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Vote-on-account: 10 things to expect from Chidambaram
06 Feb 2014, 05:14 PM IST 
- A vote-on-account deals only with the expenditure side of the government's budget, so the finance minister is unlikely to announce changes in direct taxes such as income or corporate tax. Earlier this week, Finance Minister P Chidambaram said his vote-on-account will be short, between 12 and 18 pages, on which the government would prefer a debate.
- Taxes: Mr Chidambaram has said the government can cut indirect taxes such as excise duty and service tax without Parliament's approval through a notification. In the past, both NDA and UPA governments have announced indirect tax cuts through vote-on-account.
- The finance minister can outline the government's economic policy and can also make policy statements for the next fiscal in the vote-on-account. So, Mr Chidambaram can put out GDP estimates for 2014-15 (FY15) and also outline the roadmap to meet the FY15 fiscal deficit target of 4.2 per cent of GDP.
- The government will present revised estimates (versus budget targets) of the expenditure incurred and revenues from different sources during 2013-14 (FY14). These estimates will provide an assessment of how efficiently the government spent its resources.
- Fiscal deficit for FY14 will be announced. India's deficit is the highest among the BRIC nations and a breach of the red line (4.8 per cent of GDP) may lead to a downgrade by ratings agencies, which Indian cannot afford. For the nine months to December, deficit has reached Rs 5.16 trillion, or 95.2 per cent of the full-year target.
- Higher-than-expected proceeds from the 2G spectrum auction and inflows from public sector dividends and divestment could help the finance minister meet the fiscal deficit target.
- Quantum of subsidies rolled over: The subsidy bill - mainly for selling oil, fertiliser and food at cheaper rates - is likely to touch near Rs 3 trillion (1 trillion=1 lakh crore) in 2013-14, against a budgeted target of Rs 2.21 trillion. The government is planning to defer some subsidy payments to next year to meet its deficit target.
- In 2012-13, Finance Minister Chidambaram had cut down investment spending by nearly Rs 1 trillion, which helped contain the fiscal deficit at 4.9 per cent of GDP. Mr Chidambaram will announce how much expenditure the government curtailed in 2013-14 to meet the deficit target.
- Tanvee Jain of Macquarie told NDTV that analysts will be closely tracking how the deficit target is achieved. "The quality of fiscal spending is getting compromised. It's being achieved by relying on one-off items or by cutting down planned or productive expenditure, which will have implications on 2014-15 growth."
- Gross market borrowing for 2014-15: This is important from markets' point of view. Ms Jain says the government might announce borrowings of Rs 6.6-6.7 trillion to meet the 2014-15 fiscal deficit target of 4.2 per cent of GDP. As a result, pressure on yields will continue, she added.
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