TAME HIGH INFLATION

• 9.33 % India’s average monthly retail inflation in the last 12 months.

• Sharply rising food prices have hit family budgets.

• For the same money fever goods are available.

• Most services have also turned dearer.

ACTION TAKEN

• ₹ 500 crore price stabilization fund to subsidize retail food prices in times of high volatility.

• Food corporation of India will be broken up for more efficient food grain management.

• Plans announced to stitch together a National Agricultural Market for easier movement of staples from surplus to deficit areas.

INTENDED IMPACT

• Break the cabal of middlemen to ensure greater profits over the cost of production for farmers.

• Narrow down the difference between retail prices and prices that farmer get.

• Cushion the impact of costly raw material, high borrowing rates & falling rupee.

• Signal to RBI to cut loan rates after inflation start falling on budgets proposals.

ECONOMY

ANNUAL GROWTH RATE (%)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

2

4

6

8

10

12

8.1

7

9.5 9.69.3

6.7

8.68.9

6.7

4.5 4.7

FINANCIAL YEAR

AN

NU

AL R

ATE

ACTION TAKEN

• Form expenditure management commission.

• ₹6,500 crore from shares held by SUUTI.

• Revamp FCI, make PDS more efficient.

• ₹5,000 crore from RBI from government’s SDR holding.

• Minimum ₹1 k/m pension to subscribers & increase in PF wage ceiling to ₹15,000.

• New Indian accounting standards.

• Government to move to e-biz portal by Dec 31.

• Set up National Industrial Corridor Authority.

INTENDED IMPACT

• Shift from government non-productive spending to create space for development spending.

• Investors will have one more opportunity to pick up equity in this blue chip.

• It will make entire food procurement and distribution more efficient.

• Through this swap of the government holdings of IMF’S SDRs, the country entire reserves will be housed with RBI.

• Ensure a minimum pension for subscribers and PF savings will rise.

• Converge India’s accounting with International Financial Reporting Standards.

CREATE JOBS, IMPART SKILLS

• 33% proportion of unemployed persons who are graduates or above, compared to the total, as of 2012-13.

• Of the total population of 1.2 billion, 60% are in the working age group.

• Of the 12 million individuals who join the pipeline of job seekers. Only 3% undergo vocational training.

• In villages the unemployment rate among graduates and above for the age group 15-29 years is estimated to be 36.6%, it is 26.5% in cities.

ACTION TAKEN

• Launch “National Multi-skill Mission”.

• The mission would impart training and support to traditional professional such as welders, carpenters, cobblers, masons, blacksmiths, weavers etc.

• Specific schemes announces on developing labour-intensive sectors such as textiles, infrastructure, housing & tourism.

INTENDED IMPACT

• Leverage India’s demographic dividend & shift the focus to employability.

•Encourage small enterprise through tax breaks to add capacities & hire more people.

• Remove people from unproductive farm work in villages to skill-based jobs in semi-urban areas.

BUILDING INFRASTRUCTURE

• ₹762,451 cr estimated investments in about 100 major infrastructure projects as of Dec,12 that are behind running schedule.

• Around 11 km per day of highways were constructed during 2013-14 against the government target of 20 km – the worst ever performance since 2008-09.

• Restrictive land condition hurting expansion.

14

Railways

10

Road transport & highways

33

Power

18

Petroleum

3

Shipping & ports

5

Steel

3

Atomic Energy

3

Coal

NUMBER OF DELAYED PROJECTS

ACTION TAKEN

• A target to build an additional 23 km a day of highways has been set.

• Building 100 new cities, priority development of 100 most backward districts.

• Rules to be changed to make it easier to hasten infrastructure and industrial projects such as Special Economic Zones.

INTENDED IMPACT

• Reduce time & cost run that have been the major bane of India’s infrastructure projects.

• Construction in highways, railways, airports, power and other projects help create additional jobs.

