PC finalizes Interim Budget

Finance Minister P Chidambaram on Sunday finalised the Interim Budget or Vote On Account for fiscal 2014-15, which will be presented in Parliament Monday. Chidambaram will be walking a tightrope when he presents an interim budget on Monday. It is expected that he might be doling out more funds to woo voters and tax cuts to support industry while projecting a lower fiscal deficit before elections.
Officials say Chidambaram is likely to make a last-ditch attempt to win back voters by announcing more funds for health, rural jobs, roads and food subsidies, and to speak about the government’s achievements in the last 10 years.
Chidambaram will have slightly more maneuvering room after an auction of telecommunications spectrum which ended on Thursday brought in a much higher-than-expected 61000 crore in bids. The government will get at least 20000 crore upfront in the current fiscal year, with the rest spread out until 2026.
In an election year, India presents an interim budget to parliament for approval for planned expenditure for three to four months, but leaves the next government to take major policy steps in the full-year budget after the polls.
Chidambaram is expected to cut factory-gate duties on products like autos to support the manufacturing sector, extend an interest subsidy on bank loans to exporters, farmers, and offer tax concessions for poorer regions.
May announce some sops in interim budget
Traditionally no major policy announcements are made in the interim budget. However, Chidambaram may announce some sops apparently to please voters, keeping in mind the forthcoming general election.
“We cannot propose amendments to the Income Tax Act, Customs Act or the Excise Act. But any proposal short of amending a law can be made,” the finance minister had said recently.
Chidambaram is also likely to highlight the Congress party-led United Progressive Alliance government’s achievements and outline the vision for the future.
The main budget for the financial year 2014-15 will be presented by the new government that will come into power after the general elections due by May.