Budget 2014: How boring budget numbers affect you

Do you pay attention only to tax and tax-saving bits in the Budget? And do you ignore those boring numbers? But those numbers affect you as well. Here’s why.
GDP

India's GDP Is Around $2.3 Trillion

FM will mention a GDP growth figure. Pay attention. This will influence your next year’s pay. Higher the growth, better your pay prospects. If you feel a lot richer over the past 10 years — compare your pay cheques of 2004 and 2014 — it’s because GDP has jumped from around $690 billion to $2.3 trillion. Just a half percentage point jump in growth, say, from 5.5% to 6%, adds at current GDP levels $11.5 billion to the economy, that’s nearly Rs 700 billion extra. Nothing to scoff at.

Subsidies

GOI SUBSIDISES FOOD, FUEL, FERTILIZER. YOU MAY BE MILDLY INTERESTED IN FUEL SUBSIDY BECAUSE OF DIESEL AND LPG. BUT BE MORE INTERESTED

Total subsidies are Rs 2.5 lakh crore or around 2.5% of GDP. Since deficit is over 4% of GDP, do the math — subsidies keep defi cit high and spoil the economic mood. And this should also interest you — subsidy cuts needn’t be painful. Did you really feel deprived when diesel price went up periodically by 50 paise/litre? Therefore, if FM announces a cleverly calibrated cut in subsidies, it will mean GoI will be able to bring down deficit while not losing political capital. That means it may get bolder on reforms later. Which, of course, is good for you.

Fiscal Deficit/Borrowings

FISCAL DEFICIT IS THE AMOUNT GOI BORROWS BECAUSE ITS REVENUES DON’T COVER EXPENSES

GoI’s defi cit now is supposed to be around Rs 5.3 lakh crore or over $80 billion or over 4% of GDP. Markets, economists and credit ratings agencies say 4%-plus is too high. But you should also worry. High government borrowings reduce bank credit for you and your employers, and push up interest rates. And a high deficit number can mean tumbling markets, lower global ratings, less foreign investment and a souring of the mood. So, goodbye good pay prospects next year. A low deficit number, however, means the opposite.

Disinvestment

A STRANGE WORD COINED BY GOI, IT MEANS SELLING SARKARI COMPANIES’ SHARES IN THE STOCK MARKET

For experts, high disinvestment target means more revenue and less deficit. For you, it means two things. Stock markets can see some zing if lots of sarkari company shares are sold. And if disinvestment brings down deficit, it’s good for you (See ‘Deficit’).