VARSA SHAHDADPURI PREETI BAHL

PAYAL SHARMAJITENDRA JATSWATI BANTHIA HEMA VATSHUMA KHAN

ANALYSIS OF UNION BUDGET 2014-15

INTRODUCTION

MEANING OF BUDGET ECONOMIC SURVEY TYPES OF ACCOUNTS RECEIPTS AND

EXPENDITURE FISCAL DEFICIT INTERIM BUDGET VOTE ON ACCOUNT

Definition: According to Article 112 of the Indian Constitution, the Union Budget of a year, also referred to as the annual financial statement, is a statement of the estimated receipts and expenditure of the government for that particular year. Union Budget keeps the account of the government's finances for the fiscal year that runs from 1st April to 31st March

ECONOMIC SURVEY

With detailed statistical data covering all aspects of the economy—macro as well as sectoral—the report provides an overview of the following issues:

State of the Indian economy Challenges, policy responses, and medium-

term outlook Fiscal policy and monetary management Financial intermediation and the role of

markets External sector, balance of payments, and

trade Agriculture, industrial development and

services sector Energy, infrastructure, and communications Human development, climate change and

public programmes India and the Global Economy

ACCOUNTS OF GOVERNMENT ARE KEPT IN THREE PARTS:

CONSOLIDATED FUND OF INDIA All revenues received by the

Government by way of taxes like Income Tax, Central Excise, Customs and other receipts flowing to the Government in connection with the conduct of Government business i.e. Non-Tax Revenues are credited into the Consolidated Fund constituted under Article 266 (1) of the Constitution of India. Similarly, all loans raised by the Government by issue of Public notifications, treasury bills (internal debt) and loans obtained from foreign governments and international institutions (external debt) are credited into this fund.

(II)     CONTINGENCY FUND OF INDIA:

This is kept at the disposal of the President of India to enable the Government to meet unforeseen expenditure pending its authorization by the Parliament. The money is to be used to provide immediate relief to victims of natural calamities and also to implement any new policy decision taker, by the Government pending its approval by the Parliament. In all such cases, after the Parliament meets, a Bill is presented indicating the total expenditure to be incurred on the scheme/project during the current financial year. After the Parliament votes the bill, the money already spent out of the Contingency Fund is recouped by debiting the expenditure to the concerned functional Major Head etc. in the Consolidated Fund of India.

III)     PUBLIC ACCOUNT OF INDIA:

All Public Money received by Government other than those which are for credit to the Consolidated Fund of India are accounted for under Public Account. The receipts into the Public Account and disbursements out of it are not subject to vote by the Parliament. Receipts under this account mainly flow from the sale of Savings Certificates, contributions into General Provident Fund and Public Provident Fund, Security Deposits and Earnest Money Deposits received by the Government. In respect of such receipts, the Government is acting as a Banker or Trustee and refunds the money after completion of the contract/event. The Public Account also includes various suspense and remittance heads.

RECEIPTS OF THE GOVERNMENT

Revenue budget includes the government's revenue receipts and expenditure. There are two kinds of revenue receipts - tax and non-tax revenue.

Capital Budget includes capital receipts and payments of the government. Loans from public, foreign governments and RBI form a major part of the government's capital receipts

EXPENDITURE OF THE GOVERNMENT

Revenue expenditure is the expenditure incurred on day to day functioning of the government and on various services offered to citizens. If revenue expenditure exceeds revenue receipts, the government incurs a revenue deficit.

Capital expenditure is the expenditure on development of machinery, equipment, building, health facilities, education etc.

FISCAL DEFICIT

Fiscal deficit is incurred when the government's total expenditure exceeds its total revenue.

