Budget 2014

10Jul

Budget 2014 : Oil and Gas bits

Key to budget subsidies. Gas grid to be built for another 15,000 km, double current level. Royalty rates on minerals to be revised this year.

8Jul

Railway Budget 2014-15 – Highlights

To enhance network around Bangalore, neighbouring towns

Some stations to be developed to international standards through PPP model: Gowda

To ensure safety, provision of Rs 1,785 crore for road-over/under bridges, multi-pronged approach to eliminate unmanned level crossings.

Future e-Ticketing to support 7200 tickets per minute and to allow 1.2 lakh simultaneous users: Rail Minister

Wi-Fi in A-1 and A category stations and in select trains: Rail Minister

Setting up of Railway University for technical and non-technical subjects. Tie-up with technical institutions.

Railways plans to increase speed of trains to 160 to 200 km per hour in nine select sectors

Gowda announces decision to launch diamond quadrilateral of high speed trains

Ladies’ coaches to be escorted by women RPF constables; additional care for ladies travelling alone, says Railway Minister

To boost fruit, vegetables transport via AC storage spaces 

Bullet train proposed on Mumbai-Ahmedabad sector

4,000 women constables to be inducted to enhance onboard safety: Railway Minister

Outsourcing at 50 major stations; onboard housekeeping to be extended to more trains; Launching feedback service through IVRS on the quality of food; Food can be ordered by SMS and phone

Resource mobilisation through leveraging PSU resources, Foreign Direct Investment and Public Private Participation: Rail Minister

Recent fare and tariff hike to mop additional revenue of about Rs 8,000 crore 

Reservation system will be revamped and ticket-booking through mobile phones and post offices popularised: Gowda.

Budget allocation for cleanliness up by 40 per cent over the last year.

Retiring room facility to be extended to all stations: Gowda.

Computer workstations on select trains upon payment 

The Indian Railways carry 23 million passengers a day, over 1 billion tonnes of freight every year.

Trains that run in India are capable to move the entire population of Australia.

Target to become the largest freight carrier of the world

Indian Railways spent Rs 41,000 crore on laying of 3,700 km of new lines in last 10 years.

Gross traffic receipts in 2013-14 was Rs 12,35,558 crore; operating ratio was 94 per cent, says Gowda presenting Rail Budget

Social obligation of Railways in 2013-14 was Rs 20,000 crore: Gowda said.

Populist projects and mismanagement have brought Railways to point of funds crunch: Gowda

This state of affairs in railways needs immediate course correction: Gowda

Need to explore alternative sources of resource mobilisation and not depend on fare hike alone: Rail Minister

Recent fare revision to net Rs 8,000 cr to Railways

Of the 676 projects sanctioned, only 356 remain completed

FDI in railway projects, except in operations, to be attracted: Gowda.

Future projects to be financed on public-private partnership model: Gowda

8Jul

Rail Budget 2014-15 LIVE: First Bullet Train between Mumbai-Ahmedabad, 58 new trains

Presenting his maiden Rail Budget in Lok Sabha on Tuesday, Union Railway Minister Sadananda Gowda announced 58 new trains including 5 new Jansadharans, 5 premium trains, 6 AC express, 27 express trains, 8 passenger trains, 2 MEMU trains and 5 DEMUs. He further announced extension of 11 trains’ route.

Stating that bullet trains are a priority, the Railway Minister proposed the first bullet train between Mumbai and Ahmadabad route. Railways will also launch high-speed trains to connect major cities, he said.

Gowda said his ministry would also seek cabinet approval for allowing foreign direct investment in the state-owned network, but passenger services would be excluded.

“The bulk of our future projects will be… by the PPP model,” he told India`s parliament, referring to public-private partnerships.

India`s railway, the world`s fourth-largest, has suffered from years of low investment and populist policies to subsidise fares. This has turned a once-mighty system into a slow and congested network that crimps economic growth.

The decision to push private investment signals the appetite Prime Minister Narendra Modi`s new government has for taking tough and unpopular decisions he has said are needed to revive the economy.

Reform of the railways has long proven politically sensitive. Successive governments have backed away from modernization, preferring instead to use the system to provide cheap transport for voters, and jobs for 1.3 million people.

