CHALLENGES
to lead economy to high GDP growth rate of 9 per cent per annum at the earliest
to deepen and broaden the agenda for inclusive development
to improve delivery mechanisms of the government.
OVERVIEW OF THE ECONOMY
Growth rate of Gross Domestic Product dipped from an average of over 9 per cent
in the previous three fiscal years to 6.7 per cent during 2008-09.
Whole sale price index rose to nearly 13 per cent in August, 2008 and had an
equally sharp fall to zero per cent in March, 2009.
The structure of India's economy changed over the last ten years with contribution
of the services sector to GDP at well over 50 per cent and share of merchandise
trade doubling to 38.9 per cent of GDP in 2008-09.
Recognising economic recovery and growth as co-operative effort of the Central
and State Governments, meeting with Finance Ministers of States held as part of
preparation of the Budget. This is intended to become an annual feature.
TOWARDS ECONOMIC REVIVAL
Short-term Measures
To counter the negative fallout of the global slowdown on the Indian economy,
Government responded by providing three focused fiscal stimulus packages in the
form of tax relief and increased expenditure on public projects along with RBI
taking a number of monetary easing and liquidity enhancing measures.
Fiscal accommodation led to an increase in fiscal deficit from 2.7 per cent in
2007-08 to 6.2 per cent of GDP in 2008-09.
The fiscal stimulus at 3.5 per cent of GDP at current market prices for 2008-09
amounts to Rs.1,86,000 crore.
Measures taken by the Government were effective in arresting the fall in GDP
growth rate in 2008-09. 6.7 per cent growth rate recorded in 2008-09.
Infrastructure Development
IIFCL to evolve a Takeout financing scheme in consultation with banks to facilitate
incremental lending to infrastructure sector.
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IIFCL to refinance 60 per cent of commercial bank loans for PPP projects in critical
sectors over the next fifteen to eighteen months. IIFCL and Banks are now in a
position to support projects involving total investment of Rs.1,00,000 crore.
Highway and Railways
Allocation to National Highways Authority of India (NHAI) for the National
Highway Development Programme (NHDP) increased by 23 per cent over
B.E. 2008-09 in B.E. 2009-10 and allocation for Railways increased from Rs.10,800
crore in Interim B.E. 2009-10 to Rs.15,800 crore in B.E. 2009-10.
Urban Infrastructure
Allocation under Jawaharlal Nehru National Urban Renewal Mission (JNNURM)
stepped up by 87 per cent to Rs.12,887 crore in B.E. 2009-10 over B.E. 2008-09.
Allocation for housing and provision of basic amenities to urban poor enhanced to
Rs.3,973 crore in B.E. 2009-10. This includes provision for Rajiv Awas Yojana
(RAY), a new scheme announced.
Brihan Mumbai Storm Water Drainage Project (BRIMSTOWA)
Provision for the project BRIMSTOWA initiated in 2007 and funded through Central
Assistance to address the problem of flooding in Mumbai, enhanced from Rs.200
crore in Interim B.E. 2009-10 to Rs.500 crore in B.E. 2009-10 to expedite
completion of the project.
Power
Allocation under Accelerated Power Development and Reform Programme
(APDRP) increased by 160 per cent to Rs.2,080 crore in B.E. 2009-10 over
B.E. 2008-09.
Gas
Blueprint to be developed for long distance gas pipelines leading to a National Gas
Grid to facilitate transportation of gas across the length and breadth of the country.
Assam Gas Cracker Project
Outlay for Assam Gas Cracker Project stepped up suitably in B.E. 2009-10.
AGRICULTURE DEVELOPMENT
Target for agriculture credit flow set at Rs.3,25,000 crore for the year 2009-10.
In 2008-09 agriculture credit flow was at Rs.2,87,000 crore.
Interest subvention scheme for short term crop loans up to Rs.3 lakh per farmer at
the interest rate of 7 per cent per annum to be continued. Additional subvention of
1 per cent to be paid from this year, as incentive to those farmers who repay short
term crop loans on schedule. Additional allocation of Rs.411 crore over Interim
B.E. 2009-10 made for this.
Debt Relief for Farmers
Time given to the farmers having more than two hectares of land to pay 75 per cent
of their overdues under Debt Waiver and Debt Relief Scheme extended from 30th
June, 2009 to 31st December, 2009.
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Taskforce to be set up to examine the issue of debt taken by a large number of
farmers in some regions of Maharashtra from private money lenders who were not
covered by the loan waiver scheme announced last year.
Accelerated Irrigation Benefit Programme
Allocation under Accelerated Irrigation Benefit Programme (AIBP) increased by
75 per cent over B.E. 2008-09.
Allocation under Rashtriya Krishi Vikas Yojana (RKVY) stepped up by 30 per
cent in B.E. 2009-10 over B.E. 2008-09.
RESTORING EXPORT GROWTH
Adjustment assistance scheme to provide enhanced Export Credit and Guarantee
Corporation (ECGC) cover at 95 per cent to badly hit sectors extended upto
March 2010.
Allocation for Market Development Assistance Scheme enhanced to Rs.124 crore
in B.E. 2009-10.
Interest subvention of 2 per cent on pre-shipment credit for seven employment
oriented export sectors extended beyond the current deadline of September 30,
2009 to March 31, 2010.
To facilitate flow of credit at reasonable rates, Rs.4,000 crore provided as special
fund out of Rural Infrastructure Development Fund (RIDF) to Small Industries
Development Bank of India (SIDBI). This will incentivise Banks and State Finance
Corporations (SFCs) to lend to Micro and Small Enterprises (MSEs) by refinancing
50 per cent of incremental lending to MSEs during the current financial year.
Stimulus package for print media comprising waiver of 15 per cent agency
commission on DAVP advertisements and 10 per cent increase in DAVP rates to be
paid as a special relief subject to documentary proof of loss of revenue in nongovernmental
advertisements, extended from 30th June, 2009 to 31st December, 2009.
MEDIUM-TERM SUSTAINABILITY
To bring the fiscal deficit under control, institutional reform measures to be initiated
during the current year itself.
Fertilizer Subsidy
To ensure balanced application of fertilizers for increasing agricultural productivity,
Government intends to move towards a nutrient based subsidy regime so as to
cover larger basket of fertilizers with innovative fertilizer products available in the
market at reasonable prices.
It is intended to move to a system of direct transfer of subsidy to the farmers in due
course.
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Petroleum and Diesel pricing Policy
With almost three quarters of our oil consumption met through imports, it is
important to recognise that domestic prices of petrol and diesel are broadly in sync
with global prices. Government to set up an expert group to advise on a viable and
sustainable system of pricing petroleum products.
Taxation
SARAL – II forms to be introduced early.
People's ownership of PSUs
While retaining at least 51 per cent Government equity in Public Sector
Undertakings, people's participation in disinvestment programmes to be encouraged.
Public Sector Enterprises such as banks and insurance companies to remain in
public sector and will be given full support including capital infusion to grow and
remain competitive.
Financial Sector
The threshold for non-promoter public shareholding for all listed companies to be
raised in a phased manner.
Scheduled commercial banks allowed to set up off-site ATMs without prior approval
subject to reporting.
A sub-committee of State Level Bankers Committee (SLBC) to identify and
formulate an action plan for providing banking facilities in under-banked/unbanked
areas in the next three years. Rs.100 crore set aside as one-time grant in-aid to
ensure provision of at least one centre/Point of Sales (POS) for banking services in
each of the unbanked blocks.
Government has established Competition Commission of India, an autonomous
regulatory body. An Appellate body headed by a retired judge of Supreme Court
also constituted.
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