Budget 2014: Hits, misses in Arun Jaitley’s maiden policy statement

Hits



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



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 passthroughs 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 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



Misses



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



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Posted in: Indian Market Tips