Summary of Union Budget 2010-11 - India News and Travel Times Provides India-centric and other News and Features

The Union Budget this year has aimed to focus on inclusive growth and ensuring food security. The concerns for 'aam aadami' or common man have gone hand in hand with credible measures for improving investment climate, strengthening infrastructure and fiscal consolidation. As the country looks to 'quickly revert to high GDP growth path' in the wake of 'uncertain times', concerns for inclusive growth targeting the disadvantaged sections form the defining features of the Budget. Many new initiatives have been introduced for sustained and inclusive growth. These include setting up of Mahila Kisan Sashaktikaran Pariyojana, Financial Stability and Development Council, Gold Regulatory Authority, Technical Advisory Group for Unique Projects, National Mission for Delivery of Justice and Legal Reforms, Independent Evaluation Office and National Clean Energy Fund. Presenting the Union Budget 2010-11 in the Lok Sabha today, the Finance Minister Pranab Mukherjee, said that three challenges would continue to engage the Indian policy planners for next few years. The first challenge is to quickly revert to the high GDP growth path of 9 per cent and then find the means to cross the double digit growth barrier. The second challenge is to consolidate recent gains in making development more inclusive. The third challenge is to remove weaknesses at different levels of governance and to improve public delivery mechanism. The Budget, therefore, focuses on fiscal consolidation, making growth more broad-based and ensuring that supply-demand imbalances are better managed. The Minister expressed the hope that the economy will reach 10 per cent growth in not too distant a future. The Minister explained that after a fall in GDP growth in 2008-09 to 6.7 per cent, the growth has built up and 7.2 per cent growth is expected in 2009-10. The Minister said that the recovery is very encouraging as it has come about despite negative growth in agriculture sector. "The growth rate in manufacturing in December 2009 was 18.5 per cent, the highest in past two decades. Similarly, there are also signs of a turnaround in the merchandise exports with a positive growth in November and December 2009 after a decline in about twelve successive months," he said. Expressing concern at the emergence of double digit food inflation, the Minister said that the Government has set in motion steps in consultation with the State Chief Ministers to bring down the inflation in the next few months and ensure better management of food security. The Minister said that now that the recovery has taken roots, there is a need to review public spending, mobilize resources and gear them towards building the productivity of the economy. The government will follow the recommendations of the Thirteenth Finance Commission by capping the government debt. The Commission has recommended a capping of the combined debt of the Centre and the States at 68 per cent of the GDP to be achieved by 2014-15. The Finance Minister expressed the hope that a broad consensus would be achieved on the Direct Tax Code and the Goods and Service Tax (GST) and these would be introduced from April 2011. The Finance Minister said that a number of steps have been taken to simplify the Foreign Direct Investment (FDI) regime. The government also intends to make the FDI policy user-friendly by consolidating all prior regulations and guidelines into one comprehensive document. This would enhance clarity and predictability of our FDI policy to foreign investors, he said. With a view to strengthen and institutionalize the mechanism for maintaining financial stability, Government has decided to set up an apex-level Financial Stability and Development Council. It would monitor macro prudential supervision of the economy, including the functioning of large financial conglomerates. Towards strengthening the banking system, the Budget provides Rs.16500 crore as Tier-I capital. It would ensure that the Public Sector Banks are able to attain a minimum 8 per cent Tier-I Capital by March 2011. Further capital would also be infused into the Regional Rural Banks (RRBs). The Minister also informed that the RBI is considering giving some additional banking licenses to private sector players. Non Banking Financial Companies could also be considered, if they meet the RBI's eligibility criteria. A four-pronged strategy would be followed to spur growth in agriculture sector. The elements of the strategy are (a) agricultural production; (b) reduction in wastage of produce; (c) credit support to farmers; and (d) a thrust to the food processing sector. The Budget provides Rs.400 crore for extending the green revolution to the eastern region of the country comprising Bihar, Chattisgarh, Jharkhand, Eastern UP, West Bengal and Orissa, with the active involvement of Gram Sabhas and the farming families. To improve the storage capacity of food grains, Food Corporation of India is being allowed to hire godowns from private parties for a guaranteed period of seven years. This period so far was five years. The target for farm credit is being raised to Rs.3,75,000 crore in 2010-11 from Rs.3,25,000 crore in the current year. Five more Mega Food Parks will be set up in addition to the 10 already being established. External Commercial Borrowings will henceforth be available for cold storage, farm level pre-cooling and preservation and storage of agricultural and allied produce marine products and meat. The Budget provides Rs.1,73,552 crore for infrastructure, accounting for over 46 per cent of the total Plan allocation. The allocation for road transport is being increased by over 13 per cent from Rs 17,520 crore to Rs.19,894 crore. The Plan allocation for power sector is being more than doubled from Rs.2,230 crore in 2009-10 to Rs.5,130 crore in 2010-11. Stating that inclusive development is an act of faith for the UPA government, the Finance Minister said that after the Right to Information, Right to Work and Right to Education, the government is now ready with the draft Food Security Bill. A sums of Rs.1,37,674 crore, representing 37 per cent of the total outlay, will be spent on social sector programmes. A Technology Advisory Group for Unique Projects (TAGUP) is proposed to be set up under the Chairmanship of Shri Nandan Nilekani for creation of reliable and secure IT projects. Defence gets an allocation of Rs.1,47,344 crore. As a one time confidence building measure in Jammu and Kashmir about 2000 youths will be recruited as constables in five Central Para-Military forces in 2010. The Finance Minister emphasized the need for continued Tax Reforms. The Tax Returns form are being simplified and the Income Tax Department is now ready to notify Saral-2 forms for individual salary tax payers. The Finance Minister has proposed to partially roll back the rate deduction in Central Excise duties and enhance the standard rate on all non-petroleum products from 8 per cent to 10 per cent ad valorem. "The specific rates of duty applicable to Portland cement and cement clinker are also being adjusted upwards proportionately. Similarly, the ad valorem component of excise duty on large cars, multi-utility vehicles and sports utility vehicles which was reduced as part of the first stimulus package, is being increased by 2 percentage points to 22 per cent," he said. Excise duty on non-smoking tobacco is being enhanced. In addition a compounded levy scheme is being introduced by chewing tobacco and branded unmanufactured tobacco based on the capacity of pouch making machines.