Some points on the Union Budget 2014-15

Surajit Das teaches Economics at at Centre for Economic Studies and Planning, JNU, New Delhi.

Surajit Das

Surajit Das

Some points on the Union Budget 2014-15

1) Fiscal deficit has been reduced from 4.8% to 4.1% of GDP by expenditure reduction from 14.7% to 13.9% of GDP and the revenue also has been estimated to reduce from 9.3% to 9.2% of GDP.

2) Capital expenditure has been reduced from already low level of 3% to 2.7% on the face of lower growth rate.Dharavi_Slum_in_Mumbai

3) The revenue expenditure has also been reduced from 12.6% to 12.2% of GDP despite the level of interest payment component remaining the same as percentage of GDP.

4) The non-plan expenditure has been reduced from 9.8% to 9.5% and the plan expenditure has also been reduced from already low 4.9% to 4.5% of GDP.

5) Gross tax revenue has been estimated to reduce from 10.9% to 10.6% of GDP particularly because of reduction in corporate profit tax (from 3.7% to 3.5% of GDP) and union excise duty (from 1.7% to 1.6% of GDP). Notably, ours is one of the lowest tax-GDP ratios in the World.

6) As percentage of GDP, as compared to the budget estimates of previous year, expenditure would be brought down for some significant ministries including ministry of agriculture, ministry rural development, ministry of drinking water and sanitation, ministry of health and family welfare, ministry of human resource development, ministry of women and child development, ministry of power, ministry of petroleum and natural gas, social justice and empowerment etc.

7) More indirect tax and less direct tax (by implementation of GST & DTC) would aggravate the inequality situation in the country.

8) Possible reduction in subsidies would either be inflationary or reduce purchasing power of people by increasing service charges and fees.

9) Fiscal conservatism under demand constrained situation would lead to further contraction in growth and employment.

10) There is no major shift/change in the direction of economic policies is visible in this budget as compared to the earlier UPA-II regime.

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