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Budget 2013-14

P. Chidambaram will be presenting the Budget for the fiscal year 2013-14. The constant thing mounting enormous pressure on him is on how he will encourage growth while keeping the fiscal deficit and inflation at bay. Thus what his decisions are we can only see on the last day February. However if I was made the Finance Minister I would have focussed on the following policies-

1. Reduce the fiscal deficit The fiscal deficit for the year 2012-13 stood at 5.3% of the GDP. This has to be decreased significantly to levels of 4.5% of the GDP. The measures for carrying this out will be talked about below. 2. GrowthThe growth in the current year was very sloppy. It was at a decade low and so significant improvements have to be made in this regard. 3. SubsidiesA lot of money is spent on subsidies. Various things like oil, natural gas, fertilisers and energy are subsidised. This greatly increases the fiscal deficit. But at the same time it is absolutely necessary to provide subsidies to keep inflation in control. So we have to prioritize the sectors which should be given more amounts of subsidies. Oil and energy is extremely important as it is most susceptible to supply shocks. So expenditure on

fertilisers will have to be cut down. 4. DisinvestmentIncreased amount of stakes would be sold of PSUs. These are highly inefficient and privatising them would make them more efficient as well help in bringing down the fiscal deficit by a large amount. 5. Tax System The issue of GST has been stretched way too far. The implementation of this is very necessary. Only about 5% of the people in the country pay taxes. The tax base has to be increased. Also taxing the super-rich would mean lesser revenues earned from taxes since more people will resort to keeping black money rather than disclosing the amount of money which they actually have. 6. Changes in MarketsForeign institutional investment in corporate and infrastructural bonds. Security transaction tax on equities should also be removed. 7. Taxes on commoditiesTaxes on steel can be increased so as to protect the domestic steel producers from foreign competition. The growth in the auto sector shows how much the economy has really grown. The excise duty on cars and other vehicles should be decreased so as to stimulate growth. Remove import duty on thermal coal and introduce tax-free bonds for power sector.

8. SEZsMinimum Alternate Tax levied on SEZs, severely affecting foreign investments in India to be discontinued or reduced drastically. This would lend strategic benefits and ensure continued thrust on investments from companies with a long term focus on India. 9. The IT industryIncorporate policies and measures to develop the domestic software industry and also focus on encouraging software products segment in the country by protecting it from foreign competition in the domestic market. Promote Indian software products to develop more Intellectual property for India 10. CommunicationIncreasing penetration is by making it affordable to the enduser especially on mobile. Abolishing service tax on mobile internet/broadband services in Budget 2013-14 would make it affordable and boost penetration as well as help in empowerment of users through knowledge and information in non-metro as well as rural India. 11. Increase in spending in education and health care facilitiesThese are the areas where the government cant afford any reduction in expenditure. Quality education and health facility is very important for the growth of any country therefore if India wants to achieve long term growth then it should pay attention on these aspects.