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The full text of Union Budget 2011 presented by Finance Minister Pranab Mukherjee
on February 28, 2011 in Lok Sabha, can be downloaded here.
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Madam Speaker,
I rise to present the Union Budget for 2011-12.
We are reaching the end of a remarkable fiscal year. In a globalised world
with its share of uncertainties and rapid changes, this year brought us some
opportunities and many challenges as we moved ahead with steady steps on the
chosen path of fiscal consolidation and high economic growth.
2. Our growth in 2010-11 has been swift and broad-based. The economy is
back to its pre-crisis growth trajectory. While agriculture has shown a rebound,
industry is regaining its earlier momentum. Services sector continues its near
double digit run. Fiscal consolidation has been impressive. This year has also
seen significant progress in those critical institutional reforms that would set the
pace for double-digit growth in the near future.
3. While we succeeded in making good progress in addressing many areas
of our concern, we could have done better in some others. The total food inflation
declined from 20.2 per cent in February 2010 to less than half at 9.3 per cent in
January 2011, but it still remains a concern. In the medium term perspective, our
three priorities of sustaining a high growth trajectory; making development more
inclusive; and improving our institutions, public delivery and governance
practices, remain relevant. These would continue to engage the Indian policyplanners for some time. However, there are some manifestations of these
challenges that need urgent attention in the short term.
4. Though we have regained the pre-crisis growth momentum, there is a
need to effect adjustments in the composition of growth on demand and supply
side. We have to ensure that along with private consumption, the revival in private
investment is sustained and matches pre-crisis growth rates at the earliest. This
requires a stronger fiscal consolidation to enlarge the resource space for private
Budget 2011-2012
Speech of
Pranab Mukherjee
Minister of Finance
February 28, 20112
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enterprise and addressing some policy constraints. We also have to improve the
supply response of agriculture to the expanding domestic demand. Determined
measures on both these issues will help address the structural concerns on inflation
management. It will also ensure a more stable macroeconomic environment for
continued high growth.
5. The UPA Government has significantly scaled up the flow of resources
to rural areas to give a more inclusive thrust to the development process. The
impact is visible in the new dynamism of our rural economy. It has helped
Yet, there is much that still needs to be done, especially in rural India
to reconcile legitimate environmental concerns with necessary developmental
needs. Above all, there is the 'challenge of growing aspiration' of a young
6. To address these concerns, I do not foresee resources being a major constraint,
at least not in the medium-term. However, the implementation gaps, leakages from
public programmes and the quality of our outcomes are a serious challenge.
7. Certain events in the past few months may have created an impression of
drift in governance and a gap in public accountability. Even as the Government
is engaged in addressing specific concerns emanating from some of these events
in the larger public interest and in upholding the rule of law, such an impression
is misplaced. We have to seize in these developments, the opportunity to improve
our regulatory standards and administrative practices. Corruption is a problem
that we have to fight collectively.
8. In a complex and rapidly evolving economy, the Government can not profess
to be the sole repository of all knowledge. Indeed, in a democratic polity, it stands
to benefit from inputs from colleagues on both sides of the House. They must lend
their voice and expertise to influence public policy in the wider national interest.
In some areas, good results depend on coordinated efforts of the Centre and the
State Governments and in some others, on favourable external developments.
9. I see the Budget for 2011-12 as a transition towards a more transparent
and result oriented economic management system in India
steps in simplifying and placing the administrative procedures concerning
taxation, trade and tariffs and social transfers on electronic interface, free of
discretion and bureaucratic delays. This will set the tone for a newer, vibrant and
more efficient economy.
10. At times the biggest reforms are not the ones that make headline, but the
ones concerned with the details of governance, which affect the everyday life of
aam aadmi. In preparing this year's Budget, I have been deeply conscious of this
fact. I am grateful for the able guidance of the Hon’ble Prime Minister and the
strong support lent by UPA Chairperson Smt. Sonia Gandhi in my endeavour. I
would now begin with a brief overview of the economy.3
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I. Overview of the Economy
11. On last Friday, I laid on the table of the House the Economic Survey
2010-11, which gives a detailed analysis of the economic situation of the country
over the past 12 months. The Gross Domestic Product (GDP) of India
to have grown at 8.6 per cent in 2010-11 in real terms. In 2010-11 agriculture is
estimated to have grown at 5.4 per cent, industry at 8.1 per cent and services at
9.6 per cent. All three sectors are contributing to the consolidation of growth.
More importantly, the economy has shown remarkable resilience to both external
and domestic shocks.
12. Our principal concern this year has been the continued high food prices.
Inflation surfaced in two distinct episodes. At the beginning of the year, food
inflation was high for some cereals, sugar and pulses. Towards the second half,
while prices of these items moderated and even recorded negative rates of
inflation, there was spurt in prices of onion, milk, poultry and some vegetables.
Of late prices of onion have crashed in wholesale markets and we have had to
remove the ban on their exports.
13. Despite improvement in the availability of most food items, consumers
were denied the benefit of seasonal fall in prices normally seen in winter months.
These developments revealed shortcomings in distribution and marketing systems,
which are getting accentuated due to growing demand for these food items with
rising income levels. The huge differences between wholesale and retail prices
and between markets in different parts of the country are just not acceptable.
These are at the expense of remunerative prices for farmers and competitive
prices for consumers.
14. Monetary policy stance in 2010-11, while being supportive of fiscal policy,
has succeeded in keeping core-inflation in check. As the transmission lag in
monetary policy tends to be long, I expect the measures already taken by the RBI
to further moderate inflation in coming months.
15. The developments on India
encouraging. Even as the recovery in developed countries is gradually taking
root, our trade performance has improved. Exports have grown at 29.4 per cent
to reach US Dollar 184.6 billion, while imports at US Dollar 273.6 billion have
recorded a growth of 17.6 per cent during April-January 2010-11, over the
corresponding period last year. The current account deficit is around the
2009-10 level and poses some concerns because of the composition of its
financing.
16. Policy making in a globalised world has to take into account the likely
international developments. To realise the desired outcomes, it is important that
there is convergence in expectations of our investors, entrepreneurs and consumers
on the macroeconomic prospects of the economy. Against this backdrop, the4
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Indian economy is expected to grow at 9 per cent with an outside band of +/-
0.25 per cent in 2011-12. I expect the average inflation to be lower next year and
the current account deficit smaller and better managed with higher domestic
savings rate and stable capital flows. While, like last year, I seek the blessings of
Lord Indra to bestow on us timely and bountiful monsoons, I would pray to
Goddess Lakshmi as well. I think it is a good strategy to diversify one's risks.
