UNION BUDGET OF INDIA – 2013-2014
(Figures shown in Rupees) (1 Crore = 10 million; 1 Lakh = 0.1 million)
The Economy and the Challenges
- Getting back to potential growth rate of 8 per cent is the challenge facing the country.
- Slowdown in Indian economy has to be seen in the context of slowing global economic growth from 3.9 per cent in 2011 to 3.2 per cent in 2012.
- Between 2004 and 2008, and again in 2009-10 and 2010-11 the growth rate was over 8 per cent and crossed 9 per cent in four of those six years.
- XIth Plan period had average growth rate of 8 per cent, highest during any Plan period, entirely under the UPA Government.
- A new fiscal consolidation path with fiscal deficit at 5.3 per cent of GDP this year and 4.8 per cent of GDP in 2013-14 announced by the Government.
- Foreign investment in an imperative in view of the high current account deficit (CAD). FII, FDI and ECB three main source of CAD Financing. Foreign investment that is consistent with our economic objectives to be encouraged.
- Efforts in the past few months have brought down headline WPI inflation to about 7 per cent and core inflation to about 4.2 per cent.
- Faced with huge fiscal deficit, Government expenditure rationalized in 2012-13.
Health and Education
- Health for all and education to all remains priority.
- Rs. 37,330 crore allocated to the Ministry of Health & Family Welfare.
- New National Health Mission will get an allocation of Rs.21,239 crore.
- Rs.4,727 crore for medical education, training and research.
- Rs.150 crore provided for National Programme for the Health Care of Elderly.
- Ayurveda, Unani, Siddha and Homoeopathy are being mainstreamed. Allocation of Rs.1,069 crore to Department of AYUSH.
- Rs.1,650 crore allocated for six AIIMS-like institutions.
- Allocation of Rs.65,867 crore to the Ministry of Human Resource Development, an increase of 17 per cent over the RE of the current year.
- Rs.27,258 crore provided for Sarva Shiksha Abhiyaan (SSA).
- An increase of 25.6 per cent over RE of the current year for investments in Rashtriya Madhyamik Shiksha Abhiyan (RMSA).
- Rs.5,284 crore allocated to Ministries/Departments in 2013-14 for scholarships to students belonging to SC, ST, OBC, Minorities and girl children.
- Mid Day Meal Scheme (MDM) to be provided Rs.13,215 crore.
- Government committed to the creation of Nalanda University as a centre of educational excellence.
- Average annual growth rate of agriculture and allied sector was 3.6% during XIth Plan against 2.5% and 2.4% in IXth and Xth plans respectively.
- In 2012-13, total food-grain production will be over 250 million tonnes.
- Rs.27,049 crore allocated to Ministry of Agriculture, an increase of 22 per cent over the RE of current year.
- Agricultural research provided Rs.3,415 crore.
- Interest subvention scheme for short-term crop loans to be continued scheme extended for crop loans borrowed from private sector scheduled commercial banks.
- Bringing green revolution to eastern India a remarkable success. Rs.1,000 crore allocated in 2013-14.
- Rs.500 crore allocated to start a programme of crop diversification that would promote technological innovation and encourage farmers to choose crop alternatives.
- Rashtriya Krishi Vikas Yojana and National Food Security Mission provided Rs.9,954 crore and Rs.2,250 crore respectively.
- Allocation for integrated watershed programme increased from Rs.3,050 crore in 2012-13 (BE) to Rs.5,387 crore.
- Allocation made for pilots programme on Nutri-Farms for introducing new crop varieties that are rich in micro-nutrients.
- National Institute of Biotic Stress Management for addressing plant protection issues will be established at Raipur, Chhattisgarh.
- The Indian Institute of Agricultural Bio-technology will be established at Ranchi, Jharkhand.
- Pilot scheme to replant and rejuvenate coconut gardens implemented in some districts of Kerala and the Andaman & Nicobar extended to entire State of Kerala.
Farmer Producer Organizations
- Credit Guarantee Fund to be created in the Small Farmers’ Agri Business Corporation with an initial corpus of Rs.100 crore.
National Livestock Mission
- National Livestock Mission to be set up.
- A provision of Rs.307 crore made for the Mission.
- Additional provision of Rs. 10,000 crore for National Food Security Act.
Investment, Infrastructure and Industry
- Communication with investors to be improved to remove any apprehension or distrust, including fears about undue regulatory burden.
- Need of new and innovative instruments to mobilise funds for investment in infrastructure sector. Measures such as:
- Infrastructure Debt Funds (IDF) to be encourged,
- IIFCL to offer credit enhancement.
- Infrastructure tax-free bond of Rs.50,000 crore in 2013-14,
- Build roads in North eastern states and connect them to Myanmar with assistance from WB & ADB,
- Raising corpus of Rural Infrastructure Development Fund (RIDF) to Rs.20,000 crore and Rs.5,000 crore to NABARD to finance construction for warehousing. Window to Panchayats to finance construction of godowns.
- A regulatory authority for road sector.
