Finance minister, P. Chidambaram presented his 8th and India’s 82nd Union budget on 28th February 2013.
Key Highlights: * No change in slabs and rate for personal income tax. * Tax credit of Rs 2000 to be provided to every person to having income of up to Rs 5 lakh, this will benefit 1.8 crore people. * 5 to 10 per cent surcharge on domestic companies whose taxable income exceeds Rs 10 crore. * Commodities transaction tax levied on non-agriculture commodities futures contracts at 0.01 per cent. * No change in peak rate of customs duty for non-agriculture products. * Import duty raised on set-top boxes from 5 to 10 per cent to safeguard interest of domestic producers. * Education cess to continue at 3 per cent. * Import duty raised from 75 to 100 per cent on luxury vehicles. * Duty free limit on gold raised to Rs 50,000 in case of male and Rs 100,000 in case of female. * Specific excise duty on cigarettes and cigars raised by 18 per cent. * Excise duty on SUVs to be increased to 30 per cent from 27 per cent, SUVs registered as taxis exempted. * Vocational courses offered by state-affiliated institutes to be exempted from services tax. * Duty on mobiles above Rs 2,000 raised from one to six per cent, based on their maximum retail prices. * Service tax to be levied on all a/c restaurants. * One time voluntary compliance scheme for service tax defaulters to be introduced. Interest and penalties to be waived. * Direct tax proposals to yield Rs 13,300 crore, indirect tax proposal to give Rs 4,700 crore. * Fiscal deficit will be 5.2 per cent in current year and 4.8 per cent in the next fiscal.
Impact Of Budget On Social Sector:
Education:
Highlights: * 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.
Comments:
Finance minister Chidambaram has allocated Rs 65,867 crore to the ministry of human resource development (MHRD) — an increase of 17 per cent compared to last fiscal year 2012-13.
While allocations for education sector have increased significantly, overall expenditure performance has been weak with a large portion of allocated funds remaining unutilized. Funds are released only at the end of the year due to which the funds cannot be effectively utilized.
Political decentralization must be supported by financial decentralization. Once the fund is parked in the ministry, schemes and programmes must be immediately clocked so that fund flow is made available to the local self government bodies within a month
The focus on Sarva Shiksha Abhiyan is not enough. Aspirations for higher education have enhanced exponentially among Indian Youth. Government aided higher education and vocationalisation of education is the need of the hour.
Health Care:
Highlights:
* Mid Day Meal Scheme (MDM) to be provided Rs. 13,215 crore. * The Integrated Child Development Scheme has been allocated 17,700 crore in 2013-14, representing an increase of 11.7 percent, from Rs 15,850 crores. * Allocation of funds for Drinking water and Sanitation * Eligibility conditions for life insurance policies of persons suffering disabilities and certain ailments to be liberalized. * Extension of Rashtriya Swasthya Bima Yojana (RSBY) to other categories.
Comments:
The scope of Rashtriya Swasthya Bima Yojna (RSBY) has been expanded to widen its coverage, to include rag pickers, rickshaw pullers, taxi and autorickshaw drivers, miners, sanitation workers and toddy workers which is also expected to have an impact in improving access to healthcare for the marginalized section of the society.
Public expenditure on health in India is one of the lowest in the world i.e. 1.3 percent of the GDP and forty percent children of 0-5 years were suffering from malnutrition. Again, appropriate utilization of allocated funds plays a major role in addressing these problems.
Empowerment, safety and security of women:
Highlights:
Rs 1000 crore announced for Nirbhaya Fund to promote safety of women.
Additional Rs 200 crore has been allocated for the Ministry of Women and Child Development to fight gender inequality.
Proposal for setting up India's first all-women public sector bank
Comments:
To appease the angry youth, the budget has announced Rs. 1000 crore as seed money for a ‘Nirbhaya Fund’. However, there is no clear mandate for this Fund – that it will be used for rehabilitation of survivors of sexual violence and acid attacks. This fund should try to cover various demand by women groups such as 1. More toilets for women in public places. 2. More ‘Ladies special’ trains and buses
Employment and Skill Development
Highlights:
* Rs 1 lakh crore allotted for enhancing skills of youth. * Rs. 1000 crore set aside for National Skill Development Corporation.
