Mixed criticisms for Budget 2013

Had not welfare spending given some importance in Budget 2013 (though not the big way), extreme poverty could not be tackled. But then overall, Union Budget 2013 is practical! An unchanged sovereign rating is another outcome of the budget.

No wonder structural imbalances cause macro-economic challenges and the budget hardly addresses them. It is rightly conjectured Mauritius tax treaty could have been avoided, especially when statistics prove that 40 percent of foreign in-flows come through this path.

Measures like additional tax break for first home owners, implementation of the Goods and Services Tax, higher govt. borrowing, are indeed appreciable not to mention debt fund investments (for a year). The common man’s struggle against inflation and negative real return on investments and income seem to continue. ‘Taxing on the rich’ is no big solution! The Direct Taxes Code can only deliver some change.

The big challenge for Chidambaram now remains of meeting the 4.8 percent of GDP fiscal deficit target next fiscal. You can read the complete article here
http://blogs.reuters.com/india-expertzone/2013/03/05/budget-2013-a-rather-ambitious-budget/

Reaction of rating agencies for Budget 2013

Yes, Union Budget 2013 is indeed realistic. Reaction of rating agencies substantiates the fact. Moody's Investor Service said that the initiatives introduced can help meeting India's fiscal deficit target at 4.8 percent of GDP, which will pave the way for positive credit ratings. But this is an overall comment; there are issues that are challenging. Meeting the growth targets in few areas will remain challenging. The revenue and spending issue cannot be ignored as well.

So, India is all geared up for an economic growth revival. According to reaction of rating agencies such as Moody's it was sharp spending cuts that has helped the country meet its fiscal deficit target of 5.2 percent of GDP, ending March fiscal 2013. The same commitment needs to be retained ahead.

According to Moody's, the selling of stakes in public companies was less, which led to raising of less money though at the same time budget targets being not met during the past several years.

You can read the complete article here –
http://in.reuters.com/article/2013/03/04/india-ratings-moodys-budget-idINDEE92303I20130304

Chidambaram’s boldness well exhibited in Union Budget 2013

Yes, P. Chidambaram did live up to the country’s expectations, as exhibited by his Budget 2013. Problems facing India at the time when he held the finance minister’s portfolio were slow economic growth, downgrade credit rating, growth, high fiscal deficit, high interest rates, stubborn inflation, high budget, and insufficient investment. Union Budget 2013 explicitly focuses on these setbacks; Chidamabaram is resisting fiscal suicide!

Union Budget 2013 Show Ups
·        Limit to govt spending
·        No big expansion in subsidies
·        Limit govt net borrowings to 4.84 trillion rupees
·        Ending of the arresting of household financial savings
·        Levy of 10 percent surcharge for rich taxpayers
·        Focus on in-flow of foreign funds
·        Hopes of 19 percent increase in tax collections next year.

Fiscal consolidation measures of the Union Budget 2013 should certainly improve the nation's overall financial savings. But investors of the stock market are disappointed on the cuts in govt. spending. Thanks to Chidambaram’s tough and bold decision. It is now to wait and watch the implementation and outcomes of Budget 2013!

The above post is based on the expert opinion of Andy Mukherjee. You can read the complete article here:
http://in.reuters.com/article/2013/02/28/india-union-budget2013-breakingviews-idINDEE91R09L20130228?type=economicNews

India Budget 2013 – reviewing incentives and exemptions

To reduce budget deficit, it is saving every rupee that P. Chidambaram has committed. This very commitment is expected to be met in the India Budget 2013. One of the measures towards meeting this objective is certainly withdrawing of tax incentives which have outlived their purpose. Incentives are the loss of revenue caused by the difference between prescribed rates in general and effective rates of taxation. Of course, incentives and exemptions are measures implemented to defuse inflation, promote exports, and benefiting backward areas.

Total loss from taxation is estimated at 936 billion rupees including 148 billion rupees from the corporate sector, 284 billion rupees from individual tax payers from savings incentives, 4.35 trillion rupees (major loss) from excise and customs; firms are no exception. Effectiveness of all incentives should be reviewed. Change of non-effective incentives is suggested while those no longer necessary should be withdrawn.

