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India Budget 2013-14 Analysis

The last time Finance Minister Palaniappan Chidambaram presented the budget, India was growing at 9% and inflation was at 5%. This time around, the growth is a much-muted 5%, while inflation is at 7%. With national elections looming in 2014, this last full budget for the term meant Chidambaram had two options: set his sights on 2014, go with guns blazing and devise a populist budget, or retain prudence and economic sense, and make a budget that takes care of the long term.


Given the limited resources at his disposal, expectations from the finance minister were low. Domestic and foreign investors were not anticipating an encore of the “Dream Budget of 1997”. There were regular wish lists:

  • Reduce the fiscal deficit, which is crowding out private investment and driving up interest rates
  • Reduce the current account deficit – Energy and gold imports have driven the current account deficit to 5% of GDP, which is double the government’s long-intended comfort level of 2.5%
  • Generate growth – Get economic growth back to 9% levels by providing incentives for consumption and investment
  • Ensure a stable taxation regime – Undo the follies of his predecessor, revise the direct tax regime and hasten the passage of the GST (which, by some estimate, can boost GDP growth by 2%)

In the face of such expectations, the finance minister presented what must be called a responsible fiscal budget, eschewing the populist agenda of the past. The improving situation in the past couple of months allowed the finance minister enough wiggle room to increase public spending by 16%, increasing outlays on social as well as key economic sectors. This should translate into economic growth of 6.1–6.7% in FY 2014 and keep fiscal deficit under check at 4.8% of GDP… [Read the complete Aranca Analysis of India Budget 2013-14]

Our analysts put together a short commentary on:

  • GDP, fiscal deficit and taxation matters
  •  Proposals to boost investment
  • Measures on corporate fund raising and initiatives in core sectors
  • Sectoral impact analysis

Download your copy of the Aranca Analysis of the India Budget 2013-14 now!