Dr. Sanjiv Agarwal
Hard pressed by the compulsions of political ethics, the UPA -2 Government could not present the full fledged budget for the next fiscal 2014-15. However, an interim budget (Vote on Account) has been presented to seek approval for expenditure for next four months i.e., upto 30th June, 2014 and it is expected that the new Government will be in place and also present a regular budget by then. The usual economic survey has also been skipped.
The current economic condition appears to have been accepted which is in a mess so far as growth rate is concerned. The world’s economic growth rate is just 3% in 2013 where as India economy’s growth is also expected to be below 5% only, lowest in last 9 years. Inflation is slightly lower but still affecting one and all. Government intends to keep the budget for expenditure at same level as of last in next four months.
It is hoped that Goods and Services Tax (GST) and reforms in Income Tax (Direct Tax Code) shall be the focus of next government as there is an appeal to all parties to get these through in future.
While there are no changes in direct tax rates and provisions (though expected that at least surcharge would go), the interim budget has proposed some relief in tax rates in excise duties to offer temporary boost to some sectors reeling in slow growth, may be on industry demand. This relief is by way of reduction in excise duty rates for a period upto 30th June, 2014 ,i.e., these will be reviewed at the time of regular budget. 2 percent rate cut is given to all consumer durable items, 4 percent cut in duties for small cars, motor cycles, scooters etc, 6 percent duty cut for SUVs and 4 percent cut for large and mid-segment cars. Also, mobile handsets would be cheaper now by 5 percent. The duty would be 1 percent (earlier 6 percent) without Cenvat credit.
In Service Tax, exemption has been granted to ‘rice’ treating it as agricultural produce. Thus, storage, warehousing, packing, loading, unloading etc for rice would be exempt from Service Tax. Earlier only paddy was exempt. Similarly, blood banks would also be exempt treating them as part of health care services which were already exempt.
With slow all round growth this year, whether the government would be able to achieve revenue targets in 2013-14 is also doubtful. On a futuristic note, interim budget looks at Indian economy to be the third largest economy after US and China. A sketchy road map has been outlined but its implementation holds the key – easier said than done.