II. Sustaining Growth
17. In my last Budget, I had started rolling back the fiscal stimulus
implemented over 2008-09 and 2009-10 to mitigate the impact of the global
financial crisis on economic slowdown in India
moved further on that path. I believe that a part of the current recovery must be
stored away to build future resilience. Indeed, a counter cyclical fiscal policy is
our best insurance against external shocks and localised domestic factors.
Fiscal Consolidation
18. The experience with Fiscal Responsibility and Budget Management Act,
2003 (FRBM Act) at Centre and the corresponding Acts at State level show that
statutory fiscal consolidation targets have a positive effect on macroeconomic
management of the economy. In the course of the year the Central Government
would introduce an amendment to the FRBM Act, laying down the fiscal road
map for the next five years.
19. The Thirteenth Finance Commission has worked out a fiscal consolidation
road map for States requiring them to eliminate revenue deficit and achieve a
fiscal deficit of 3 per cent of their respective Gross State
by 2014-15. It has also recommended a combined States’ debt target of 24.3 per
cent of GDP to be reached during this period. The States are required to amend
or enact their FRBM Acts to conform to these recommendations.
20. The Government has been in the process of setting-up an independent
Debt Management Office in the Finance Ministry. A Middle Office is already
operational. As a next step, I propose to introduce the Public Debt Management
Agency of India Bill in the next financial year.
Tax Reforms
21. The introduction of the Direct Taxes Code (DTC) and the proposed Goods
and Services Tax (GST) will mark a watershed. These reforms will result in
moderation of rates, simplification of laws and better compliance.
22. As Hon'ble Members are aware, the Direct Taxes Code Bill was introduced
in Parliament in August, 2010. After receiving the report of the Standing
Committee, we shall be able to finalise the Code for its enactment during
2011-12. This has been a pioneering effort in participative legislation. The Code5
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is proposed to be effective from April 1, 2012 to allow taxpayers, practitioners
and administrators to fully understand the legislation and adjust to the revised
procedures.
23. Unlike DTC, decisions on the GST have to be taken in concert with the
States with whom our dialogue has made considerable progress in the last four
years. Areas of divergence have been narrowed. As a step towards the roll-out of
GST, I propose to introduce the Constitution Amendment Bill in this session of
Parliament. Work is also underway on drafting of the model legislation for the
Central and State GST.
24. Among the other steps that are being taken for the introduction of GST is
the establishment of a strong IT infrastructure. We have made significant progress
on the GST Network (GSTN). The key business processes of registration, returns
and payments are in advanced stages of finalisation. The National Securities
Depository Limited (NSDL) has been selected as technology partner for
incubating the National Information Utility that will establish and operate the IT
backbone for GST. By June 2011, NSDL will set up a Pilot portal in collaboration
with eleven States prior to its roll out across the country.
Expenditure Reforms
25. The effective management of public expenditure is an integral part of the
fiscal consolidation process. Expenditure has to be oriented towards the
production of public goods and services. The extant classification of public
expenditure between plan, non-plan, revenue and capital spending needs to be
revisited. This is necessary as one recognises the importance of service sector
and the knowledge economy for our development. A Committee under
Dr. C. Rangarajan has been set up by the Planning Commission to look into
these issues.
Subsidies
26. During the year 2010-11, the Nutrient Based Subsidy (NBS) policy was
successfully implemented for all fertilisers except urea. The policy has been
well received by all stakeholders, and the availability of fertilisers has improved.
The extension of the NBS regime to cover urea is under active consideration of
the Government.
27. The Government provides subsidies, notably on fuel and food grains, to
enable the common man to have access to these basic necessities at affordable
prices. A significant proportion of subsidised fuel does not reach the targeted
beneficiaries and there is large scale diversion of subsidised kerosene oil. A recent
tragic event has highlighted this practice. We have deliberated for long the
modalities of implementing such subsidies. The debate now has to make way for
decision. To ensure greater efficiency, cost effectiveness and better delivery for
both kerosene and fertilisers, the Government will move towards direct transfer
of cash subsidy to people living below poverty line in a phased manner.6
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28. A task force headed by Shri Nandan Nilekani has been set-up to work
out the modalities for the proposed system of direct transfer of subsidy for
kerosene, LPG and fertilisers. The interim report of the task force is expected by
June 2011. The system will be in place by March 2012.
People’s Ownership of PSUs
29. The Government's programme to broadbase the ownership of Central
Public Sector Undertakings (CPSUs) has received an overwhelming response.
The six public issues of CPSUs in the current financial year have attracted around
50 lakh retail investors.
30. As against a target of `40,000 crore, the Government will raise about
`22,144 crore from disinvestment in 2010-11. A higher than anticipated realisation
in non-tax revenues has led us to reschedule some of the divestment issues planned
for the current year. I intend to maintain the momentum on disinvestment in
2011-12 by raising `40,000 crore. Let me reiterate here that the Government is
committed to retain at least 51 per cent ownership and management control of the
CPSUs, as stated earlier in my Budget speech for 2009-10.
Investment Environment
Foreign Direct Investment
31. To make the FDI policy more user-friendly, all prior regulations and
guidelines have been consolidated into one comprehensive document, which is
reviewed every six months. The last review has been released in September
2010. This has been done with the specific intent of enhancing clarity and
predictability of our FDI policy to foreign investors. Discussions are underway
to further liberalise the FDI policy.
Foreign Institutional Investors
32. Currently, only FIIs and sub-accounts registered with the SEBI and NRIs
are allowed to invest in mutual fund schemes. To liberalise the portfolio
investment route, it has been decided to permit SEBI registered Mutual Funds
to accept subscriptions from foreign investors who meet the KYC requirements
for equity schemes. This would enable Indian Mutual Funds to have direct
access to foreign investors and widen the class of foreign investors in Indian
equity market.
33. To enhance the flow of funds to the infrastructure sector, the FII limit for
investment in corporate bonds, with residual maturity of over five years issued
by companies in infrastructure sector, is being raised by an additional limit of
US Dollar 20 billion taking the limit to US Dollar 25 billion. This will raise the
total limit available to the FIIs for investment in corporate bonds to US Dollar
40 billion. Since most of the infrastructure companies are organised in the form
of SPVs, FIIs would also be permitted to invest in unlisted bonds with a minimum
lock-in period of three years. However, the FIIs will be allowed to trade amongst
themselves during the lock-in period.7
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Financial Sector legislative Initiatives
34. The financial sector reforms initiated during the early 1990s have borne
good results for the Indian economy. The UPA Government is committed to
take this process further. Accordingly, I propose to move the following legislations
in the financial sector:
(i) The Insurance Laws (Amendment) Bill, 2008;
(ii) The Life Insurance Corporation (Amendment) Bill, 2009;
(iii) The revised Pension Fund Regulatory and Development Authority
Bill, first introduced in 2005;
(iv) Banking Laws Amendment Bill, 2011;
(v) Bill on Factoring and Assignment of Receivables;
(vi) The State Bank of India
2009; and
(vii) Bill to amend RDBFI Act 1993 and SARFAESI Act 2002.
