Indian ‘Vote of Account’: Accounting for Economic Stilling

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The Indian interim budget presented by the finance minister raised a lot of expectations for Indian economy with national elections just round the corner.

Indian students exchange Aabir (coloured dust) during celebrations of Holi in Kolkata city.
Indian students exchange Aabir (coloured dust) during celebrations of Holi in Kolkata city. There was a lot to cheer for the Indian middle-class, students, the industrial sector and the defence sector as these avenues received a greater portion of the finance minister’s budgetary attention.

Fluctuations in the global economy impacted the trend of positivity expected for the Indian economy for the whole of last financial year (2012-13). The past few months were exceedingly dire for the Indian economy with the rupee falling quite substantially against the dollar and internal policy paralysis plaguing the overall working of the country.

The interim budget or the ‘vote of account’ – as it is referred to in the Indian Parliament – thus was a highly anticipated affair with India heading towards national elections in less than three months. And while the ‘vote of account’ presented by Mr. P. Chidambaram, India’s finance minister, addressed a lot of the troubling issues, it did little to soothe the questions of the oppositions parties.

Primarily the core areas of the interim budget focused on the problematic areas of the Indian economy. There was a lot to cheer for the Indian middle-class, students, the industrial sector and the defence sector as these avenues received a greater portion of the finance minister’s budgetary attention. The salient points of the interim budget can be pinpointed as follows:

  • Slashing of excise duties by two percent on capital and consumer products
  • Cars, mobile phones (manufactured in India) and electronic items to cost cheaper in order to promote boost in their sales
  • Subsidies on food, fuel and fertilisers
  • Cord blood banks used for preservation of stem cells have been exempted from service taxes
  • Re-direction of funds for centrally sponsored schemes to individual states allowing the latter greater discretionary powers
  • An enhanced pension scheme to benefit those employed in the defence and armed sector

The tax rates and slabs remained unchanged with the finance minister emphasising on the continuing of 10 percent surcharge on those earning incomes more than one crore rupees ($160.85 million). One of the most significant points made by Mr. Chidambaram was about the controlling of fiscal deficit to 4.6% of the GDP (Gross Domestic Product) as compared to the estimated tabulation of 4.8%. This reduction was pinpointed to be an instrumental progress of the Indian economy by the finance minister in an otherwise gloomy economic situation.

Though members of leading opposition parties voiced pertinent concerns about the interim budget, for most accounts the ‘vote of account’ has been largely satisfying catering and focusing on a wider section of the country.

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