A national interim Budget refers to the budget of a government that is going through a transition period. These budgets are common in democracies where one political party or a coalition is voted out and another political party or a coalition is voted into office. The two governments often have different fiscal plans, so the old government budget is cut short and a new budget is created. The interim Budget helps span the transition time between the two governments so that the government can continue to function. Countries like India use the term interim Budget specifically to describe this period. A national interim Budget is created out of necessity. National governments require interim budgets to function in the months it takes for a new government to create its own budget plan

A vote-on-account presents an estimate of expenditures to be sanctioned by the exchequer till the Budget is passed.

INTERIM BUDGET

What's a Vote on Account? When the Union government needs to withdraw any money from

the Consolidated Fund of India to cover its expenditure (especially during the time when elections are underway and a caretaker government is in place), it has to seek approval from Parliament.

Article 266 of the Constitution mandates that parliamentary approval is required to draw money from the Consolidated Fund of India.

A special provision is, therefore, made for a 'Vote on Account' by which the government obtains the vote of Parliament for a sum sufficient to incur expenditure on various items for a part of the year.

This enables the government to fund its expenses for a short period of time or until a full Budget is passed.

Normally, the 'Vote on Account' is taken for two months for a sum equivalent to one sixth of the estimated expenditure for the entire year under various demands for grants. But it can be for a slightly longer period of time (3-4 months) as well.

Most importantly, a 'Vote on Account' cannot alter direct taxes since they need to be passed through a Finance Bill.

VOTE ON ACCOUNT

Union budget 2014-15Taxation

• Investment limit under section 80C of the Income-taxAct raised from Rs.1 lakh to Rs. 1.5 lakh.

• Deduction limit on account of interest on loan in respect of self occupied house property raised from Rs.1.5 lakh to Rs. 2 lakh.

•  No Changes in :         No change in the rate of surcharge either for the

corporates or the individuals, HUFs, firms etc. The education cess to continue at 3 percent.  

Tax Rates- INDIVIDUALS

DIRECT TAX

Tax Incentives - CORPORATE • Provided investment allowance at the

rate of 15% to a manufacturing company investing >Rs25cr for investments up to 31.03.2017, in any year for new plant and machinery.

Tax on Dividends –foreign subsidiaries • The concessional rate of tax at 15% on

dividends received by Indian companies from their foreign subsidiaries to continue without any sunset date.

India Income tax slabs 2014-2015 for General tax payers and Women

Income tax slab (in Rs.) 0 to 2,50,000 - No tax 2,50,001 to 5,00,000 - 10% 5,00,001 to 10,00,000 - 20% Above 10,00,000 - 30%

India Income tax slabs 2014-2015 for Senior citizens (Aged 60 years but less than 80 years)

Income tax slab (in Rs.) 0 to 3,00,000 - No tax 3,00,001 to 5,00,000 - 10% 5,00,001 to 10,00,000 - 20% Above 10,00,000 - 30%

INDIRECT TAX

CRT television LED/LCD TVs

especially below 19 inch

Footwear priced between Rs 500 to Rs 1,000 per pair

Soaps E—book readers Desktop, laptops and

tablets RO based water

purifiers

LED Lights, fixtures and lamps

Pre forms of precious and semi—precious stones

Sports Gloves Branded petrol Matchbox Life micro insurance

policies HIV/AIDS drugs and

diagnostic kits

YOU WILL PAY LESS FOR

YOU WILL PAY MORE FOR

Aerated drinks with sugar

Pan masala Gutka and chewing

tobacco Jarda scented tobacco Radio Taxi Imported electronic

products Portable X—ray

machines Half cut/broken

diamonds.

UNION BUDGET 2014-15

BANKING AND FINANCE

INTRODUCTION Financial sector lies at the heart of the

economy's growth engine. And banks are central to this growth.

Banking is the process through which an institution, most often owned by the government, provides financial services. They include collecting deposits, lending money, and issuing debit and credit cards.

Finance generally means provision of funding for use in whichever area. It applies techniques to individual as well as entities to enable them to manage their financial activities.

ORIGIN Banking in India originated in the last decades of the

18th century. The oldest bank in existence in India is the State Bank of

India, a government-owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country.

