Expectations from India's 2013-14 budget

Finance Minister P. Chidambaram is expected to push fiscal consolidation through spending cuts while looking to increase revenues to ward off the threat of a credit rating downgrade. Following are expectations from economists, analysts, investors and companies from the budget.

FISCAL DEFICIT

*Government target seen at 4.8 percent of gross domestic product for 2013/14 Government has revised 2012/13 target to 5.3 percent of gross domestic product, compared with 5.1 percent estimated in the budget in March.

GROWTH

Government's GDP growth forecast for 2013/14 seen at 6 to 6.5 percent, compared with a decade-low of 5 percent in 2012/13 according to estimates released by the ministry of statistics. The finance minister has said the economy should expand 5.5 percent in 2012/13.

BORROWING

Analysts expect net government borrowing below 5 trillion rupees ($92.4 billion) in FY14, little changed from 4.67 trillion rupees in FY13

SUBSIDIES

Total subsidy burden seen falling by 400 billion-500 billion rupees from estimated 2.6 trillion rupees in FY13 Ratio of subsidy payments to GDP seen below 2 percent by the end of 2013/14, compared with preliminary expectations of about 2.5 percent in 2012/13 FY14 food subsidy bill seen between 850 billion and 1 trillion rupees versus 750 billion rupees budget estimates for current year Likely to cut fertiliser subsidy by at least 15 percent for 2013/14

SPENDING

Finance minister plans to cut FY14 public spending target by up to 10 percent from FY13's original target Of 14.9 trillion rupees Spending on defence, rail , other development and welfare projects to be cut, according to Reuters sources

FY13 public expenditure already reduced by 9 percent from original target

DIVESTMENT

Likely to target 400 billion rupees via stake sales in FY14 in state-run companies versus estimated 300 billion rupees in FY13

TAXES

Likely to lay out roadmap for implementation of goods and services tax (GST) Low expectations for increase in headline corporate tax rates Income tax slabs may be increased

MARKETS

May remove cap on foreign institutional investments in rupee

denominated corporate bonds, or at least in infrastructure bonds May expand definition of term "infrastructure" to include companies that develop affordable housing May simplify processes for foreign investor Seen removing withholding tax on corporate bonds that have no restrictions on maturity or lock-in periods, or bring it down substantially. May abolish or reduce securities transaction tax on equity investments

COMMODITIES

May remove import duty on iron ore or raise duty on some steel imports to support domestic steel industry; could reduce iron ore export duty at behest of mines ministry May cap imports or cut number of companies authorised to import gold if purchases have not slowed by Feb. 28 Production tax on jewellery and unveiling of gold saving schemes with some tax breaks seenMay raise import tax to cut rising purchases of vegetable oils from Malaysia and Indonesia May levy transaction tax on commodity future May give tax breaks to new LNG terminals, could also remove customs duty on LNG imports May extend tax breaks for new oil refineries and projects May implement export tax on value-added oil meal products.

COMPANIES

Auto industry hopes for excise duty cut on small cars to 10 percent from 12 percent. Budget may impose additional duty on diesel cars and utility vehicle Roadmap expected for capital infusion into state-owned banks IT services providers hope for clarity around transfer pricing norms, foreign tax credit and refund of service tax claims Telecommunications companies lobby for reduction in levies and tax breaks * Real estate sector wants tax concessions and other fiscal benefits to builders, financiers and buyers of affordable housing Retail and consumer goods companies want industry status and an independent ministry set up for retail as well as a cut in rate of service tax on commercial property rent Budget may propose increase in excise duty for cement makers. May remove import duty on thermal coal and introduce tax-free bonds for power sector ($1 = 54.1 Indian rupees)

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