Budget 2014: Goodies for all

Tax payers could save on their salaries and consumer goods like TVs, soap, footwear, processed food and computers will cost less as the Rs18-lakh crore maiden budget of Narendra Modi's government was presented in Parliament on Thursday.

Expectations ran high from the first budget of the Modi government, after having been voted to power with a landslide victory mainly on promises of "happy days" for India's 1.2 billion people. As Jaitley was unveiling his proposals, the stock markets swung both ways with a key index gaining more than 800 points at one point, before closing with an overall loss of around 70 points or 0.25 per cent. Industry, nevertheless, welcomed the proposals.

While every section has benefited, there is nothing for the aam aadmi to cheer about in the Budget. He is reeling under sky-rocketing prices of essential items, including vegetables, LPG prices, power cuts and acute shortage of drinking water. He is left at the mercy of the unpredictable monsoon and Jaitely’s promise of taking steps to control the prices

• Jaitley presents Rs 18 lakh crore maiden Budget of Modi Govt
• He targets fiscal consolidation, aims at 7-8 % growth in 3-4 years
• No big-bang announcements; budget growth-oriented
• IT exemption raised to Rs 2.5 lakh, and Rs 3 lakh for senior citizens
• FDI in insurance, Defence raised from 26 % to 49 %
• Proposes overhaul of subsidy regime, including food and petroleum
• Subsidies on food, fuel and fertilisers amount to Rs2.40 lakh crore
• MNREGA linked to asset utilisation and agriculture
• Govt to set up an Expenditure Management Commission
• High-level Commission to review retrospective tax claims
• Jaitley hopes to introduce GST from next financial year

New Delhi: The Modi government on Thursday unveiled a reform-oriented Budget that promises to raise economic growth to 7-8 per cent in the next three to four years, by promoting manufacturing and infrastructure sectors. To encourage the inflow of foreign exchange, the composite cap on FDI, both in Defence and Insurance, has been raised from 26 per cent to 49 per cent, with full Indian management and control through the FIPB route.

Failing to present any out-of-the-box proposal or a bold Budget, Finance Minister Arun Jaitley, in his maiden Budget, however, accepted the target of 4.1 per cent of the fiscal deficit, fixed by his predecessor P Chidambaram for the current year, taking it as a challenge, despite the low GDP rate in the past two years, almost static industrial growth, a moderate increase in indirect taxes and a large subsidy burden. He, however, brought respite to the salaried class through his Budget proposals by raising the personal income-tax exemption limit by Rs 50,000, i.e., from Rs 2 lakh to Rs 2.5 lakh. For senior citizens, he raised the exemption limit from Rs 2.5 lakh to Rs 3 lakh. Exemption limit under 80C is also raised from Rs 1lakh to Rs 1.5 lakh.

Women have all reasons to smile as the price of diamond, precious stones, cosmetics and other household items like refrigerators, computers, mobile phones, small LEDs and LCDs, RO-based water purifiers, footwear less than Rs 1000 will all cost less. However, cigarettes, cigars, paan-masala, besides video camera, aerated drinks, high-end mobile phones, video cameras and eating out in AC restaurants will all be expensive.

Jaitley announced the setting-up of an Expenditure Management Commission to look into various aspects of expenditure reforms to be undertaken by the government. He also proposed to overhaul the subsidy regime, including food and petroleum subsidies, by making it more targeted while providing full protection to the marginalised, poor and SC/STs.

Subsidies for food, fuel and fertilizer cost the exchequer around Rs 40 billion or Rs 2.40 lakh crore a year. Jaitley in his interaction with journalists informed that MNREGA unveiled by the previous UPA government has been linked to asset utilisation and agriculture while no call has been taken on Direct Cash Transfers scheme that has been left to the Expenditure Management Commission. Another favourite scheme of Congress President Sonia Gandhi, The Food Security Act, has not been scrapped, as of now, by the new government with Jaitley admitting to the scribes later that reform is the "art of the possible and not art of the confrontation."

The Finance Minister announced the setting up of a high-level Committee to review retrospective tax claims, blamed for choking off foreign investment after companies such as Britain’s Vodafone were hit with massive demands. He promised to provide a stable and predictable tax regime that would be investor-friendly and spur growth.

As regards GST, Jaitley hoped to find a solution in the course of the year and introduce the legislation that will streamline tax administration, avoid harassment of the business and would bring higher revenue collection both for the Centre and the States.

In order to infuse Rs 2,40,000 crore as equity in the Banks by 2018, the Finance Minister announced the raising of the capital by increasing the shareholding of the people in a phased manner through the sale of shares largely through retail to common citizens of the country. Thus, while the government will continue to have majority shareholding, the citizens of India, will also get direct shareholding in these banks, which currently they hold indirectly. Breaking with tradition, the Finance Minister did not conclude his speech with any quotation that was often the case with his predecessors PChidambaram quoting from Thiruvalluvar and Pranab Mukherjee from Tagore.