Sunday, 16 February 2014

India interim Budget 2014 14: Gold import duty may fall by 2%

India' Finance Minsiter P Chidambaram's last budget before the term of the ministry comes to an end is expected to have some populist measures with an eye on elections but at the same time an uneventful affair as it is an interim budget to approve expenditure for four months beyond March 31.

Market expects gold import duty to be eased by 2% from the current 10% in view of success attained in containing current account deficit (CAD). (However, Chidambaram decided to maintain status quo stating that India still needs to have curbs in place to keep gold imports in check)
 
Chidambaram will no doubt highlight the achievements of the government in containing Current Account Deficit and fiscal deficit. The fiscal deficit is likely to have been fallen to 4.8% of the GDP or lower by postponing expenditure and advancing income. Huge dividend payout from public sector companies and windfall from spectrum allocation is expected to bring some balance to government's financila position.

Chidambaram may address the issues related to slowdwon in the economy while some people expeced relaxation in import curbs on gold in view of the persistent demand from gem and jewellery industry.
Some of the sectors expecting relief are automobilies, mining and agriculture.

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