1. Union Budget
2014-15

2. make a strong effort towards building exports.
This can be a major platform to create
employment and growth.
Faster clearance and simpler procedures for
export and import will help companies become
part of global value chains or build their own.
However, it will be important to see how these
proposed changes will be implemented.
The tax holiday for power and the benefits for
renewable energy should also help address to
some extent the power issues that are faced by
industry and also provides a good investment
opportunity in renewable energy for global and
Indian investors.
The Finance Minister had a tough act to meet
the targets set by his predecessor on fiscal
prudence while at the same time balancing the
measures to keep the Budget inclusive in its
approach. He also had to send a strong
message to investors that his government would
remain transparent and predictable. In the
process he has stayed away from making any
big ticket changes but has tinkered with different
policy measures available to him. There are
several announcements ranging from skill
development to a targeted approach to
subsidies that give a positive feel to the Budget.
Growth and fiscal prudence has, as expected,
been the underpinning sentiment in the Union
Budget presented by Finance Minister Arun
Jaitley. The focus on foreign direct investment is
a welcome step as also is the stress on the
introduction of the goods and services tax this
year. Duty concessions and removal of inverted
duty structures should also help some important
sectors.
The intent of the government to bring the focus
back on growth of over 5 per cent is good
though the stock markets initially failed to
recognise the intent and lost ground,
subsequently gaining after tax proposals were
announced. Industry has remained positive
though cautious. The devil, they understand, will
lie in the details. It is also important to note that
intent alone will not help in resurrecting the
manufacturing sector, which is important for
growth.
Importantly, the Minister has addressed the
issue of retrospective taxation, though industry
and investors may feel that more could have
been achieved and would have hoped from
some stronger words to give solace to
distressed investors. However, it is important
that he has been categorical about making the
tax regime transparent and predictable for
investors.
The increase in FDI limits for sectors has been a
good indicator of how the government views
foreign investment.
The reliance on the PPP model for infrastructure,
which was evident across the speech, is a good
step towards fiscal prudence. The emphasis on
PPP model to create a strong manufacturing
base would benefit investors.
Manufacturing has rightly received a lot of
attention. The decision to place importance on
industrial corridors and building smart cities will
also help in building a strong base for investment
and should provide a wider base for investment
for Indian and foreign players.
On the export front it is important that the
Minister has shifted some of the responsibility to
the states by establishing the export promotion
mission that will bring state and central efforts
under one umbrella. It is time that the states also
Major Administrative Announcements
New Urea Policy would be formulated.
Introduction of GST to be given thrust
High Level Committee to be constituted by the CBDT before taking any
decision retrospective taxation
Sort out pending tax demands of more than Rs. 4 lakh crore under
dispute and litigation
Income-tax Settlement Commission scope to be enlarged
New Indian Accounting Standards to be adopted by Indian Companies
New Expenditure Management Commission to look into expenditure
reforms
Shyama Prasad Mukherji Rurban Mission for integrated project based
infrastructure
Foreign Direct Investments
4.5
Fiscal Deficit
2013-14
Actual
2014-15
Target
% of GDP
4.1 2015-16
3.6 2016-17
3
Estimated
Revenue De cit
2.9
3.3
% %
DefenceInsurance
T. S. Vishwanath
Senior Advisor - Public Affairs
Fiscal
prudence
takes priority
Highlights
To roll out by the end of this scalGST
200 crores for the statue of Sardar Patel in Gujarat
2.29 lakh crore for Defence sector
One Uniform KYCDemat Account,
FDI in manufacturing to be given a thrust
Incentives for Real Estate Investment Trusts
3,600 crore under National Rural Drinking Water Programme
Individual tax payers will get exemptions of Rs 2.5 lakh
4
AIIMS
5
IITs
5
IIMs