35. In my last Budget speech, I had announced that Reserve Bank of India
would consider giving some additional banking licences to private sector players.
Accordingly, RBI issued a discussion paper in August, 2010, inviting feedback
from the public. RBI has proposed some amendments in the Banking Regulation
Act. I propose to bring suitable legislative amendments in this regard in this
session. RBI is planning to issue the guidelines for banking licences before the
close of this financial year.
Public Sector Bank Recapitalisation
36. During the year 2010-11, the Government is providing a sum of `20,157
crore for infusion in the Public Sector Banks to maintain Tier I Capital to Risk
Weighted Asset Ratio (CRAR) at 8 per cent and increase government equity in some
banks to 58 per cent. I propose to provide a sum of `6,000 crore for the year 2011-12
to enable Public Sector Banks to maintain a minimum Tier I CRAR at 8 per cent.
Recapitalisation of Regional Rural Banks
37. As a part of financial strengthening of Regional Rural Banks, an amount
of `350 crore was given to these banks during this year. I propose to provide
`500 crore during 2011-12 to enable them maintain a CRAR of at least 9 per
cent as on March 31, 2012.
Micro Finance Institutions
38. The Micro Finance Institutions (MFIs) have emerged as an important
means of financial inclusion. Creation of a dedicated fund for providing equity
to smaller MFIs would help them maintain growth and achieve scale and
efficiency in operations. I propose to create in the course of the year, "India
Microfinance Equity Fund" of `100 crore with SIDBI. To empower women and
promote their Self Help Groups (SHGs), I propose to create a “Women’s SHG’s
Development Fund” with a corpus of `500 crore. The Committee set up by RBI
to look into issues relating to micro finance sector in India
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report. The Government is considering putting in place appropriate framework
to protect the interests of small borrowers.
Rural Infrastructure Development Fund
39. The Rural Infrastructure Development Fund (RIDF) is an important
instrument for routing bank funds for financing rural infrastructure. This is popular
among State Governments. I propose to raise the corpus of RIDF XVII to `18,000
crore in 2011-12 from `16,000 crore in the current year. The additional allocation
would be dedicated to creation of warehousing facilities.
Micro, Small and Medium Enterprises
40. Micro and Small enterprises play a crucial role in furthering the objective
of equitable and inclusive growth. Last year, `4,000 crore was provided to SIDBI
for refinancing incremental lending by banks to these enterprises. For the year
2011-12, I propose to provide `5,000 crore to SIDBI for the same purpose out of
the shortfall of banks on priority sector lending targets.
41. Handloom weavers have been facing economic stress. Consequently,
many of them have not been able to repay debts to handloom weaver cooperative
societies which have become financially unviable. I propose to provide `3,000
crore to NABARD, in phases for these cooperative societies. The initiative would
benefit 15,000 cooperative societies and about 3 lakh handloom weavers. The
details of the scheme would be worked out by the Ministry of Textiles in
consultation with Planning Commission.
42. I am happy to report that the outstanding loans to minority communities
which stood at 13 per cent of total priority sector lending at the end of last year
have increased to 13.6 per cent in the current year. I have directed the Public
Sector Banks to achieve the target of 15 per cent at the earliest.
Housing Sector Finance
43. To further stimulate growth in housing sector, I am liberalising the existing
scheme of interest subvention of 1 per cent on housing loans by extending it to
housing loan upto `15 lakh where the cost of the house does not exceed `25 lakh
from the present limit of `10 lakh and `20 lakh respectively.
44. On account of increase in prices of residential properties in urban areas,
I propose to enhance the existing housing loan limit from `20 lakh to `25 lakh
for dwelling units under priority sector lending.
45. To provide housing finance to targeted groups in rural areas at competitive
rates, I propose to enhance the provision under Rural Housing Fund to `3,000
crore from the existing `2,000 crore.
46. Credit enablement of Economically Weaker Sections (EWS) and LIG
households is a serious challenge. To address this issue, I propose to create a
Mortgage Risk Guarantee Fund under Rajiv Awas Yojana. This would guarantee
housing loans taken by EWS and LIG households and enhance their credit
worthiness.9
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47. To prevent frauds in loan cases involving multiple lending from different
banks on the same immovable property, the Government has facilitated setting
up of Central Electronic Registry under the SARFAESI Act, 2002. This Registry
will become operational by March 31, 2011.
Financial Sector Legislative Reforms Commission
48. In pursuance of the announcement made in Budget 2010-11, the
Government has set up a Financial Sector Legislative Reforms Commission under
the Chair of Justice B. N. Srikrishna. It would rewrite and streamline the financial
sector laws, rules and regulations and bring them in harmony with the
requirements of a modern financial sector. The Commission will complete its
work in 24 months.
49. The Companies Bill introduced in the Parliament in 2009 has been
received from the Parliamentary Standing Committee. The proposed bill will be
introduced in the Lok Sabha in the current session.
Agriculture
50. Agriculture development is central to our growth strategy. Measures taken
during the current year have started attracting private investment in agriculture
and agro-processing activities. This process has to be deepened further.
51. In the Budget for 2010-11, I had delineated a four-pronged strategy
covering agricultural production, reduction in wastage of produce, credit support
to farmers and a thrust to the food processing sector. These initiatives have
started showing results but there are other issues in our food economy that require
attention. The recent spurt in food prices was driven by increase in the prices of
items like fruits and vegetables, milk, meat, poultry and fish, which account for
more than 70 per cent of the WPI basket for primary food items. Removal of
production and distribution bottlenecks for these items will be the focus of my
attention this year. I propose to make allocations for these schemes under the
ongoing Rashtriya Krishi Vikas Yojana (RKVY) for an early take off. The total
allocation of RKVY is being increased from `6,755 crore in 2010-11 to `7,860
crore in 2011-12.
Bringing Green Revolution to Eastern Region
52. The Green Revolution in Eastern Region is waiting to happen. To realize
the potential of the region, last year's initiative will be continued in 2011-12 with
a further allocation of `400 crore. The program would target the improvement in
the rice based cropping system of Assam , West Bengal, Orissa, Bihar , Jharkhand,
Eastern Uttar Pradesh and Chhattisgarh.
