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Thursday, July 10, 2014

The 2014 Indian Financial Budget - Highlights


The Finance Minister Mr. Arun Jaitley presented the new BJP Governments maiden Financial Budget today in the Indian Parliament. With expectations skyhigh and a lot of pressure due to the current Indian Economic and Financial situation, this budget will be crucial to India's future as a nation as well as for its Growth.The purpose of this article is to highlight the key points from the Budget that was presented today.

Before We Start:


The Idea of this article is not to Review the Indian  Budget from a Political perspective.The purpose of this article is just to give you an overview of the key highlights of this Budget. This is not a Politically Motivated Review of the Budget. I am just a blogger and my take on this budget is just my personal view. You are free to disagree with me :-) but please be civil in the comments section.

Points to be Considered - Before Looking At the Budget Highlights


The following are some of the key points to be considered before we look at our budget and its highlights. These are points that the ruling BJP Govt, our PM Mr. Modi and our FM Mr. Jaitley would've or should've taken into consideration before coming up with the budget.


  • Inflation is at an all time high. The cost of living in India has gone up exponentially over the past 10 years. The Common Man or Aam Aadmi (No, I am not referring to the supporters of the AAP Party) is struggling to make ends meet. 
  • The Indian Economy is under severe stress due to reduced growth
  • Our previous Budgets have done very little to address the Fiscal Deficit. With the deficit getting larger and larger, this budget cannot come up with populist freebies or sops
  • Our GDP is much lower than our peer Developing Nations. We need to revive our growth
  • A Majority of our Population still live in Villages and Tier II or III Cities/Towns with little access to power, clean water or sanitary conditions. These people are well below the Poverty Line and need help



Key Highlights of the Indian Financial Budget

The following are some of the key highlights from the Indian Financial Budget for 2014-15 that was Presented today in the Parliament.



