The government announced a package of indirect tax cuts on Monday to breathe life into spending and investment, and trumpeted its record of growth and reform over the past decade in its last budget before an election it looks set to lose.
Amid uproar in parliament as lawmakers shouted him down, Finance Minister P. Chidambaram also announced that he would contain the fiscal deficit for 2013/13 (April-March) at 4.6 percent of gross domestic product (GDP), below his target of 4.8 percent.
Indian businessmen watching the speech were further cheered by his estimate that the fiscal deficit would shrink further to 4.1 percent in 2014/15.
Monday's budget was an interim exercise ahead of the election due by May. Opinion polls predict voters will oust the government led by the Nehru-Gandhi dynasty's Congress party amid widespread discontent with its mismanagement of the economy, high inflation and corruption scandals.
P. Chidambaram, struggling to deliver his speech above the din of lawmakers angry over a plan to divide a southern state, announced no major changes in tax rates.
However, he said factory-gate taxes on some capital goods and consumer durables would be reduced to 10 percent from 12 percent, and excise duties on small cars, two-wheel and commercial vehicles would be cut to 8 percent from 12 percent.
He also announced small-bore measures to soften student loans and help retired members of the armed forces.
Asia's third-largest economy is facing its worst slowdown in nearly a decade, with shrinking manufacturing, slower jobs growth and high inflation.
P. Chidambaram said, however, that growth would recover to at least 5.2 percent in the second of 2013/14 from 4.6 percent in the first half.
Looking back at the two terms of rule under a Congress-led coalition, P. Chidambaram said there had been an unprecedented growth trend of 6.2 percent over the past decade and - rejecting charges that the government was mired in a policy paralysis - laid out a raft of reform steps it has taken.
EXPERTS ANALYSE INTERIM BUDGET
RADHIKA RAO, ECONOMIST, DBS, SINGAPORE
"Three positives out of the just concluded speech - the fiscal target in FY13/14 has not only been met but undershot, excise duty rates were cut for a handful of the troubled sectors and (he) assured that fiscal rationalisation will remain on track into 14/15. But, under the hood concerns - primarily on how these deficit targets were met/will be met next year -- remain largely unanswered. The cut in the excise duties will also have a bearing on the indirect tax takeaways, putting revenue targets at risk.
"Clarity on the continuity of few of the tax surcharges levied last year is also awaited, with the quality of fiscal consolidation still in question. Nonetheless, while the rating agencies will sift through the details, they are unlikely to act as yet. Their focus has shifted to the post-election growth and reform agenda."
VIJAI MANTRI, CHIEF EXECUTIVE, PRAMERICA ASSET MANAGERS, MUMBAI
"The market was fixated on the fiscal deficit number and the borrowing program and I think all of them are in line with expectations.
"Since the last one year India was under so much scrutiny because of a probability of a rating downgrade, we have been in an environment where the policy makers have been constantly communicating with the various stakeholders. So I think what came out in the final document was not surprising, which is a net positive from the market's point of view given that the finance minister has been able to deliver on his promise.
"I think the interim budget is also positive for the auto industry given the long awaited excise duty cuts, but it also depends on whether the next government will continue this or not."
SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI
"Refraining from populist announcements, the budget has proposed a few measures to support investments and consumption by cutting excise duty. The subsidy payment roll over was along expected lines, so no incremental negative surprise. Overall, one could say that its largely a non-event budget.
"The only positive in the interim is that the net borrowing program for the year at 4.6 trillion rupees is lower than last year's 4.8 trillion rupees."
ANEESH SRIVASTAVA, CHIEF INVESTMENT OFFICER, IDBI FEDERAL LIFE INSURANCE, MUMBAI
"Some tinkering on excise is positive for auto companies. More importantly clarity on fiscal deficit and government's borrowing program is a greater positive.
"Now we have a roadmap on government borrowing, we were earlier thinking it to be about 6.30 lakh crore (6.3 trillion rupees), and what has come is much better than expectations.
"This is positive for equities. Elections are next to watch. We should now see if markets rally from here on Modi optimism. Any substantial decline would be a buying opportunity."
* "I reject the argument of policy paralysis; economy looking much better than 2 years ago" FM P. Chidambaram hits back at critics.
* Average growth under UPA's ten year rule was 6.2 per cent against 5.9 during NDA period of 1999-2004
* Average growth under UPA-I was 8.4 per cent and UPA-II 6.6 per cent
* Government lowers disinvestment target to Rs 16,027 cr from Rs 40,000 cr for 2013-14; eyeing Rs 36,925 cr next fiscal.