Here are the Highlights of Rail Budget 2014:

-I am grateful to PM Narendra Modi for having reposed his faith in me, I promise to fulfill this responsibility

-Indian Railways is the nation’s prime mover

-Indian Railways cuts across all barriers of class and creed

-I am flooded with request and suggestions for new trains, new rail lines

-Everybody feels that there is a solution to the challenges that the Indian Railways faces

-Quotes Kautilya “ïn the happiness of the people lies the happiness of the ruler”

-Indian Railways carries 23 million passengers

-Run 4700 freight trains with 3 million tonnes of freight everyday

-Target to become the largest freight carrier in the world

-Indian Railways carries anything and everything, it never says no to anything if it fits the wagons

-We carry over 1 billion tonnes of freight every year

-Freight business has grown but IR carries only 31% of total freight movement in the country

-Network of 1.16 lakh km, 63,000 passenger coaches, more than 2 lakh wagons and over 13 lakh employees

-Gross receipts in 2013-14 were Rs 139,558 cr, expenditure was 130,320 cr

-Indian Railways has an operating ratio of 94%

-This means we spent 95% of every rupee earned

-Loss in passenger sector was 23 paisa per km, freight rates were increased to compensate

-In the last ten years 99 new line projects were sanctioned out of which only 1 project is complete, there are 4 projects that are as old as 30 years

-If this trend is allowed to continue it would lead to spending of many more crores without returns

-41,000 cr was spent on laying of new lines but spent only 18,000 cr on doubling of tracks, though it was a priority over new lines

-Indian Railways is starved of funds despite 100% advance payment by customers

-Mismanagement led to severe fund crunch

-Dilemma between choosing commercial viability and social viability

-Time to take corrective actions, fare revision was one such step

-Fare revision will bring in 8000 cr but IR needs more than 9 lakh crore only to complete the golden quadrilateral project

-Only hiking fares is unrealistic, will work on Railways PSUs

-Private investment in railway infrastructure – domestic as well as foreign

-FDI in railways except railway operation

-PPP route to generate revenue

-Our target is to finance bulk of future projects through PPP mode

-Support for timely completion of projects

-Gross traffic receipt grew by 12 % but revenue target could not be reached

-Internal resource generation was around 11,000 cr, short of target by over 2000 cr

-Operating ratio deteriorated by 2.7%

Budget estimates:

-Anticipating a healthier economy. Gross receipt estimate pegged at Rs 164,374 cr, expenditure at 149,176 cr, freight growth of 4.9%, an incrementation of 51% over last year

-Anticipate small growth in passenger grower

-Freight revenue estimate at 157,770, passenger traffic revenue estimate at 44,645 cr

-Thank FM for increasing resource allocation by 1,100 cr in 2013-14

-Large part of higher plan outlay will go to improve safety

-Plan to scale down market borrowing to around 1,100 cr

-Maximum financial outlay to projects that are scheduled to be completed this year

-Allocate resources to high priority areas like safety, cleanliness, capacity augmentation

-Foot over bridges, escalators at all major stations through PPP mode, toilets, water shelters at all stations

-Involve NGOs to improve passenger amenities

-Work stations in select trains, pilot project this year

-Expanding scope of online booking

-Railways have been attaching high priority to cleanliness but it has always been a challenges

-40% increase in budget allocation for the same

-Outsource cleanliness at 50 major stations, cleanliness will be monitored by CCTV cameras

-Onboard house keeping currently available in select trains will be introduced in all trains

-1785 cr collocation for road under- and over- bridges

-Speedy clearances on first come, first serve basis

-Action to eliminate all level crossings

-Ultrasonic system to detect fault in tracks

-Technology for automatic clsing of doors both in main line and suburban sections

-17000 RPF personnel have been recruited, 4000 women RPF constables would be recruited – coaches meant for ladies will be escorted

-RPF personnel will be provided with mobiles so that passengers can contact them in times of distress

-New tourist circuit to be introduced

-Special train to propagate the teachings of swami Vivekananda

-Ticketing through post offices will be popularized

-e-ticketing mechanism will be strengthened to allow 120,000 simultaneous bookings

-Special scheme for meritorious wards of railway personnel

-Railway university for both technical and non-technical subjects

-Drinking water facility at all stations

-Endeavor to fulfill the long cherished dream of bullet trains

-Bullet trains on Mumbai-Ahmedabad section

-Ambitious plan to have a diamond quadrilateral high speed rail network – 100 cr allocated in budget

