Analysis of Budget 2013-2014

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Pandora of Problems

Helpless and Cornered Similar to Sivaji

Snapshot of Economy

Data Category GDP Growth Rate Savings Rate Capital Formation rate Inflation CPI Gross Fiscal Deficit

2008-09 6.7 32.0 34.3

2009-10 8.6 33.7 36.5

2010-11 9.3 34.0 36.8

2011-12 6.2 30.8 35.0

2012-13 5.0 na na

Solve the Sudoku

9.1 6.0

12.4 6.5

10.4 4.8

8.4 5.7i

10.0d 5.1j

Source :Economic Survey

Revenue Deficit

4.5

5.2

3.2

4.3i

3.5j

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?

Impact Jobless Growth

GDP Growth Elasticity of Employment Employment Rate

8% 0.4% 3.2%

7% 0.4% 2.8%

6% 0.4% 2.4%

5% 0.4% 2.0%

Labour Force Growth Rate

Surplus/Deficit

2.5%
0.7%

2.5%
0.3%

2.5%
-0.1%

2.5%
-0.5%

Source : Kelkar Committee

Economic survey good job is the best form of inclusion.

IAMR study indicts UPA policies for jobless growth.

In search of Inclusive Growth?

Concerns over Growth

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

Sectors Agriculture, Forestry and Fishing (less than 15% of GDP) 2010-11
7.9
2010-11 7.9

2011-12
3.6
2011-12

2012-13 (AE)
1.8
2012-13 (AE) 1.8 0.4

Reasons Decline due to deficient rainfall

Manufacturing Sectors (16% Agriculture, Forestry and 20% of GDP) Fishing 4.9
Manufacturing

(0.6)

3.6

4.9

(0.6)

0.4

Trade, Hotels, Trade, Hotels, Restaurants, Transports Restaurants, Transportsand Communication(around and 30.0% of Service Sector Communication(around 12.3 GDP ) 30.0% of Service Sector GDP ) Sectors 2010-11

12.3

7.0

5.2

7.0

5.2

Reasons Regulatory hurdles Decline due to and deficient rainfall decline in Regulatory hurdles and mining decline in mining Slackening growth due to slowdown Slackening growth of economic activity in slowdown of due to the industry and economic activity in agriculture sectors

the industry and agriculture sectors 2011-12 2012-13 (AE) Reasons

Skyfall in Manufacturing

Source : CMIE Six sectors namely electricity, roads, telecommunication services, steel, real estate and mining accounted 80% of stalled projects.

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

Fiscal Stimulus
As a % of GDP F2008 F2009 Post Change F2008 and 2009 -1.2% -0.1% 2.2% 2.3% 0.5% 0.9% 0.3%

Revenue Receipts Capital Receipts Expenditure Revenue Expenditure Wages, Salaries and Pension Subsidy MGNREGS

10.9% 0.2% 13.6% 11.9% 1.5% 1.4% 0.3%

9.7% 0.1% 15.8% 14.2% 2.0% 2.2% 0.6%

Source :MSCO

Kanna Laddu Thina Asaiya

% Expenditure on wages F2009 F2010 F2011 F2012 68.4% 69.8% 69.2% 72.8%

% Expenditure on Materials 31.6% 30.2% 30.8% 27.2%

MNREGA, Farm loan waiver and Sixth pay commission led to increase in FD. UPA adopted the policy of Distribute to Grow

Sare Jahan se Mehnga

Moola Mantra Fiscal Stimulus + Global Food Price Inflation + Farm Wage Index

Source Economic times

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

Expenditure

Source E&Y

Fiscal Cliff

Source : Kotak Mahindra

History repeats itself

Source : Kotak Mahindra

Chakravyuh

High Fiscal Deficit

Current Account Deficit

Consumption Expenditure

Leading to High Inflation

Women Youth and Poor

As a % of GDP 2011-12 (Actuals) 0.30 2012-13 (BE) 0.34 2012-13 (RE) 0.29 2013-14 (BE) 0.33

Health and Family Welfare Human Resource Development

0.67

0.74

0.67

0.70

Women and Child Development

Youth Affairs and Sports

0.17

0.19

0.17

0.18

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