The Reserve Bank of India was set up in April 1935 to regulate the formal banking sector in the country

Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the Imperial Bank of India, relegating it to commercial banking functions.

After India's independence in 1947, the Reserve Bank was nationalized and given broader powers.

In 1969 the government nationalized the 14 largest commercial banks;

ROLE OF BANKING AND FINANCE IN INDIAN ECONOMY

Banking system plays a very significant role in the economy of a country. It is central to a nation’s economy

India’s banking system has several outstanding achievements to its credit. It is no longer confined to only the metropolitans, but have reached even to the remote corners of the country. This is one of the reasons of India’s growth process.

Finance in agriculture is an important as development of technologies. A dynamic and growing agricultural sector needs adequate finance through banks to accelerate overall growth.

after nationalization of 14 major commercial banks, it was mandatory for them to provide finance to agriculture as a priority sector. Thus, agricultural credit acquired multi-agency dimension.

The Industrial Development Bank of India (IDBI) is the premier institution in India purveying financial assistance to the industrial sector projects.

the banking sector is one of the biggest service sectors in India. Availability of quality services is vital for the well-being of the economy. The focus of banks has shifted from customer acquisition to customer retention.

The facility of ATMs and credit/debit cards has revolutionized the choices available with the customers. Banks also serve as alternative gateways for making payments on account of income-tax and online payment of various bills

Technology has made tremendous impact in banking. “ANYWHERE BANKING” and “ANYTIME BANKING” have become a reality

MAJOR CHALLENGES FACED BY THE FINANCIAL SERVICES

• Lack of availability of long term financing for infrastructure has been a hurdle in boosting greater participation by private sector

• Increase in Non Performing Assets of public sector banks

• Insurance penetration and density being very low, benefits of insurance are yet to reach the people at large

• Decline in savings rate at a micro level• Rising inflation

HIGHLIGHTS OF BUDGET IN BANKING

SECTOR

BANKS ARE THE SECOND-BIGGEST BENEFICIARY

The FM has agreed to provide additional autonomy to PSU Banks

Recapitalizing banks - but not with taxpayer money

Shareholding of public sector banks to be divested in a phased manner by increasing shareholding of Indian citizens

Reserve Bank of India to create framework for license of small banks and for other differentiated banks

Banks will be encouraged to extend long term loans to infrastructure sector with flexible structuring

Banks will be permitted to raise long term funds for lending to infrastructure sector with minimum regulatory pre-emption such as Cash Reserve Ratio, Statutory Liquidity Ratio and Priority Sector Lending

Six new Debt Recovery Tribunals to be set up to recover Non Performing Assets

IMPACT

For the PSU banks - greater autonomy could mean a valuation re-rating over a period of time.

Faster recovery of bad loans would provide significant relief to the banks.

This will help banks raise funds more easily for infrastructure projects and reduce financial burden.

The increase in infrastructure focus could also be good news for the capital goods sector

INSURANCE

• Foreign Direct Investment (FDI) enhanced from 26% to 49% with full Indian management and control

• Additional FDI introduced under Foreign Investment Promotion Board approval route

• Pending Insurance Law Amendment Bill to be brought for consideration of Parliament

IMPACT

Increase in tax exemptions on investments too could see funds flowing to the financial sector through increased savings.

The hike in Foreign Direct Investment (FDI) in the sector to 49%, will have positive implications.