-Increase in speed of trains to 160 to 200 kilometers per hour on select sectors

-Delhi-Agra, Delhi-Chandigarh, Delhi-Kanpur
Nagpur-Bilaspur, Mysore-Bangalore-Chennai, Nagpur-Secunderabad

-Develop international standard stations in 10 major cities and important junctions

-Over 33% freight runs run empty, discount to customers who will provide returning traffic

-Parcel traffic would be segregated to separate terminals to decongest platforms

– New design for parcel vans is being finalized

-Policy of private freight terminals through PPP mode is being finalized

-10 temperature-controlled warehouses at 10 locations in first phase to prevent wastage of fruit and vegetables

-Indian Railways will start using biodiesel upto 5% of total consumption in diesel locomotives

-Project management group to be set up at railway board level to monitor execution of projects

-E-procurement to be made compulsory for procurement worth Rs 25 lakh and above

-Substantial higher funds for projects in Northeast – 54% jump in allocation over the previous year

-WiFi in A1 and A category stations & in select trains. Internet-based Platform & Unreserved Tickets

-864 more EMUs for Mumbai suburban network

-Bayapanhalli to be developed as a coach terminal near Bangalore

-Projects worth over Rs 20,000 are at various stages in Telangana and AP. They will be completed

-18 surveys for new lines, 10 surveys for doubling-tripling of lines in 2013-2014

-Train connectivity to Kedarnath-Badrinath to be examined

-5 new Jansadharans, 5 premium trains, 6 AC express, 27 express trains, 8 passenger trains, 2 MEMU trains, 5 DEMUs

-Extend run of 11 trains

7Jul

Budget-2014-15 Glossary

AD-VALOREM DUTIES

These are the duties determined as a certain percentage of price of the product.

ANNUAL FINANCIAL STATEMENT

It is a statement of receipts and expenditure of states for the financial year, presented to Parliament by the government. It is divided into three parts: Consolidated Fund, Contingency Fund and Public Account.

APPROPRIATION BILL

This Bill is like a green signal enabling the withdrawal of money from the Consolidated Fund to pay off expenses. These are instruments that Parliament clears after the demand for grants has been voted by the Lok Sabha.

BALANCE OF PAYMENTS

The difference between demand and supply of a country’s currency in the foreign exchange market.

BALANCE OF TRADE

The difference between monetary value of exports and imports of output in an economy over a certain period of time. It is the relationship between a nation’s imports and exports.

Banking cash transaction tax (BCTT)

BCTT is a small tax on cash withdrawal from bank exceeding a particular amount in a single day. The basic idea is to curb the black economy and generate a record of big cash transactions. This tax was introduced in 2005-06 budget.

BUDGETARY DEFICIT

Such a situation arises when expenses exceed revenues. Here the entire budgetary exercise falls short of allocating enough funds to a certain area.

BUDGET ESTIMATES

It is an estimate of Fiscal Deficit and Revenue Deficit for the year. The term is associated with estimates of the Center’s spending during the financial year and income received as proceeds of tax revenues.

CAPITAL GOODS

Goods used in the manufacturing of finished products.

CAPITAL BUDGET

Capital Budget keeps track of the government’s capital receipts and payments. This accounts for market loans, borrowings from the Reserve Bank and other institutions through sale of Treasury Bills, loans acquired from foreign governments and recoveries of loans granted by the Central government to State governments and Union Territories.

CAPITAL PAYMENTS

Expenses incurred on acquisition of capital assets.

CENVAT

This is a replacement for the earlier MODVAT scheme and is meant for reducing the cascade effect of indirect taxes on finished products. This is more extensive scheme with most goods brought under its preview.

CESS

his is an additional levy on the basic tax liability. Governments resort to cess for meeting specific expenditure. For instance, both corporate and individual income is at present subject to an education cess of 2%. In the last Budget, the government had imposed another 1% cess as secondary and higher education cess on income tax to finance secondary and higher education.

CURRENT ACCOUNT DEFICIT

This deficit shows the difference between the nation’s exports and imports.

CURRENT ACCOUNT SURPLUS

Excess of receipts over expenditure on current account in a country’s balance of payments.

CUSTOM DUTIES

These duties are levied on goods whenever they are either brought into the country or exported from the country. The importer or the exporter pays custom duties.

