Dubai: India’s finance minster P. Chidambaram on Monday presented the interim budget before the general elections this year with the pledge to cut the country’s fiscal deficits and reducing taxes for goods from cars to mobile phones.
The budget deficit is projected to narrow to 4.1 per cent of gross domestic product (GDP) by March 31, 2015, from an estimated 4.6 per cent in the current fiscal year, lower than an earlier target of 4.8 per cent.
The finance minister said in his budget speech that the current-account deficit would be contained at $45 billion in the fiscal year through March, compared with $88 billion in the previous year.
The government also expects to add about $15 billion to foreign reserves.
Excise tax rates on sport-utility vehicles, mobile phones and small cars would be cut until June 30, Chidambaram said, while urging lawmakers to pass a goods and services tax.
Defense spending would rise by about 10 per cent to modernise the country’s military, he said.
Leading car manufacturers such as Tata Motors and Maruti Suzuki India have welcomed the tax cuts and said that they will pass on excise benefits to consumers with immediate effect and hopes that significant price reduction, will spur a revival in the sector.
In his last ditch attempt to revive the manufacturing sector, Chidambaram has slashed the excise duty on autos to support the sector in the wake of sluggish growth. He cut excise duty for small cars/commercial vehicle (CV) from 12 per cent to 8 per cent, 20 per cent on large and mid-segment cars. Excise duty on SUVs has been reduced from 30 per cent to 24 per cent.
GDP expansion in 2013-14 third and fourth quarters will be at least 5.2 per cent
Fiscal deficit projected at 4.1 per cent of GDP in 2014-15
Fiscal deficit seen at 4.6 per cent of GDP in 2013-14
Current account deficit for 2013-14 projected at $45 billion
Forex reserves to rise by $15 billion by end of 2013/14
Gross market borrowing seen at 5.97 trillion rupees in 2014-15
Net market borrowing at 4.07 trillion rupees
Plan expenditure for 2014-15 seen at 5.55 trillion rupees
Non-plan spending estimated at about 12.08 trillion rupees in 2014-15
Defence spending raised to 2.24 trillion rupees in 2014-15, up 10 per cent year on year