SUBSIDIZED FUNDS FOR FARM SECTOR

To maintain a continuous flow of strong credit support, it is budgeted to provide Rs 8 trillion farm credit in FY15.

the interest subvention scheme for short term crop loans will continue.

an additional 3% interest subsidy on farm loans has been proposed

IMPACT

Relief to the farmers and boost the agricultural sector

However, the hike in the target of credit flow to the farmers from Rs 7.0 trillion in FY14 to Rs. 8.0 trillion in FY15 could have a negative impact on PSU banks as they may be forced to lend more

Budget 2014 displays intent towards financial inclusion

• To provide all households in the country with banking services, a time bound programme would be launched as Financial Inclusion Mission on August 15 this year.• It would particularly focus to empower the weaker sections of the society, including women, small and marginal farmers and labourers. Two bank accounts in each household are proposed to be opened which will also be eligible for credit.“

RAILWAY BUDGET2014 - 15

INDIAN RAILWAYS:

Founded: April 16, 1853Headquarters: New Delhi, IndiaOwner: Government of India(100%)Minister: D.V.Sadananda GowdaServices: Passenger railways, Freight services,

Parcel carrier and Tourism services.Revenue: 1,441.6 billion (2013-14).Employees: 1.307 million (2013).Divisions: 17 Railway Zones

Railway network: 1,15,000 km of track.

Railway stations: 7,172 stations.

Passengers carried: 8,425 million passengers p.y.

Trains: 12,617 passenger trains,

7,421 freight trains.Tagline: “Lifeline of the

Nation”Website:

www.indianrailways.gov.in

MAJOR CHALLENGES FACING INDIAN RAILWAYS -The Tariff Policy adopted

lacked rational approach. -Loss per passenger/km

increased from 10 paisa/km (2000-01) to 23 paisa/km (2012-13)

SURPLUS REVENUES DECLINING

-Rs 5 Lakh Cr required for ongoing projects alone. -Share of Railways in Freight traffic coming down

consistently. -Our vision is to make Railways the largest freight

carrier.

Highest-ever plan outlay of Rs 65,445 crore (US$ 10.95 billion) with budgetary support of Rs 30,100 crore (US$ 5.03 billion)

Leveraging of Railway PSU resources by bringing in their investible surplus funds in infrastructure projects of the Railways

Bullet train proposed on identified Mumbai–Ahmedabad sector.

18 surveys for new lines, 10 for doubling and extending previous lines to be initiated.

HIGHLIGHTS OF RAILWAY BUDGET

Major challenges facing Indian railways -The Tariff Policy adopted lacked rational approach. -Loss per passenger/km increased from 10 paisa/km (2000-01) to 23 paisa/km (2012-13)

5 new jansadharan trains, 5 premium and 6 AC trains, 27 new express trains, 8 new passenger services, 5 DEMU services and 2 MEMU services to be introduced and run of 11 trains to be extended.

Increasing of speed of trains to 160–200 km/h in selected 9 sectors.

23 projects underway in the northeast; rs 5,100 crore (us$ 853.8 million) allocated for northeast projects.

Diamond Quadrilateral network to connect major metros through High Speed Rails (HSR); funds worth Rs 100 crore (US$ 16.74 million) allocated for high speed project.

Provision of Rs 1,785 crore (US$ 298.8 million) for Road-over-bridges and Road-under-bridges.

Provision of foot-over bridges, escalators, lifts, etc., at all major stations.

Separate housekeeping wings at 50 major stations. 17,000 rail police constables, 4,000 women police

for security.

E-ticketing to support 7,200 users per second. Ready-to-eat meals of reputed brands to be

served in trains. Outsourced cleaning activities in 50 stations;

up to 40 per cent hike in allocation for cleanliness

Advanced technology for rail-flaw detection – Vehicle Borne Ultrasonic Flaw Detection System to detect rail and weld fractures and pilot trials on Ultrasonic Broken Rail Detection System (UBRD) at two locations.

Harnessing of solar energy by utilizing rooftop spaces of stations, railway buildings and land.

Paperless office in Railways in next five years.

All trains to be wi-fi enabled. Mobile based wakeup call system.

Dedicated freight corridors on eastern and western routes.

Eco tourism, education tourism for northeastern states.

SSWAs

ENERGY INDUSTRY

The energy industry is the totality of

All the industries involved in the production and sale of energy, including fuel extraction, manufacturing, refining and distribution.