Comments:
Agriculture:
Now moving on to the agricultural sector, some of the important provisions are * Interest Subvention Scheme extended which provides 1.5% interest subvention to farmers who take long term loans and additional 2% for short term crop loans. Farmers repaying loan in time can get loans at 4% interest. * National Institute of Biotech Stress Management is to be established in Raipur and Chattisgarh to harness the potentials of emerging tools of bio-technology in agricultural sector. * Pilot scheme to replant and rejuvenate coconut gardens extended to entire state of Kerala. * Credits guarantee Fund to be created in the Small Farmers' Agri Business Corporation with an initial corpus of Rs.100 crore. * National Livestock Mission to be set up with a provision of Rs.307 crores to augment the availability of feed and fodder. * Additional Rs.10, 000 crores to be provided for National Food Security to provide warehousing facilities. * We can see that there is 22% hike in Agricultural credit which is a good sign. * The budget could also include provisions regarding "Transfer of technology" and attempts to "Modernize agricultural practices". Banking:
* In the banking sector the important aspect is the provision of Rs.6,000 crore to Rural Housing Fund and Rs.2,000 crores to Urban Housing Fund. * This is to develop the infrastructure facilities which are a key indicator of the Economy.
Insurance: * Insurance companies can open branches in Tier 2 and below cities without the prior approval of Insurance Regulatory and Development Authority (IRDA). * The information provided in Know Your Customer (KYC) verification is sufficient to acquire insurance policies. * Banking correspondent can sell micro-insurance products to achieve the goal of having an office of LIC and an office of atleast 1 public sector general insurance company in towns with population of more than 10,000.
Taxation: * The income tax forms one of the major portions of a Union Budget. * Tax Administration Reforms Commission to be set up to review the application of tax policies and tax laws. * There is a reduction in Securities Transaction tax.
Duty on Imported Luxury goods such as high-end motor vehicles, motor cycles, yachts and similar vessels has been increased. * TDS at the rate of 1% on the value of the transfer of immovable properties if it exceeds Rs.50 lakhs. * Voluntary Compliance Encouragement Scheme to motivate assessees to file service tax returns and pay tax dues to be introduced.(Out of 17 lakhs assessees only 7 lakhs file returns regularly).
Fiscal deficit, CAD and Inflation:
Clears definition over Foreign Institutional Investment (FII) & Foreign Direct Investment (FDI) i.e. foreign investments bellow 10% of the enterprise is called FIIs and above 10% is called FDI .Focus on Fiscal consolidation was given as to decrease the fiscal deficit from 5.3% of GDP to 4.8%.Mainly concerned about current account deficit, because it acts as a working capital for the economy if there is a deficit here it would directly affect the day to day’s work. So the plan was to get foreign capital like FDIs, FIIs and ECBs to reduce this. Different measures were taken to control Inflation and Deflation and maintain a balance between them.
Budget Estimates:
Plan expenditure is placed at Rs.5.5 lakh crore and Non Plan Expenditure is estimated at Rs.11 lakh crore. There was an increase in 30% of the amount spent on planed expenditure compared to last year. So the focus was more on the planning commission and the ministries for their different schemes and policies. For non planned in was as usual most amount spent on, this time it was around Rs.11lakh crore.
Foreign Trade: Oil Prices play a very important role for us, because we have huge amount of crude oil import from the middle-east. Even a slight increase there would affect us in big way like an increase in taxes, increase in transportation, increase in subsidies given. In order to overcome this government is trying to find out about the oil reserves available in India like sea shores of Mumbai and Assam region. They are also encouraging for renewable sources and green energy. To maintain a proper Balance Of Payments , there has been an increase of some import duties like set-top-boxes,imported cars and bikes,etc and to increase exports there is been some steps taken. So that we have a good amount of Forex reserves which would indirectly affect the Rupee value.
Proposals:
After analyzing the budget, we found a gap that no much importance was given to NGOs.So our proposal was to introduce NGOs as a separate sector. As we have seen in the recent times that there is a lot of NGOs working in different parts of the country.tha main objectives of these NGOs are in social sectors like health, education, rural development ,etc. Recently Mr.Azim Premji gave Rs.12,300 crores to his foundations, likewise Infosys is doing good work in Akshayapatra (mid-day meal),etc. If govt supports such kinds of activities then the common objectives could be achieved and there would an increase in our GDP growth.
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