# 2014 Union budget of India

The 2014 Union Budget of India was presented by Finance Minister, Arun Jaitley on 10 July 2014,11 am. This was the first budget of Narendra Modi led NDA government.

## Salient features of the budget

* ₹70.6 billion (US$820 million) provided for the development of Smart Cities in India
* ₹10 billion (US$120 million) provided for irrigation
* 5 New IITs and IIMs and four new AIIMS in India.
* New airports scheme in tier 1 and 2 cities
* Schemes for development of sports across the country.

### Foreign Direct Investment

* FDI cap in Defense and Insurance sector has been increased to 49% from 26%.
* FDI in real estate for low cost housing

### Personal tax and exemption limit

* No changes in personal income tax slabs. But tax exemption limit has been increased to ₹250,000 (US$2,900) from ₹200,000 (US$2,300) for those below the age of 60. Income tax exemption limit for senior citizens has been raised to ₹300,000 (US$3,500).
* Investment limit under Section 80C has also been increased to ₹150,000 (US$1,700) from the current ₹100,000 (US$1,200).
* Housing loan interest rate deduction limit has been increased to ₹200,000 (US$2,300).

## Budget 2014: Highlights of Finance Minister Arun Jaitley’s Budget speech

* Two years of sub-five per cent growth has led to challenges to the economy
* Green shoots of recovery seen in global economy
* Slow decision making has resulted in loss of opportunity
* We look forward lower level of inflation
* Will usher in policy regime that will usher in higher growth, low inflation
* Aim to achieve 7-8 per cent economic growth rate in next 3-4 years
* Will leave no stone unturned to create a vibrant India
* Budget proposes Plan expenditure of ₹5.75 trillion (US$66 billion) for the current fiscal
* Anti-poverty programmes will be targeted well.
* We need to revive growth particularly in manufacturing sector and infrastructure
* There is urgent need to generate more resources
* Should we allow economy to suffer because of indecisiveness and populism
* Task before us is challenging
* We must continue to be watchful of CAD
* Target of 4.1 per cent fiscal deficit is daunting but accepting it as a challenge
* Finance Minister emphasizes on fiscal prudence, need to generate more resources.
* Iraq crisis having impact on oil prices
* We must address the problem of black money fully
* We must take bold steps to enhance economic activity
* Expenditure Management Commission will be constituted to look at expenditure reforms
* We are for minimum government, maximum governance
* Overall subsidy regime will be reviewed, especially food and oil. Marginalised sections and SC/ST to be protected
* New urea policy will be formulated
* We have no option but to take some bold steps to spurt economy; these are only the first steps and are directional
* This govt will not ordinarily change policies retrospectively which creates a fresh liability
* All future indirect transfers under the retro tax regime will be scrutinised by a high level committee of CBDT before action is taken
* We are committed to providing stable tax regime which is investor friendly
* Govt to set up a high-level Committee to interact with industry to bring about changes in tax laws if required
* FM Proposes to enhance the scope of income tax settlement commission.
* Govt proposes to strengthen authority for advance ruling in tax, set up more benches
* Transfer pricing regulations for residents and non-residents being done
* FDI in Defence sector raised to 49 per cent
* Finance Minister Arun Jaitley takes 5-minute break; Lok Sabha adjourned for 5 minutes
* Financial stability is foundation of rapid recovery
* Our domestic manufacturing is still at nascent stage
* Manufacturing units will be allowed to sell their products through retail and e-commerce
* Budget proposes 49 per cent FDI in insurance through FIPB route.
* Our Banking system needs to be further strengthened. Need to infuse ₹2.4 trillion (US$28 billion) in our banks
* Bank capital to be raised through retail sale of shares; Govt to continue to hold majority in PSU banks
* Govt proposes to provide finance to 500,000 landless farmers through NABARD
* Will examine proposal to give additional autonomy to banks and make them more responsible
* E-visa to be introduced at 9 airports in the country
* Govt proposes to set up 100 Smart Cities in India. Govt to provide ₹70.6 billion (US$820 million) for development of such cities
* Public sector banks need ₹2.4 trillion (US$28 billion) equity to conform with Basel-III norms by 2018
* ₹50 crore (US$5.8 million) set aside for indigenous cattle breed and blue revolution for inland fisheries
* We expect PSUs to invest ₹2,479.41 billion (US$29 billion) this fiscal
* Infrastructure Investment Trust being set up to finance infra projects and reduce burden on banks
* Total sanitation by 2019
* Budget proposes ₹10 billion (US$120 million) for Pradhanmantri Krishi Seechai Yojana to improve irrigation facility
* National multi-scale programme ‘Skill India’ to be introduced to provide training and support for employment
* ₹2 billion (US$23 million) set aside for the Sardar Patel statue project in Gujarat
* Deen Dayal Upadhyaya Gram Jyoti Yojana to be launched to augment power supply in rural areas
* Pension scheme for senior citizens being revived
* Govt committed to providing 24×7 power supply to all homes
* ₹505.48 billion (US$5.8 billion) proposed for SC development
* EPFO will launch a unified account scheme for portability of Provident Fund accounts
* Govt proposes to set up committee to examine how to utilise large funds lying unused in postal schemes
* Govt approves minimum monthly pension of ₹1,000 (US$12) per month under EPS-95 scheme run by EPFO
* Committee will be set up to examine how unused money in postal schemes can be utilised
* Govt announces schemes for disabled persons; to set up 15 new Braille press and revive 10 existing ones
* ₹143.89 billion (US$1.7 billion) provided for Pradhan Mantri Gram Sadak Yojana.
* Govt to launch ‘Beti Bachao, Beti Padhao’ scheme; sets aside ₹1 billion (US$12 million) for it
* Crisis Management Centres for women to be set up at all government hospitals in NCR region
* Govt increases wage ceiling for EPFO schemes to ₹15,000 (US$170) from existing ₹6,500 (US$75) per month
* ₹36 billion (US$420 million) provided for safe drinking water in 20,000 habitations in villages facing problem of impure drinking water
* Budget proposes National Housing Banking programme; sets aside ₹80 billion (US$920 million)
* ₹2.29 trillion (US$26 billion) allocated for Defence budget.
* 4 more AIIMS in Andhra Pradesh, West Bengal, Vidharba and Purvanchal are under consideration; ₹5 billion (US$58 million) provided
* Each state where there is no AIIMS will be added in the coming years
