17.95 trillion rupees India Budget presented
July 10, 2014, 12:56 pm

Indian Finance Minister Arun Jaitley arrives to present the 2014-15 union budget at the Indian parliament in New Delhi, Thursday, July 10, 2014 [AP]

The government said it is aiming to accelerate the growth rate to 7-8 per cent in the next three to four years.

The fiscal deficit target stands at 4.1 per cent of the GDP for 2014/15.

Among the major highlights of the budget were allocating 70.6 billion rupees to create 100 “smart cities”, raising limit on FDI in defence sector from 26 per cent to 49 per cent, and raising FDI limit in insurance sector from 26 per cent to 49 per cent.

The government has also boosted defence spending by 12 per cent in 2014-15 over the previous year in the budget.

Jaitley said the government will establish an employee’s pension system, and realize total sanitation goals by 2019, when the government completes its five-year term.

The Finance Minister also said the government would aim to provide electricity to all rural areas. Meanwhile, he extended a 10-year tax holiday for Indian power generation companies.

The Finance Minister also promised to build more colleges, hospitals across the country and introduce foreign direct investment in insurance sector and reform the state-owned banking and tax systems.

Contrary to expectations, however, the new Indian government has not scrapped rules on retrospective tax in the country.

The principle of ‘retrospective taxation’ in India has negatively impacted investor sentiment, said the Confederation of Indian Industry earlier in May this year.

The rule set in 2013 enabled the Indian government to raise tax demands on long concluded deals. British telecoms group Vodafone Group Plc is contesting a more than $2 billion tax dispute over its 2007 acquisition of Indian mobile assets.

 TBP and Agencies