The above post on India Budget 2013 is based on expert opinion by D H Pai Panandiker, President, RPG Foundation. You can read the complete article here -
http://blogs.reuters.com/india-expertzone/2013/02/13/union-budget-2013-need-to-review-tax-incentives/ 

Control on Expenditure for Positive Economic Growth!

P. Chidambaram was well aware of Union Budget 2012 being not up to expectations. With elections round the corner and with the country exhibiting decelerating economic growth, the finance minister is expected this time to present a positive Union Budget 2013 with special emphasis on growth.

Yes, Union Budget 2013 can fuel the economy; P. Chidambaram should give the big push now. Special emphasis should be laid on trimming expenditure. With GDP growth going lower than 5.3 percent and with the urgent need to implement measures to control fiscal deficit, restraint on expenditure is a must. Because if expenditure, which is at 14 percent at present, is not trimmed, taxation will see a rise! And changing income tax rates will not only dampen foreign investor confidence but also affect the industry and common man alike. Though GST can boost revenues, its implementation is unfeasible for roughly another two years.

What the finance minister can do is taxing conspicuous consumption, reduce spending on subsidies, and follow more measures.

The above post is based on expert opinion by D H Pai Panandiker, President, RPG Foundation.
You can read the complete article here -
http://blogs.reuters.com/india-expertzone/2013/01/30/budget-2013-should-trim-expenditure/

Budget 2013 - Creating the Lost Interest!

The same routine measures, policy paralysis, non-innovative and non-inventive inclusions – for over a decade these are what the budget delved on, thus losing its wow factor. But Union Budget 2013 is generating some interest!

Besides dealing with fiscal and current account, P. Chidambaram has to make the citizens happy (thanks to the approaching elections!). For bringing down deficit to 3 percent of GDP in five years, as projected, Union Budget 2013 should focus on the following:

· Cut down on plan expenditure sensibly
· Reduce subsidy using Aadhaar
· Introduce welfare schemes for the poor
· Bring more service sunder tax net
· Rationalize the indirect tax structure
· Border-less movement of products within India (via GST implementation)
· Implement tax measures to raise the tax-to-GDP ratio
· Encourage household savings
· Effectively implement Rajiv Gandhi Equity Savings Scheme
· Accelerate momentum of exports
· Ease credit norms
· Remove infrastructure bottlenecks
· Encourage FII and FDI fund flows
· Limit borrowing and wasteful expenditure
· Control of inflation, and more.
 

The above post is based on expert opinion by Rajagopal is the Head Advisory and a member of the investment committee at Kotak Mahindra (UK) Ltd. You can read the complete article here -
http://blogs.reuters.com/india-expertzone/2013/02/14/union-budget-2013-awe-factor-kotak-rajagopal/.

What the IT sector wants from Union Budget 2013?

What NASSCOM has portrayed about IT as a booming industry despite global economic volatility is well attested by the positive performance of the many IT companies. IT contributes 7.5 percent of India’s GDP besides sustaining the livelihoods of 11.7 million plus Indians.

So, what does the IT industry want from the Union Budget 2013? Here are key expectations:
·        Resolving of existing hassles over tax (direct and indirect) issues
·        Implementation of fair amendments in GAAR
·        Discontinuation or reduction of Minimum Alternate Tax (MAT) levied on SEZs
·        Clarity on transfer pricing, removing confusion regarding taxation of multiple companies of the same group.

The spate of reforms introduced by the government since September has moderately contributed towards economic boost. The IT industry likewise expects Union Budget 2013 to focus on reformative measures the big way. It is then that this sector will earn global acclaim – the evolution from BPO (business process outsourcing) to BPM (business process management).

The above post is based on expert opinion by Keshav R. Murugesh,CEO and member Board of Directors of WNS Global Services. You can read the complete article here -
http://blogs.reuters.com/india-expertzone/2013/02/07/budget-2013-wishlist-it-industry-expects-policy-changes/