* Govt proposes to add 12 more medical government colleges
* 5 new IIMs and 5 new IITs proposed to be set up
* ‘Kisan’ TV channel to be launched by DD at cost of ₹1 billion (US$12 million): ₹1 billion (US$12 million) for Community radio stations proposed
* FM proposes National Rural Internet and Technology Mission; ₹5 billion (US$58 million) set aside.
* Metro rail services to be launched in Lucknow and Ahmedabad₹1 billion (US$12 million); ₹1 billion (US$12 million) set aside for it.
* Budget proposes to set up agri-infrastructure fund at a cost of ₹1 billion (US$12 million); two more agri-research institutes in Jharkhand and Assam
* FM announces ₹1 billion (US$12 million) for modernisation of madrasas
* Govt sets aside ₹2 billion (US$23 million) for setting up of agriculture university in Andhra Pradesh and Rajasthan, and horticulture university in Haryana, Telangana
* ₹1 billion (US$12 million) provided for providing soil card to every farmer
* Govt committed to achieve 4 per cent farm growth; to use new technologies to boost crop yields
* ₹5 billion (US$58 million) price stabilisation fund to be set up
* Govt sets aside ₹1 billion (US$12 million) for initiating scheme to provide a soil health card and ₹560 million (US$6.5 million) for soil testing labs.
* No change in income tax rate; personal income tax exemption limit raised from ₹200,000 (US$2,300) to ₹250,000 (US$2,900).
* Education cess for all tax payers including corporates will continueRestructuring Food Corporation of India to be taken up on priority
* Budget proposes ₹2 billion (US$23 million) for setting up 2000 producers’ organisations across the country
* Investment limit under 80C raised from ₹100,000 (US$1,200) to ₹150,000 (US$1,700)
* There is need to examine financial architecture of SME sector
* Kakinada port and adjoining area to be developed
* ₹100 billion (US$1.2 billion) venture capital fund to be set up for MSME sector
* Trade facilitation centres will be set up at a cost of ₹500 million (US$5.8 million) to help handloom development
* Definition of MSME to be revised for high capital ceiling
* India has emerged as the largest PPP market in the world
* ₹00 cr provided for 6 more textile clusters in Rae Bareily, Lucknow, Surat, Bhagalpur, Mysore and Tamil Nadu.
* Govt sets aside ₹500 million (US$5.8 million) for Pashmina Production programme in Jammu & Kashmir
* 1,620-km Ganga inland waterway development from Haridwar to Haldia to be completed in 6 years at a cost of ₹42 billion (US$490 million)
* Selective Expressways parallel to industrial corridors to be taken up
* Ultra modern super critical power projects to be set up
* New airports to be developed through PPP mode
* Coal linkages to be rationalised to reduce power cost
* ₹42 billion (US$490 million) set aside for Jal Marg Vikas project on river Ganga connecting Allahabad to Haldia
* ₹5 billion (US$58 million) provided for ultra modern solar power plants in Rajasthan, Tamil Nadu and Ladakh in Jammu and Kashmir.
* Use of piped cooking gas to be promoted on mission mode
* CRT TVs exempted from customs duty to help poor
* Basic custom duty on LCD and LEDs below 19 inch reduced to zero from 10 per cent
* Changes in Mines and Mineral Regulation and Development Act to be introduced; royalty on minerals to be reviewed to enhance revenue for states
* Modern monetary policy framework needed; govt to put in place such framework in close consultation with RBI
* Govt proposes developing 15,000 km additional gas pipeline through PPP mode.
* Clarification on tax treatment of foreign funds to be announced
* Govt agrees in principle on consolidation of PSU banks
* Banks will be permitted to raise long term funds without regulatory hindrances.
* RBI to frame policy for licensing of small banks, differential banks
* Govt to take up pending insurance reforms bill that provides for 49 pc FDI
* Govt to revitalise small saving scheme; special scheme to encourage saving for girl child education and marriage to be introduced
* PPF investment limit increased to ₹150,000 (US$1,700) from current ₹100,000 (US$1,200)
* ₹1 billion (US$12 million) technology development fund proposed in budget
* Govt sets aside ₹22.5 billion (US$260 million) to improve weather infrastructure
* ₹1 billion (US$12 million) allocated for War Memorial and war museum at Princess Park, near India Gate in Delhi
* ₹500 million (US$5.8 million) provided for setting up of a National Police Memorial
* ₹1 billion (US$12 million) allocated for preserving heritage characters of cities like Mathura and Agra
* Govt sets aside ₹1 billion (US$12 million) for inter-linking of rivers
* Govt announces ₹1 billion (US$12 million) for development of Archaeological sites; Gaya to be developed as world class tourist spot
* Integrated Ganga mission to be set up; ₹20.39 billion (US$240 million) provided in Budget
* ₹500 million (US$5.8 million) set aside for modernisation of Ghats in places like Varanasi and Patna
* NRI fund for conservation of river Ganga to be set up
* ₹2 billion (US$23 million) upgrading indoor and outdoor stadium in Jammu and Kashmir – both in Jammu and Kashmir Valley
* Budget proposes to set up sports university in Manipur
* ₹1 billion (US$12 million) set aside for training on sportspersons for the Asiad Games
* ₹5 billion (US$58 million) provided for rehabilitation of displaced Kashmiri migrants
* ₹1 billion (US$12 million) set aside for development of organic farming in north east region
* ₹2 billion (US$23 million) provided for power reforms, ₹5 billion (US$58 million) for water reforms in Delhi
* Govt to provide ₹10 billion (US$120 million) for rail connectivity in north east region
* Govt announces “Arun Prabha” channel for NE region; will be 24×7 channel
* Non-plan expenditure pegged at ₹12,198.92 billion (US$140 billion) for 2014-15, including fertilizer subsidy and defence spending
* Gross tax receipts pegged at ₹13,645.24 billion (US$160 billion); non-tax revenue ₹2,125.05 billion (US$25 billion); capital receipt ₹730 billion (US$8.4 billion) in 2013-14
* Income tax exemption limit for senior citizens raised from ₹250,000 (US$2,900) to ₹300,000 (US$3,500)
* Exemption on payment of income tax on interest paid on loans for self occupied houses raised to ₹200,000 (US$2,300) from ₹150,000 (US$1,700)
* 10-year tax holiday to be extended to companies that start power generation by March 31, 2017
* Investment allowance of 15 per cent for three years will be allowed to manufacturing companies which invest ₹250 million (US$2.9 million) in plant and machinery
* Concensional rate of 15 per cent on dividends to continue
* Govt to review revised Direct Taxes Code taking into account comments from stakeholders
* Direct tax proposals to involve sacrifice of ₹222 billion (US$2.6 billion)

