Union Finance Minister P. Chidambaram’s unveiling of the 82nd annual Budget gets both positive and negative reactions
On 28 Feb., 2013, P. Chidambaram gave the nation its 82nd annual budget. Major issues were covered, including financial aid to the three large groups of the nation- the youth, the women, and the poor. But on the other hand, many found it to be anti-common-man and not without major loopholes.
The major changes that would have a great impact:
- Controlled-climate (air-conditioned) restaurants will be at least 12 percent more expensive than before. Eating out will now cost the people, with an additional price-list change due to a rise in the price of food commodities.
- With the high demand of cell phones (especially smartphones), the increased excise duty on cell phones will cost many. Phones that cost more than 2,000 rupees will be more costly with the excise duty rising from 1 percent to 6 percent. This will have quite an effect on mobile companies like Nokia and Samsung Electronics.
- Increased excise duty on cigarettes and cigars by 18 percent will have a negative impact on India’s biggest tobacco company (ITC Ltd.)
- Increased import duty on luxury cars, motorcycles, and yachts from 75 percent to 100 percent. Increased excise duty on sports utility vehicles (SUVs) from 27 percent to 30 percent that would hit the companies like Mahindra & Mahindra and Tata Motors.
- People will have to pay more for travelling. Freeing prices of petroleum products that might result in a probable rise on the prices of diesel and cooking gas.
- Good news on the excise duty of garments. Branded apparel, readymade garments, carpets, and other floor coverings will be cheaper due to the reduction in their excise duty.
- Duty free gold purchase will be made easier for the NRI’s; they will be able to buy more gold without worrying over the duty. But this is only if they have been living outside India for at least a year’s time.
- Investors and first-time home buyers will benefit from the Rajiv Gandhi Equity Savings Scheme. It will help the ones who are looking to invest and provide a tax-break. The investors will also be positively affected by the rise in the income limit to 12 lakh rupees from 10 lakh rupees. Home-buyers will get a deduction of 1 lakh rupees from interest to be paid on home loans above 25 lakhs rupees.
- Tax payers with taxable income of up to 5 lakh rupees will be provided with a tax credit of 2,000 rupees (that will result to a revenue sacrifice of upto 3,600 crore rupees). The finance minister also provided instruments like the inflation-indexed bonds to protect people’s personal savings from inflation. There will be a one-year surcharge of 10 percent on the “super rich” tax payers (taxable income above 1 crore rupees).
- The surcharge has been increased from 5 percent to 10 percent for domestic corporates with taxable income of 10 crore rupees. Foreign companies will pay a 5 percent surcharge instead of the previous 2 percent. This surcharge is said to be in place for a minimum of one year. Capital allowance of 15 percent to companies that invest more than 1 billion rupees.
- A Tax Deducted at Source (TDS) of one percent for the transfer of immovable properties above 50 lakh rupees.
- Power and Energy Sector:
- Equalize the duties on steam and bituminous coal (2 percent each for customs and countervailing duty)
- No custom duty for electrical plants or machinery.
- Revenue-sharing policy in oil and gas sector
13. Foreign Trade: Reduction on duty of precious and semi-precious stones (2 percent from 10 percent)
14. Banking: 140 billion rupees capital infusion in state banks
15. Defence: 2.03 trillion rupees allocation
- 270.49 billion rupees for agriculture
- 801.94 billion rupees for rural development.
17. Higher allocation for road building that would have a positive effect on highway developers. Regulatory authority for the road sector and 3,000 kilometers of projects to five states have also been given.
18. 1,000 crore rupees each has been allocated to the women and youth of the nation. Nirbhaya Fund (safety and security of women) named after the Delhi gang-rape victim will also get 1000 crore rupees. These funds promise security to the women, youth as well as the senior citizens of the country. 17,700 crore rupees allocated to the Integrated Child Development Scheme (ICDS).
19. Health and Family Care:
- 37,330 crore rupees for the Ministry of Health and Welfare
- 110 crore rupees to department of disability affairs
- 4,727 crore rupees to medical education and research
- 1,069 crore rupees to Department of Ayush
20. Social Issues:
- 200 crore rupees for Women and Child Welfare Ministry
- 3,511 crore rupees to Minority Affairs Ministry
- 13,215 crore rupees for mid-day meal programme
- 27,250 crore rupees to SarvaShikshaAbhiyaan
- 65,867 crore rupeesto the Human Resources Development
- 169 crore rupees for development of Ayurveda, Siddha, Unani, and Homeopathy
- 41,561 crore rupees for SC plan
- 24, 598 crore rupees for tribal plan
21. Ministry of New and Renewable Energy has been provided 800 crore rupees.
The plan although detailed and well presented, still has many unanswered queries about the fiscal deficit of 4.8 percent the inflation, the slow economic growth, and the increased expense for the common man on a day-to-day basis.
The opposition had a lot to say regarding the Budget 2013:
(As told to TOI)
Sushma Swaraj, LokSabha:
“There is nothing for the women, youth and poor” in this budget and neither is anything there for boosting the agri sector or for controlling prices.”
Arun Jaitley, BJP Leader:
“Having pushed the economy in a distress situation, he comes out with a budget of helplessness. In the first nine years, UPA government pushed the economy in distress and then a helpless finance minister comes out with a budget which has very little elbow space.”
Mulayam Singh Yadav, Samajwadi Party leader:
“This budget is only for 10 per cent population of the country. What kind of budget is this which ignores 65 per cent people who are engaged in farming?”
Mayawati, BSP Leader:
“There is nothing new in this budget and there nothing for farmers, employees and the middle class.”
There has been a great debate that has been going on the outcome of Chidambaram’s plans and provisions. On one hand it seems to help many sectors of the society including the women, youth, and the senior citizens. But on the other, it creates a dilemma for the middle class and does not solve the issues of inflation and economic growth.
There is a lack of faith when it comes to the numbers Chidambaram has provided, disappointing many with the reductions and provisions. But some admire the lack of risks and believe in the plan.
Will the outcome be positive or put Chidambaram’s reputation at stake?
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