India 's Interim Budget a story of growing deficit

by Nksagar | February 17, 2009 at 12:38 am

300 views | 3 Recommendations | 2 comments

EU and Japan showing negative growth Pranab painted India's growth to remain more than 7 percent which is contentious by various experts.However the main Budgetary estimate for expenditure for 2009-10 were pegged at Rs 953,231 crore and allocation for Sarva Shiksha Abhiyan programmed was increased to Rs 13,100 crore, NREGA got Rs 30,100 crore and Bharat Nirman Rs 40,900 crore in 2009-10.Interim budget propose farmers will continue to get short term loans on easier terms.Sarva Sikhsha Abhiyan programme to boost elementary education, the interim budget seeks an allocation of RS.13, 100 crore for 2009-2010.

Fiscal mechanism sought by Mr. Mukherjee a constitutional requirement before elections a vote-on-account to enable the Government to meet the expenditure for the first four months of the next financial year.The government said that despite the global meltdown India has emerged as the second fastest growing economy with a growth rate of 7.1 per cent.

Rural sector which has been lagging behind,the interim budget proposed Rs. 14,000 crore corpus for rural infrastructure projects including Rs. 4,000 crore for rural roads.

Various Federation and captains of industry look for third stimulus package in the Interim Budget, did not happen. Stock markets,barometer of economical growth were anticipation of third stimulus measures for the industry with fiscal jugglery tweaking in tax structure, today tanked with the benchmark Sensex on BSE nosediving by 320 points as the interim Budget turned out to be a damp squib.

With investors exercising caution, the markets opened weak before the presentation of interim Budget by Finance Minister Pranab Mukherjee at 1100 hours in Parliament.Inspid and dull due to lack of objectives to the industries slow down is big blow to investors for their expected cheers.Fiscal deficit this financial year to touch more than 6 per cent of the country’s gross domestic product,taking into account Rs 96,000 crore worth of bonds issued to oil and fertilizer companies the fiscal deficit is above eight percent.

Business opportunities dry up in sectors banking, finance, real estate, trade, hotels, transportation, there is potential for further slowdown in the services sector.

India inc news emerging from industries balance sheets we find the small industies have either vanished and those in organised sectors have contraced to more than sixty percents. Even from BSE listed 200 companies, more than 80 shows negative growth and rest are having more than 15 percent negative growth.Global meltdown has put the exporters in dire straits,their workers,raw material supplier related industries has recevied the severe jolt.In such deteriorating situation Chidambaram said,expressing satisfaction that 'we tamed inflation,' he said inflation would go down further in the coming months.Mukherjee is also likely to announce short-term measures for exporters reeling under the impact of a global slowdown.

Leaders from the opposition parties do have their say in context to the vote-on-account submitted by the stand in Finannce Minister a constitutional requiremnt for availing four months expenditure before a new government is elected by power of ballot in the months of April -May 09 wherin the term of present term of parliament expires.

BJP leader Arun Jaitley said, “Government calculations on fiscal deficit is wide off the mark.. It is like Satyam’s balance sheet.”Accusing the government of “living in denial mood” and “indulging in self congratulation”, the BJP leader said it is a poll budget.

“We are living in a period of grave world-wide economic crisis, but the government did not try to address issues of unemployment,” Saffron brand professional Jaitley alleged.

CPI-M politburo member Brinda Karat termed the interim budget as “election manifesto”.”UPA finishes its last budget as an election manifesto. Though the impact of recession on the economy is very clear, the budget did not address the issue… it was not even mentioned in the budget,” Karat said.

She also alleged that the government’s stimulus package had no impact on the recession.

“The government is saying that godowns are filled, but the fact remains that people’s kitchens have scarcity. There has been a massive shortfall in the food grain distribution to states,” she added.

Finding “nothing new” in the budget, CPI leader D Raja accused the government of “hoodwinking the aam janata.”

