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| Interim Budget 2009: Big Push for Govt's Flagship Schemes | | |
New Delhi, Feb 16: Refraining from tinkering with tax and duty rates in the interim budget, Finance Minister Pranab Mukherjee today made a huge allocation of Rs 30,100 crore to Government's flagship rural employment programme and many other schemes in a bid to counter the economic recession.
Despite the fact that revised estimates for tax collections during 2008-09 is projected at Rs 627,949 crore as against the budget estimate of Rs 687,715 crore, the Minister resisted the temptation of giving sops since it is an interim budget with General Elections just a few months away.
In view of the fact that security environment has deteriorated considerably with the Mumbai terror attacks giving an entirely new dimension to cross-border terrorism, the Budget increased the allocation for defence to Rs 141,703 crore including Rs 54,824 crore capital expenditure.
Aiming at enhancing expenditure on schemes to provide employment and lift the economy, the interim Budget for 2009-10 has planned a total expenditure of Rs 953,231 crore comprising Rs 285,149 crore in plan and Rs 668,082 crore in non-plan spending.
To counter the negative impact on exports due to the global economic crisis, the interest subvention of two per cent on pre and post shipment for certain employment sectors is proposed to be extended.
Like the NREGS, the Bharat Nirman scheme gets a massive injection of Rs 40,900 crore in the coming year.
"In the current environment, there is a clear need for contra-cyclical policy and it calls for a substantial increase in expenditure in infrastructure development where we have a large gap and in rural development where the programmes such as Bharat Nirman and NREGS are playing a vital social role," Mukherjee said.
He said since the scope for revenue mobalisation is bound to be limited in a period of economic slowdown, any increase in plan expenditure will increase the fiscal deficit.
Additional Plan Expenditure
"Indeed, we may have to consider, the additional plan expenditure from 0.5 per cent to 1 per cent of GDP and gear up our systems accordingly," Mukherjee, who holds the additional charge of Finance, said in his 90-minute speech.
In the Budget estimates for 2009-10, the Sarva Siksha Abhiyan has been given Rs 13,100 crore more while the Mid-day Meal Scheme will get Rs 8,000 crore, the Integrated Child Development Scheme Rs 6,705 crore and the Jawaharlal Nehru Urban Renewal Mission will get an additional Rs 11,842 crore.
Among other schemes that got increased allocation are Rajiv Gandhi Rural Drinking Water Mission (Rs 7,400 crore), Total Rural Sanitation Programme (Rs 1,200 crore) and National Rural Health Mission (Rs 12,070 crore).
To ensure continuity in financing of rural infrastructure projects, the Minister proposed RIDF-15 with a corpus of Rs 14,000 crore and continuation of the window for rural roads with a corpus of Rs 4,000 crore.
Mukherjee said the proposed provisions are appropriate for a vote-on-account but he pointed out that planned expenditure for 2009-10 will have to be increased substantially at the time the presentation of the regular Budget, if the economy has to be given a stimulus it needs to cope with the global recession that is likely to continue through the year.
The Budget makes a provision of Rs 95,579 crore for major subsidies including food, fertiliser and petroleum.
For the coming year, gross tax revenue receipts at the existing rates of taxation are estimated at Rs 671,293 crore, of which the Centre's net receipts have been projected at Rs 500,096 crore.
With revenue expenditure estimated at Rs 848,085 crore, the revenue deficit amounts to 4 per cent of the GDP. Fiscal deficit is estimated at Rs 332,835 crore which is 5.5 per cent of the GDP.
This would be lower than in 2008-09 but higher than would be appropriate under normal circumstances, he said.
"However, conditions in the year ahead are not likely to be normal and therefore the high fiscal deficit is inevitable. We will return to FRBM targets once the economy is restored to the recent trend growth path," he said.
Highlights
• Revenue deficit seen at 4 per cent of GDP, fiscal deficit at 5.5 per cent of GDP in 2009-10
• Fiscal deficit has gone up from Rs 133,287 crore in the budget estimates to Rs 326,515 crore in the revised estimates for 2008-09
• Revised fiscal deficit estimated at 6 per cent of GDP as against 2.5 per cent in the Budget estimate.
• Revised revenue deficit placed at 4.4 per cent as against 1 per cent in the Budget estimate for 2008-09
• Rs 40,000 crore relief extended through tax cuts to counter economic slowdown.
• Plan expenditure in 2009-10 may have to be increased substantially at the time of presentation of overall budget if we have to give economy the stimulus it needs
• The economy witnessed a sustained growth of 9 per cent in the last three years
• Gross domestic savings rate increased from 29.8 per cent in 2003-04 to 30.7 per cent in 2007-08
• Tax to GDP ratio increased from 9.2 per cent 2003-04 to 4.5 per cent 2007-08
• Foodgrain production increased by 10 million tonnes each year to all time high of 230 million tonnes in 2007-08.
• Foreign trade rose from 23.7 per cent of GDP to 35.5 per cent of GDP in 2007-08.
• Annual rate of growth in agriculture was 3.7 per cent.
• Inflation rate fell to 4.4 per cent on January 31, 2009
• World economy, according to forecasts, will fare worse in 2009 than in 2008
• India is second fastest growing economy in the world with 7.1 per cent GDP expansion in 2008-09
• Industrial production fell by two per cent in 2008 on a year to year basis
• Export growth rate in first nine months of 2008-09 touched 17.1 per cent. Industrial production fell by 2 per cent in December
• 50 infrastructure projects worth Rs 67,700 crore given in-principle or final approval
• India Infrastructure Finance Company to raise Rs 10,000 crore from market by end of March 2009
• India Infrastructure Finance Company will finance 60 per cent of commercial loans in private public partnership in critical projects.
• India Infrastructure Finance Company to raise Rs 30,000 crore from market in next fiscal year
• Government relaxes Fiscal Responsibility Budget Management (FRBM) targets to counter global economic slowdown
• FDI inflow between April-Nov 2008 was USD 23.3 billion, a growth of 45 per cent compared with that during the same period in 2007
• Need for acclerating pace of policy reforms, particularly in financial sector
• Plan allocation for agriculture hiked by 300 per cent
• Agriculture credit has been increased by three fold to Rs 2,50,000 crore
• Rs 65,300 crore in loans waived for farmers during 2008-09. It benefitted 3.6 crore households
• Minimum support price for wheat increased from Rs 630 to Rs 1080 per quintal
• Government to continue interest subvention scheme for farmers for loans up to Rs 3 lakh
• 60.4 lakh houses constructed under Indira Awas Yojana during the year
• Rural infrastructure development scheme to be expanded through suitable allocations
• Six new IITs started functioning in 2008-09. Two more IITs in Madhya Pradesh and Rajasthan will start functioning in 2009-10
• Student loans increased from Rs 4,500 crore on March 31, 2004 to Rs 24,260 crore as on September 30, 2008
• Turnover of public sector companies has increased from Rs 587,000 crore i
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