Union Budget

The newly elected NDA government presented its first budget this Wednesday. Some avant-garde steps were expected by the Finance minister to justify the ‘Ache din aane wale hain’ slogan of his government. However the budget appears to be just some old wine in the new bottle.

The highlights of the budget and some personal opinion are as following:

• The finance minister announced that FDI in defence could go up from 26% to 49%.  According to me, FDI in defence should have been increased to atleast 51% and technology transfer clause should have been made mandatory. 49% limit is tantamount to 26% limit and I don’t think it will improve the situation.
• Income Tax exemption limit has been raised by Rs. 50,000 to Rs. 2.5 lakh for ordinary taxpayers. This is a welcome step by the government and will help decrease the financial pressure on the middle class and help him save his earnings.
• A target of building 8,500 km of highways in 2014-15 at the cost of Rs. 37,880 is a great step. Construction industry is currently in deep slump and a kick-start was necessary.
• Rs. 100 cr has been earmarked for Lucknow and Ahmedabad metro projects. This will help push the projects in these cities and make people’s commute fast and comfortable.
• Rs. 1000 cr has been allocated for modernisation of border infrastructure. This will help the country to secure its land against unwanted incursion from other countries and help in connecting the citizens residing in remote border areas with the mainland.
• FDI in Insurance has been increased from 26% to 49%. This will open up new avenues for investments in rural areas and newer instruments. Currently only 5% Indians possess insurance cover.  
• Government announced that Goods and Services Tax (GST) would roll out by the year end. This is a welcome decision as it will help reduce the friction between the states over tax rates. Interstate logistics would benefit a lot from this step.
• Starting a 10,000 cr fund for helping the start-ups is a great initiative by the government and will benefit them in kick-starting their businesses. An “entrepreneur friendly legal bankruptcy framework” would help them to shut their business with ease.
• Foreign companies have been allowed to sell their products online without its approval, provided that the product is indigenous. This will boost the manufacturing sector in the country.
• Excise duty on cigarettes, tobacco products and pan masala has been hiked in the range of 11% to 72%. This has dual benefit. High cost will help reduce the demand of these unhealthy products and moreover aid the government in garnering the funds too.
• Government has allocated Rs. 7060 cr to set-up 100 smart cities. This will improve the housing problems in the existing cities and help set-up domain specific cities to improve performance.
• Rs. 3600 cr has been set aside for National Rural Drinking Water programme. This will provide clean water to the rural populations and help reduce water borne diseases.