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Interim Budget 2009-10
Quite social but sopless talk
* Taxes unchanged * No cheer for industry
Bhagyashree Pande
Tribune News Service

New Delhi, February 16
A poll-bound Congress-led UPA government’s Interim Budget 2009-2010 concentrated on two major issues — ‘aam aadmi’ and national security.

The Budget showcased the government’s commitment to the common man’s welfare and its pledge to eliminate terror and ensure peace at borders. Emphasis on more allocations for social sector was in synergy with the UPA’s leading party’s poll slogan - “Congress ki pehchan - Vikas aur Nirman.”

‘Dada’, as the External Affairs Minister Pranab Mukherjee is popularly known, was back as the Financial Minister after 25 years to present the Union Budget in the Lok Sabha. After P Chidambaram was made the Home Minister, post Mumbai attacks, Mukherjee has been holding additional charge of the finance portfolio.

With concerns being raised over the national security, especially after 26/11, the government allocated Rs 1,41,703 crore for the defence sector, an almost 34 per cent rise over the previous fiscal in one of the steepest hikes in recent years. The increase, amounting to Rs 36,103 crore over last year’s allocation of Rs 1,05,600 crore, is apparently intended to fund the fast-track procurement of defence equipment.

While presenting the Budget, Mukherjee said the allocation was increased due to the prevailing security environment, which had “deteriorated considerably.” Noting that the Mumbai attacks had amounted to the threshold being crossed on the security front, he said, “We are going through tough times. The Mumbai terror attacks have given an entirely new dimension to cross-border terrorism.”

The government has also increased allocation to its flagship programmes, which directly affect the rural and urban poor, small and medium farmers, and children. As regards the industry, which is reeling under global slump, there is a small relief for the exporting community.

While the fund allocation for National Rural Employment Guarantee Scheme (NREGS) has been increased to Rs 30,100 crore, the figures for Sarva Siksha Abhiyaan and Mid-day Meal Scheme are Rs 13,100 crore and Rs 8, 000 crore, respectively. For the urban infrastructure and services development, Jawaharlal Nehru National Urban Renewal Mission has received an increased allocation of Rs 11,842 crore. The Bharat Nirman, the time bound plan for building rural infrastructure, has been allocated Rs 40,900 crore for 2009-10. The corpus of the Rural Infrastructure Development Fund (RIDF), which is the main instrument of the Government to channelise bank funds for financing rural infrastructure, has been increased from Rs. 5,500 crore in 2003-04 to Rs 14,000 crore for the year 2008-09 ensuring greater availability of funds for its activities.

The Budget makes no changes in direct and indirect taxes, but for the extension of a two per cent interest subvention on pre and post-shipment credit for certain employment sectors to support exports hit by the global economic slump.

The government has side-stepped fiscal and revenue deficit targets, while making provisions for social, infrastructure and other sectors, a scenario that would necessitate higher market borrowings in the face of economic slowdown and fall in tax revenue.

To manage the revenue deficit of 4 per cent and 5.5 per cent fiscal deficit during FY’10, the Budget provides for nearly tripling market borrowings to over Rs 3,00,000 crore.

“Extraordinary economic circumstances merit extraordinary measures. Now is the time for such measures. Our government decided to relax the Fiscal Responsibility and Budget Management targets in order to provide the much-needed demand boost to counter the situation created by the global financial meltdown,” Mukherjee said in his 90-minute speech.

In view of the fact that conditions in the year ahead are not likely to be normal, Mukherjee said a fiscal deficit of 5.5 per cent of the GDP — Rs 3,32,835 crore — is inevitable. “We will return to Fiscal Responsibility Budget Management targets once the economy is restored to its recent growth path,” Mukherjee said.

The Minister also said while the proposed provisions are appropriate for a vote-on-account, he would like to point out that Plan expenditure for 2009-10 may have to be increased substantially at the time of the presentation of the regular budget “if we are to give the economy the stimulus it needs to cope with the global recession that is likely to continue through the current year.

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.

The revised estimates for tax collections during 2008-09 project a fall of nearly Rs 60,000 crore due to the economic slowdown.

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Defence gets 34% more
Ajay Banerjee
Tribune News Service

New Delhi, February 16
Faced with a reality of living in a troubled neighbourhood, the government today allocated Rs 1,41,703 crore for defence, 34 per cent rise over the previous fiscal in one of the steepest hikes in recent years.

In 2008-09, the total allocation for defence expenditure was Rs 105,600 crore which was later revised to Rs 1,14,600. And with a regular Budget expected after General Election, the allocation for 2009-10 is expected to rise further.

This is the biggest ever hike in defence allocation in rupee terms since Independence. Notably, 13 per cent of the total expenditure of the government will be on defence in the coming fiscal.