- 3000 kms. of road projects in Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh will be awarded in the first six months of 2013-14.
Cabinet Committee on Investment
The Cabinet Committee on Investment (CCI) has been set up. Decisions have been taken in respect of a number of gas, power and coal projects.
- Companies investing Rs.100 crore or more in plant and machinery during the period 1.4.2013 to 31.3.2015 will be entitled to deduct an investment allowance of 15 per cent of the investment.
- Incentives to semiconductor wafer fab manufacturing facilities, including zero customs duty for plant and machinery.
- Need to incentivise greater savings by household sector in financial instruments.
- Following measures proposed:
- ™ Plans for seven new cities have been finalized and work on two new smart industrial cities at Dholera, Gujarat and Shendra Bidkin, Maharashtra will start during 2013-14.
- Delhi-Mumbai Industrial Corridor (DMIC) to be provided additional funds during 2013-14 within the share of the Government of India in the overall outlay, if required.
- Chennai Bengaluru Industrial Corridor to be developed.
- Preparatory work has started for Bengaluru Mumbai Industrial Corridor.
Leh-Kargil Transmission Line
- Government to construct a transmission system from Srinagar to Leh at a cost of Rs.1,840 crore.
- Preparatory work underway to build a grid connecting waterways, roads and ports.
- A policy to encourage exploration and production of shale gas will be announced.
- The 5 MMTPA LNG terminal in Dabhol, Maharashtra will be fully operational in 2013-14.
- In the medium to long term need to reduce our dependence on imported coal. One way forward is to devise a PPP policy framework with Coal India Limited as one of the partners.
- Ministry of Coal to announce Government’s policies in due course.
- Guidelines regarding financial restructuring of DISCOMS have been announced. State Government urged to prepare the financial restructuring plan, quickly sign MoU and take advantage of the scheme.
Micro, Small and Medium Enterprises
- Benefits or preferences enjoyed by MSME to continue upto three years after they grow out of this category.
- Refinancing capacity of SIDBI raised to Rs.10,000 crore.
- Another sum of Rs.100 crore provided to India Microfinance Equity Fund.
- A corpus of Rs.500 crore to SIDBI to set up a Credit Guarantee Fund for factoring.
- A sum of Rs.2,200 crore during the XIIth Plan period to set up 15 additional Tool Rooms and Technology Development Centres with World Bank assistance.
- Technology Upgradation Fund Scheme (TUFS) to continue in 12th Plan with an investment target of Rs.151,000 crore.
- A new scheme called the Integrated Processing Development Scheme will be implemented in the XIIth Plan to address the environmental concerns of the textile industry.
- Support to measures to be taken to boost exports of goods and services.
- A standing Council of Experts to be constituted in the Ministry of Finance to analyze the international competitiveness of the Indian financial sector.
- Compliance of public sector banks with Basel III regulations to be ensured. Rs.14,000 crore provided in BE 2013-14 for infusing capital.
- Proposal to set up India’s first Women’s Bank as a public sector bank. Provision of Rs.1,000 crore as initial capital.
- Rs.6,000 crore to Rural Housing Fund in 2013-14.
- National Housing Bank to set up Urban Housing Fund. Rs.2,000 crore to be provided to the fund in 2013-14.
- A multi-pronged approach to increase the penetration of insurance, both life and general, in the country.
- A comprehensive social security package to be evolved for unorganized sector by facilitating convergence among different schemes.
- ™ SEBI will simplify the procedures and prescribe uniform registration and other norms for entry for foreign portfolio investors.
- ™ Rule that, where an investor has a stake of 10 per cent or less in a company, it will be treated as FII and, where an investor has a stake of more than 10 per cent, it will be treated as FDI will be laid.
- ™ FIIs will be permitted to participate in the exchange traded currency derivative segment to the extent of their Indian rupee exposure in India.
- ™ FIIs will also be permitted to use their investment in corporate bonds and Government securities as collateral to meet their margin requirements.
- ™ Small and medium enterprises, to be permitted to list on the SME exchange without being required to make an initial public offer (IPO).
- ™ Stock exchanges to be allowed to introduce a dedicated debt segment on the exchange.
Backward Regions Grant Fund
- New criteria for determining backwardness to be evolved and reflect them in future planning and devolution of funds.
- Target of 50 million people in the XIIth Plan period, including 9 million in 2013-14.
- Allocation for Defence increased to Rs.203,672 crore including Rs.86,741 crore for capital expenditure.
- Constraints not to come in the way of providing any addition requirement for the security of nation.
Science and Technology
- Despite constraints substantial enhancements given to Science and Technology, Space and Atomic Energy.
- Rs.200 crore to be set apart to fund organizations that will scale up S&T innovations and make these products available to the people.
Institutions of Excellence
- A grant of Rs.100 crore each made to 4 institution of excellence.
- Plan expenditure is placed at Rs.555,322 crore.
- Non Plan Expenditure is estimated at Rs.1109,975 crore.
- Fiscal deficit for the current year contained at 5.2 per cent and for the year 2013-14 at 4.8 per cent.