Integrated Development of 60,000 pulses villages in rainfed areas
53. Government's initiative on pulses has received a positive response from
the farmers. As per the second advance estimates, a record production of 165
lakh tonnes of pulses is expected this year as against 147 lakh tonnes last year.10
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While consolidating these gains, we must strive to attain self-sufficiency in
production of pulses within next three years. I propose to provide an amount of
`300 crore to promote 60,000 pulses villages in rainfed areas for increasing crop
productivity and strengthening market linkages.
Promotion of Oil Palm
54. The domestic production of edible oil meets only about 50 per cent
demand. The gap in supply is met through imports, which are often at high
prices due to the quantum of our requirement. Our recent interventions and
good rains are expected to result in a higher oilseeds production of 278 lakh
tonnes in 2010-11 as against 249 lakh tonnes in 2009-10. To achieve a major
breakthrough, we have to pay special attention to oil palm as it is one of the
most efficient oil crops. I propose to provide an amount of `300 crore to bring
60,000 hectares under oil palm plantation, by integrating the farmers with the
markets. The initiative will yield about 3 lakh metric tonnes of palm oil annually
in 5 years.
Initiative on Vegetable Clusters
55. The growing demand for vegetables has to be met by a robust increase
in the productivity and market linkage. An efficient supply chain, to provide
quality vegetables at competitive prices will have to be established. I propose to
provide an amount of `300 crore for implementation of vegetable initiative to
set in motion a virtuous cycle of higher production and incomes for the farmers.
To begin with, this programme will be launched near major urban centres.
Nutri-cereals
56. While we ensure food for all, we must also promote balanced nutrition.
Bajra, jowar, ragi and other millets are highly nutritious and are known to possess
several medicinal properties. The availability and consumption of these Nutricereals is, however, low and has been steadily declining over recent years. A
provision of `300 crore is being made to promote higher production of these
cereals, upgrade their processing technologies and create awareness regarding
their health benefits. This initiative would provide market linked production
support to ten lakh millet farmers in the arid and semi-arid regions of the country.
The programme would be taken up in 1000 compact blocks covering about 25,000
villages. This will help improve nutritional security and increase feed and fodder
supply for livestock.
National Mission
57. The consumption of foods rich in animal protein and other nutrients has
risen of late, with demand growing faster than production. The National Mission
for Protein Supplements is being launched in 2011-12 with an allocation of `300
crore. It will take up activities to promote animal based protein production through
livestock development, dairy farming, piggery, goat rearing and fisheries in
selected blocks.11
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Accelerated Fodder Development Programme
58. Adequate availability of fodder is essential for sustained production of
milk. It is necessary to accelerate the production of fodder through intensive
promotion of technologies to ensure its availability throughout the year. I
propose to provide `300 crore for Accelerated Fodder Development Programme
which will benefit farmers in 25,000 villages.
59. Hon'ble Members may be curious as to why all these new initiatives
are being launched with an allocation of `300 crore. Well, the number 3 happens
to be my lucky number !
National Mission
60. While the need to maximize crop yields to meet the growing demand
for food grains is critical, we have to sustain agricultural productivity in the
long run. There has been deterioration in soil health due to removal of crop
residues and indiscriminate use of chemical fertilizers, aided by distorted prices.
61. To address these issues, the Government proposes to promote organic
farming methods, combining modern technology with traditional farming
practices like green manuring, biological pest control and weed management.
Agriculture Credit
62. To get the best from their land, farmers need access to affordable credit.
Banks have been consistently meeting the targets set for agriculture credit flow
in the past few years. For the year 2011-12, I am raising the target of credit
flow to the farmers from `3,75,000 crore this year to `4,75,000 crore in 2011-
12. Banks have been asked to step up direct lending for agriculture and credit
to small and marginal farmers.
63. The existing interest subvention scheme of providing short term crop
loans to farmers at 7 per cent interest will be continued during 2011-12. In the
last budget, I had provided an additional 2 per cent interest subvention to those
farmers who repay their crop loans on time. The response to this scheme has
been good. In order to provide further incentive to these farmers, I propose to
enhance the additional subvention to 3 per cent in 2011-12. Thus, the effective
rate of interest for such farmers will be 4 per cent per annum.
64. In view of the enhanced target for flow of agriculture credit, I propose
to strengthen NABARD's capital base by infusing `3000 crore, in a phased
manner, as Government equity. This would raise its paid-up capital to `5,000
crore. To enable NABARD refinance the short-term crop loans of the
cooperative credit institutions and RRBs at concessional rates, I propose a
contribution of `10,000 crore to NABARD’s Short-term Rural Credit Fund for
2011-12 from the shortfall in priority sector lending by Scheduled Commercial
Banks.12
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Mega Food Parks
65. Despite growing production of vegetables and fruits, their availability is
inadequate due to bottlenecks in retailing capacity. An estimated 40 per cent of
the fruit and vegetable production in India
cold chain and transport infrastructure. To address these issues, the Eleventh
Plan target for number of Mega Food Parks was set at 30. So far, 15 such parks
have been sanctioned. During 2011-12, approval is being given to set up 15
more Mega Food Parks.
Storage Capacity and Cold Chains
66. The years 2008 to 2010 saw very high levels of foodgrain procurement.
On January 1, 2011, the foodgrain stock in Central pool reached 470 lakh metric
tonnes, 2.7 times higher than 174 lakh metric tonnes on January 1, 2007. The
storage capacity for such large quantities requires augmentation. Process to create
new storage capacity of 150 lakh metric tonnes through private entrepreneurs
and warehousing corporations has been fast tracked. Decision to create 20 lakh
metric tonnes of storage capacity under Public Entrepreneurs Guarantee (PEG)
Scheme through modern silos has been taken. While we will be able to add
about 2.6 lakh tonnes of capacity by March 2011, based on existing sanctions,
the addition will reach 40 lakh tonnes by March 2012. During 2010-11, another
24 lakh metric tonnes of storage capacity has been created under the Rural
Godown Scheme.
67. Investment in cold storage projects is now gaining momentum. During
this year, 24 cold storage projects with a capacity of 1.4 lakh metric tonnes have
been sanctioned under National Horticulture Mission
storage projects with a capacity of over 5 lakh metric tonnes have been approved
by the National Horticulture Board.
68. To attract investment in this sector, henceforth, capital investment in the
creation of modern storage capacity will be eligible for viability gap funding
scheme of the Finance Ministry. It is also proposed to recognize cold chains and
post-harvest storage as an infrastructure sub-sector.
Agriculture Produce Marketing Act
69. The recent episode of inflation in vegetables and fruits has exposed serious
flaws in our supply chains. The government regulated mandis sometimes prevent
retailers from integrating their enterprises with the farmers. There is need for the
State Governments to review and enforce a reformed Agriculture Produce
Marketing Act urgently.
