some Highlights of 82nd Union Budget of India

Not many of us understand Finance or the financial implications of the Budget ~ yet there is so much clamour to hear and discuss the budget.. !  Union Finance Minister P Chidambaram presented his 8th Union Budget and India's 82nd. This is the last Union Budget before the 2014 Lok Sabha elections. May not have any direct relationship – the rate of pure gold 24K was Rs.2967/- per gram as against 3009 on 18.2.13; the standard gold was Rs.2774/- per gram as against 2813 of 18.2.13.

Chidambaram in his budget speech spoke of ‘Global economic growth slowing from 3.9 percent in 2011 to 3.2 percent in 2012’.  He stated that  India is part of the global economy: our exports and imports amount to 43 percent of GDP and two-way external sector transactions have risen to 108 percent of GDP. We are not unaffected by what happens in the rest of the world and our economy too has slowed after 2010-11.  He added that  however, there is no reason for gloom or pessimism. Even now, of the large countries of the world, only China and Indonesia are growing faster than India in 2012-13. And in 2013-14, if we grow at the rate projected by many forecasters, only China will grow faster than India.

A simple search on Budget highlights yielded some of the following :

•        Tax credit of Rs. 2,000 for income upto Rs. 5 lakh

•        Surcharge of 10 per cent for taxable incomes above Rs. 1 crore, No review of tax slabs

•        Excise duty on SUVs to be increased to 30 per cent from 27 per cent, SUVs registered as taxis exempted

•        Rs 532 crore to make post offices part of core banking

•        Duty-free limits raised to Rs 50000 for men and Rs 1 lakh for women

•        18% rise in excise duty on Cigarattes, cigars and cheerots

•        Service tax on all A/C restaurants

•        Royalty tax hiked from 10% to 25%

•        Tax Deducted at Source to be fixed at 1% on land deals over Rs 50 lakh

•        No change in peak custom, excise rates.

•        5 to 10 per cent surcharge on domestic companies whose taxable income exceeds Rs 10 crore

I have nothing to cheer or jeer, as none of the above would seemingly affect me or alter my way of life, in any way.  Then there is announcement about  all-woman banks across the country.  There are women entrepreneurs, women heading bank branches and a couple of them heading banks too…. Is there any necessity for ‘all-women’ bank and in which would that help the women of India ?  Are not banks today funding entrepreneurial initiatives by women?, that only an exclusive bank would do.   Anyway, our FM has announced an allocation of Rs 1,000 crore as initial capital to start the first all-woman bank that employs women, helps fund enterprises started by women.

There is another – Rs.1,000 crore Nirbhaya fund. Chidambaram urged the Ministry of Women and Child Development to figure out ways and strategies to utilise the fund in a way that it helps women be secure in public spaces. There have been some incidents recently which have cast shadow on the safety of women in public places. There certainly is need for curbing any violence anywhere against women, especially in public places and that way more funds to Law Enforcement Agencies, clearer directions and stringent laws are the need of the hour.  May be, we have more ‘All women Police Stations, with those (wo)manning those equipped with good vehicles and sophisticated equipments’.   The FM also announced a Rs 200 crore-allocation to the Ministry of Women and Child Development to make sure that vulnerable women – single mothers, widows and suchlike – are taken care of and can live with dignity.

If you are a salaried employee and expected some relief ~ there is nothing in your way. There will be no change in tax rates or slabs for FY14, Finance Minister P Chidambaram said in his Budget speech. He has announced a tax credit of Rs 2000 for Rs 2-5 lakh tax payers bracket. Chidambaram said that only 42,800 people in India last year declared a taxable income over Rs 1 crore. Therefore, he levied a surcharge of 10% on people earning a taxable income of Rs 1 crore and above ~ a la ‘super rich tax’.

White is right in India in almost every respect except income — where only black is the King – people flout all rules and how many of us can claim totally clean ?  Sad, that the FM has admitted that there are only 42800 who admitted to a taxable income exceeding 1 crore per year; does not the Govt, FM, the authorities know that this figure is obviously low ~ with so many luxury cars getting sold, there should be tens of thousands in each city.  Will the Govt ever have the gumption to punish all those tax offenders.  A seemingly popular measure announced in today’s budget is the increase in the tax deduction allowed on home loan interest by Rs 1 lakh. Currently a deduction of Rs 1.5 lakh is allowed to someone buying his first home. The extra deduction of Rs 1 lakh comes with caveats. The first caveat is that the house should be bought during the period between April 1, 2013, and March 31, 2014. The home loan taken should not be more than Rs 25 lakh. And the value of the house being bought should not exceed Rs 40 lakh; if you add another couple of warranties as we put on policies, perhaps you can exclude almost all……….

The Minister also suggested initiation of pilot programme on Nutri-Farms for introducing new crop varieties that are rich in micro-nutrients such as iron-rich bajra, protein-rich maize and zinc-rich wheat.  He has proposed to provide a sum of upto `200 crore to start the pilots. Ministry of Agriculture will formulate a scheme and he hopes that  that agri businesses and farmers will come together to start a sufficient number of pilots in the districts most affected by malnutrition.

That is Budget 2013-14 for you, Happy ?   The only thing that made it interesting for me was his concluding quote from Thiruvalluvar :

கலங்காது கண்ட வினைக்கண் துளங்காது

தூக்கங் கடிந்து செயல்.

~ meaning -  "What clearly eye discerns as right, with steadfast will; and mind unslumbering, that should man fulfil". 

With regards – S. Sampathkumar

28^th Feb 2013