“The whole attempt of the government was to present a rosy picture of the economy and to hoodwink the common men… the aam janata… real issues were not touched upon,” Raja said.A “poll lollipop” senior CPI leader Gurudas Dasgupta accused stand-in finance minister Pranab Mukherjee of “making his first election speech” in parliament.

“Our finance minister has in fact made the first election speech in Parliament without announcing the names of the candidates and spelling out the dates. After seeing Lalu Prasad’s lollipop, we have today seen Pranabji’s lollipop. The budget is simply a poll lollipop,” Dasgupta said.

It’s an election budget without any realistic fundamentals of economy,” Dasgupta said accusing the government of not recognising basic human problems of the country.
Abhiyan programme to boost elementary education, the interim budget seeks an allocation of RS.13, 100 crore for 2009-2010.

The world's largest mid-day meals programme in schools, will get Rs. 8,000 crore and the Integrated Child Development Scheme over Rs.6,700 crore.
Another Aam Amadi programme Jawaharlal Nehru National Urban Renewal Mission for development of urban infrastructure and services is proposed to get an outlay of over Rs. 11,800 crore.

The interim budget proposes an outlay over Rs. 12,000 crore for National Rural Health Mission, Rs. 7,4000 crore for Rajiv Gandhi Rural Drinking water Mission and Rs. 1,200 crore for rural sanitation programme.

Budgets hold to have sustain growth rate of 9 per cent per annum, creating 12 million new job opportunities a year, bringing down the proportion of people living below poverty line to less than half by 2014 from the current fiscal, ensuring of agriculture growth of 4 per cent, bridging of infrastructure gap by increasing investment to more than 9 per cent of GDP in five years and support for Indian industry to meet global competition. The interim budget also suggests strengthening and improving economic regulatory framework, expansion of the range and reach of social safety nets and strengthening of the delivery mechanism for primary health care facilities. It says a competitive, progressive and well regulated education system of global standards should be established and the nation should move on towards energy security to all.

On the budget estimates, the interim budget predicts a fiscal deficit of 5.5 per cent, and a total expenditure of Rs.9,53,231 crore for the coming financial year. This includes Rs. 2,85,149 crore under plan and Rs. 6,68,082 crore under non-plan. Of the total income, 22 per cent comes from corporate tax, 12 per cent from Income Tax and 10 per cent each from Customs and Excise. Of the allocations, 18 per cent goes to central plan, 14 per cent for non-plan and 13 per cent for defence. States share of taxes and duties works out to 15 per cent on subsidies get 9 per cent, and interest payment 20 per cent.

Finance Minister said that India has arrived on the international economic scene with an impressive 8.6 per cent growth of its economy, which is much faster than ever before. The creative energies of farmers, entrepreneurs, businessmen, Scientists and engineers have been unleashed. Increased global competitiveness of Indian enterprise, its resilience to global shocks and a positive economic outlook has contributed to this growth.

India has also successfully launched Chandrayaan mission to moon and found its rightful place in the comity of nations dismantling nuclear apartheid. He said the nuclear deal has opened up new opportunities for civil nuclear cooperation and cleared the way for rapid industrialization. He said the people will soon be called upon to exercise their democratic right o choose the next government. The Indian people have repeatedly shown that they can be relied upon to make sound decisions to make the nation's future.

They have seen how the Aam Aadmi has become the focus of development process and the hand that has made it possible. The government made every effort to deliver on the commitment made in the common minimum programme of the UPA government with seven clear economic objectives maintaining the growth rate providing of universal access to quality basic education, health, generation of gainful employment, focusing on agriculture, rural development and infrastructure.President of ASSOCHAM Mr. Sajjan Jindal said that the direction on the infrastructure, refinancing are not clearly laid out.
The Lok Sabha has been adjourned for the day after the presentation of the Budget.Mr. Mukharjee said sectors like services, manufacturing and construction sectors showed impressive performance . A record production of food grains of 230 million tonnes in 2007-08 was achieved with an increase of 10 million tonnes every year. Inflation has come down to 4.4 per cent in the week ending 31st of January 2009. The FDI inflow has increased 45 per cent in 2007-08 as compared to the previous year.