Infrastructure and Industry
70. Infrastructure is critical for our development. For 2011-12, an allocation
of over ` 2,14,000 crore is being made for this sector, which is 23.3 per cent
higher than current year. This amounts to 48.5 per cent of the Gross Budgetary
Support to plan expenditure.13
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71. Our experience with PPP model for creation of public sector assets in the
country has been good. We have recently launched the National Capacity Building
Programme to enhance capacities of public functionaries in identifying,
conceptualising, structuring and managing PPPs. It is our endeavour to come up
with a comprehensive policy that can be used by the Centre and the State
Governments in further developing public-private partnerships.
72. Government established India Infrastructure Finance Company Limited
(IIFCL) to provide long term financial assistance to infrastructure projects. It is
expected to achieve a cumulative disbursement target of `20,000 crore by March
31, 2011 and `25,000 crore by March 31, 2012. The take out financing scheme
announced in the Budget 2009-10 has been implemented and seven projects
have been sanctioned with a debt of `1,500 crore. Another `5,000 crore will be
sanctioned during 2011-12.
73. In order to give a boost to infrastructure development in railways, ports,
housing and highways development, I propose to allow tax free bonds of `30,000
crore to be issued by various Government undertakings in the year 2011-12.
This includes Indian Railway Finance Corporation `10,000 crore, National
Highway Authority of India
crore.
74. To attract foreign funds for the infrastructure financing, I propose to create
Special Vehicles in the form of notified infrastructure debt funds. I will come to
the details in Part B of my speech.
National Manufacturing Policy
75. For sustained growth of GDP and productive employment for younger
generation, it is imperative that the growth in manufacturing sector picks up. We
expect to take the share of manufacturing in GDP from about 16 per cent to 25
per cent over a period of ten years. Government will come out with a
manufacturing policy, which will bring down the compliance burden on the
industry through self-regulation and help make Indian industry globally
competitive.
76. To address the need for greater transparency and accountability in
procurement policy and allocation, pricing and utilisation of natural resources,
the Government has set up two committees. The recommendations will be
available within three months.
77. A Group of Ministers has been set up to consider all issues relating to
reconciliation of environmental concerns emanating from various departmental
activities including those related to infrastructure and mining. This Group will
also suggest changes in the existing statutes, rules, regulations and guidelines
and make its recommendations in a time bound manner.
78. The Indian automobile market is the second fastest growing in the world
and has shown nearly 30 per cent growth this year. World over, substantial14
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investments are being made in the field of hybrid and electric mobility. To provide
green and clean transportation for the masses, National Mission
Electric Vehicles will be launched in collaboration with all stakeholders.
79. The funding of 15,260 modern low floor and semi-low floor buses under
JNNURM, besides adding to passenger comfort, has transformed the urban
transport across India Delhi
Line III are proposed to be taken up. The ongoing Metro projects of Bengaluru,
Kolka t a and Chenna i wi l l be provided f inanc i a l a s s i s t anc e for spe edy
implementation.
80. Investment in fertilizer sector is capital intensive and is considered high
risk. It is proposed to include capital investment in fertiliser production as an
infrastructure sub-sector.
Exports
81. The Task Force on Transactions Cost set up by the Department of
Commerce to identify and suggest ways to achieve improvement in efficiency of
our export processes, has completed its work. Twenty one suggestions made by
the Task Force have already been implemented. Action on remaining two will be
taken in next few months. This will mitigate transactions cost by about `2,100
crore.
82. To quicken the clearance of the cargo by Customs authorities and further
modernise the Customs administration, I propose to introduce self-assessment
in Customs. Under this, importers and exporters will themselves assess their
duty liabilities while filing their declarations in the EDI system. The Department
will verify such assessments on a selective system driven basis.
83. There have been considerable difficulties in the sanction of refunds
relating to tax paid on services used for export of goods. I propose to shortly
introduce a scheme for the refund of these taxes on the lines of drawback of
duties in a far more simplified and expeditious manner. A new scheme is also
being introduced by which units in SEZs will be able to obtain tax-free receipt of
services wholly consumed within the zone and get their refunds in a much easier
manner.
84. Mega clusters have large employment and export potential. I propose to
extend the Mega Cluster Scheme for development of leather products. Seven
mega leather clusters would be set up during the year 2011-12. I also propose to
include Jodhpur
Black Money
85. The generation and circulation of black money is an area of serious
concern. To deal with this problem effectively, Government has put into operation15
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a five-fold strategy which consists of Joining the global crusade against 'black
money'; Creating an appropriate legislative framework; Setting up institutions
for dealing with illicit funds; Developing systems for implementation; and
Imparting skills to the manpower for effective action.
86. We secured Membership of the Financial Action Task Force (FATF) in
June last year. This is an important initiative of G-20 for anti-money laundering.
We have also joined the Task Force on Financial Integrity and Economic
Development, Eurasian Group (EAG) and Global Forum on Transparency and
Exchange of Information for Tax Purposes.
87. During the year, we have concluded discussions for 11 Tax Information
Exchange Agreements (TIEAs) and 13 new Double Taxation Avoidance
Agreements (DTAAs) along with revision of provisions of 10 existing DTAAs.
To effectively handle the increase in tax information exchange and transfer
pricing issues, Foreign Tax Division of CBDT has been strengthened. A
dedicated Cell for exchange of information is being set up to work on this
agenda.
88. The amendment in our Money Laundering Legislation in 2009 has
significantly increased its scope and application. The number of cases registered
under this law has increased from 50 between 2005 to 2008 to over 1200 by
January this year. The strength of the Enforcement Directorate has been increased
three-fold to deal effectively with the increased workload.
89. The Ministry of Finance has commissioned a study on unaccounted
income and wealth held within and outside our country. It would suggest methods
to tax and repatriate this illicit money.
90. Trafficking in narcotic drugs is also a contributor to the generation of
black money. To strengthen controls over prevention of trafficking and improve
the management of narcotic drugs and psychotropic substances, I propose to
announce a comprehensive national policy in the near future.