Modern society consumes large amounts of fuel, and the energy industry is a crucial part of the infrastructure and maintenance of society in almost allcountries.

ENERGY INDUSTRY COMPRISES:

the petroleum industry, including oil companies, petroleum refiners, fuel transport and end-user sales at gas stations

the gas industry, including natural gas extraction, and coal gas manufacture, as well as distribution and sales

ENERGY SECTOR

the electrical power industry, including electricity generation, electric power distribution and sales

the coal industry

the nuclear power industry

the renewable energy industry, comprising alternative energy and sustainable energy companies, including those involved in hydroelectric power, wind power, and solar power generation, and the manufacture, distribution and sale of alternative fuels

traditional energy industry based on the collection and distribution of firewood, the use of which, for cooking and heating, is particularly common in poorer countries

BUDGET ALLOCATION FOR ENERGY

Rs 1,000 crore for the solar power sector.

Rs 500 crore for new and renewable energy

Rs 400 crore for launching a scheme for solar power-driven agricultural pump sets and water pumping stations for energizing one lakh pumps

Rs 100 crore for the development of one-MW solar parks on the banks of canals

Rs 100 crore for super critical ultra modern thermal power and rationalization of coal linkages.

IMPACT

AS MANY PROJECTS HAVE GOT DELAYED DUE LACK OF APPROVALS FROM VARIOUS GOVERNMENT AUTHORITIES, LACK OF FUNDING ETC. THIS MOVE WILL RESULT INTO FRESH LOOK BY INVESTORS IN STALLED PROJECTS

-REDUCED CUSTOM DUTY ON SOME WIND POWER EQUIPMENT TO 5%

POSITIVE FOR WIND POWER SECTOR WHICH IS STILL TRYING TO OVERCOME AFTERSHOCK OF WITHDRAWAL OF BENEFITS OF ACCELERATED DEPRECIATION

ADEQUATE QUANTITY OF COAL WILL BE PROVIDED TO POWER PLANTS WHICH ARE ALREADY COMMISSIONED OR WOULD BE COMMISSIONED BY MARCH 2015

-AN EXERCISE TO RATIONALIZE COAL LINKAGES TO OPTIMIZE TRANSPORT OF COAL AND REDUCE COST OF POWER IS UNDERWAY.

OVERALL BUDGET IMPACT IS POSITIVE FOR POWER INDUSTRY AND MORE SO FOR RENEWABLE

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DEFENCE SECTOR

DEFENCE SECTOR The defense industry, also called the 

military industry, comprises government and commercial industry involved in research, development, production, and service of military materiel, equipment and facilities. It includes:

Defense contractors: business organizations or individuals that provide products or services to a military department of a government

The Arms industry, which produces guns, ammunition, missiles, military aircraft, and their associated consumables and systems

BUDGET ALLOCATION IN DEFENCE

 Rs.2,29,000 crore for the current financial year for defence

 Rs.5,000 crore for capital expenditure for acquisition of new weapon systems and hardware.

Increase of 12.5 per cent over the previous fiscal

Finance Minister Arun Jaitley, who also holds the defence portfolio, allocated Rs5,000 crore more than Rs.2.24 lakh crore set aside for defence in the interim budget presented by the UPA government in February. The defence sector was allocated  Rs2,03,672 crore in 2013-14.

hiked the FDI cap for the domestic defence industry 26 per cent to 49 per cent to attract investments

from global arms majors and to widen and enhance a military industrial complex dominated by state-run firms.

FDI IMPACT IN DEFENCE SECTOR

India today is a largest buyer of defence equipment in the world but our domestic manufacturing capabilities are still at a nascent stage.

The increase in FDI in defence sector would open the doors for a several foreign players to have a local existence with full domestic management under the FIPB route.

MARKET SURGES

Most of the defence related stocks have already rallied so far in the year 2014 ahead of the announcement. L&T, BEML, Bharat Electronics, Astra Microwave have rallied 50-200 per cent in the same period.