• Easier land acquisition rules will enable companies to set up factories, new capacity lines, create jobs and hire more people.

REVIVE INDUSTRY

• 28.3% of GDP, India’s gross fixed capital formation (GFCF) in 2013-14, a proxy for investment activity the lowest in five years.

• Higher prices and need to find additional money for EMIs have forced cuts on purchase of televisions & cars.

• The resultant fall in demand have hit companies.

• High loan rates have also hit investment.

2010 2011 2012 2013 2014

-2

0

2

4

6

8

10

12

14

7.7

11

12.3

0.8

-0.1

Financial Year

GROSS FIXED CAPITAL FORMATION (%)

ACTION TAKEN

• The government has clarified its position on retrospective tax provisions.

•FDI in Insurance and Defense sector raised to 49% from 26%.

• A venture capital fund for micro small and medium enterprises will be established with corpus of ₹10,000 crore to act as a catalyst to attract private capital.

INTENDED IMPACT

• Clarifications on retrospective tax will soothe frayed nerves of anxious investors.

• Electronic goods manufacturing hubs to boost hiring, investment and eventually, reduce dependents on imports.

• Mega industry zones such as the DMIC will add jobs and boost sectors such as steel and cement.

BOOSTING SPENDIND

• 57.1% the proportion of GDP that India’s house holds spent in 13-14, the same as previous year.

• Raising people’s spending ability on goods is critical to push demand & investment.

• In a year of flat income, it becomes difficult to raise spending without tax breaks.

• High loan rates have also prompted people to defer purchases.

ACTION TAKEN

• Tax breaks on income and saving to raise people’s disposable income.

• Tax cuts will bring down prices of a host of consumer products like footwear and LED TV panels prompting people to spend more.

• The excise duty cuts announced in the interim budget will continue till December.

INTENDED IMPACT

• Greater disposable income will goad people to save and spend more.

• More spending will increase sales of goods such as cars.

• Greater purchases means goods will move out of shop-selves faster prompting companies to produce more to meet the additional demand.

SOCIAL SECTOR

ACTION TAKEN

• Free drugs, free diagnosis for everyone under HEALTH FOR ALL.

• Interest subvention to women self-help groups.

• Price stabilization fund for farmers.

• Minimum pension of ₹1,000 and mandatory wage ceiling for EPF raised to ₹15,000.

• A house for everyone, a toilet for every house.

• Slew of measures to clean up and conserve Ganga.

INTENDED IMPACT

• It will reduce out-of-pocket expenditure on healthcare in the country.

• More women in additional 100 districts will get bank loan at 4% on prompt repayment as against the rate of 7%.

• Will insulate farmers from fluctuation in prices.

• About 20 lakh people, including five lakh widows, will benefit from the higher minimum pension while 50 lakh people will come under the EPF.

• It will help 78 million homeless people and 600 million people who practice open defecation.

• The river’s ghats would be beautiful.

CLOSING THE DEFICIT

• 4.1% of GDP – India’s budgeted fiscal deficit for 2014-15, down from previous year’s 4.5 %.

• Fiscal deficit – the amount of money that the government borrows - in the first two months of the 2014-15 financial year touched ₹2.40 lakh crore or 45.6% of the full year target.

• Low income level limits tax revenue collections.

ACTION TAKEN

• Petroleum subsidy bill to brought down to ₹ 64,426.95 crore from ₹ 84,480 crore last year.

• Total subsidy bill kept at ₹ 260,657.62 crore, marginally up from ₹ 255,516.25 crore in 2013-14.

• Budget for MNREGA raised by ₹ 100 crore to ₹ 34,100 crore.

INTENDED IMPACT

• Manageable fiscal deficit will lower the threat of a sovereign downgrade.

• A lower fiscal deficit this year will give the government elbow room to introduce tax breaks next year.

• Consistently lower deficit will enable early adoption of direct & indirect tax reforms.