Finance minister Pranab Mukherjee on Friday (February 26) presented India's budget for the next fiscal with a renewed sense of optimism over the country's growth and clear signals from policymakers to bring deficits back to manageable levels. Expectations are high from the 74-year-old veteran politician, who has tabled four budgets in the past, to address the twin issue of bringing down prices while ensuring higher overall growth for the economy.
Highlighting Indias success in combating the economic crisis Pranab Mukherjee begins his budget speech in the Lok Sabha saying. India has weathered economic crisis and the Indian economy is now in a better position that it was a year ago. However, challenges today are not any less than what it was 9 months back. Our task now is to quickly revert to a high GDP.
Highlights of Budget 2009
Union Cabinet approves Budget for 2010-11. Fiscal year 2009-10 was challenging for Indian economy First challenge before Government is to quickly revert to high GDP growth path of 9 per cent Second challenge is to harness economic growth to make it more inclusive and consolidate gains. Impressive recovery in the past few months. Can witness faster recovery in the coming months, says Mukherjee We have strengthened food security, says Mukherjee. 18.5 per cent manufacturing growth in December was highest in two decade. Figures for merchandise exports for January encouraging after turnaround in November and December last. Need to review stimulus imparted to economy, says FM. Need to ensure that the demand-supply imbalance is managed, says Mukherjee.
Tackling fuel/food price rise
Double digit food inflation last year due to bad monsoon and drought-like conditions, says FM Erratic monsoon and drought-like conditions forced supply side bottleneck that fuelled inflation, says FM. Deficit in foodgrains storage capacity to be met by private sector participation. Government conscious of the situation of price rise and taking steps to tackle it, says FM. Kirit Parekh report on fuel price deregulation will be taken up by Oil Minister Murli Deora in due course, says FM.
Taxes, Disinvestments and Exports/Imports
Finance Minister says Government hopes to implement direct tax code from April 2011. Earnest endeavour to implement General Sales Tax in April 2011. Status paper on public debt within six months. Market capitalisation of five PSUs listed since October increased by 3.5 times. FDI inflows steady during the year. Government has taken series of steps to simplify FDI regime. Government intends to make FDI policy user friendly by complying all guidelines into one document. Government to continue interest subvention of 2 per cent for one more year for exports covering handicrafts, carpets, handlooms and small and medium enterprises
Nutrient based fertiliser subsidy scheme to come into force from April 1. Nutrient based fertiliser subsidy will reduce volatility of subsidy and also reduce it Government to provide Rs 300 crore to organise 60,000 pulse and oilseed villages and provide integrated intervention of watershed and related programme. Repayment of loan by farmers extended by six months to June 30, 2010 in view of drought and floods in some part of the country, says FM. Interest subvention for timely repayment of crop loans raised from one per cent to two per cent, bringing the effective rate of interest to five per cent.
Growth schemes and proposals
Government has decided to set up apex-level Financial Stability and Development Council. RBI considering some additional banking licenses to private companies, NBFC will also be considered if they meet criteria. Government committed to ensure continued growth of Special Economic Zones. Need to take firm view on opening up of the retail sector, says FM. Government proposes to set Coal Development Regulatory Authority. Government for competitive bidding for coal blocks for captive power plants. Clean Energy Fund to be created for research in new energy sources. Alternative port to be developed at Sagar Island in West Bengal.
Infrastructure and Education
Rs 1,73,552 crore provided for infrastructure development. Road transport allocation raised by 13 per cent to Rs 19,894 crore, says FM. Propose to maintain thrust of upgrading infrastructure in rural and urban areas. IIFCL authorised to refinance infrastructure projects. Allocation for Railways fixed at Rs 16,752 crore, an increase of Rs 950 crore over last financial year. Mega power plant policy modified to lower cost of generation; allocation to power sector more than doubled to Rs 5,130 crore in 2010-11. Rs 500 crore allocated for solar and hydro projects for Ladakh region. Allocation for new and renewable energy ministry increased by 61 per cent to Rs 1,000 crore. One-time grant of Rs 200 crore provided to Tirupur textile cluster in Tamil Nadu. Allocation for National Ganga River Basin Authority doubled to Rs 500 crore. Plan allocation for school education raised from Rs 26,800 crore to Rs 31,036 crore in 2010-11.
Rural and social sector development
Govt to provide Rs 66,100 crore for rural development Outlay for social sectors pegged at Rs 1,37,674 crore, accounting for 37 per cent of the total plan allocation. Plan allocation for health and family welfare increased to Rs 22,300 crore from Rs 19,534 crore. For rural development, Rs 66,100 crore have been allocated. Allocation for NREGA stepped up to Rs 40,100 crore in 2010-11. Indira Awas Yojana scheme's unit cost raised to Rs 45,000 in plain area and Rs 48,500 in hilly areas. Government will raise Rs 25,000 crore from disinvestment of its stake in state-owned firms. Government to provide Rs 16,500 crore to public sector banks to maintain tier-I capital. Rs 200 crore provided for climate resilient agriculture initiative. 25 per cent of plan outlay earmarked for rural infrastructure development. Allocation for urban development increased by 75 per cent to Rs 5,400 crore in 2010-11. One per cent interest subvention loan for houses costing up to Rs 20 lakh extended to March 31, 2011; Rs 700 crore provided.