However, most of the defence stocks slipped post the announcement largely on account of profit-booking. At 11:40 a.m. Bharat Electronics was trading 8.3 per cent lower at Rs 1800, the stock fell nearly 10 per cent intraday. L&T was down 1.5 per cent to Rs 1628.

BEML was trading 5 per cent lower at Rs 699.25 and Astra Microwave slipped by 6 per cent to Rs 124.05.Tata Power was trading flat at Rs 102.25.

IMPACT OF FDI IN DEFENCE SECTOR

Finance Minister, Arun Jaitley in his first maiden Budget said that the government is looking at raising foreign direct investment (FDI) in Defence sector to 49 per cent from 26 per cent.

President Pranab Mukherjee in his speech last month emphasised on the fact that India can emerge as a global platform for defence manufacturing including software, which will strengthen our defence and spur industrial development as well as exports.

FDI in defence would be key to the revival of domestic manufacturing and government. The move will be positive for Bharat Electronics, L&T and Tata Power, Microsec Capital said in a report.

A

Importance of Agriculture in Indian economy

Source of livelihood

In India the main occupation of our working population is agriculture. About 70 per cent of our population is directly engaged in agriculture.

Share of Agriculture in National Income

Agriculture has got a prime role in Indian economy. Though the share of agriculture in national income has come down, still it has a substantial share of 18.5% in GDP.

Important Source of Industrial Development

Various important industries in India find their raw material from agriculture sector -cotton and jute textile industries, sugar, vanaspati etc are directly dependent on agriculture.

Importance in International Trade

India’s foreign trade is deeply associated with agriculture sector. Agriculture accounts for about 14.7% of the total export earnings.

IIMPORTAS

Importance in Transport

Agriculture is the main support for railways and roadways which transport bulk of agricultural produce from farm to mandies and factories.

Vast Employment Opportunities:

The agricultural sector is significant as it provides greater employment opportunities in the construction of irrigation projects, drainage system and other such activities.

Agricultural budget 2014-15

Source of government income

In India many state governments get sizeable revenue from the agriculture sector. Land revenues, agricultural income tax, and some other type of taxes are being levied on agriculture by the state governments.

Overall economic development

In the course of economic development , agriculture employs majority of people. This means raising the level of the national income and standard of living of common man.

Prime Minister Narendra Modi, in his election speeches, expressed concern over the dip in investment needed to finance agricultural development and the farming sector in the country.

* Will focus on achieving 4 percent growth per year in agriculture* Sets farm credit target at 8 trillion rupees for 2014/15* Proposes a long-term rural credit fund with an initial corpus of 50 billion rupees

SAgriculture Credit

Banks are providing strong credit support to the agriculture sector. A target of Rs 8 lakh crore has been set for agriculture credit during 2014-15 

Interest Subvention Scheme for Short Term Crop LoansUnder the Interest Subvention Scheme for short term crop loans, the banks are extending loans to farmers at a concessional rate of 7%. The farmers get a further incentive of 3% for timely repayment.

Rural Infrastructure Development Fund

NABARD operates the Rural Infrastructure Development Fund (RIDF), out of the priority sector lending shortfall of the banks, which helps in creation of infrastructure in agriculture and rural sectors across the country.

Warehouse Infrastructure FundIncreasing warehousing capacity for increasing the shelf life of agriculture produces and thereby the earning capacity of the farmers is of utmost importance. Keeping in view the urgent need for availability of scientific warehousing infrastructure in the country, It is proposed to allocate Rs 5,000 crore for the fund.

Food Security

Government is also committed to provide wheat and rice at reasonable prices to the weaker sections of the society. Even if due to inadequate rainfall there is a marginal decline in agriculture production, stocks in the Central pool are adequate to meet any exigency.

