UPA-II to present its last Budget today

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New Delhi: Finance Minister P Chidambaram will present the last interim budget of the UPA-II on Monday in Parliament. Chidambaram will present the vote on account on Monday, giving an estimate of funds required to meet expenditure until a new government is in place.

Chidambaram will give a report card on the economy for the past five years and elaborate on tax collection. No major tax announcements are likely. But the government is likely to announce some incentives to woo voters ahead of elections.

However, the government is also worried about the Telangana-triggered interruption in the House. While the Railway Budget was reduced to a mere 14-minute show, people across the country await Congress-led UPA’s last minute attempts to woo the voters ahead of polls.

By tradition, the interim budget does not contain proposals seeking to tinker with direct taxes, nor are there any policy announcements, although there may be some sops for the common man and sectors that need help.

Earlier, Chidambaram had indicated he may tweak excise duties and service tax rates in the interim budget in an apparent bid to boost the economy, but he may not pursue key reform legislation due to lack of political consensus.

“In 2004, Mr Jaswant Singh made a 12-page speech. In 2009, Mr Mukherjee made an 18-page speech. So I have two numbers to choose from between 12 to 18. We can make any proposal short of amending any law,” Chidambaram said.

“We cannot propose amendments to the Income Tax Act, Customs Act or the Excise Act. But any proposal short of amending a law can be made. We can also outline a vision for the future,” he had said.

It would be interesting to see if Chidambaram continues with the super-rich tax in 2014-15 as well, but indications are he may choose not to since it would need amendment of the law.

In the last Budget, the government imposed a 10 per cent surcharge for a year (2013-14 fiscal) on people earning income above Rs 1 crore. It covered 42,800 individuals and entities.

The minister is expected to use the opportunity to highlight the achievements of the UPA-II government and focus on how the government has been able to contain the fiscal deficit and the current account deficit (CAD), notwithstanding the difficult global situation.

What to expect from the interim Budget

– The interim Budget essentially an economic report card of UPA-II

– Chidambaram will set the fiscal deficit target for FY15 and a roadmap for fiscal discipline

– A possible cut in indirect taxes for troubled sectors is indicated.

– An excise duty cut to revive manufacturing, specially the auto sector is also expected.

– In an election year, there could be more sops for health, food and rural jobs.

– Interest subsidy on bank loans to farmers and exporters could also be extended

– Tax concessions could be offered for some of the poorer regions in the country.

– The government could also defer oil, fertiliser and other subsidies to next year.

– Revenues could include proceeds from the recently concluded spectrum auction.

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