Major Challenges
The major challenges before the Indian Economy against which the Budget 2013-14 would have to give a fire ordeal are as:
- Declining Growth Rate: The last quarter of the year 2012-13 has witnessed the GDP growth rate of about 4.5%.
- Rising Inflation: The inflation in last couple of years have reached in double digits.
- Widening fiscal deficit: Although the fiscal deficit for the year 2012-13 has been curtailed to 5.2% of the GDP as per the target but to achieve the target of 4.8% for next year would be a great challenge.
- Lower than targeted revenue collection
Identified target Groups for Budget 2013-14
Although the aim of the budget is incluse growth, yet the target groups which would be able to accrue the maximum benifits out of the budgetary allocations are:
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- Nirbhaya Fund to empower women and to keep them safe and secure.
- Proposal to set up India’s first Women’s Bank as a public sector bank.
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- Direct Benefit Transfer (DBT) Scheme to be rolled out throughout the country during the term of UPA Government.
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- Rs. 1,000 crore for skill development of ten lakh youth to enhance their employability and productivity
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Fiscal Deficit Trends
Fiscal Deficit
Fiscal deficit is an economic phenomenon, where the Government's total expenditure surpasses the revenue generated . It is the difference between the government's total receipts (excluding borrowing) and total expenditure. Fiscal deficit gives the signal to the government about the total borrowing requirements from all sources |
The following is the trend of Fiscal Deficit observed in the last few years:
The finance minster has kept the target for fiscal deficit for the forth coming year i.e. 2013-14 at 4.8% of the GDP. This would be highly challenging in the present context.
Agriculture
- There has been a 22% hike in the planned budgetary allocation for agriculture sector. Rs 27, 049 crore has been allocated for agriculture
this out which Rs. 3,415 would be for farm research.
- Farm credit has been enhanced to Rs. 7,00,000 crore from Rs. 5,75,000 crore.
- Budget has allocated Rs. 1000 crore for extending the yield revolution to eastern India, particularly in Assam, Bihar, Chattisgarh and West Bengal.
- Budget provides Rs. 500 crores for crop diversification in Punjab and Haryana region. As the region is marred by decline in water table and soil salinisation.
- In his budget speech, finance minster has also announced setting up of the Indian Institute of Agriculture Bio-Technlogy at Ranchi, Jharkhand, as well as a National Institute of Biotic stress Management for addressing plant protection issues at Raipur, Chattisgarh.
Social Sector
The social sector spending has witnessed a nominal increase in the budget of this year.- The allocation to Ministry of Rural Development has gone up marginally by 5%.
- The allocation for MANREGA has remained to be the same vis-a-vis last year.
- The allocation for Pradhan Mantri Gram Sadak Yojna has been cut by more then 9% vis-a-vis last year.
- The budget has hiked the funds for rural housing scheme, Indra Awas Yojna.
- A 13% hike in the Integrated Child Development Scheme retaining focus on malnutrition since the Hungama report.
- National Rural Health Mission set to be expanded to urban slums covering 779 cities.
- The allocation for the education sector has been given a hike of 7.2%.
Clarity in defining FDI and FII
Budget 2013-14 will also be remembered for removing ambiguity related to identifying FDI and FII. In the budget speech finance minster defined a categorical benchmark to distinguish FDI from FII. From now if an investor has a stake of 10% or less in a company, it will come under the category of FII. However any stake in a company that is above 10% would be treated as FDI.
Other major highlights
- The budget has allocated Rs. 3.511 crore to the Minority Affairs Ministry, and increase of 12% over last fiscal year.
- The budget has provision to tax the super rich. Now those who have annual income of over 1 crore per annum has to give 10% surcharge.
- The budget has proposed tax deducted at source (TDS) of 1% to be charged on the transfer of immovable property over 50 lakhs.
- The budget 2013-14 has reannounced the Generation Based Incentive for the Wind Energy. A sum of Rs. 800 crores will be given to the Ministry of New and Renewable Energy.
- Rs. 150 crore is allocated for the "neighbourhood development project" at Kundankulam in Tamil Nadu.
- The textile sector gets a major thrust with Rs. 2400 crore allocated for modernization of the power loom sector.
- The food subsidy budget for the year 2013-14 is Rs. 80,000 crore, this is Rs. 500 crore less then the revised estimates of 2012-13.
- Rs. 6,257 crore has been allocated for Ministry of Science and Technolgy. Rs. 5,6515 crore has been allocated for the Department of Science, and Rs. 5880 for the Department of Energy.
- Government to come up with Infrastructure tax-free bonds of Rs. 50, 000 crore in 2013-14.
- Rs. 5,000 crore alloted to NABARD to finance construction for warehousing.
- Budget has allotted Rs. 200 crore to fund efforts to produce and market products based on a few selected innovations that can benefit common man.
