Union Budget 2014-15 Highlights: Boost to infra, real estate and manufacturing
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The Union Budget 2014-15, presented by the Finance Minister, Arun Jaitley, and the maiden budget of the Narendra Modi-led NDA government, was keenly awaited to see whether it heralds the coming of good days for the downbeat business sentiment. The budget has, by and large, met expectations. It has stayed clear of a major hike in tax rates as this could dampen the incipient recovery in the economy, and is instead relying on the rejuvenated confidence of investors during the year, to achieve fiscal consolidation.
Thus, the budget’s projections, particularly in revenue receipt, would depend significantly on economy growth which in real terms is projected at 5.4-5.9 per cent, against 4.7 per cent for FY14. With the south west monsoons playing truant till early July, the farm sector, as also the economy, may under-perform, which may put downward pressures on fiscal receipt on the one hand, and upward pressures on government disbursements on the other to contain inflation. All this, would lead to some slippage in fiscal deficit.
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The budget contains several business/investment-friendly proposals, like infra real estate financing, PPP, FDI and Smart Cities. BSE Sensex, the sensitive barometer of India Inc’s response to the budget, ended nominally lower, after remaining above the previous day’s close during the major part of the trading session.
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INFRASTRUCTURE
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Investment of Rs 37,880 crore in NHAI and State Roads, which includes Rs 3,000 crore for the North East
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Rs 14,389 crore aloocated to Pradhan Mantri Gram Sadak Yojana
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16 new port projects proposed to be awarded this year with a focus on port connectivity
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Rs 11,635 crore to be allocated for the development of Outer Harbour Project in Tuticorin, for phase-I
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SEZs will be developed in Kandla and JNPT
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Comprehensive policy to be announced to promote Indian ship building industry
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Rs 1,000 crore provided for development of rail connectivity in the North Eastern region
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Rs 4,200 crore for Jal Marg Vikas project on river Ganga connecting Allahabad to Haldia over 1,620 km
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Additional 15,000 km gas pipeline to be set up
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Rs 7,060 crore provided for developing 100 Smart Cities
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Rs 100 crore provided for Metro projects in Lucknow and Ahmedabad
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Scheme for development of new airports in Tier-I and Tier-II cities to be launched
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Rs 5,000 crore for the Warehouse Infrastructure Fund in 2014-15
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An institution to provide support to mainstream PPPs, called 3P India, will be set up with a corpus of Rs 500 crore
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TOURISM
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Rs 500 crore provided for developing five tourist circuits
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Sarnath-Gaya-Varanasi Buddhist circuit to be developed with world class tourist amenities
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e-Visa facility to be introduced in a phased manner at nine airports
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Rs 200 crore provided to build the “Statue of Unity”
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Rs 100 crore allocated for War Memorial at Princess Park
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EDUCATION
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Five IITs to be set up in Jammu & Kashmir, Chhattisgarh, Goa, Andhra Pradesh and Kerala. Five IIMs in Himachal Pradesh, Punjab, Bihar, Odisha and Maharashtra. Rs 500 crore allocated for this
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Four AIIMS to be set up in Andhra Pradesh, West Bengal, Vidarbha in Maharashtra, and Poorvanchal in UP with an allocation of Rs 500 crore
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12 new government medical colleges also proposed
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Rs 100 crore allocated for setting up sports university in Manipur
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Rs 200 crore provided to open Agriculture Universities in Andhra Pradesh and Rajasthan and Horticulture Universities in Telangana and Haryana
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REAL ESTATE AND HOUSING
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Deduction limit on account of interest on loan in respect of self-occupied house property extended from Rs 1.5 lakh to Rs 2 lakh
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Necessary incentives provided for Real Estate Investment Trusts (REITS) which will have to pass through for the purpose of taxation
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A modified REITS type structure for infrastructure projects was announced as Infrastructure Investment Trusts (InvITs) for PPP and other infrastructure projects
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A Mission on Low Cost Affordable Housing which will be anchored in the National Housing Bank (NHB)
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Rs 4,000 crore for NHB, with a view to increase the flow of credit for affordable housing
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FDI
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Composite cap of FDI in Defence and Insurance raised from 26 per cent to 49 per cent with full Indian management and control through the FIPB route
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Requirement of the built-up area and capital conditions for FDI to be reduced from 50,000 square metre to 20,000 square metre, and from USD 10 million to USD 5 million respectively
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MANUFACTURING
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Rs 100 crore provided for setting up a National Industrial Corridor Authority with its headquarters in Pune
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Perspective plan for the Bengaluru Mumbai Economic corridor (BMEC) and Vizag-Chennai corridor to be completed, with provision for 20 new industrial clusters
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Kakinada port and its adjoining area will be developed as the key drivers of economic growth in the region, with a special focus on hardware manufacturing
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Course of action on goods & service tax (GST) by the year end
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New Urea Policy to be formulated
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Master planning of three new smart cities in the Chennai-Bengaluru Industrial Corridor region, viz. Ponneri in Tamil Nadu, Krishnapatnam in Andhra Pradesh, and Tumkur in Karnataka to be completed
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Rs 200 crore allocated to set up six new textile mega-clusters at Bareily, Lucknow, Surat, Kutch, Bhagalpur, Mysore,and one in Tamil Nadu
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An investment allowance at the rate of 15 per cent to a manufacturing company that invests more than Rs 25 crore in any year in new plant and machinery
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POWER
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Rs 100 crore is allocated for a new scheme “Ultra-Modern Super Critical Coal- Based Thermal Power Technology”
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Rs 500 crore provided for Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, Andhra Pradesh and Laddakh
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A Green Energy Corridor Project is being implemented to facilitate evacuation of renewable energy across the country
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Rs 500 cr allocated to boost rural power infrastructure
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10 year tax holiday extended for the power undertakings which begin generation, distribution and transmission of power by 31 March, 2017
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Adequate quantity of coal to be provided to power plants which are already commissioned or will be commissioned by March 2015
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Quote of the week:
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"In the first budget of this NDA government that I am presenting before the august House, my aim is to lay down a broad policy indicator of the direction in which we wish to take this country. The steps that I will announce in this budget are only the beginning of a journey towards a sustained growth of 7-8 per cent or above within the next 3-4 years..."
- Arun Jaitley, Minster of Finance
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