How different will 2014 be?

R. Srinivasan
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Rising inflation, slow growth and falling Re made 2013 eminently forgettable. Will the coming year be better? All indications are that it will be — but only by a bit. Growth will pick up, but not much over 5 per cent.

If ever one wanted to chuck rocks at the government without fear of retaliation, 2013 was the year to do that. Virtually any stick could be used to beat a floundering government with — and was.


An average inflation rate in excess of 10 per cent for the whole year could not be blamed on temporary ‘supply side’ bottlenecks. There was ample anecdotal evidence to suggest that the spectacular surge in fruit and vegetable prices during the year — food inflation was over 15 per cent for the year — was less due to late or heavy rains or physical disruptions caused by floods and landslides, and more due to speculation and hoarding.

But the government did little to control it, till an unexpected bumper crop brought some relief.


This was the year when the ‘global forces’ excuse started to wear thin. The US, the minutest change in whose fortunes finds a big reflection in India, actually managed to start turning around, with unemployment falling and growth rising. It even managed to avoid falling off the ‘fiscal cliff’; President Barack Obama pushed through his healthcare reform. And, even the feared Fed taper did not lead to a disastrous collapse in markets.

The Euro Zone managed to avert collapse and elsewhere, revolutions did not lead to the kind of super spike in oil prices as was feared.

Rupee slide

Back home, though, none of these helped. The threat of the taper sent the rupee nose-diving, stampeded foreign investors and caused a surge in gold buying as investors ran back to the safest hedge they knew. At one point, as the current account deficit widened to 4.9 per cent of GDP, and the threat of exchange controls loomed, it looked like 1991 all over again.

That things didn’t pan out the way they were expected to was no thanks to government or policy intervention. Reviving external demand and a falling rupee combined to rescue exports, which led to a narrowing of the current account deficit. The taper turned out to be not as bad as feared, which brought the dollars back into the markets and helped stop the rupee’s freefall.

Standstill continued on reforms, with the government failing to push through key measures such as the Goods and Services Tax and the Direct Taxes Code. The subsidy monster was not tamed, diesel price control could not quite be abolished and, just as the year was drawing to a close, the government even had to back pedal on the cooking gas subsidy.

The policy logjam continued on other fronts, with the government blaming ‘judicial activism’ for its inability to deliver clearances or kickstart investments. The Prime Minister finally stepped in, formed a group to clear stalled projects and even managed to clear projects worth over Rs 4 lakh crore. But on the ground, actual investment in infrastructure — in roads, ports, airports and power plants — continued to be at a near standstill.

Election year

Which brings us to 2014. Will the coming year be better? All indications are that it will be — but only by a bit. Growth will pick up, but not much over 5 per cent. Roadblocks in the way of actual reform in FDI remain, with the government managing to come up with just one Tesco for its touted FDI reform in retail.

And then there are the elections. The ‘semi-finals’ in the four State elections have already thrown up some surprising results. The Aam Aadmi Party may not be able to replicate its Delhi success, but it has already decisively changed the nature of politics. Which means the standard assumptions of the ‘If Modi wins, things would change’ variety can no longer be made.

Which may be the best thing to have happened yet in a year of lost opportunities.

(This article was published on December 31, 2013)
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Union Budget 2014-15 Highlights

  • Following are the highlights of the Union Budget 2014-15 presented by Finance Minister Arun Jaitley in Parliament on July 10, 2014
  • Income-tax exemption limit raised by Rs 50,000 to Rs 2.5 lakh and for senior citizens to Rs 3 lakh
  • Exemption limit for investment in financial instruments under 80C raised to Rs 1.5 lakh from Rs 1 lakh.
  • Investment limit in PPF raised to Rs 1.5 lakh from Rs 1 lakh
  • Deduction limit on interest on loan for self-occupied house raised to Rs 2 lakh from Rs 1.5 lakh.
  • Committee to look into all fresh tax demands for indirect transfer of assets in wake of retrospective tax amendments of 2012
  • Fiscal deficit target retained at 4.1% of GDP for current fiscal and 3.6% in FY 16
  • Rs 150 crore allocated for increasing safety of women in large cities
  • LCD, LED TV become cheaper
  • Cigarettes, pan masala, tobacco, aerated drinks become costlier
  • 5 IIMs to be opened in HP, Punjab, Bihar, Odisha and Rajasthan
  • 5 more IITs in Jammu, Chhattisgarh, Goa, Andhra Pradesh and Kerala.
  • 4 more AIIMS like institutions to come up in AP, West Bengal, Vidarbha in Maharashtra and Poorvanchal in UP
  • Govt proposes to launch Digital India’ programme to ensure broad band connectivity at village level
  • National Rural Internet and Technology Mission for services in villages and schools, training in IT skills proposed
  • Rs 100 cr scheme to support about 600 new and existing Community Radio Stations
  • Rs 100 cr for metro projects in Lucknow and Ahmedabad
  • Govt expects Rs 9.77 lakh crore revenue crore from taxes
  • Govt’s plan expenditure pegged at Rs 5.75 lakh crore and non-Plan at Rs 12.19 lakh crore.
  • Rs 2,037 crore set aside for Integrated Ganga Conservation Mission called ‘Namami Gange’
  • Kisan Vikas Patra to be reintroduced, National Savings Certificate with insurance cover to be launched
  • FDI limit to be hiked to 49% pc in defence, insurance
  • Disinvestment target fixed at Rs 58,425 crore
  • Gross borrowings pegged at Rs 6 lakh crore
  • Contours of GST to be finalised this fiscal; Govt to look into DTC proposal.
  • ‘Pandit Madan Mohan Malviya New Teachers Training Programme’ launched with initial sum of Rs 500 crore
  • Govt provides Rs 500 crore for rehabilitation of displaced Kashmiri migrants
  • Set aside Rs 11,200 crore for PSU banks capitalisation
  • Govt in favour of consolidation of PSU banks
  • Govt considering giving greater autonomy to PSU banks while making them accountable
  • Rs 7,060 crore for setting up 100 Smart Cities
  • A project on the river Ganga called ‘Jal Marg Vikas’ for inland waterways between Allahabad and Haldia; Rs 4,200 crore set aside for the purpose.
  • Govt proposes Ultra Modern Super Critical Coal Based Thermal Power Technology
  • Expenditure management commission to be setup; will look into food and fertilizer subsides
  • Impasse in coal sector will be resolved; coal will be provided to power plants already commissioned or to be commissioned by March 2015
  • Long term capial gains tax for mutual funds doubled to 20%; lock-in period increased to 3 years
  • Rs 4,000 cr set aside to increase flow of cheaper credit for affordable housing to the urban poor/EWS/LIG segment.
  • EPFO to launch the ‘Uniform Account Number’ service to facilitate portability of Provident Fund accounts
  • Mandatory wage ceiling of subscription to EPS (Employee Pension Scheme) raised from Rs 6,500 to Rs 15,000
  • Minimum pension increased to Rs 1,000 per month
  • Union Budget 2014: List of products getting cheaper/ costlier

  • Finance Minister Arun Jaitley today spared the common man from price hikes by keeping duties on commonly used day-to-day items unchanged but made it costlier for smokers and tobacco consumers with a steep increase in excise rate in tax proposals in Budget 2014—15.
  • Following is a list of what will be cheaper and costlier:
  • 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
  • DDT insecticides
  • Cigarettes
  • 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.


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