III. Strengthening Inclusion
91. The UPA Government has engineered a major directional change in public
policy by its focus on inclusive development. Creation of legal entitlements for
an individual's right to work has added to resilience and dynamism in our rural
economy. The right to information and the right to education are effective tools
of empowerment for removing social imbalances. The country has carried for
long enough the burden of hunger and malnutrition. After detailed consultations
with all stakeholders including State Governments, we are close to the finalisation
of National Food Security Bill (NFSB) which will be introduced in the Parliament
during the course of this year. The proposed allocation of ` 1,60,887 crore for
social sector in 2011-12 is an increase of 17 per cent over current year. It amounts
to 36.4 per cent of the total plan allocation.16
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Bharat Nirman
92. The UPA Government's flagship programmes have been the principal
instrument for implementing its agenda for inclusive development. For the
year 2011-12, Bharat Nirman, which includes Pradhan Mantri Gram Sadak
Yojna (PMGSY), Accelerated Irrigation Benefit Programme, Rajiv Gandhi
Grameen Vidyutikaran Yojna, Indira Awas Yojna, National Rural Drinking
Water Programme and Rural telephony have together been allocated `58,000
crore. This is an increase of `10,000 crore from the current year. A plan has
been finalised to provide Rural Broadband Connectivity to all 2,50,000
Panchayats in the country in three years.
MGNREGA
93. In pursuance of my earlier budget announcement to provide a real wage
of `100 per day, the Government has decided to index the wage rates notified
under the MGNREGA to the Consumer Price Index for Agricultural Labour.
The enhanced wage rates have been notified by the Ministry of Rural
Development on January 14, 2011. It has resulted in significant enhancement
of wages for the beneficiaries across the country.
94. The Anganwadi workers and Anganwadi helpers are the backbone of
Integrated Child Development Services Scheme. I am happy to announce an
increase in the remuneration of Anganwadi workers from `1,500 per month to
`3,000 per month and for Anganwadi helpers from `750 per month to `1,500
per month. This will be effective from April 1, 2011. Around 22 lakh Anganwadi
workers and helpers will benefit from the increase.
Scheduled Castes and Tribal Sub-plan
95. In the Budget for 2011-12, for the first time, specific allocations are
being earmarked towards Scheduled Castes Sub-plan and Tribal Sub-plan.
These will be shown in the Budget of the relevant Ministries and Departments
under separate minor heads of account. Further, I propose to increase the Budget
allocation for primitive tribal groups from `185 crore in 2010-11 to `244 crore
in 2011-12.
Education
96. Our “demographic dividend” of a relatively younger population
compared to developed countries is as much of an opportunity as it is a
challenge. Over 70 per cent of Indians will be of working age in 2025. In this
context, universalising access to secondary education, increasing the percentage
of our scholars in higher education and providing skill training is necessary.
For education, I propose an allocation of ` 52,057 crore, which is an increase
of 24 per cent over the current year.17
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Sarva Shiksha Abhiyan
97. The existing operational norms of Sarva Shiksha Abhiyan have been
revised to implement the right of children to free and compulsory education
which has come into force with effect from April 1, 2010. For the year 2011-12,
I propose to allocate `21,000 crore which is 40 per cent higher than `15,000
crore allocated in the Budget for 2010-11. A revised Centrally Sponsored Scheme
“Vocationalisation of Secondary Education” will be implemented from 2011-12
to improve the employability of our youth.
98. Empowerment flows from Education. While the Scheduled Castes and
Scheduled Tribes had access to post matric scholarships, there was so far a lack
of pre matric scholarship scheme. In 2011-12, I propose to introduce a scholarship
scheme for needy students belonging to the Scheduled Castes and Scheduled
Tribes studying in classes ninth and tenth. It would benefit about 40 lakh
Scheduled Caste and Scheduled Tribe students.
National Knowledge Network
99. Approved in March 2010, the National Knowledge Network (NKN) will
link 1500 Institutes of Higher Learning and Research through an optical fibre
backbone. During the current year, 190 Institutes will be connected to NKN.
Since the core will be ready by March 2011, the connectivity to all 1500
institutions will be provided by March 2012.
Innovations
100. To move beyond the formal R&D paradigm, a National Innovation
Council under Shri Sam Pitroda has been set up to prepare a roadmap for
innovations in India
each State and Sectoral Innovation Councils aligned to Central Ministries is
underway.
101. The Government has been providing special grants to recognise excellence
in universities and academic institutions. In the course of 2011-12, I propose to
provide:
• `50 crore each to upcoming centres of Aligarh Muslim University
at Murshidabad in West Bengal and Malappuram in Kerala;
• `100 crore as one-time grant to the Kerala Veterinary and Animal
• `10 crore each for setting up Kolkata and Allahabad
Mahatma Gandhi Antarrashtriya Hindi Vishwavidyalaya, Wardha;
• `200 crore as one time grant to IIT, Kharagpur;
• `2 0 c r o r e f o r R a j i v G a n d h i N a t i o n a l I n s t i t u t e o f Yo u t h
Development, Sriperumbudur, Tamil Nadu18
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• `20 crore for IIM, Kolkata, to set up its Financial Research and
Trading Laboratory;
• `200 crore for Maulana Azad Education Foundation;
• `10 crore for Centre for Development Economics and Ratan Tata
Library, Delhi School of Economics , Delhi
• `10 crore for Madras School
Skill Development
102. I am happy to inform the House that National Skill Development Council
(NSDC) is well on course to achieve its mandate of creation of 15 crore skilled
workforce two years ahead of 2022, the stipulated target year. It has already
sanctioned 26 projects with a total funding of `658 crore. These projects alone
are expected to create more than 4 crore skilled workforce over the next ten
years. In the current year, skill training has so far been provided to 20,000 persons.
Of these, 75 per cent have found placements. I will provide an additional `500
crore to the National Skill Development Fund during the next year.
103. Na t i o n a l c e l e b r a t i o n s o f 1 5 0 t h B i r t h An n i v e r s a r y o f Gu r u d e v
Rabindranath Tagore will commence from May 7, 2011 in New Delhi
Important events will be held in several countries in Europe, America
joint India-Bangladesh Celebrations Committee. An international award with
prize money of `1 crore is being instituted for promoting values of Universal
Brotherhood in the memory of Gurudev Rabindranath Tagore.
Health
104. For health, I propose to step up the plan allocations in 2011-12 by 20 per
cent to `26,760 crore. The Rashtriya Swasthya Bima Yojana has emerged as an
effective instrument for providing a basic health cover to poor and marginal
workers. It is now being extended to MGNREGA beneficiaries, beedi workers
and others. In 2011-12, I propose to further extend this scheme to cover
unorganized sector workers in hazardous mining and associated industries like
slate and slate pencil, dolomite, mica and asbestos etc.
Financial Inclusion
105. In my last budget speech I had advised Banks to provide banking
facilities to habitations having a population of over 2000 by March, 2012. The
Banks have identified about 73,000 such habitations for providing banking
f a c i l i t i e s u s i n g a p p r o p r i a t e t e c h n o l o g i e s . A m u l t i - m e d i a c a m p a i g n ,
“Swabhimaan”, has been launched to inform, educate and motivate people to
open bank accounts. During this year, banks will cover 20,000 villages.