COUNTERVAILING DUTIES (CVD)

This is levied on imports that may lead to price rise in the domestic market. It is imposed with the intention of discouraging unfair trading practices by other countries

CONSOLIDATED FUND

This is one big reservoir where the government pools all its funds together. The fund includes all government revenues, loans raised and recoveries of loans granted.

CONSUMER PRICE INDEX

It is a price index covering the prices of consumer goods.

CONTINGENCY FUND

It is more or less similar to that extra little bit of savings that all mothers set aside in case of an emergency. Likewise, the government has created this fund to help it tide over difficult situations. The fund is at the disposal of the President to meet unforeseen and urgent expenditure, pending approval from Parliament. The amount that is withdrawn from the fund is recouped.

CAPITAL EXPENDITURE

Long-term in nature they are used for acquiring fixed assets such as land, building, machinery and equipment. Other items that also fall under this category include, loans and advances sanctioned by the Center to the State governments, union territories and public sector undertakings.

CAPITAL RECEIPT

Capital Receipts consist of loans raised by the Center from the market, government borrowings from the RBI & other parties, sale of Treasury Bills and loans received from foreign governments. Other items that also fall under this category include recovery of loans granted by the Center to State governments & Union Territories and proceeds from the dilution of the government’s stake in Public Sector Undertakings.

CENTRAL PLAN OUTLAY

It refers to the government’s budgetary support to the Plan. It is the division of monetary resources among different sectors in the economy and ministries of the government.

DIRECT TAXES

Taxes paid directly by the person or organization on whom they are lived. Income Tax and Corporate Tax fall under this tax category.

DISINVESTMENT

t is the dilution of government’s stake in Public Sector Undertakings.

DEMAND FOR GRANTS

It is a statement of estimate of expenditure from the Consolidated Fund. This requires approval of the Lok Sabha.

EXCISE DUTIES

These duties refer to duties imposed on goods manufactured within the country.

FINANCE BILL

It is the government’s proposals for imposition of new taxes, modification of the existing tax structure or continuance of the existing tax structure beyond the period approved by Parliament.

FISCAL DEFICIT

It is the difference between the Revenue Receipts and Total Expenditure.

FISCAL POLICY

Fiscal policy is a change in government expenditure and/or taxation designed to influence economic activity. These changes are designed to control the level of aggregate demand in the economy. Governments usually bring about changes in taxation, volume of spending, and size of the budget deficit or surplus to affect public expenditure.

FRINGE BENEFIT TAX (FBT)

It is the tax lievied on the ‘fringe benefit’ / perks given by a company to its employees. Companies could no longer get away with marking such expenses as ‘ordinary business expenses’ and escape tax when they actually gave out club memberships to their employees. Employers had to now pay a tax (FBT) on a percentage of the expense incurred on such perquisites. This tax was introduced in the 2005-06 budget.

FRBM ACT

Enacted in 2003, the Fiscal Responsibility and Budget Management Act required the elimination of revenue deficit by 2008-09 . This means that from 2008-09 , the government was to meet all its revenue expenditure from its revenue receipts. Any borrowing was to be done to meet capital expenditure i.e. repayment of loans, lending and fresh investment. The Act also mandates a 3% limit on the fiscal deficit after 2008-09; one that allows the government to build capacities in the economy without compromising on fiscal stability.

GROSS DOMESTIC PRODUCT

Total market value of the goods and services manufactured within the country in a financial year.

GROSS NATIONAL PRODUCT

Total market value of the finished goods and services manufactured within the country in a given financial year, plus income earned by the local residents from investments made abroad, minus the income earned by foreigners in the domestic market.

GST

A GST (Goods and Services Tax) contains the entire element of tax borne by a good / service including a Central and a state-level tax.

INCOME TAX

This is the tax levied on individual income from various sources like salaries, investments, interest, etc.

INDIRECT TAXES

Taxes imposed on goods manufactured, imported or exported such as Excise Duties and Custom Duties.

INFLATION

A progressive increase in prices of goods and services. It is the percentage rate of change in the price level. In inflation, everything tends to appear more valuable except money.

MINIMUM ALTERNATE TAX (MAT)

It’s known that a company pays tax on profits as per the Income-Tax Act. If a company’s tax liability is less than 10% of its profits, it has to pay a minimum alternate tax of 10% of the book profits.

MODVAT

It stands for Modified Value Added Tax and is a way of giving some relief to the final manufacturers of goods on Excise Duties borne by their suppliers.

