Analysis of Budget 2013-2014

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Pandora of Problems

Helpless and Cornered Similar to Sivaji

Data

Category

2008-09 2009-10 2010-11 2011-12 2012-13

GDP Growth

Rate

6.7 8.6 9.3 6.2 5.0

Savings Rate 32.0 33.7 34.0 30.8 na

Capital

Formation

rate

34.3 36.5 36.8 35.0 na

Inflation CPI 9.1 12.4 10.4 8.4 10.0d

Gross Fiscal

Deficit

6.0 6.5 4.8 5.7i 5.1j

Revenue

Deficit

4.5 5.2 3.2 4.3i

3.5j

Snapshot of Economy

Solve the

Sudoku

Source :Economic Survey

Concerns over Growth

GDP Growth has

declined from

about 8% in 2011

to about 5.4% in

2013

The Industrial

growth has

declined more than

Agriculture and

Service

Impact?

Source : Kelkar Committee

GDP Growth 8% 7% 6% 5%

Elasticity of

Employment

0.4% 0.4% 0.4%

0.4%

Employment

Rate

3.2% 2.8%

2.4%

2.0%

Labour Force

Growth Rate

2.5% 2.5% 2.5% 2.5%

Surplus/Deficit 0.7% 0.3% -0.1% -0.5%

Economic survey – good job is the best form of inclusion.

IAMR study indicts UPA policies for jobless growth.

In search of Inclusive Growth?

Impact Jobless Growth

Sectors 2010-11 2011-12 2012-13 (AE) Reasons

Agriculture, Forestry and

Fishing 7.9 3.6 1.8

Decline due to

deficient rainfall

Manufacturing 4.9 (0.6) 0.4

Regulatory hurdles and

decline in mining

Trade, Hotels, Restaurants,

Transports and

Communication(around

30.0% of Service Sector

GDP )

12.3 7.0 5.2

Slackening growth due

to slowdown of

economic activity in

the industry and

agriculture sectors

Concerns over Growth

Growth in GDP at Factor Cost at 2004-05 prices (per cent)

Sectors 2010-11 2011-12 2012-13 (AE) Reasons

Agriculture, Forestry

and Fishing (less than

15% of GDP) 7.9 3.6 1.8

Decline due to

deficient rainfall

Manufacturing (16% -

20% of GDP) 4.9 (0.6) 0.4

Regulatory hurdles

and decline in

mining

Trade, Hotels,

Restaurants, Transports

and

Communication(around

30.0% of Service Sector

GDP )

12.3 7.0 5.2

Slackening growth

due to slowdown of

economic activity in

the industry and

agriculture sectors

Sectors 2010-11 2011-12 2012-13 (AE) Reasons

Skyfall in Manufacturing

Six sectors namely electricity, roads, telecommunication services, steel, real estate and

mining accounted 80% of stalled projects.

Source : CMIE

Fiscal Deficit (FD) and Revenue Deficit (RD)

Expenditure Budget Receipts Budget

FD = Total Expenditure (1000) – Total Receipts (750) = 250

RD = Revenue Expenditure (800) – Revenue Receipts (700) = 100

Fiscal Deficit

Fiscal Deficit went up from 2.5% of GDP in 2007-08 to 5.7% of GDP in 2011-12

Stimulus or Giveaway

As a % of GDP F2008 F2009 Post Change F2008 and

2009

Revenue Receipts 10.9% 9.7% -1.2%

Capital Receipts 0.2% 0.1% -0.1%

Expenditure 13.6% 15.8% 2.2%

Revenue Expenditure 11.9% 14.2% 2.3%

Wages, Salaries and Pension 1.5% 2.0% 0.5%

Subsidy 1.4% 2.2% 0.9%

MGNREGS 0.3% 0.6% 0.3%

Fiscal Stimulus

Source :MSCO

% Expenditure

on wages

% Expenditure

on Materials

F2009 68.4% 31.6%

F2010

69.8% 30.2%

F2011

69.2% 30.8%

F2012

72.8% 27.2%

MNREGA, Farm loan waiver and Sixth pay commission led to increase in FD.

UPA adopted the policy of “Distribute to Grow”

Kanna Laddu Thina Asaiya

Sare Jahan se Mehnga

Source – Economic times

Moola Mantra – Fiscal

Stimulus + Global Food Price

Inflation + Farm Wage Index

Hungry hey Kya?

Food Inflation is driven by increase in Cereals, Milk, Pulses and Egg.

Current Account Deficit

Higher Inflation had led to more Investment in Gold and Real Estate

Revenue Statement of the Budget

Source – E&Y

Source – E&Y

Expenditure

Fiscal Cliff

Source : Kotak Mahindra

History repeats itself

Source : Kotak Mahindra

Consumption Expenditure

Leading to High Inflation

Current Account Deficit

High Fiscal Deficit

Chakravyuh

Women Youth and Poor

As a % of GDP 2011-12

(Actuals)

2012-13

(BE)

2012-13

(RE)

2013-14

(BE)

Health and Family Welfare

0.30 0.34 0.29 0.33

Human Resource Development

0.67 0.74 0.67 0.70

Women and Child Development

0.17 0.19 0.17 0.18

Youth Affairs and Sports

0.01 0.01

0.01

0.01

Even Nirbhaya could have Bhaya over this allocation

?

“Annual income twenty pounds, annual expenditure nineteen six, result happiness.

Annual income twenty pounds, annual expenditure twenty pounds ought and six,

result misery”

Thank You