What does Indian Budget 2013-14 mean for the Common Man?

Home What does Indian Budget 2013-14 mean for the Common Man?
As Mr. Swaminathan Aiyar has rightly put it, never before has a Finance Minister rejected populist giveaways so decisively in an election year, as Mr. P Chidambaram has done in the last Union Budget before the 2014 General Elections. What this means is that the FM has sought a different strategy, by accelerating GDP growth & reducing the fiscal deficit, in order to gain a strong hold going into 2014.
 
So what does the Union Budget 2013-14 have in it for the “aam aadmi”, a.k.a. the common man? 
Here are a few insights:
 
No significant changes to tax slabs, a temporary Surcharge of 10% on High-Income Individuals – The good news is that there are no new taxes introduced, or any major changes made to the tax slabs. However, taking a page out of Mr. Azim Premji’s book, a temporary surcharge of 10% would be imposed on high-income individuals and corporate for the next one year. What this implies is that the Finance Minister has delivered on his promise of commitment towards tax stability. Another welcome move by the Finance Minister was the announcement of a tax credit of Rs. 2,000 for individuals who have taxable income in the Rs 2-5 lakh bracket.
 
Rajiv Gandhi Equity Savings Scheme – In the last Union Budget, the former Finance Minister & our Honourable President Mr. Pranab Mukherjee had introduced a new section, Section 80 CCG, which would give an individual deductions with respect to the investments made under the Rajiv Gandhi Equity Savings Scheme. This year, the Finance Minister has increased the scope of the Scheme to encourage retail investors to invest in mutual funds. The Finance Minister has also raised the income level of eligible investors from Rs. 10 lakh to Rs. 12 lakh per annum.  What this means in that under this scheme, an individual with an annual income of up to Rs. 12 lakhs gets tax incentives for investing up to Rs. 50,000 in the stock market.

Tax Deduction for first home loan borrowers – There is something to cheer for individuals seeking home loans as well. The Finance Minister has announced that for first time borrowers of home loans up to Rs. 25 lakh during the financial year 2013-14, there will be an additional tax deduction of Rs. 1 lakh on the interest. This implies affordable housing to many, and is also expected to generate more employment in the construction sector. The FM has also announced that the additional tax deduction can be carried forward to the next year, if the limit has not been exhausted in the present year.

 
Greater focus on women-centric plans – Following the outrage after the Delhi rape case, the FM has announced quite a few steps aimed at women. The allocation for women-centric schemes was raised to Rs. 8,500 crore, including the formation of a Rs. 1,000 crore Nirbhaya Fund to look after the welfare of women. Rs. 200 crore has also been set apart for the Ministry for Women & Child Development, in order to support projects like a national helpline, a one-stop crisis centre, and to encourage better implementation of the domestic violence act & the discrimination at the workplace act. In order to foster financial inclusion, the Finance Minister has also announced the country’s first all-women Bank, with an initial capital of Rs. 1,000 crore. This is seen as a great step towards empowering women and providing a boost to their livelihoods.
 
Inflation-indexed bonds to protect saving – Inflation has been one of the major worries for the common man in the last few years. In order to address this issue, the Finance Minister has announced the issue of inflation-indexed funds. The primary aim of these funds would be to protect the savings of the common man, especially the poor & the middle class, from any adverse impact caused by inflation. The Finance Minister has mentioned that the instrument will be in the form of inflation-indexed bonds or inflation-indexed national security certificates.
 
While this budget is not a socialistic one with focus on increasing subsidies, it aims to provide a platform for faster economic growth, while reducing inflation. One might also be forced to believe that if implementation follows the broad framework provided by the Budget, the Finance Minister might well have won a few hearts going into 2014.
 
[The article has been written by Nikhil Prabhu. He has completed his engineering in Information Science from MSRIT, Bangalore and his MBA in Marketing from TAPMI, Manipal. Nikhil is currently the Vice-President (Marketing) at ELIND, one of the leading manufacturers of Battery Chargers & Battery Testing Equipment in India. ]
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