What is good and bad in latest union budget 2014-15

Sheenam (Finance Professional) (70 Points)

10 July 2014  

The budget could be a joy to behold. The good part is that the Finance Minister has not made exaggeratedly hopeful projections, and so the scope for disappointment could be limited.

 

Good:

  • Bank loans for infra sector to be exempt from CRR, SLR. This should reduce cost of funds for infra companies, and hopefully boost infrastructure.

 

  •  FY15 fiscal deficit target pegged at 4.1 percent, FY16 at 3.6 percent .

 

  •  Foreign institutional investors’ capital gains to be taxed, and not business income.

 

  •  Tax-pass through allowed for real estate, infrastructure investment trusts to avoid double taxation.

 

  • Power plants going operational in March 2015 to get adequate coal supply.

 

  • Tax holiday for power generation companies extended till 2017.

 

  • Subsidy expenses estimated at Rs 2.5 Lakh Crore, almost the same as in the interim Budget

 

  • FDI in insurance sector hiked from 26 percent to 49 percent.

 

  •  I-T exemption limit hiked to Rs 2.5 lakh for those below 60 years and up to Rs 3 lakh for senior citizens.

 

  • Divestment target not very aggressive at Rs 43,425 crore. This means that government is not relying heavily on divestment to bridge 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 shared risk basis.

 

Bad:
    

  •        No move to repeal retrospective tax amendments

 

  •      No clear plan to reduce subsidies.

 

  •     No clear plan to recapitalize PSU banks or tackle the NPA problem

 

  •      No cut in gold import duty.

 

  •      No clear time line for implementation of GST

 

  •      No mention of GAAR

 

  •      Rs.200 crores set for Sardar Patel’s Statue.