Thursday, Nov 27, 2014

Union Budget 2014: Key features

Express News Service | Posted: July 10, 2014 6:02 pm | Updated: July 10, 2014 9:55 pm

The current economic situation and the challenges

Decisive vote for change represents the desire of the people to grow, free themselves from the curse of poverty and use the opportunity provided by the society. Country in no mood to suffer unemployment, inadequate basic amenities, lack of infrastructure and apathetic governance.

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Challenging situation due to Sub five per cent growth and double digit inflation.

Continued slow-down in many emerging economies a threat to sustained global recovery.

Recovery seen with the growth rate of world economy projected at 3.6 per cent in 2014 vis-à-vis in 2013.

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First budget of this NDA government to lay down a broad policy indicator of the direction in which we wish to take this country.

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Steps announced are only the beginning of the journey towards a sustained growth of 7-8 per cent or above within the next 3-4 years along with macro-economic stabilization.

Growing aspirations of people will be reflected in the development strategy of the Government led by the Prime minister Shri Narendra Modi and its mandate of “Sab ka Saath Sab ka Vikas”.

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Need to revive growth in manufacturing and infrastructure sectors.

Tax to GDP ratio must be improved and Non-tax revenues increased.

Deficit and Inflation

Decline in fiscal deficit from 5.7% in 2011-12 to 4.5% in 2013-14 mainly achieved by reduction in expenditure rather than by way of realization of higher revenue.

Improvement in current account deficit from 4.7 % in 2012-13 to year end level of 1.7% mainly achieved through restriction on non-essential import and slow-down in overall aggregate demand. Need to keep watch on CAD.

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4.1 per cent fiscal deficit a daunting task in the backdrop of two years of low GDP growth, static industrial growth, moderate increase in indirect taxes, subsidy burden and not so encouraging tax buoyancy.

The government is committed to achieve this target. Road map for fiscal consolidation outlines fiscal deficit of 3.6 % for 2015-16 and 3 % for 2016-17.

Inflation has remain at elevated level with gradual moderation in WPI recently.

The problem of black money must be fully addressed.

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Bold steps required to enhance economic activities and spur growth in the economy.

Administrative Initiatives

Sovereign right of the Government to undertake retrospective legislation to be exercised with extreme caution and judiciousness keeping in mind the impact of each such measure on the economy and the overall investment climate.

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A stable and predictable taxation regime which will be investor friendly and spur growth.

Legislative and administrative changes to sort out pending tax demands of more than 4 lakh crore under dispute and litigation.

Resident tax payers enabled to obtain on advance ruling in respect of their income-tax liability above a defined continued…

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