annum
• Tax slab on personal income remains unchanged 
• no change in the exemption limit for senior citizens above 80 years
• hiked the tax-free cap on home loan interest from Rs. 1.5 to Rs. 2 lakh
• hiked the exemption limit on long-term financial savings u/s 80-C currently capped at Rs. 1 lakh, by Rs. 50,000 

Women Safety:

• Outlay of Rs. 50 crores for a pilot scheme on road safety
• Another 150 crores to be spent by MHA on safety on women in larger cities
• 'Beti Bachao, Beti Padhao Yojana' - 100 crores

Rural Housing:

• 8000 crores for national housing banking programme - for rural housing
• Special proposals for visually challenged: Government to print currency notes with braille like signs to help the blind

Smart Cities
Prime Minister Narendra Modi had a vision of developing 100 smart cities as satellite towns of larger cities and by modernising existing midsized cities.

• allocated Rs 7,060 crore for developing 100 'smart cities' in the country

• To encourage development of smart cities, requirement of the built-up area and capital, conditions for FDI is being reduced from 50,000 square metres to 20,000 square metres and from $10 million to $5 million, respectively, with a three-year post completion lock-in

• Projects committing at least 30 per cent of their total cost for low cost affordable housing will be exempted from minimum built up area and capitalisation requirements, with the condition of a three year lock-in period.

Housing

Housing for all is one of the dreams of Prime Minister Narendra Modi. Backing his vision of providing homes to everyone by 2022, the government unveiled many sops for the affordable housing segment in the Union Budget for 2014-15
allocation of Rs 4,000 crore during the current fiscal for National Housing Bank(NHB) to increase the flow of cheaper credit for affordable housing to the urban poor
enhanced allocations to the tune of Rs 8,000 crore has been made for NHB for 2014-15 to expand and support rural housing across the country.
To encourage people to own houses, the government announced it would extend an additional tax incentive on home loans
hiked the housing interest rate deduction limit to Rs 2 lakh from Rs 1.5 lakh on personal home loans

Education:

• All 6 additional AIIMS have become operational
• Plan to set up 4 more AIIMS in Andhra Pradesh, West Bengal, Vidharbha and Purvanchal. Rs. 500 crore allocated
• Pandit Madan Mohan Malviya New Teacher's Training Programme launched. 5 more IITs and IIMs  to be set up - 500 crores allocated
• FTII Pune, SRFTI Kolkata will be accorded the status of institute of national importance

Agriculture:

• Urgent need for investment in agro-technology and development
• 100-crore Agri-Infrastructure fund
• Horticulture University in Telangana and Haryana
• Rs 500 crore for establishing a Price Stabilisation Fund
• set an agriculture credit target of Rs 8 lakh crore and a scheme of interest subvention of 3 per cent for timely repayment of farm loans
• Rs 100 crore for a scheme to provide every farmer a soil health card in a mission mode.
• Rs 56 crore was allocated to set up 100 mobile soil testing laboratories.
  
  
   

Fiscal Deficit

Accepts fiscal deficit target of 4.1% of GDP for 2014/15

* Fiscal deficit seen at 3.6% of GDP in 2015/16

* Finance minister says: "We cannot spend beyond our means"

* Tax-to-GDP ratio must be raised

Outlining the roadmap for fiscal consolidation, Arun Jaitley said fiscal deficit would be brought down to 3.6 per cent in 2015-16 and 3 per cent by 2016-17.

The fiscal deficit which had touched a high of 5.7 per cent in 2011-12, was brought down to 4.8 per cent in 2012-13 and further to 4.5 per cent in 2013-14

Growth

* Aims for sustained growth of 7-8% in the next 3-4 years

* Finance minister says he is bound to usher in policies for higher growth, lower inflation

Taxation

* Aims to approve goods and services tax by end of this year

* Will not change rules on retrospective taxation

* All pending cases of retrospective tax for indirect transfers to be examined by a high-level committee before action is taken

* Proposes changes in transfer pricing mechanism

Defence

• raised military spending for 2014-15 to Rs 2.29 lakh crore, marking an increase of 12.5 % over the previous fiscal(allocated Rs 2,03,672 crore in 2013-14)

• allocated Rs 5,000 crore more than Rs 2.24 lakh crore set aside for defence in the interim budget presented by the UPA government in February 2014

• hiked the FDI cap for the domestic defence industry from 26% to 49% to attract investments from global arms majors, and to widen and enhance a military industrial complex dominated by state-run firms. 

• capital outlay for the three services in 2013-14 was Rs 86,740 crore while the actual expenditure was Rs 78,872 crore. The allocation under this head for the current fiscal is 94,587 crore
• allocated Rs 1,000 crore for 2014-15 to implement a policy of "One Rank One Pension" for ex-servicemen

Roads

• an investment of Rs 37,880 crore in National Highways Authority of India (NHAI) and state roads, which includes Rs 3,000 crore for the north eastern region of the country.