However, despite today’s hike, India will be spending just a shade above 2 per cent of its GDP on defence. In comparison, China spends 7 per cent of the GDP, while Pakistan spends 5 per cent.

Presenting the Interim Budget, Pranab Mukherjee justified the hike and termed cross-border terrorism was a new dimension to the security needs of the country.

It was amply clear that the interim Budget will focus on continuing fast-track upgradation of armaments and modernisation of the armed forces as the allocation on capital outlay has been pegged at Rs 54,824 crore. This in itself is a jack up of 33 per cent over last year’s capital allocation of Rs 41,000. Most of it will be used to upgrade the existing ageing fleet of aircrafts, naval warships, submarines, military equipment besides addition of radars, sensors and new weapons.

A part of the funds would be used for plans to strengthen coastal reconnaissance and coastguards along with expansion of and additional equipment for crack commando troops. The government would provide for any additional requirement for the security of the nation, Mukherjee asserted.

Lieut-Gen Raj Kadyan (retd), a former deputy chief of the Army, welcomed the hike saying “top priority has to be on defence preparedness” In the capital outlay a sum of Rs 11,121 crore has been allocated for Army equipment. This is a substantial jump from Rs 6268 crore over the present year’s revised estimates. Another Rs 6891 crore is for IAF equipment and Rs 6840 crore is for the Naval fleet.

Another significant increase is for the ordnance factories that will get Rs 672 crore. In the present year, the ordnance factories got just Rs 176 crore. Excluding the capital outlay, the Army with a force strength of over 1.3 million continues to be biggest recipient of the defence budget with an allocation of Rs 58,648 crore for the year 2009-10. The allocation for Army has been raised by Rs 10,453 crore over the present year’s revised estimates.

The allocation for Air Force has been pegged at Rs 14,318 crore while the Navy has been allocated Rs 8,322 crore. The Defence Research and Development Organisation have also received a boost of almost Rs 900 crore. The DRDO outlay has been pegged at Rs 4,757 crore against this years revised figure of Rs 3,844 crore.

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Farmers our heroes, says Pranab
Vibha Sharma
Tribune News Service

New Delhi, February 16
Calling farmers real heroes of India’s success story, Finance Minister Pranab Mukherjee on Monday reiterated the government’s thrust on the agriculture sector. Presenting the Interim Budget 2009-10 in the Lok Sabha, he largely focused on the government’s past achievements in the sector. He assured the farmers that during 2009-10 the government would continue to provide interest subvention to ensure that they get short-term crop loans up to three lakh at seven per cent per annum.

The plan outlay for the agriculture sector had gone up by 300 per cent between 2003-04 and 2008-09. “While the plan allocation for agriculture has gone up by 300 per cent between the period 2003-04 and 2008-09, the agriculture credit disbursement too has increased from Rs 87,000 crore to Rs 2,50,000 crore up to 2007-08,” he explained.

He said to strengthen the short-term credit structure, a revival package in 25 states involving financial assistance of about Rs 13,500 crore was being implemented by the government. “The government will continue to provide interest subvention in 2009-10 to ensure that farmers get short-term crop loans up to Rs three lakh at seven per cent per annum,” he added.

He said foodgrain production increased by 10 million tonne each year to an all-time high of 230 million tonne in 2007-08. The annual rate of growth in agriculture was 3.7 per cent, he added. “The real heroes of India’s success story are our farmers. With record procurement of 22.7 million tonne wheat and 28.5 million tonne rice for our Public Distribution System in 2008, our granaries are full,” he said,

Mukherjee said despite a high base, the outlook for 2008-09 was encouraging with the country receiving normal rainfall during the agricultural season. Under the loan waiver scheme introduced by his predecessor P Chidambaram, Mukherjee said loans amounting to Rs 65,300 crore were waived for farmers during 2008-09 which benefited 3.6 crore households.

Since 2003-04, MSP for the common variety of paddy has been increased from Rs 550 to Rs 900 per quintal for the crop year 2008-09. In case of wheat, the increase has been from Rs 630 in 2003-04 to Rs 1,080 per quintal for the year 2009. In spite of higher procurement costs during the past five years, the central issue prices under the TPDS had been maintained at the level of July 2000 in case of BPL and Antyodaya Anna Yojana categories and July 2002 levels for above poverty line category.

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PGI allocation up
Tribune News service

New Delhi, February 16
The Interim Budget for the current year has earmarked Rs 283 crore allocation for PGI Chandigarh - Rs 15 crore more than the revised estimates for the last year that stood at Rs 268 crore.

PGI’s allocation for this year is second only to that of AIIMS, New Delhi, that has been allocated Rs 532 crore this year. The enhanced allocation has been made under the medical education, training and research head. Other institutes that have been given finances for improved research and training are ICMR, Delhi; Vallabh Bhai Patel Chest Institute; Lady Hardinge Medical College; and PGI, Puducherry.

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