What Is Good And Bad In The Budget 2014-15?

What Is Good And Bad In The Budget 2014-15?

The budget can be a joy to behold. The good part here is that the Finance Minister has not made exaggeratedly optimistic projections, and, therefore, the scope for disappointment could be reduced.

Good Factors:

  • Bank loans for the infra area to be excluded from CRR and SLR. This should decrease the cost of funds for these organisations and hopefully will increase the infrastructure.
  • Financial Year 2015 fiscal deficit target at 4.1 per cent, FY16 at 3.6 per cent.
  • International institutional investors’ capital gains to be charged and not business income.
  • Tax-pass through allowed for real estate, infrastructure investment trusts to avoid double taxation.
  • Power plants are running operationally in March 2015 to get enough coal supply.
  • Tax holiday for power generation companies extended till 2017.
  • Subsidy expenses are estimated at Rs 2.5 Lakh Crore, almost the same as in the interim Budget.
  • FDI in the insurance sector insurance from 26% to 49%.
  • I-T exemption deadline hiked to Rs 2.5 lakh for those under 60 years and up to Rs 3 lakh for senior voters.
  • Divestment targets are not very aggressive at Rs 43,425 crore. This suggests that the government is not relying massively on divestment to bridge the fiscal deficit.
  • Budgetary provision for Pooled Municipal Debt Obligation enhanced from Rs 5000 crores to Rs 50,000 crores to promote and finance infrastructure projects in urban areas on a shared risk basis.

Bad Factors:

  • No move to repeal retrospective tax amendments
  • No clear plan to reduce subsidies.
  • No clear strategy to recapitalize PSU banks or take the NPA problem
  • No reduction in gold import duty.
  • No clear timeline for implementation of GST
  • No mention of GAAR
  • Rs.200 crores set for Sardar Patel’s statue.

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