Remaining will be covered during 2011-12.19
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Unorganised sector
106. I had announced a co-contributory pension scheme “Swavalamban” in
the Budget 2010-11. This scheme has been welcomed by the workers in
unorganised sector. Over 4 lakh applications have already been received. On the
basis of the feedback received, I am relaxing the exit norms whereby a subscriber
under Swavalamban will be allowed exit at the age of 50 years instead of 60
years, or a minimum tenure of 20 years, whichever is later. I also propose to
extend the benefit of Government contribution from three to five years for all
subscribers of Swavalamban who enroll during 2010-11 and 2011-12. An
estimated 20 lakh beneficiaries will join the scheme by March 2012.
107. Under the on-going Indira Gandhi National Old Age Pension Scheme
for BPL beneficiaries, the eligibility for pension is proposed to be reduced
from 65 years at present to 60 years. Further, for those who are 80 years and
above, the pension amount is being raised from ` 200 at present to ` 500 per
month.
Environment and Climate Change
Forests
108. Protection and regeneration of forests has great ecological, economic
and social value. Our Government has launched an ambitious ten-year Green
Fund to begin its implementation in 2011-12.
Environmental Management
109. Environmental pollution has emerged as a serious public health concern
across the country. I propose to allocate `200 crore from the National Clean
Energy Fund as Centre's contribution in 2011-12 for launching environmental
remediation programmes.
Cleaning of Rivers and Lakes
110. A number of projects under the National Ganga River Basin
have been approved in 2010-11. This momentum will be further stepped up.
There are many rivers and lakes of cultural and historical significance that need
to be cleaned. In the course of the year 2011-12, I propose to provide a special
allocation of `200 crore for the clean-up of some important lakes and rivers
other than the Ganga .
Some Other Initiatives
111. In order to boost development in the North Eastern Region and Special
Category States, the allocation for special assistance has been almost doubled to
`8,000 crore for 2011-12. Out of this, `5,400 crore has been allocated as untied
Special Central Assistance.
112. The Government’s special support to Jammu & Kashmir is anchored in
`28,000 crore Prime Minister's Reconstruction Plan. In addition, for the current20
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year, about `8,000 crore has been provided for the State's development needs. A
Task Force to assess infrastructure needs that can be addressed within a time
horizon of 24 months for Ladakh and Jammu
recommended projects amounting to `416 crore and `497 crore, respectively. I
am providing `100 crore for Ladakh and `150 crore for Jammu
projects in 2011-12.
113. To give a boost to the development of backward regions, the allocation
under the Backward Regions Grant Fund has been increased from `7,300 crore
to `9,890 crore amounting to an increase of over 35 per cent.
114. To address problems related to Left Wing Extremism affected districts,
an Integrated Action Plan (IAP) for 60 selected tribal and backward districts
has been launched in December 2010. The scheme is being implemented with
100 per cent block grant of `25 crore and `30 crore per district during the
years 2010-11 and 2011-12, respectively. The allocated funds are placed at the
disposal of the district level committees who in consultation with local MPs
will have the flexibility to spend the amount on development schemes as per
the local needs.
115. In recognition of the sacrifices made by Central Para-military Forces
engaged in tackling Left Wing Extremism, a lump sum ex-gratia compensation
of `9 lakh for 100 per cent disability will now be granted to personnel of the
Defence and para-military forces who are discharged from service on medical
grounds on account of disability attributable to or aggravated in government
service. For personnel with disability ranging from 20 to 99 per cent, a
proportionate amount would be given.
116. In the Budget 2011-12, a provision of `1,64,415 crore has been made
for Defence services which include `69,199 crore for capital expenditure.
Needless to say, any further requirement for the country's defence would
be met.
117. In order to speed up delivery of justice, the Plan provision for
Department of Justice for 2011-12 has been increased three-fold to `1,000
crore. The enhanced provision will help in building judicial infrastructure and
the project on E-courts.
Census 2011
118. The 15th Census in the country is being conducted from 9th February. It
is the largest administrative exercise in the country providing statistical data on
different socio-economic parameters of population.
119. In response to the overwhelming demand for enumeration of castes other
than Scheduled Castes and Scheduled Tribes in Census 2011, it has been decided
to canvass ‘caste’ as a separate time bound exercise. This exercise will start in
June 2011 and will be completed by 30th September 2011.21
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IV. Improving Governance
I now turn to some important measures being taken for improving
governance.
UID Mission
120. The UID Mission
in large numbers. So far 20 lakh Aadhaar numbers have been given and from 1st
October 2011, ten lakh numbers will be generated per day. The stage is now set
for realising the potential of Aadhaar for improving service delivery, accountability
and transparency in governance of various schemes.
IT Initiatives
121. The backbone of an efficient tax administration is a robust IT infrastructure
and its deployment for enhanced taxpayer services. Towards this objective, both
the Central Boards of Direct Taxes (CBDT) and Excise and Customs (CBEC)
have put in place the following measures:
• The on-line preparation and e-filing of income tax returns,
e-payment of taxes through 32 agency banks, ECS facility for
electronic clearing of refunds directly in taxpayers’ bank accounts
and electronic filing of TDS returns are now available throughout
the country. These measures have empowered taxpayers to meet
their tax obligations without visiting an income tax office.
• The Centralized Processing Centre (CPC) at Bengaluru has
increased its daily processing capacity from 20,000 to 1.5 lakh
returns in 2010-11. This project has won a Gold Award for
e-Governance in 2011. Two more CPCs will become operational
in Manesar and Pune by May 2011 and a fourth CPC will come up
in Kolkata in 2011-12.
• With the completion of its IT Consolidation Project, CBEC can
now centrally host its key applications in Customs, Central Excise
and Service Tax. The Customs EDI system now covers 92 locations
across the country. CBEC's e-Commerce portal ICEGATE, has
also been conferred a Gold Award for e-Governance.
• The 'Sevottam' concept has been adopted by both Boards. The three
pilot projects of Aaykar Seva Kendras (ASKs) under CBDT have
come of age. CBDT will commission eight more such centres this
year. In 2011-12, another fifty ASKs will be set up across the
country. CBEC has also launched a similar initiative and four of
their pilot projects have been commissioned.
• The electronic filing of Tax Deduction at Source (TDS) statements
has stabilized. The Board shall soon notify a category of salaried
taxpayers who will not be required to file a return of income as22
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their tax liability has been discharged by their employer through
deduction at source.
• CBDT will provide a separate web-based facility to enable a direct,
stand-alone interface for taxpayers with the Income Tax Department
so that they can report and track the resolution of their refunds and
credit for prepaid taxes.