Kisan TV

Kisan TV, dedicated to the interests of the agriculture and allied sector will be launched in the current financial year. This will disseminate real time information to the farmers information regarding new farming techniques, water conservation, organic farming etc. It is proposed to set aside a sum of Rs 100 crore for this purpose.

AUTOMOBILE INDUSTRY

BUDGET 2014-15

•Automotive industry is the key driver of any growing economy.• It plays a pivotal role in country's rapid economic and industrial development.• It caters to the requirement of equipment for basic industries like steel, non-ferrous metals, fertilisers, refineries, petrochemicals, shipping, textiles, plastics, glass, rubber, capital equipments, logistics, paper, cement, sugar, etc.• It facilitates the improvement in various infrastructure facilities like power, rail and road transport

INTRODUCTION

COMPOSITION OF AUTOMOBILE INDUSTRY

Passenger cars; Light, medium and heavy commercial vehicles Multi-utility vehicles such as jeeps, scooters motor-cycles, Three wheelers, Tractors,

Auto components like engine parts, drive and transmission parts, suspension and braking parts , electricals, body and chassis parts; etc.

GLOBAL BENCHMARK OF AUTO INDUSTRY

• One of the largest industries showing impressive growth over the years.

•Presently, India is the world's second largest manufacturer of two wheelers, fifth largest manufacturer of commercial vehicles as well as largest manufacturer of tractors.

• It is the fourth largest passenger car market in Asia as well as a home to the largest motor cycle manufacturer.

MAJOR PLAYERS IN AUTO INDUSTRYTata Motors is leading the commercial vehicle segment with a market share of about 64%. MARUTI SUZUKI is leading the passenger vehicle segment with a market share of 46%. Hyundai Motor India and Mahindra and Mahindra are focusing expanding their footprint in the overseas market. Hero Honda Motors is occupying over 41% and sharing 26% of the two wheeler market in India with Bajaj Auto. Bajaj Auto in itself is occupying about 58% of the three wheeler market.

CURRENT SCENARIOThe last year, in particular, has been one of the worst that the industry has seen.

All the market segments, except two wheelers, have been declining continuously.

The bus segment has also witnessed 17% decline in sales

REASONS FOR DECLINEA gradual rise in diesel prices, a slowdown in new infrastructure projects.

BUDGET 2014 AND AUTO-INDUSTRY.

Fin Min allocates Rs 37,800 crore for development of National and state highways across India with a specific sum of Rs 3,000 crore for Northeastern India in finance Budget 2014. This will include completion of construction of national highways worth Rs 8,500 crore this year. 

This gives a major boost to road infrastructure, which has been a major concern raised by car manufacturers.

The development of roadways runs side-by-side with the growth of the auto industry, specifically the commercial vehicle industry.

With a sizeable amount of the Budget 2014 corpus allocated towards expanding our road network, a direct positive impact could be seen on the automotive manufacturing industry in the medium term.    

IMPACT YOU WILL GET BETTER ROADS TO DRIVE ON.

CHEAPER CARS WITH BETTER QUALITY.A 15 percent investment allowance has been sanctioned for a three-year period to the manufacturing SMEs that aim to invest more than INR 25 crore in plant and machinery. This move will encourage automotive SME's (mainly the auto-part suppliers) in the country and will enable global auto companies to localise its operation more easily.

INDUSTRY REACTIONS

ARVIND SAXENA President and Managing director, General Motors India“As far as auto motive industry is concerned the focus on rural roads and highways are welcome decisions. These proposals and announcements made in budget if implemented effectively should have a positive impact on industry and economy as a whole.

Joe King head Audi India “We expect the steps announced by the finance minister to lead to an improvement in economic sentiments which will in turn benefit the auto-mobile industry in long term.”Mr. Kenichiro Yomura - President Nissan India Operations said, "The Budget 2014 presented today by the Honourable Finance Minister is based on fiscal prudence with a progressive outlook. We appreciate his considerations and his aim to achieve 7-8% GDP in 3 to 4 years.