FICCI welcomed the Union Budget

Industry bodies FICCI  today welcomed the Union Budget presented by Finance minister P. Chidambaram. FICCI President Naina Lal Kidwai termed the measures announced in the budget as responsible and well managed. She also lauded efforts to contain the current account deficit and announcements on tax free bonds to energize the Road and Highway sector.

 Adi Godjrej termed the Union budget as development oriented, aims at inclusive growth.  Godrej  further adds  Chidambaram has contain the fiscal deficit to 5.2 per cent in the current fiscal and measures to lower it down to 4.2 per cent in the next fiscal.

Sensex at the Bombay Stock Exchange tumbled 291 points, or 1.5 percent, to close below the 19,000 mark, at 18,862, today, after the presentation of the Union Budget, and amid the monthly derivatives expiry. The Nifty at the National Stock Exchange slumped 104 points, or 1.8 percent, to 5,693.
But stock markets Japan, China, Hong Kong, South Korea and Singapore rose between 0.3 percent and 2.7 percent.

Stock Markets gave thumbs-down to Finance Minister P Chidambaram's Budget 2013-14, with BSE benchmark Sensex nosediving 291 points to close below 19,000 level as FII tax issues and new surcharge on domestic corporates left investors disappointed. After a higher start, the Sensex tumbled by 290.87 points, or 1.52 per cent to settle at 18,861.54, its lowest level since November 27. The gauge recorded its second biggest loss this month after February 21 when it tumbled 317 points.National Stock Exchange index Nifty dropped by 103.85 points, or 1.79 per cent to 5,693.05.

Banking stocks led by State Bank of India suffered heavy losses on concerns a liquidity in the banking system after the government set its target for gross market borrowing at Rs 6.29 trillion this fiscal was less than the market expectations.The sentiment turned bearish on hike in some taxes despite reduction in Securities Transaction Tax and a higher global trend. 

Major Highlights of Economic Survey 2012-13 tabled in the Lok Sabha:

1.    The downturn is more or less over and the economy is looking up

2.    GDP growth pegged at 6.1 pc - 6.7 pc for 2013-14

3.    GDP growth rate in current fiscal estimated at 5% in 2012-13

4.    Calls for widening tax base and prioritising expenditure to check fiscal deficit

5.    Govt priority to fight inflation by reducing fiscal impetus to demand as well as by focusing on incentivizing food production.

6.    Priority of govt to fight high Inflation

7.    Headline WPI inflation may decline between 6.2 to 6.6 per cent in March 2013

8.    More jobs in low productivity construction sector

9.    Balance of Payments under pressure with net exports decline

10. Service sector has shown more resilience despite global slowdown

11. Pitches for hike in price of diesel and LPG to cut subsidy burden

12. Railway freight grows by 5.1 per cent in 2012-13

13. Economic Survey calls for curbing import of gold to contain current account deficit

14. Foreign Exchange reserves remains steady at USD 295.6 Billion at December 2012 end

Prepared by a team of economists led by Chief Economic Advisor Raghuram Rajan, the Economic Survey pitches for speeding up economic reforms to activate a sluggish economy.

The Economic Survey is customarily tabled in Parliament by the Finance Minister a day before the General Budget for the coming fiscal year.

The document serves as an indicator of what is likely to be contained in the General Budget proposals.

On the taxation front, the survey pitches for early implementation of the Goods and Services Tax (GST) and the Direct Taxes Code (DTC), with a view to expanding tax base and raising tax-GDP ratio.

The issues like surge in gold import and widening Current Account Deficit (CAD) too are figured prominently.

Noting that fiscal deficit target for the current financial year would be "breached substantially", the Survey underlined the need for curbing government expenditure.

Such a step, it added, would also help in containing inflation, especially in the food items which has pushed retail inflation to near double digit mark.

"With the subsidies bill, particularly that of petroleum products, increasing, the danger that fiscal targets would be breached substantially became very real in the current year. The situation warranted urgent steps to reduce government spending so as to contain inflation", it said.

The government had pegged the fiscal deficit for the current fiscal at 5.1 per cent of the Gross Domestic Product (GDP).

In view of rising expenditure and subdued revenue collection, Chidambaram raised it to a more realistic level of 5.3 per cent.

The Minister had proposed to bring it down to 4.8 per cent for 2013-14.

Some announcements in this regard could be made in the Budget to be unveiled in Lok Sabha on Thursday.

The Survey said that there was across the board slowdown in all sectors during 2012-13 leading to problems in other areas of economy, especially revenue collection.

"Another consequence of the slowdown has been lower-than-targeted tax and non-tax revenues".

It, however, expressed the hope that measures announced by the government in the recent months would help in restoring the fiscal health of the government and check widening CAD.

The government has recently partially deregulated diesel prices, allowed FDI in multi-brand retail and liberalised foreign investment norms for various sectors.

"With the global economy also likely to recover somewhat in 2013, these measures should help in improving the Indian economy's outlook for 2013-14", the Survey said.