* No changes in tax laws in interim budget
* Excise duty on mobile phone handset to be 6 pc on CENVAT credit to encourage domestic production
* Revenue deficit estimated at 3 pc for current fiscal
* 140 mn people lifted out of poverty in last 10 years
* Excise duty on small cars, motorcycles and SUVs reduced
* Excise duty on SUVs cut from 30 to 24 pc, in large and mid-segment cars from 27-24 pc to 24-20 pc
* Excise duty on small cars, motorcycles and commercial vehicles cut from 12 to 8 pc; appropriate cut to be done on chassis, trailers
* Fiscal deficit for current fiscal to be 4.6 pct
* Govt has obtained information in 67 cases of illegal offshore accounts of Indians
* Excise duty cut from 12 to 10 per cent in capital goods sector to stimulate growth
* Fiscal deficit target of 3 pc to be achieved by 2017, RBI must strike a balance between growth and moderating inflation
* We must focus on manufacturing, specially manufacturing for exports
* A Rs 100 crore scheme formulated to promote community
radio stations: Chidambaram
* I am disappointed that we could not introduce GST
* Social Justice Ministry gets Rs 6730 crore; Panchayati Raj Ministry Rs 7000 crore
* Moratorium on interest on student loans taken before March 31, 2009; to benefit 9 lakh borrowers
* Public Debt Management Bill ready
* Rs 3711 crore for Minority Affairs; Housing and Urban Poverty Alleviation gets Rs 6000 crore
* Service tax relief storage for warehousing for rice
* Rs 6000 crore to rural housing fund, Rs 2000 crore for urban housing fund
* Blood banks to be exempt from service tax
* Minority bank accounts have swelled to 43,53,000 by 2013-14 from 14,15,000 bank accounts 10 years ago
* Defence allocation increased by 10 per cent to Rs 2.24 lakh crore
* UPA govt accepts One Rank, One Pension demand of Defence forces, to be implemented in 2014-15
* Rs 500 crore estimated requirement for implementing one-rank-one-pay scheme for armed forces in 2014-15.
* Food subsidy will be Rs 1,15,000 crore for implementation of National Food Security Act
* Rs 2,46,397 crore allocated for food, fertilizer and fuel subsidy
* Budgetary support to Railways increased from Rs 26,000 crore to Rs 29,000 crore 2014-15
* Non-plan expenditure to exceed by a small amount in 2013-14
* Plan expenditure will be Rs 5,55,322 crore in 2014-15, unchanged from last fiscal
* Rs 1,200 crore additional assistance to N-E states to be released before end of the year
* Rs 1,000 crore grant for Nirbhaya Fund will be non-lapsable; another Rs 1,000 crore to be given next fiscal
* Rs 3,370 crore to transferred to 2.1 crore LPG users; Govt committed to Aadhaar-based LPG transfer but scheme on hold temporarily
* PSUs to achieve record capex of Rs 2,57,645 crore in 2013-14
* 500 MW fast breeder nuclear reaction in Kalpakkam to be ready shortly; 7 nuclear power reactors under construction
* Expenditure on education has risen from Rs 10,145 crore 10 years ago to Rs 79,251 crore this year
* Sugar decontrol, gradual correction of diesel prices, application for new bank licenses, sick electricity distribution companies restructured
* GDP growth rate in Q3 and Q4 of 2013-14 will be at least 5.2 pc
* Declining fiscal deficit, moderation of CAD, stable exchange rate and increase in project implementation result of hard work
* Power capacity rises to 234,600 MW in 10 years: FM
* Fiscal deficit to be curtailed to 4.6 pct of GDP in 2013-14.
* CAD will be USD 45 billion in 2013-14
* Foreign exchange reserves up by USD 15 billion
* Foodgrain production estimated at 263 million tons in 2013-14
* Agriculture credit will cross USD 45 billion against USD 41 billion in 2012-13
* Aadhaar is tool for empowerment
* 296 projects worth Rs 6,60,000 crore cleared by Cabinet Committee on Investment by end January 2014
* Merchandise export to grow by 6.8 pc to USD 326 billion
* 3 more industrial corridors - Chennai-Bangalore, Bangalore-Mumbai, Amritsar-Kolkata - under various stages of implementation