What follows is my live blog of the budget speech, 2013, on Feb 28 by Mr. P. Chidambaram. Read the full budget speech.
To end: We are the 10th largest economy. We could become 8th or 7th by 2017. (Me: Yeah, two or three will die off. ;)
12:30 pm: Reduction in STT in equity futures to 0.01%. MF redemptions from 0.25% to 0.001%. MF ETF purchases from 0.1% to 0.001% .
Commodity Derivatives (other than agri products) will have Comm Transaction tax (CTT) of 0.01%.
Well laid out procedure with officer and panel (with judge) for GAAR, from 2016.
To encourage env friendly vehicles, parts of electric hybrid cars to be extended. Rice bran cake export duty removed.
NO SLAB CHANGES! Screw inflation, you're still paying the same taxes.
Lots of indirect tax changes folks, bear with me, can't type in all. Will do the analysis later.
Ship and vessels will have no excise duty.
Cigarettes: excise duty increased to 18%.
Excise on SUVs increased from 27% to 30% except for taxis.
Mobile phones get duty of 1%. For more than Rs. 2,000 pay 6% now. (Get that google nexus now!)
Service Tax will now apply to a/c restaurants even those that don't serve liquor.
GST must be introduced. 9,000 cr. set aside for paying up states that are jittery.
12:15 pm: Plan expenditure at 5 lakh cr., non plan expenditure at 11 lakh cr. Thank you for listening, now pay the fees. By 2015, let's get the fiscal deficit to 3%.
Now for Tax Proposals.
Taxes are way too low, with tax-to-gdp of about 10%.
First bracket of Rs. 2 to 5 lakh to get a Rs. 2,000 tax credit. 1.8 crore taxpayers to benefit.
Only 42,800 person who admit to income of Rs. 1 crore. Surcharge of 10% on Rs. 1 crore income - to individuals and firms and everyone. Surcharge of 5% more on 10 crore.
Donations made to national children's fund will get 100% deduction.
Foreign subsidiary incentives to continue this year. As are lower withholding taxes for NRI inv in infra funds.
Venture Capital funds have pass through status, and so will AIFs registered as VC funds and Cat 1 VC funds (Angel funds). Wonderful!
12:05 pm: Defence to get 2 lakh crore. (2 trillion). And more if they ask, because natLIional security is paramount.
5600 cr. for ministry of space. Because there isn't any.
Now senti fundas about girl child, the youth and the poor. Please rescue us.
Okay now budget is talking about saving dignity of women. This has to be going somewhere real fast.
The "Nirbhaya" fund of Rs. 1,000 cr.! Okay, that did go somewhere real fast.
"Aapka paise, aapke haath", has been quoted. Uh oh.
11:50 am: Committee to check the financial competitiveness with international players.
14,000 cr. (last year 12,570 cr. ) for additional capital to public sector banks. You're now funding Kingfisher.
All PSU bank branches to have ATMs by 2014.
"No bank exclusively serves women"? Dude, what is wrong with you? Employs predominantly women, loans mostly to women. Welcome to India's first women's bank, with Rs. 1,000 cr. initial capital, as a public sector bank.
Ooh, Insurance. Nothing major for insurance other than no branch opening approvals in non-metros and banks to sell microinsurance. Group insurance for "homogeneous" groups, whatever that means.
Strengthening SEBI power is in consideration. With KYC, SEBI to simply procedure to allow entry of foreign portfolio investors like central banks, sovereign wealth funds etc. To remove FDI/FII confusion, we will follow broad principle that if investor has less than 10% = FII, more than 10%=FDI. Incredible way to increase FDI :)
FIIs can hedge to the extent of rupee exposure and give G-Secs as margin.
SEBI will create regulations for angel investors to make them AIF.
"Informed investors" can invest in non-IPO listings of SMEs. Gotta read more.
Stock exchanges to introduce separate debt areas to help the debt markets.
MF Distributors to become MF members of stock exchanges to expand reach.
11:40 am: home loan deduction increase to 2.5 lakh only for loans upto 25 lakh, taken in 2013-14. Not for existing, not for larger loans.
Shale gas exploration policy will be created. Nat gas terminal will be started next year.
Plans being developed for Chennai-Bengaluru industrial corridor.
MSME benefits to remain three years after it becomes a large entity, to help them not circumvent definitions. Okay that last bit was mine.
500 cr. to SIDBI for SME factory credit guarantees.
MCA to notify that money given to incubators forms part of CSR - the 2% that all cos need to spend!
11:30 AM: Total expenditure around 14.3 trillion.
Agri credit target of Rs. 7 trillion (lakh crore).
10 lakh per "FPO" for credit guarantee for small farmers has been announced. Need to see the full budget doc for this.
The national food security bill is a promise of the UPA govt, says the FM. He has set up, over the food subsidy, another Rs. 10,000 cr. for the gap created. (Bad!)
Govt projects more than 55 lakh cr in infra, in 12th plan. 47% by private sector.
Tax free bonds: Rs. 30,000 cr in 2011-12, 25,000 cr. in 2012-13, and another 50,000 cr. will be allowed in specific areas for 2013-14.
A company investing 100 cr. or more 2013 to 2015 will get a 15% investment allowance deduction = HUGE!
Zero customs duty for fab manufacturing (plant/machinery)
11 AM: Budget speech starts. FM does the usual fundas on we need to do everything, cut inflation, increase growth, cut deficit, keep everyone happy, etc. etc. "Some inflation is important" he says. Current account deficit is more important that the fisc situation, according to him.
Plan expenditure is 29% higher, to sounds of clapping. Er?
Health for all and education for all remain priorities. 37,330 cr. to the min of health and family affairs (rural and urban missions will get 21,000 cr.+). Rs. 4,727 cr. for medical education. 1000+ for homeopathy/unani/ayurveda types. Additional focus on child malnutrition and so on.
Clean drinking water and sanitation get 15,000 cr. +, higher by 2,000 cr. Another Rs. 1400 cr. for setting up filtration plants.
NREGA gets only 33,000 cr. (Phew) but the others like PMJSY together with NREGA get 80,000 cr. One replaced with another.
Glitch in Rajya Sabha shows that Housing loan interest deduction increased from 1.5 lakh to Rs. 2.5 lakh.