India's 2013/14 budget

NEW DELHI Thu Feb 28, 2013 11:23am GMT

India's Finance Minister Palaniappan Chidambaram (C) arrives at the parliament to present the 2013/14 federal budget in New Delhi February 28, 2013. Chidambaram will present one of the most highly anticipated budgets of recent years, a blueprint for austerity that forms the centrepiece of India's efforts to stave off a ratings downgrade. Investors will watch closely to see whether he will fulfil his promise of fiscal prudence. REUTERS/Adnan Abidi

India's Finance Minister Palaniappan Chidambaram (C) arrives at the parliament to present the 2013/14 federal budget in New Delhi February 28, 2013. Chidambaram will present one of the most highly anticipated budgets of recent years, a blueprint for austerity that forms the centrepiece of India's efforts to stave off a ratings downgrade. Investors will watch closely to see whether he will fulfil his promise of fiscal prudence.

Credit: Reuters/Adnan Abidi

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NEW DELHI (Reuters) - India unveiled new taxes on the rich and large companies on Thursday to fund higher-than-expected spending for the next fiscal year, in a budget that aimed to revive growth amid the country's worst slowdown in a decade ahead of a 2014 election.

FISCAL DEFICIT

* Fiscal deficit seen at 5.2 pct of GDP in 2012/13

* Fiscal deficit seen at 4.8 pct of GDP in 2013/14

BORROWING

* Gross market borrowing seen at 6.29 trln rupees in 2013/14

* Net market borrowing seen at 4.84 trln rupees in 2013/14

* Net short-term borrowing seen at 198.44 bln rupees in 2013/14

* To buy back 500 bln rupees worth of bonds in 2013/14

SPENDING

* Total budget expenditure seen at 16.65 trln rupees in 2013/14

* Non-plan expenditure estimated at about 11.1 trln rupees in 2013/14

* India's 2013/14 plan expenditure seen at 5.55 trln rupees

* Revised estimate for total expenditure is 14.3 trln rupees in 2012/13, which is 96 pct of budget estimate

SUBSIDIES

* 2013/14 major subsidies bill estimated at 2.48 trln rupees from 1.82 trln rupees

* Petroleum subsidy seen at 650 bln rupees in 2013/14

* Revised petroleum subsidy for 2012/13 at 968.8 bln rupees

* Estimated 900 bln rupees spending on food subsidies in 2013/14

* Revised food subsidies at 850 bln rupees in 2012/13

* Revised 2012/13 fertiliser subsidy at 659.7 bln rupees

TAX

* Propose surcharge of 10 pct on rich taxpayers with annual income of more than 10 mln rupees a year

* To increase surcharge to 10 pct on domestic companies with annual income of more than 100 mln rupees

* For foreign companies, who pay the higher rate of corporate tax, the surcharge will increase from 2 pct to 5 pct

* To continue 15 pct tax concession on dividend received by India companies from foreign units for one more year

* To impose withholding tax of 20 pct on profit distribution to shareholders

* Amnesty on service tax non-compliance from 2007

* 10 bln rupees for first instalment of balance of GST (Goods and Services Tax) payment

* Propose to reduce securities transaction tax on equity futures to 0.01 pct from 0.017 pct

* To introduce commodities transaction tax (CTT)

* CTT on non-agriculture futures contracts at 0.01 pct

GROWTH

* India faces challenge of getting back to its potential growth rate of 8 pct

* India must unhesitatingly embrace growth as highest goal

REVENUE

* Expect 133 bln rupees through direct tax proposals in 2013/14

* Expect 47 bln rupees through indirect tax proposals in 2013/14

* Target 558.14 bln rupees from stake sales in state-run firms in 2013/14 vs estimate of 240 bln rupees in 2012/13

* Expect revenue of 408.5 bln rupees from airwave surcharges, auction of telecom spectrum, licence fees in 2013/14

CURRENT ACCOUNT DEFICIT

* India's greater worry is current account deficit

* Will need more than $75 bln this year and next year to fund current account deficit

INFLATION

* Food inflation worrying, will take all steps to augment supply side

CORPORATE SECTOR AND MARKETS

* To issue inflation-indexed bonds

* Propose capital allowance of 15 pct to companies on investments of more than 1 bln rupees

* Foreign institutional investors (FIIs) can use investments in corporate, government bonds as collateral to meet margin requirements

* Insurance, provident funds can trade directly in debt segments of stock exchanges

* FIIs can hedge forex exposure through exchange-traded derivatives

* Investor with less than 10 pct stake in a company will be regarded as FII, more than 10 pct stake as FDI (foreign direct investor)

* Stock exchange regulator will simplify know-your-customer norms for foreign portfolio investors

* To implement quickly recommendations of financial sector legislative reforms commission

* To cut factory gate duty on trucks to 13 pct from 14 pct

POWER AND ENERGY SECTOR

* Zero customs duty for electrical plants and machinery

* Move to revenue-sharing from profit-sharing policy in oil and gas sector

* To equalise duties on steam and bituminous coal to 2 pct customs duty and 2 pct cvd (countervailing duty)

FOREIGN TRADE

* To cut duty on exports of precious and semi-precious stones to 2 pct from 10 pct

BANKING

* To provide 140 bln rupees capital infusion in state-run banks in 2013/14

DEFENCE

* To allocate 2.03 trln rupees to defence in 2013/14

AGRICULTURE

* 801.94 bln rupees to rural development in 2013/14

* 270.49 bln rupees for agriculture in 2013/14

FINANCE MINISTER COMMENTS

* "Faced with a huge fiscal deficit, I have no choice but to rationalize expenditure. We took a dose of bitter medicine. It seems to be working."

(Compiled by Matthias Williams, Annie Banerji, Arup Roychoudhury and Satarupa Bhattacharjya)

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