Fiscal deficit: Government target seen at 4.8 per cent of gross domestic product for 2013-14. Government has revised 2012-13 target to 5.3 per cent of gross domestic product, compared with 5.1 per cent estimated in the budget in March.
Growth: Government's GDP growth forecast for 2013-14 seen at 6 to 6.5 per cent, compared with a decade-low of 5 per cent in 2012-13, according to estimates released by the ministry of statistics. The finance minister has said the economy should expand 5.5 per cent in 2012-13.
Borrowing: Analysts expect net government borrowing below Rs 5 trillion in FY14, little changed from Rs 4.67 trillion in FY13.
Subsidies: Total subsidy burden seen falling by Rs 40,000-50,000 crore from estimated Rs 2.6 trillion in FY13. Ratio of subsidy payments to GDP seen below 2 per cent by the end of 2013-14, compared with preliminary expectations of about 2.5 per cent in 2012-13. FY14 food subsidy bill seen between Rs 85,000 crore and Rs 1 lakh crore versus Rs 75,000 crore budget estimates for current year. Likely to cut fertiliser subsidy by at least 15 per cent for 2013-14.
Spending: Finance minister plans to cut FY14 public spending target by up to 10 per cent from FY13's original target of Rs14.9 trillion. Spending on defence, rail, other development and welfare projects to be cut, according to Reuters sources. FY13 public expenditure already reduced by 9 percent from original target.
Divestment: Likely to target Rs 40,000 crore via stake sales in FY14 in state-run companies versus estimated Rs 30,000 crore in FY13.
Taxes: Likely to lay out roadmap for implementation of goods and services tax (GST). Low expectations for increase in headline corporate tax rates. Income tax slabs may be increased.
Markets: May remove cap on foreign institutional investments in rupee-denominated corporate bonds, or at least in infrastructure bonds. May expand definition of term "infrastructure" to include companies that develop affordable housing. May simplify processes for foreign investors. Seen removing withholding tax on corporate bonds that have no restrictions on maturity or lock-in periods, or bring it down substantially. May abolish or reduce securities transaction tax on equity investments.
Commodities: May remove import duty on iron ore or raise duty on some steel imports to support domestic steel industry; could reduce iron ore export duty at behest of mines ministry. May cap imports or cut number of companies authorised to import gold if purchases have not slowed by February 28. Production tax on jewellery and unveiling of gold saving schemes with some tax breaks seen. May levy transaction tax on commodity futures.
Companies: Auto industry hopes for excise duty cut on small cars to 10 per cent from 12 per cent. Budget may impose additional duty on diesel cars and utility vehicles. Roadmap expected for capital infusion into state-owned banks. IT services providers hope for clarity around transfer pricing norms, foreign tax credit and refund of service tax claims. Telecommunications companies lobby for reduction in levies and tax breaks. Real estate sector wants tax concessions and other fiscal benefits to builders, financiers and buyers of affordable housing. Retail and consumer goods companies want industry status and an independent ministry set up for retail as well as a cut in rate of service tax on commercial property rent. Budget may propose increase in excise duty for cement makers. May remove import duty on thermal coal and introduce tax-free bonds for power sector.
Copyright Thomson Reuters 2013