  • FDI (Foreign Direct Investment) to be allowed in several sectors of our Economy. This will help boost Manufacturing and Industrial Output as well as our GDP. Not to mention the additional employment this would generate
  • Banks to be allowed greater Autonomy to make them more Responsible and to stabilize the Financial Situation in the Country. 
  • A national program called Skill India to be introduced to provide training and support for employment: Jaitley.
  • Visa on Arrival facility (e-Visa's) to be introduced in 9 Major Airports in our country. This will make India an even more attractive Tourist Destination and increase tourish revenues
  • 'Pradhanantri Krishi Sichayin Yojana' to be started to help Farmers with Irrigation for their Agricultural Lands
  • EPFO will launch a unified account scheme for portability of Provident Fund accounts. No more submitting for Transfer of EPF when we switch jobs. Just mention your unified PF Account number and continue your PF Account without hassles
  • Idle Money lying around in the coffers of the Post Office (And other government Establishments) to be put to proper use. 
  • Rs. 100 crores set aside to help the Girl Children of India. 'Beti padhao, beti badhao yojana' will facilitate the same
  • Pradhan Mantri Gram Sadak Yojan or PMGSY to get Rs.14,389 crores to boost Rural Development
  • A new National Housing Banking programme created and Rs. 8000 cr set aside for the same
  • Rs.3600 crore set aside for National Rural Drinking Water programs
  • Four more new AIIMS to be set-up across the country. Rs.500 crore set aside for this. The four new AIIMS will be in Andhra, West Bengal, Vidarbha and Purvanchal
  • 5 new IIM's and 5 new IIT's to be set-up across the country. 
  • 12 New Govt Medical colleges with dental facilities to be built
  • 15 Model Rural Health Research centers to be set up for rural health issues
  • Rs. 500 crores set aside for the National Rural Internet and Technology Mission
  • Rs. 400 crores set aside to incentivize development of low cost housing
  • Rs. 100 crores set aside for Metro Rail project (in Public-Private-Partnership or PPP Mode) in Ahmedabad and Lucknow
  • Rs. 100 crores set aside for Modernization of Madrasas across the country
  • Rs.200 cr set aside to build New Agriculture Universities in Andhra & Rajasthan and Horticulture Universities in Haryana & Telangana. 
  • To help Farmers - Soil Testing Labs to be built across the country and issue Soil Health Cards. Rs. 56 crores set aside to build the testing labs and Rs. 100 crores set aside for the health cards program. 
  • Financial Aid to be provided to 5 lakh farmers through NABARD (National Bank for Agriculture and Rural Development)
  • Rs. 5000 crores set aside for the Rural Infrastructure Development Fund
  • A Rs.5000 cr short time rural credit refinance fund set up to help Farmers this year
  • Rs.100 cr set aside for Kisan Television to provide real time information on various farming and agriculture issues to help Farmers
  • All govt departments and ministries to be integrated through E-platform by 31 Dec this yea
  • Rs.50 cr set aside for pashmina production programme in Jammu and Kashmir
  • Rs.4200 cr set aside for the Jal Marg Vikas project on river Ganga connecting Allahabad to Haldia,over 1620 km
  • In order to complete gas grid, 15000 km of additional pipeline to be developed through PPP mode
  • New airports to be developed through PPP mode (Details on where and how is still awaited)
  • Bank will be encouraged to give long term funds and loans to the infrastructure sector to help revive the same
  • Schemes to make Banking & Insurance services reach the common-man to be introduced. 
  • Rs. 7060 crores set aside to develop & build new Cities 
  • Rs. 6000 crores set aside for the welfare of Senior Citizens across the country
  • Rs. 150 crores set aside to improve women safety 
  • Rs. 5000 crores set aside (over and above the amount set aside in the Interim Budget) to strength the country's defense
  • Rs. 100 crores set aside for the Project that aims at linking Rivers
  • Rs. 2037 Crores set aside for the "Namami Ganga", an integrated Ganga Development Project
  • Rs. 28,000 Crores set aside to provide Sanitation (toilets) in all Primary Schools
  • Biotech clusters to be set up in Bangaluru and Faridabad to take science and technology to new heights
  • Govt will set up national sports academy for different sports in different parts of India
  • Rs. 100 crores set aside to build a Sports University in Manipur
  • Rs.200 crores set aside for upgradation of indoor and outdoor stadium in Jammu and Kashmir to international standards
  • Rs. 500 crores set aside for the Project to help Displaced Kashmiri Migrants 
  • Rs. 8,00,000 Crores set aside for development of Agriculture in India
  • Rs.1000 crores to be provided for rail connectivity in North-Eastern regions
  • Rs.100 crores set aside for development of organic farming in north east India
  • Rs.150 crores set aside for communication needs of Andaman and Nicobar islands.
  • Rs. 30 crores set aside to build a Hasthkala Academy for the revival of Indian Handicrafts
  • Rs. 37,800 crores set aside for the NHAI (National Highways Authority of India) to build roads across the country
  • Rs. 3000 crores set aside to construct/upgrade roads in North East India 

Changes to Individual Income Tax

Lets come to the All Important section of this budget. The Income Tax rates were left unchanged. However, the Individual Income Tax Slabs were revised slightly and minor benefits are provided which include:
  • Tax Exemption Limit changed from 2 lakhs to 2.5 lakhs - for regular citizens
  • Tax Exemption Limit changed from 2.5 to 3 lakhs - for Senior Citizens
  • Interest Exemption on House Loan - up from 1.5 lakhs to 2 lakhs
  • Section 80C Exemption Limit changed from 1 lakh to 1.5 lakhs



My Take on this Budget


Everyone actually expected a Miracle from Mr. Modi and Mr. Jaitley. Years and years worth of damage to our economy cannot be fixed overnight. Though this budget does not do anything radical, it is obvious that this budget is intended to boost Agriculture, Industrial Production and strengthen our Nations Defense & Infrastructure. The hike in the Individual Tax Exemption limits by Rs. 50,000/- and the additional exemption of Rs. 50,000/- on home loan interest will bring marginal relief to the tax payer. The hike in Section 80C limits from 1 lakh to 1.5 lakhs is a welcome move and will motivate individual saving.

This article hasnt gone into the specifics in-terms of how this budget will impact you. That is because, it requires a little more analysis from my side and I will be posting the same very soon.





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