Union Budget 2013 Highlights

India must make tough spending choices, finance minister P Chidambaram said on 28 February, 2013, even as he unveiled a bigger-than-expected outlay for the coming fiscal year in one of the most highly anticipated Indian budgets of recent years.

Following are highlights of the Budget:

FISCAL DEFICIT
● Fiscal deficit seen at 5.2 point of GDP in 2012/13
● Fiscal deficit seen at 4.8 point of GDP in 2013/14
● Faced with huge fiscal deficit, India had no choice but to rationalize expenditure

BORROWING
● Gross market borrowing seen at 6.29 trillion rupees in 2013/14
● Net market borrowing seen at 4.84 trillion rupees in 2013/14
● Short-term borrowing seen at 198.44 billion rupees in 2013/14
● To buy back 500 billion rupees worth of bonds in 2013/14

SUBSIDIES
● 2013/14 major subsidies bill estimated at 2.48 trillion rupees from 1.82 trillion rupees
● Petroleum subsidy seen at 650 billion rupees in 2013/14
● Revised petroleum subsidy for 2012/13 at 968.8 billion rupees
● Estimated 900 billion rupees spending on food subsidies in 2013/14
● Revised food subsidies at 850 billion rupees in 2012/13
● Revised 2012/13 fertiliser subsidy at 659.7 billion rupees

GROWTH
● India faces challenge of getting back to its potential growth rate of 8 point
● India must unhesitatingly embrace growth as highest goal

SPENDING
● Total budget expenditure seen at 16.65 trillion rupees in 2013/14
● Non-plan expenditure estimated at about 11.1 trillion rupees in 2013/14
● India's 2013/14 plan expenditure seen at 5.55 trillion rupees
● Revised estimate for total expenditure is 14.3 trillion rupees in 2012/13, which is 96 point of budget estimate
● Set aside 100 billion rupees towards spending on food subsidies in 2013/14

REVENUE
● Expect 133 billion rupees through direct tax proposals in 2013/14
● Expect 47 billion rupees through indirect tax proposals in 2013/14
● Target 558.14 billion rupees from stake sales in state-run firms in 2013/14
● Expect revenue of 408.5 bln rupees from airwave surcharges, auction of telecom spectrum, licence fees in 2013/14

CURRENT ACCOUNT DEFICIT
● India's greater worry is the current account deficit - will need more than $75 billion this year and next year to fund deficit

INFLATION
● Food inflation is worrying, will take all steps to augment supply side

TAX
● Proposes surcharge of 10 point on rich taxpayers with annual income of more than 10 million rupees a year
● To increase surcharge to 10 point on domestic companies with annual income of more than 100 million rupees
● For foreign companies, who pay the higher rate of corporate tax, the surcharge will increase from 2 pct to 5 per cent.
● To continue 15 point tax concession on dividend received by India companies from foreign units for one more year
● Propose to impose withholding tax of 20 point on profit distribution to shareholders
● Amnesty on service tax non-compliance from 2007
● 10 billion rupees for first installment of balance of GST (Goods and Services Tax) payment
● Propose to reduce securities transaction tax on equity futures to 0.01 point from 0.017 point
● Time to introduce commodities transaction tax (CTT)
● CTT on non-agriculture futures contracts at 0.01 point

CORPORATE SECTOR AND MARKETS
● To issue inflation-indexed bonds
● Proposes capital allowance of 15 point to companies on investments of more than 1 billion rupees
● Foreign institutional investors (FIIs) can use investments in corporate, government bonds as collateral to meet margin requirements
● Insurance, provident funds can trade directly in debt segments of stock exchanges
● FIIs can hedge forex exposure through exchange-traded derivatives
● Investor with less than 10 point stake in a company will be regarded as FII, more than 10 point stake as FDI (foreign direct investment)
● Stock exchange regulator will simplify know-your-customer norms for foreign portfolio investors
● To implement quickly recommendations of financial sector legislative reforms commission
● To cut factory gate duty on trucks to 13 pct from 14 pct

POWER AND ENERGY SECTOR
● Zero customs duty for electrical plants and machinery
● Move to revenue-sharing from profit-sharing policy in oil and gas sector
● To equalise duties on steam and bituminous coal to 2 point customs duty and 2 point cvd (countervailing duty)

FOREIGN TRADE
● To cut duty on exports of precious and semi-precious stones to 2 point from 10 point
● No duty on import of ships, vessels

BANKING
● To provide 140 billion rupees capital infusion in state-run banks in 2013/14

DEFENCE
● To allocate 2.03 trillion rupees to defence in 2013/14

AGRICULTURE
● To allocate 801.94 billion rupees to rural development in 2013/14
● Plan to allocate 270.49 billion rupees for agriculture in 2013/14