[Budget] Union Budget 2014: Highlights

Finance Minister Arun Jaitley said he would uphold the fiscal deficit target of 4.1 per cent inherited from the last government, while incremental steps were also announced to boost capital spending and reassure foreign investors that they would get fair treatment.

Here are the highlights of the budget:


FISCAL DEFICIT
- Vows to keep fiscal deficit target of 4.1 per cent of GDP for 2014/15
- Fiscal deficit forecast to fall to 3.6 per cent of GDP in 2015/16, 3 per cent of GDP in 2016/17
- Finance Minister says: "We cannot spend beyond our means"
- Tax-to-GDP ratio must be raised, says Jaitley


GROWTH
- GDP growth in 2014/15 estimated at 5.4-5.9 per cent year-on-year
- Aims for sustained growth of 7-8 per cent in the next 3-4 years
- Nominal GDP growth in 2014/15 expected to be 13.4 per cent year-on-year
- Must usher in policies for higher growth, lower inflation


POLICY REFORMS
- Raises limit on foreign direct investment in defence sector to 49 per cent from 26 per cent
- Raises FDI limit in insurance sector to 49 per cent from 26 per cent
- Pledges to provide necessary tax changes to introduce real estate investment trusts and infrastructure investment trusts


TAXATION
- Jaitley vows to maintain a stable tax environment but stops short of scrapping rules on retrospective tax
- All pending cases of retrospective tax for direct transfers to be examined by committee before action is taken
- Retains tax collection targets and makes no major changes to direct tax rates
- Government will not ordinarily bring any change retrospectively that creates a new liability
- Aims to approve goods and services tax by end of this year
- Extends 5 per cent withholding tax on corporate bonds until June 30 2017
- Extends 10-year tax holiday for power generation companies
- Imposes 10 per cent customs duty on some telecom products
- Introduces uniform customs duty on all types of coals
- Raises export tax on bauxite to 20 per cent from 10 per cent
- Raises income tax exemption limits for individuals


REVENUES
- Revenue deficit seen at 2.9 per cent of GDP in 2014/15
- Capital receipts forecast to total Rs 739.5 billion in 2014/15
- Targets Rs 634.25 billion from total stake sales of companies in 2014/15; Rs 150 billion from stake sales of non-government companies


EXPENDITURE
- Total expenditure forecast at Rs 17.95 trillion in 2014/15
- To provide Rs 134.5 billion capital infusion to state-run banks in 2014/15
- Allocates Rs 2.29 trillion for defence spending in 2014/15; capital outlay raised by Rs 50 billion over interim budget
- Earmarks Rs 70.6 billion to create 100 "smart cities"
- Proposes Rs 50 billion for warehousing capacity
- Plans Rs 100 billion of private capital for start-up companies
- Proposes Rs 378 billion of investment in national and state highways
- Rs 40 billion for affordable housing planned through national housing bank; Rs 80 billion proposed for rural housing scheme


BORROWING
- Net market borrowing forecast at Rs 4.6 trillion in 2014/15
- Gross market borrowing forecast at Rs 6 trillion in 2014/15 versus Rs 5.97 trillion in interim budget
- Forecasts interest payments and debt servicing will total Rs 4.27 trillion in 2014/15


SUBSIDIES
- Plans to make food and petroleum subsidies better targeted
- Rural job-guarantee scheme, which provides 100 days of paid employment a year, will become more focused on asset creation
- Food subsidy bill estimated at Rs 1.15 trillion for 2014/15
- Petroleum subsidy bill seen at Rs 634.27 billion for 2014/15
- Fertiliser subsidy bill forecast at Rs 729.7 billion for 2014/15


AGRICULTURE
- Will focus on acheiving 4 per cent growth per year in agriculture
- Sets farm credit target at Rs 8 trillion for 2014/15
- Proposes a long-term rural credit fund with an initial corpus of Rs 50 billion


FINANCE MINISTER COMMENTS
- "We have no option but to take some bold steps to spurt economy; these are only the first steps and are directional."
- "The fiscal deficit target of 4.1 per cent put out by my predecessor is indeed daunting. But I have decided to accept the target."
- "The task before me is challenging because we need to revive growth in manufacturing and infrastructure. We need to introduce fiscal prudence and cannot spend beyond our means. For this, the tax-GDP ratio must be improved."
- "A high-level committee will scrutinize retrospective tax cases. We are committed to providing a stable tax regime."
- "[India's farming sector] has risen to the challenge of making India largely self sufficient in providing food for growing population" but there is "an urgent need to set up investment, both public and private"