Union Finance Minister Arun Jaitley, in his maiden Budget, attempted to achieve the impossible: He tried to please all. Though it took him 16,536 words, delivered in slightly over two hours, Jaitley succeeded in achieving his aim, if we
Jaitley began the 2014-15 Budget speech with a promise of steering the growth rate of economy to 7– 8 per cent in the next 3-4 years. For this, Jaitley plans to infuse the much-needed capital into the banks through sale of shares to retail investors. The proposed setting of debt recovery tribunals is a positive step. The banks will also be given increased autonomy, which should help them in reducing their NPAs.
To encourage savings by households and uplift the overall saving rate, the Finance Minister has proposed to increase the income tax exemption limit for individuals from Rs 2 lakh to Rs 2.5 lakh, and the deductions under Section 80C from Rs 1 lakh to Rs 1.5 lakh. While income tax exemption limit for senior citizens has been raised from Rs 2.5 lakh to Rs. 3 lakh, exemption on PPF savings has been raised to Rs 150,000.
Another fillip needed for economy was given on the infrastructure front with the development of national highways getting Rs 37,000 crore and that of village roads Rs 14000 crore. Of the money allocated for national highways, Jaitley has put aside Rs 3,000 crore for the north-eastern region of the country. According to some estimates, poor condition of national highways is responsible for wastage of diesel worth as much as Rs 70,000 crore every year in trucking. Checking this wastage will help reduce oil import bill. Poor road conditions also increases the turnout time of trucks by up to 30 per cent apart from reducing the lifespan of vehicles.
The government has plans to lay 15,000 km of gas pipelines. However, no further details have been provided about the project.
Bottlenecks in the supply of coal to thermal power stations have been the major cause behind poor performance of power sector. The 2014-15 Budget seeks to ensure uninterrupted fuel supplies to power plants that have been commissioned or will be commissioned by the end of the current fiscal. To attract, new players to the power sectors, the Finance Minister has announced 10-year tax holiday for them.
To give a boost to the real estate and infrastructure sector, Jaitley has introduced Real Estate Investment Trusts (REITS) and Infrastructure Investment Trusts. His master’s dream project of setting up 100 smart cities has got Rs 7,000 crore.
On the front of financial consolidation, the Finance Minister aims to restrict the fiscal deficit to 4.1 per cent in the current year and to around 3 per cent by the financial year 2017. Lower deficit will go a long way in reining in inflation, but it is a formidable task, indeed, especially when he has not touched the subsidies.
Jaitley has raised the allocation for defence forces by about 12 per cent to Rs 229,000 crore, and earmarked Rs 5,000 crore for the modernisation of the sector. Raising the limit on foreign investment in defence sector from 26 per cent to 49 per cent will save foreign exchange and check the current account deficit in the long run which means a stable rupee.
Another positive of the 2014-15 Budget is a move towards a common Goods and Services Tax. The government also proposes not to destabilise the tax regime with retrospective demands as far as possible.
The proposed integrated national market for agricultural produce, will allow farmers to sell their produce directly to the consumer removing the middlemen. This will not only curb inflation, but will also check spoilage of the perishable items.
On the whole, the 2014-15 Budget is an exercise whose results will take time to show. But certainly, it's not a game changer.
Reference: Media reports
Last Updated on : March 12, 2015