Union Budget 2014 Simplified | srei

Union Budget 2014 Simplified

The Hon’ble Finance Minister P. Chidambaram presented the Interim Budget for the fiscal year 2014-15 on Monday, February 17, 2014 to cover expenditure until the governments term ends in May, 2014. This year’s union budget is a significant economic and financial event in the light of the upcoming elections. The government's term ends in May and the measure was necessary to cover expenditure until a national election is completed and a new administration is installed. Chidambaram said India's economy, the 11th largest in the world, had stabilised and was showing signs of turnaround though his speech was marred by protests over the proposed division of a southern state. Chidambaram said that the budget deficit has narrowed and pledged to keep public spending steady. Let us take a closer yet simplified look at this personalised cash flow of the government.

Is the government planning to give a push to the sectors which are lagging behind? We have attempted to outline the government’s yearly economic plan. The significant pointers are as follows:

  • The income tax rates have to be kept unchanged.
  • The planned expenditure for the year 201415 will be Rs 5,55,322 crore
  • Non Plan expenditure is estimated at Rs. 12,07,892 crore
  • Fiscal deficit is to be 4.6%
  • Growth in the third and fourth quarter is expected to be 5.2%
  • The foreign exchange reserves this year are up by $15 billion.
  • The fiscal deficit target set for 2017 is 3%
  • Growth rate for the whole year is estimated at 4.9 percent.

 

As it establishes the cost constraint for a program, project or operation, the Union Budget is awaited by all sectors of the economy.  In India, buying a property is considered to be a milestone in terms of financial investments and home buyers would be interested to know that rural housing fund has been given a sanction of Rs 6000 crore where as 2000 crore has been allotted to the urban housing fund.  An excise duty reduction, that too only up to June this year, came as a surprise. Excise duty on small cars reduces to 8% where as SUVs reduces to 28%. To stimulate growth in the capital goods sector excise duty has been cut from 12 to 10 per cent. The expenditure on education has risen to 79, 251 crore whereas there has been a Rs 2,46,397 crore budget allotted to food, fertilizer and fuel subsidy. 

The modest fiscal consolidation plan unveiled is a realistic effort to correct the country's macroeconomic imbalances against a backdrop of subdued economic growth.