## Reactions

* Former Prime Minister of India, Manmohan Singh reacted on budget saying that "Budget lacks road-maps".
* The Communist Party of India (Marxist) accused the budget as "a recipe for further enriching the rich and impoverishing the poor. "
* Former Chief Minister of Delhi, Arvind Kejriwal stated that "it was a directionless budget with no steps to bring down inflation in the country".
* Sharad Yadav reacted on budget saying that "This Budget shows we are standing where we were. It's like distributing toffees".
* Sonia Gandhi said that Arun Jaitley copied the policies of congress government.
* Rajeev Shukla stated that "This budget is intended for corporate sector and rich people. There is nothing in budget for common man"
* Sudheendra Kulkarni: Smart new cities are welcome. But far bigger challenge is to make old cities smarter. Possible only with Good Governance Reforms.
* Sunil Duggal: The Union Budget 2014-15 was going to be a tough balancing act for Finance Minister Mr. Arun Jaitley, given the precarious state that the Economy was in.
* President of FICCI, Sidharth Birla stated that "The FM has set the ground for repair of the economy. There has been a mix of both short-term and long-term measures geared towards boosting confidence of all key constituents."
* President of CII, Ajay S. Shriram stated that "It has covered many aspects of the population and that is big plus. The finance minister has looked at policies from 2-3 year view and this is a positive direction for higher economic growth."