MONETIZED DEFICIT

Measures the level of support the RBI provides to the Centre’s borrowing program.

NATIONAL DEBT

Total outstanding borrowings of the central government exchequer.

NON-PLAN EXPENDITURE

Expenses that don’t form a part of the government’s five year plan. These expenses consist of Revenue and Capital Expenditure on interest payments, Defense Expenditure, subsidies, postal deficit, police, pensions, economic services, loans to public sector enterprises and loans as well as grants to State governments, Union territories and foreign governments.

NON-TAX REVENUE

Any loan given to state governments, public institutions, PSUs come with a price (interests) and forms the most important receipts under this head apart from dividends and profits received from PSUs.The government also earns from the various services including public services it provides.

PEAK RATE

It is the highest rate of Custom Duty applicable on an item.

PERFORMANCE BUDGET

It is a compilation of programs and activities of different ministries and departments.

PER CAPITA INCOME

The national income of a country, or region, divided by its population.

PROGRESSIVE TAX STRUCTURE

A tax structure in which the marginal tax rate increases as the level of income increases.

PUBLIC ACCOUNT

It is an account where money received through transactions not relating to consolidated fund is kept.

PUBLIC DEBT

The difference between borrowings and repayments during the year is the net accretion to the public debt. Public debt can be split into two heads, internal debt (money borrowed within the country) and external debt (funds borrowed from non-Indian sources).

PLAN EXPENDITURE

Consists of both Revenue Expenditure and Capital Expenditure of the Center on the Central Plan, Central Assistance to States and Union Territories.

PLAN OUTLAY

Plan Outlay is the amount for expenditure on projects, schemes and programmes announced in the Plan. The money for the Plan Outlay is raised through budgetary support and internal and extra-budgetary resources. The budgetary support is also shown as plan expenditure in government accounts.

PRIMARY DEFICIT

Fiscal Deficit minus Interest payments.

PROPORTIONAL TAX

A tax taking the same percentage of income regardless of the level of income.

REGRESSIVE TAX

A tax in which the poor pay a larger percentage of income than the rich. It is the opposite of Progressive Tax.

REVENUE DEFICIT

It is the difference between Revenue Expenditure and Revenue Receipts.

REVENUE SURPLUS

Opposite of Revenue Deficit, it is the excess of Revenue Receipts over Revenue Expenditure.

REVISED ESTIMATES

Usually given in the following budget, it is the difference between the Budget Estimates and the actual figures.

REVENUE BUDGET

Consists of Revenue Receipts and Revenue Expenditure of the government.

REVENUE RECEIPT

Consists of duties imposed by the Centre, interest and dividend on investments made by the government.

REVENUE EXPENDITURE

Expenditure incurred for the normal functioning of the government departments and various other services such as interest charges on debt incurred by the government.

SUBSIDIES

Financial aid provided by the Center to individuals or a group of individuals to be competitive. The grant of subsidies is also aimed at improving their skills of those who benefit from the subsidies.

SUBVENTION

This is how a government bears the loss that financial institutions incur when asked to give farmer loans below the market rates.

SURCHARGE
This is an extra bit of 10% on the tax liability that individuals pay for earning more than Rs 10 lakh. Companies with a revenue of up to Rs 1 crore are spared.

SECURITIES TRANSACTION TAX (STT)

STT is a small tax you need to pay on the total amount you pay or receive in a share deal. In the 2004-05 Budget, the government did away with the tax on profits earned on the sale of shares held for over a year (known as long-term capital gains tax) and replaced it with STT.

TREASURY BILL (T-BILLS )

These are bonds (debt securities) with maturity of less than a year. These are issued to meet short-term mismatches in receipts and expenditure.

VAT

This tax is based on the difference between the value of output and the value of inputs used to produce it. The aim here is to tax a firm only for the value it adds to the manufacturing inputs, and not the entire input cost. Thus, VAT helps avoid a cascading of taxes as a product passes through different stages of production/value addition.

VOTE ON ACCOUNT

It is a sort of interim budget where the government presents accounts required to keep the process on until the next government takes over.

WAYS AND MEANS ADVANCE (WMA)

RBI is the banker for both Central and State governments. Hence, it provides a breather to manage mismatches in their receipts and payments in the form of ways and means advances.

WHOLESALE PRICE INDEX

Prices of goods that are dealt with wholesale (mostly inputs to production, rather than finished commodities).

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