122. Mission Mode Projects for computerization of Commercial Taxes in
States that I announced in my last Budget, will allow States to align with the
roll out of GST. Funds have been released for 31 projects received from the
States and Union Territories
the facility of dealers making electronic payments. A number of States have
already started accepting Electronic Tax Returns and issuing forms required
for inter-state trade.
123. With the development of the economy, the need to review the provisions
of the Indian Stamp Act, 1899 has been felt over the years. I propose to introduce
a Bill shortly to amend the Indian Stamp Act.
124. Five years ago, we took an initiative to introduce a modern and peoplefriendly e-stamping facility in the country. Only six States have introduced this
system so far. I propose to launch a new scheme with an outlay of `300 crore to
provide assistance to States to modernise their stamp and registration
administration and roll out e-stamping in all the districts in the next three years.
125. I propose to introduce a new simplified return form 'Sugam' to reduce
the compliance burden of small taxpayers who fall within the scope of
presumptive taxation.
126. The increase in scope of cases admitted by the Settlement Commissions
has provided relief to several taxpayers. This has also increased the workload of
the Commission. To fast track the disposal of cases, three more Benches of the
Commission are being set up.
127. Substantial amounts of revenue in both direct and indirect taxes, remain
locked up in appeals at different levels. Both Boards also invest substantial effort
and money in litigation with their employees. In keeping with the National
Litigation Policy, several steps have been initiated in 2010-11 for reducing
litigation and focusing attention on high revenue cases. Instructions have been
issued raising limit of tax effects below which, tax disputes will not be pursued
by Government in higher Courts of Appeal. These measures would enhance
productivity of resources employed in raising revenue.
Corruption
128. A Group of Ministers has been constituted to consider measures for
tackling corruption. The Group has been tasked with addressing issues relating
to State funding of elections, speedier processing of corruption cases of public23
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servants, transparency in public procurement and contracts, discretionary powers
of Central ministers and competitive system for exploiting natural resources.
The Group will make its recommendations in a time bound manner.
Performance Monitoring and Evaluation System
129. Pursuant to the recommendations of Second Administrative Reforms
Commission, the Government has set up a Performance Monitoring and
Evaluation System (PMES) to assess the effectiveness of Government
departments in their mandated functions. It involves preparation of a Results
Framework Document (RFD) by each department, highlighting its objectives
and priorities for the financial year and achievements against pre-specified
targets at the end of the year. This document would be available for public
information on the departmental websites. In the first phase, 62 departments
have been covered under PMES.
TAGUP
130. In pursuance of the announcement made in the Budget 2010-11, I had
set up a Technology Advisory Group for Unique Projects (TAGUP). The Group
has submitted its report and its recommendations have been accepted in
principle. The modalities of implementation are being worked out.
131. Indian Rupee now has a new symbol which has been notified for use by
the Central and State Governments, business entities and the general public. A
new series of coins carrying this symbol will be issued shortly. The Government
has approached Unicode Standards Authority for inclusion of the symbol in
international standards.
V. Budget Estimates 2011-12
I now turn to the Budget Estimates for 2011-12.
132. The Gross Tax Receipts are estimated at `9,32,440 crore which is an
increase of 24.9 per cent over the Budget Estimates for 2010-11. After
devolution to States, the net tax to Centre in 2011-12 is `6,64,457 crore. The
Non Tax Revenue Receipts for 2011-12 are estimated at `1,25,435 crore.
133. The total expenditure proposed for 2011-12 is `12,57,729 crore, which
is an increase of 13.4 per cent over the Budget Estimates for 2010-11. The
Plan Expenditure at `4,41,547 crore marks an increase of 18.3 per cent and the
Non Plan Expenditure at `8,16,182 crore is an increase of 10.9 per cent over
BE 2010-11. As 2011-12 is the last year of the Eleventh Plan, I am happy to
share that Eleventh Plan expenditure in nominal terms is more than 100 per
cent of the expenditure envisaged for the Plan period.
134. The total plan and non-plan transfers of `2,01,733 crore to States and UT
Governments in 2011-12 have increased by 23 per cent over the Budget Estimates24
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2010-11. This includes grants of `13,713 crore in 2011-12 to local bodies as per
the recommendation of the Thirteenth Finance Commission.
135. Hon'ble Members are aware that in the course of 2010-11, I had the
opportunity to effect a further improvement in the fiscal balance, due to the
higher than anticipated non-tax revenues from 3G spectrum auctions. I chose
to do that and much more. While I provided additional resources of about
`50,000 crore to critical infrastructure and social sectors and also to meet the
expenditure on subsidies, I have brought down the fiscal deficit from 5.5 per
cent to 5.1 per cent of the GDP for 2010-11. For 2011-12, I have kept it at 4.6
per cent of GDP, which improves upon my own target for 2011-12 indicated in
the fiscal road map presented in the last Budget. In the Medium Term Fiscal
Policy Statement being presented to the House today, the rolling targets for
fiscal deficit are placed at 4.1 per cent for 2012-13, and 3.5 per cent for
2013-14.
136. There has been some concern expressed regarding the stickiness of
Government's revenue deficit in the post-global crisis phase of the economy.
For 2010-11 as against a target of 4 per cent, the revenue deficit is estimated at
3.4 per cent of GDP. In the past few years the transfers to States and other
developmental expenditure have grown significantly. These are classified as
revenue expenditure even though a considerable part of the expenditure from
these transfers is in the nature of capital expenditure. In 2010-11, `90,792
crore from such revenue expenditures were in the nature of capital expenditure.
Similarly, in 2011-12 grants-in-aid for creation of capital assets, which are
now shown separately in the Budget documents, are about `1.47 lakh crore.
Taking these budget provisions into account, the “effective revenue deficit” is
estimated at 2.3 per cent in the Revised Estimates for 2010-11 and 1.8 per cent
for 2011-12.
137. In my last Budget, I had stated that Government would avoid issuing
bonds in lieu of subsidies to oil and fertiliser companies. I have adhered to this
decision, thereby bringing all subsidy related liabilities into our fiscal
accounting.
138. The fiscal deficit of 4.6 per cent of GDP in 2011-12 works out to
`4,12,817 crore. Taking into account the various other financing items for
fiscal deficit, the net market borrowing of the Government in 2011-12 would
be `3.43 lakh crore. In addition, `15,000 crore is proposed to be financed
through Treasury Bills. Accordingly, the Central Government debt as a
proportion of GDP is estimated at 44.2 per cent for 2011-12 as against 52.5 per
cent recommended by the Thirteenth Finance Commission.
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