• a total of 8,500 kilometers of national highway will be constructed during the current financial year, Jaitley has announced. 

• will initiate work on select expressways parallel to the development of industrial corridors.

Sports

• will set up national sports academies for various sporting disciplines across the country, as well as the Rs 200 crore earmarked for J&K as a special incentive to enhance sporting facilities in the state
• sports university will also be set up in Manipur for which a sum of Rs 100 crore earmarked 
• SAI has been given Rs 405.10 crore - a hike of Rs 84.65 croreover the previous Budget
• an annual event will be started to promote traditional sports in the Himalaya region
• allocating Rs 1,769 crore to the discipline, a significant hike of Rs 561 crore from last year

NDA Govt to continue Aadhaar, provides Rs. 2k cr in 2014-15

Rs. 2,039 crore provided in the budget for the Unique Identification Project in the current fiscal.

 

Government expects Rs 9.77 lakh crore revenue crore from taxes

Plan expenditure pegged at Rs 5.75 lakh crore and non-plan at Rs 12.19 lakh crore.

Fiscal deficit target retained at 4.1 pc of GDP for current fiscal and 3.6 pc in FY 16

Govt raised the disinvestment target for the current fiscal to Rs. 58,425 crore.

The target include Rs. 43,425 crore from selling stake in PSUs and another Rs. 15,000 crore from sale of residual stake in the erstwhile government companies, as per the Budget document.

This is higher than the Rs. 51,925 crore PSU stake sale target estimated in the interim budget presented in February 2014 by the UPA government.

Under current norms, government undertakings should have at least 10 per cent public shareholding whereas for non-PSU firms the minimum level is 25 per cent.

After a five-minute break, Arun Jaitley continues with his budget speech

• 50-crores for indigenous cattle breeding. 8 lakh crores set aside for Agriculture credit.  
• Allocation of 5000 crores  to address the need to scientific warehousing
• Long-term rural credit fund to be set up in NABARD with initial support of 5000 crores
• Kisan TV will be launched in the current year
• The government is committed to provide housing for all by 2022, said Finance Minister Arun Jaitley Thursday
• All the Government departments and ministries will be integrated through E-platform by 31 December this year
• MSME sector - 10,000 crore rupee fund by way of attracting further private equity
• Entrepreneurship friendly bankruptcy laws to facilitate easy exit
• 16 new port projects to be awarded this year
• Over 11 thousand crores for Tuticorin, Kandla and other ports
• Schemes for development of airports in tier 1 and 2 cities via AAI and PPP
• Investment in NHAI and state highways to the tune of 37,887 cores  - including 3000 crore for North east
• Allahabad-to-Haldia Ganga waterway project announced
• Proposals to boost investment in mining sector
• Proposals for Capital Markets - Introduction of uniform KYC norms
• One single operating DMAT account
• Modern monetary policy framework; liberalize ADR, GDR regime
• Revamp Indian Depository Reciepts
• Time bound programme to provide banking services to all households
• Two bank accounts in each household to be opened which would also be eligible for credit
• Pending Insurance Law Amendment Bill to be taken up for consideration
• 2,29,000 crores allocated for Defence; One-Rank-One-Pay Adopted
• War Memorial to be constructed at Princess' Park and supplemented by a War Museum - 100 crores allocated
• Wage ceiling for EPFO schemes increased to Rs. 15,000 from existing Rs. 6,500 per month.
• Construction of a national police memorial
• Rs. 100 crore for development of Technology Development Fund
• Additional 5000 crore will be set aside for defence outlay over and above amount provided under interim budge
• NRI Fund for 'Clean Ganga' Programme
• 200 crores for upgrading indoor and outdoor facilities in Jammu and Kashmir
• 100 crores for training sportsmen and women for upcoming Commonwealth and Asian Games
• IT Exemption limit raised by 50,000
• Education cess continues as 3 %
• Direst taxes: exemptions limit raised by 50,000 to 2.50 lakh
• Under 80C - 1 lakh to 1.5 lakhs to encourage savings
• Investment allowance at 15% for 3 yrs to manufacturing company which invest more than Rs. 25 crore in plant and machinery
• No tax for those earning below Rs. 2.5lakh per annum
• Those earning above Rs. 2.5 lakh per annum to save Rs. 5150 per year
• 10 year tax holiday for power companies who start production and distribution on March 31, 2017
• Small colour TVs to be cheaper
• Income Tax Department is expected to function not only for  enforcement but also as a facilitator
• New Aykar Sewa Kendras to be opened
• Colour picture tubes exempted from basic customs duty - basic customs duty on LCD, LED panels below 19 inches reduced to NIL
• Excise duty concessions extended already. More proposals to cut excise on food processing and footwear
• Cigarettes, chewing tobacco, Gutkha and Pan masala and aerated Water containing added sugar  to become more expensive