Topic: Union Budget-2013
Date: March 23, 2013
KIIT School of Management, KIIT University hosted a talk by Ms. Mythili Bhusmurmath, Consulting Editor, The Economic Times on ‘Union Budget-2013 on 23rd March 2013. The focus area of the talk was the challenges faced by the Government while determining the budget of a financial year and key points of Budget 2013-14.
Ms. Bhusmurmath spoke about the need of budget and explained the concepts related to the budget such as Revenues and Capital in form of expenditure and receipts. The key challenges she pointed out were:
- Spur the growth without fiscal imprudence
- Reduce the Current Account Deficit which is well above the danger level
- Controlling inflation without hampering growth
According to her, the first step should be to bring the revenue deficit to zero. Revenue expenditures met through borrowings is detrimental for the economy. Pointing towards the facts and figures, she said the revenue deficit is 70% of the fiscal deficit. She pointed out that the states have managed the fiscal deficit better than the center.Ms. Bhusmurmath stressed on sustainable Foreign Direct Investments required for the growth of the country.
Key challenge area of Budget 2013-14
- Growth vs. Fiscal Discipline: All the decisions and assumptions of the budget are based on the GDP growth at 6.5% but the ways and means to achieve this figure is missing.
- Capital Account Deficit is over dependent on fickle capital flows.
- Inflation vs. growth: Controlling the inflation without hurting the growth.
- Sops vs. Prudence : She gave various examples such as ‘all women’s bank’ and questioned the requirement.
She clearly indicated that the budget estimates are over ambitious as the gap between the actual and assured is probably quite huge.
Finally the question Ms. Bhusmurmath raised was ‘will we get what we assume?’ and the answer to this can only be “yes”, if the global economy recovers considerably.