- Revenue deficit for the current year at 3.9 per cent and for the year 2013-14 at 3.3 per cent.
- By 2016-17 fiscal deficit to be brought down to 3 per cent, revenue deficit to 1.5 per cent and effective revenue deficit to zero per cent.11
- Relief for Tax Payers in the first bracket of Rs.2 lakhs to Rs.5 lakhs. A tax credit of Rs.2000 to every person with total income upto 5 lakhs.
- Surcharge of 10 per cent on persons (other than companies) whose taxable income exceed Rs.1 crore to augment revenues.
- Increase surcharge from 5 to 10 per cent on domestic companies whose taxable income exceed Rs.10 crore.
- In case of foreign companies who pay a higher rate of corporate tax, surcharge to increase from 2 to 5 per cent, if the taxable income exceeds Rs.10 crore.
- In all other cases such as dividend distribution tax or tax on distributed income, current surcharge increased from 5 to 10 per cent.
- Additional surcharges to be in force for only one year.
- Permissible premium rate increased from 10 per cent to 15 per cent of the sum assured by relaxing eligibility conditions of life insurance policies for persons suffering from disability and certain ailments.
- Investment allowance at the rate of 15 per cent to manufacturing companies that invest more than 100 crore in plant and machinery during the period 1.4.2013 to 31.3.2015.
- Concessional rate of tax of 15 per cent on dividend received by an Indian company from its foreign subsidiary proposed to continue for one more year.
- Securitisation Trust to be exempted from Income Tax. Tax to be levied at specified rates only at the time of distribution of income for companies, individual or HUF etc. No further tax on income received by investors from the Trust.
- Investor Protection Fund of depositories exempt from Income-tax in some cases.
- TDS at the rate of 1 per cent on the value of the transfer of immovable properties where consideration exceeds Rs.50 lakhs. Agricultural land to be exempted.
- A final withholding tax at the rate of 20 per cent on profits distributed by unlisted companies to shareholders through buyback of shares.
- Proposal to increase the rate of tax on payments by way of royalty and fees for technical services to non-residents from 10 per cent to 25 per cent.
- A number of administrative measures such as extension of refund banker system to refund more than 50,000, technology based processing, extension of e-payment through more banks and expansion in the scope of annual information returns by Income-tax Department.
- No change in the normal rates of 12 per cent for excise duty and service tax.
- No change in the peak rate of basic customs duty of 10 per cent for non-agricultural products.
- Period of concession available for specified part of electric and hybrid vehicles extended upto 31 March 2015.
- Duty on specified machinery for manufacture of leather and leather goods including footwear reduced from 7.5 to 5 per cent.
- Duty on pre-forms precious and semi-precious stones reduced from 10 to 2 per cent.
- Export duty on de-oiled rice bran oil cake withdrawn.
- Duty of 10 per cent on export of unprocessed ilmenite and 5 per cent on export on ungraded ilmenite.
- Concessions to air craft maintenance, repair and overhaul (MRO) industry.
- Duty on Set Top Boxes increased from 5 to 10 per cent.
- Duty on raw silk increased from 5 to 15 per cent.
- Duties on Steam Coal and Bituminous Coal equalized and 2 per cent custom duty and 2 per cent CVD levied on both kinds coal.
- Duty on imported luxury goods such as high end motor vehicles, motor cycles, yachts and similar vessels increased.
- Duty free gold limit increased to Rs.50,000 in case of male passenger and Rs.100,000 in case of a female passenger subject to conditions.
- Relief to ready made garment industry. In case of cotton, zero excise duty at fibre stage also. In case of spun yarn made of man made fibre, duty of 12 per cent at the fibre stage.
- Handmade carpets and textile floor coverings of coir and jute totally exempted from excise duty.
- To provide relief to ship building industry, ships and vessels exempted from excise duty. No CVD on imported ships and vessels.
- Specific excise duty on cigarettes increased by about 18 per cent. Similar increase on cigars, cheroots and cigarillos.
- Excise duty on SUVs increased from 27 to 30 per cent. Not applicable for SUVs registered as taxies.
- Excise duty on marble increased from `30 per square meter to ` 60 per square meter.
- Proposals to levy 4 per cent excise duty on silver manufactured from smelting zinc or lead.
- Duty on mobile phones priced at more than `2000 raised to 6 per cent.
- MRP based assessment in respect of branded medicament of Ayurveda, Unani, Siddha, Homeopathy and bio-chemic systems of medicine to reduce valuation disputes.
- Proposals to levy Service Tax on all air conditioned restaurant.
- For homes and flats with a carpet area of 2,000 sq. ft. or more or of a value of 1 crore or more, which are high-end constructions, where the component of services is greater, rate of abatement reduced from from 75 to 70 per cent.
- Tax proposals on Direct Taxes side estimated to yield to Rs.13,300 crore and on the Indirect Tax side Rs.4,700 crore.
- Good and Services Tax
- A sum of Rs.9,000 crore towards the first instalment of the balance of CST compensation provided in the budget.
Published on: March 3, 2013