3. The Finance Minister, Mr.Arun Jaitley's task
was extremely onerous. On the one hand, he
had inherited an economy that is in anything
but the pink of health. On the other, the
expectations roused by Prime Minister Modi's
election campaign, at once epic and epochal,
have been such that it would be an extremely
challenging task to satisfy those who expect his
Government to transform the country by the
wave of his magic wand. There have been
many who seem to expect the new
Government to work wonders in no time.
Additionally, the latest crisis in the Middle East
and the prospects of a weak monsoon have
made his task even more dif cult.
Viewed against such a backdrop, the Union
Budget is creditable. Mr. Jaitley has ful lled
many electoral promises and addressed many
constituencies. Breaks in direct taxes that, by
one reckoning, can save individual taxpayers
up to Rs. 36,000 a year, are directed at the
middle classes. There are proposals galore to
help rural India, women & the girl child, and the
people of backward & border regions.
The many proposals to revive manufacturing,
help domestic industry and give a llip to skills
development are heartening. These should
also go a long way in creating jobs and
increasing job-worthiness in the youth both
thrust areas for Mr. Modi. In his campaign
speeches, Mr. Modi accused the previous UPA
Government as being negligent of the nation's
defence needs. Mr. Jaitley has sought to
address this by hiking the defence budget,
paying attention to the special needs of border
states in infrastructure and other areas, and
allowing for increased foreign direct investment
(FDI) in defence manufacturing.
Besides defence manufacturing, Mr.Jaitley has
given the green signal to increased FDI in
insurance. He has eased the requirements for
allowing FDI in the housing sector. He has also
begun the process of shutting the door on
retrospective taxation, an ill-advised move of
the previous regime that had rung alarm bells in
the global investor community. These
measures will go a long way in improving the
investment climate.
On balance, Mr. Jaitley's instincts were right.
He wanted to demonstrate his commitment to
scal responsibility. He wanted to revive growth
by increasing demand and boosting
investment. He wanted to battle in ation. He
w a n t e d t o h e l p t h e p o o r a n d t h e
disadvantaged. In all four areas, there is much
in the Budget proposals to show that he has
done much. This is just the beginning of the
process of smart economic management to
revive the economy and place it on the high
growth trajectory. It will take a lot more to rouse
the economy from the slumber that it was lulled
into by the previous regime. The new
government will have to do more before the
economy gets up and gets going. It is very
encouraging that Mr. Jaitley has taken the rst
steps towards restoring investor con dence
and reviving animal spirits.
Vivek Sengupta
Senior Advisor -
Public Affairs & Advocacy
A good
beginning
Market Reactions
For women safety in large cities
For sports stadia in Jammu & Kashmir
Deen Dayal Upadhyaya Gram Jyoti Yojana to augment power supply in rural areas
For an institution to provide support to mainstreaming PPPPs called 4PIndia
Pradhan Mantri Krishi Sinchayee Yojna for irrigation
One rank, one pension in Defence
Namami Gange for conservation of Ganga
Neeranchal for watershed development in the country
For modernisation of state police
Warehouse Infrastructure Fund
100 smart cities
National Housing Bank for rural housing
To encourage Start-Ups
Outer Harbour Project
Pradhan Mantri Gram Sadak Yojna
Sarva Shiksha Abhiyan
For investment in NHAI
Corpus for Urban Development
Scheduled Castes
Planned Allocation for North East Region
Agriculture credit
150 cr
200 cr
500 cr
500 cr
1,000 cr
1000 cr
2037 cr
2,142cr
3,000 cr
5,000 cr
7,060 cr
8,000 cr
10,000 cr
11,635 cr
14,389 cr
28,635 cr
37,880 cr
50,000 cr
50,548 cr
53,706 cr
800,000 cr
Allocations
Non Plan
Government Expenditure in FY14
12,19,892
crore
Plan Total
17,94,892
crore
+ =5,75,000
crore
Gross Tax
Receipts
13,64,524
crore
Capital Receipts
other than borrowing
73,952
crore
Non Tax
Revenues
2,12,505
crore

4. Arun Jaitley
Minister of Finance
Nirmala Sitharaman
Minister of State,
Commerce & Finance
Arvind Mayaram
Finance Secretary
Shaktikanta Das
Revenue Secretary
Ratan P Watal
Expenditure Secretary
Nripendra Mishra
PS to Prime Minister
Ravi Mathur
Disinvestment
Secretary
Sindhushree Khullar
Secretary, Planning
Commission
Rajat Bhargava
Joint Secretary,
Budget Division
G S Sandhu,
Financial Services
Secretary
P K Mishra,
Additional PS
to Prime Minister
Behind the Budget
focus have been?
Ans: I think he could have laid more emphasis
on the power sector and made more speci c
announcements. There are some indications of
reforms from the Budget speech but perhaps
he could have looked more into speci c issues
such as availability of coal for power
generation. Delivering the targets for scal
de cit will be the biggest challenge and there is
no clear indication as to how the new
government will go about it.
How is this Budget different from the
earlier Budgets presented by the UPA
government?
Ans: One major difference is that there is less
focus on entitlements and rights based
approach. While the new government has
continued with the schemes like MNREGA, the
Finance Minister has proposed more emphasis
on increasing productivity and employment
generation. Possibly the instruments of this
would be providing more skills and loans to the
households for self-employment, emphasising
on the urban development such as concept of
'smart cities' which could provide more jobs.
What are your views on Modi
government's rst Union Budget?
Ans: The industry was hoping for a bolder
budget but there are no big bang reforms that
the government has proposed in this budget.
However, given the short time the new
government had to present this Budget, I think
it is a good pragmatic Budget, the Finance
Minister has not set his targets very
ambitiously. He is focusing on achieving the
scal de cit targets set in the Interim Budget by
UPA II.
Having said that, he has certainly laid down a
roadmap for scal consolidation and provided
a direction on what policy measures the
government will take to bring economic
reforms. One major problem he has recognized
and address is on the savings front which has
gone below 31%. He has taken steps to
increase individual savings which will positively
impact the economy and investments.
But in my view the Finance Minister could have
given more emphasis on labour reforms. Large
scale employment based manufacturing
industries will not come up without relaxation of
labour laws and he could have given some
indication on of the government's intent on this
front.
How do you this budget will impact the
business sentiments?
Ans: We must realise that the Budget is not the
only way to bring about economic reforms, it is
just one of the tools. But the new government
has certainly tried to project that this will be a
stable regime and decisions will not be taken in
a hurry such as in the case of retrospective tax.
This is a good sign that due diligence would be
done on critical policy decisions. Decisions to
increase FDI in defence and insurance will give
positive signals to the outside world from
investment point of view. Other such
announcements are on the roadmap for GST,
expected legislative changes for quick settling
of tax demand under disputes and emphasis
on skill development.
Any key sector that you think should have
been focussed on? And what should the
Professor Manoj Panda,
Director, Institute of Economic
Growth
Jaitley adopts a
cautious
approach