The Union Budget 2012-13 presented by the Finance Minister Mr. Pranab Mukherjee identifies five objectives to to be addressed effectively in the ensuing fiscal year. They are growth recovery driven by domestic demand, boost to private investment, removing supply bottlenecks in agriculture, energy and transport sectors, tackle malnutrition and address the problem of black money and corruption.
Mr. Pranab Mukherjee said that India’s GDP growth in 2012-13 is expected to be 7.6 per cent +/-0.25 per cent. He said that in 2011-12, India’s GDP is estimated to grow at 6.9 per cent after having grown at the rate of 8.4 per cent in each of the two preceding years. He said though the global crisis had affected India, it still remains among the front runners in economic growth.
Mr. Mukherjee laid emphasis on striking a balance between fiscal consolidation and strengthening macro-economic fundamentals. He announced introduction of amendments to the Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act) as part of the Finance Bill 2012. He said that concept of “Effective Revenue Deficit” and “Medium Term Expenditure Framework” statement are two important features of Amendment to FRBM Act in the direction of expenditure reforms.
The Finance Minister called for a need to have a close look at the growth of revenue expenditure, particularly, on subsidies. He said that the Government will endeavor to restrict the expenditure on central subsidies under 2 per cent of GDP in 2012-13 and over the next three years, it would be further brought down to 1.75 per cent of GDP.
Mr. Mukherjee said that based on recommendations of the Task Force headed by Nandan Nilekani, a mobile-based Fertilizer Management System has been designed to provide end-to-end information on movement of fertilizers and subsidies which will be rolled out nation-wide during 2012.
On the tax reforms, the Finance Minister said that the Direct Taxes Code (DTC) Bill will be enacted at the earliest and informed that drafting of model legislation for Centre and State Goods and Services Tax (GST) in concert with States is under progress.
The Finance Minister informed that the government will raise about Rs.14,000crore from disinvestment as against a target of Rs.40,000 crore during 2011-12. He proposed to raise Rs.30,000 crore through disinvestment in 2012-13.
Calling for strengthening investment environment, he proposed to introduce a newscheme called Rajiv Gandhi Equity Savings Scheme to allow for income tax deduction of 50 per cent to new retail investors who invest up to Rs.50,000 directly in equities and whose annual income is below Rs.10 lakh. The scheme will have a lock-in period of 3 years.
To strengthen the banking system Mr. Mukherjee proposed to provide Rs. 15,888 crore for capitalization of Public Sector Banks, Regional Rural Banks and other financial institutions including NABARD.
Emphasizing on infrastructure and industrial development, ShriMukherjee said that during the 12th Plan, infrastructure investment will go up to Rs.50 lakh crorewith half of this expected from private sector. Stating that in 2011-12 tax free bonds for Rs.30,000 crore were announced for financing infrastructure projects, he proposed to double it to raise Rs.60,000 crore in 2012-13.
The Finance Minister announced a target of covering 8,800 km. under National Highway Development Programme, NHDP next year and increased the allocation of the Road Transport and Highways Ministry by 14 per cent to Rs.25,360 crore in 2012-13.
Regarding textile sector, the Finance Minister announced setting up of two more mega clusters, one to cover Prakasam and Guntur districts in Andhra Pradesh and other for Godda in Jharkhand A powerloom Mega Cluster will be set up in Ichalkaranji in Maharashtra.
The Finance Minister proposed to set up a Rs.5000 croreIndia Opportunities Venture Fund with SIDBI to enhance availability of equity to Micro, Small and Medium Enterprises.
Underlining importance of timely access to affordable credit for farmers, the Finance Minister proposed to raise the target for agricultural credit to Rs.5,75,000 crore, which represents an increase of Rs. 1,00,000 crore over the target for the current year.
The allocation for rural drinking water and sanitation is proposed to be increased by over 27 per cent to Rs. 14,000 crore and for Pradhan Mantri Gram Sadak Yojana by 20 per cent to Rs. 24,000 crore in 2012-13. He proposed to enhance the allocation under Rural Infrastructure Development Fund to Rs. 20,000 crorewith Rs.5,000 crore exclusively earmarked for .creating warehousing facilities.
The Finance Minister proposed an increase in allocation by 21.7 per cent for Right to Education – Sarva Shiksha Abhiyan to Rs.25,555 crore and by 29 per cent for Rashtriya Madhyamik Shiksha Abhiyan to Rs. 3,124 crore,
Regarding health sector he proposed an increase in allocation for NRHM to Rs.20,822 crore in 2012-13. He also said that National Urban Health Mission is being launched.