-By Dr. M.S. Kapadia
The BE numbers for the next year given in the Interim Budget 2014-15 presented by the Union Finance Minister, P.Chdambaram in the Lok Sabha on 17 February, have generated less-than-usual interest as these could undergo transformation under the new government that takes over in next four-five months after general elections. Even then, ostensibly to halt the economy sag, the finance minister has announced several changes in excise duty, customs duty and service tax, which has pleased significant sections of industry. With fiscal deficit placed below BE, the Central government is set to end the current year on a better-than-expected note, going by RE data.
The interim budget provides for plan expenditure of Rs555,322 crore (+16.7 per cent) and non-plan expenditure of Rs12,07,892 crore (+8.4 per cent) for 2014-15, taking the total expenditure to Rs17,63,214 crore (10.9 per cent) for the year. The plan budget allocations for the next include Rs82,200 crore for Ministry of Rural Development; Rs67,398 crore for Ministry of Human Resource Development; Rs33,725 crore for Ministry of Health and Family Welfare; Rs21,000 crore for the Ministry of Women and Child Development and Rs15,260 for Ministry of Drinking Water and Sanitation. Further, an allocation of Rs48,638 crore has been made for the scheduled caste sub- plan and Rs30,726 crore for the Tribal Sub-Plan. Gender Budget gets Rs97,533 crore and the child budget Rs81,024 crore.
Centrally Sponsored Plan Schemes
In a major change in focus on plan budget allocations, the budget support for Central Plan has been cut down to Rs216,760 crore in 2014-15 (BE) from Rs304,739 crore in 2012-13 and Rs356,493 crore in 2013-14 (RE), whereas that for state/UT plans has been hiked to Rs338562 crore from Rs108886 crore in 2012-13 and Rs119039 crore in 2013-14 (RE). Centrally Sponsored Schemes were restructured into 66 programmes for greater synergy from the 126 such schemes currently in vogue under 17 flagship programmes. Funds under these programmes will be released as Central assistance to State plans,
Accordingly, Rs34,000 crore is proposed to be given towards State/UTs Plans for Mahatma Gandhi National Rural Employment Guarantee scheme; Rs27,635 crore for Sarva Siksha Abhiyan; Rs13,152 crore for National Programme for Mid-Day meals in schools and Rs4,965 crore for Rashtriya Madhyanik Shiksha Abhiyan. Further, for the Integrated Child Development Services (ICDS) a central assistance of Rs18691 crore will be provided to State/UTs Plans; Rs16,000 crore would be for rural housing, Rs13,000 crore for Pradhan Mantri Gram Sadak Yojna, Rs11,000 crore for drinking water supply, Rs4,260 crore for rural sanitation; Rs2,200 crore for National Food Security Mission, and Rs7,060 crore for the Jawahar Lal Nehru National Urban Renewal Mission( JNNURM). As a result of this shift in focus from Central to State Plans, Ministry of Agriculture, Ministry of Health & Family Welfare, Ministry of Human Resource Development, Ministry of Rural Development, Ministry of Water Resources and Ministry of Women & Child Development, among several other ministries, would see routing of much more funds to the state plans, as compared to their spending on Central Plan schemes.
Total Central Plan outlay has been put at Rs464,934 crore, a sharply reduced amount when compared to Rs614,134 crore) for the current fiscal. Central Plan outlay would comprise IEBR of Rs248,174 crore (Rs257,642 crore) of PSUs and Budget support of Rs216,760 crore (Rs356,493 crore).
Budgetary support to railways has been increased from Rs26,000 crore to Rs29,000 crore. A modernization plan at a cost of over Rs11,000 crore has been made to strengthen the capacity of Central Armed Police Forces.
Rs11,200 crore has been provided for capital infusion in Public Sector Banks
The allocation for food subsidy has been raised to Rs1,15,000 crore mainly for implementation of the National Food Security Act, from Rs92,000 crore for 2013-14. Food subsidy seeks to meet the difference between the economic cost of foodgrains and their sales realisation at the Central Issue Price fixed under the public distribution system (PDS) and other welfare schemes. Total food, fertilizer and fuel subsidy would amount to Rs246,397 crore (Rs245,952 crore).
The current year’s budget data includes rollover of Rs45,000 crore from the fourth quarter of 2012-13, whereas the next year’s budget would bear rollover of Rs35,000 crore from the fourth quarter of the ongoing fiscal.
As per the Budget documents, the government expects to get Rs9,86,417 crore from tax revenue, showing 17 per cent increase over 2013-14; whereas at Rs1,80,714 crore receipt from non-tax revenue would probably be lower by around 1.4 per cent. PSU equity disinvestment is likely to yield Rs56,925 crore. The Finance Minister has assumed13.4 per cent increase in GDPmp in the next year, against 11.9 per cent in the current year.
Budgeted receipt and expenditure for the next year will leave a fiscal deficit of Rs528,631 crore (+0.8 per cent), equivalent to 4.1 per cent (4.6 per cent) of GDPmp and revenue deficit of Rs382923 crore (+3.4 per cent), 3 per cent (3.3 per cent) of GDPmp), The interim budget has pegged its net market borrowing for 2014-15 at Rs457,321 crore, Rs11,580 crore less than the revised estimates of the current fiscal.
To stimulate growth in the capital goods and consumer non-durables, excise duty rate has been reduced from 12 per cent to 10 per cent on all goods falling under Chapter 84 and 85 of the schedule to the Central Excise Tariff Act for the period up to 30 June 2014. The chapters broadly include electrical & non-electrical machinery and consumer durables like refrigerators air conditioners, etc.
To give relief to the automobile industry which is registering negative growth, excise duty has been brought down for the period up to 30 June 2014:
• Small cars, motorcycles, scooters and commercial vehicles; from 12% per cent to 8 per cent
• SUVs; from 30 per cent to 24 per cent
• Large & Mid-segment Cars; from 27/24 per cent to 24/20 per cent
Accordingly, appropriate reductions would be effected in the excise duty on chassis and trailers.
Excise duties for all categories of mobile handsets have been restructured to encourage domestic production of mobile handsets and reduce the dependence on imports. The rates will be 6 per cent with CENVAT credit or 1 per cent without CENVAT credit.
Customs duty structure on non-edible grade industrial oils and its fractions, fatty acids and fatty alcohols has been restructured at 7.5 per cent to encourage domestic production of soaps and oleo chemicals.
Exemption from CVD is withdrawn on imported machinery to encourage domestic production of specified road construction machinery.
Concessional customs duty of 5 per cent on capital goods imported by the Bank Note Paper Mill India Pvt. Ltd has been proposed to encourage indigenous production of security paper for printing currency notes.
Loading, unloading, packing, storage and warehousing of rice has been exempted from service tax.
Services provided by Cord Blood Banks have been exempted from service tax.
The Government has taken step to set-up the Cabinet Committee on Investment and the Project Monitoring Group to speed up the implementation of projects in the country. As result, by the end of January, 2014, the way was cleared for completing 296 projects with an estimated project cost of Rs660,000 crore.
Rs8 lakh crore target for agriculture credit target has been fixed for the next year. Banks will extend Rs7.35 lakh crore in agriculture credit, exceeding the target of Rs7 lakh crore of Agriculture credit fixed for the current year. Interest subvention scheme shall continue in the next year. Under this scheme, a subvention of 2 percent and an incentive for 3 per cent for prompt payment is provided.