Click to play videoNew Delhi: Refraining from tinkering with tax and duty rates in the Interim Budget, External Affairs Minister Pranab Mukherjee, who is at present also looks after the Finance Ministry, on Monday made a huge allocation of Rs 30,100 crore to Government's flagship rural employment programme and many other schemes in a bid to counter the economic recession.
Despite the fact that revised estimates for tax collections during 2008-09 is projected at Rs 6,27,949 crore as against the budget estimate of Rs 6,87,715 crore, the Minister resisted the temptation of giving sops since it is an Interim Budget with General Elections just a few months away.
In view of the fact that security environment has deteriorated considerably with the Mumbai terror attacks giving an entirely new dimension to cross-border terrorism, the Budget increased the allocation for defence to Rs 141,703 crore including Rs 54,824 crore capital expenditure.
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 9,53,231 crore comprising Rs 2,85,149 crore in plan and Rs 6,68,082 crore in
non-plan spending.
To counter the negative impact on exports due to the global economic crisis, the nterest subvention of two per cent on pre and post shipment for certain employment sectors is proposed to be extended.
Like the NREGS, the Bharat Nirman scheme gets a massive injection of Rs 40,900 crore in the coming year.
"In the current environment, there is a clear need for contra-cyclical policy and it calls for a substantial increase in expenditure in infrastructure development where we have a large gap and in rural development where the programmes such as Bharat Nirman and NREGS are playing a vital social role," Mukherjee said.
He said since the scope for revenue mobalisation is bound to be limited in a period of economic slowdown, any increase in plan expenditure will increase the fiscal deficit.
"Indeed, we may have to consider, the additional plan expenditure from 0.5 per cent to 1 per cent of GDP and gear up our systems accordingly," Mukherjee said in his 90-minute speech.
In the Budget estimates for 2009-10, the Sarva Siksha Abhiyan has been given Rs 13,100 crore more while the Mid-day Meal Scheme will get Rs 8,000 crore, the Integrated Child Development Scheme Rs 6,705 crore and the Jawaharlal Nehru Urban Renewal Mission will get an additional Rs 11,842 crore.
Among other schemes that got increased allocation are Rajiv Gandhi Rural Drinking Water Mission (Rs 7,400 crore), Total Rural Sanitation Programme (Rs 1,200 crore) and National Rural Health Mission (Rs 12,070 crore).
To ensure continuity in financing of rural infrastructure projects, the Minister proposed RIDF-15 with a corpus of Rs 14,000 crore and continuation of the window for rural roads with a corpus of Rs 4,000 crore.
Mukherjee said the proposed provisions are appropriate for a vote-on-account but he pointed out that planned expenditure for 2009-10 will have to be increased substantially at the time the presentation of the regular Budget, if the economy has to be given a stimulus it needs to cope with the global recession that is likely to continue through the year.
The Budget makes a provision of Rs 95,579 crore for major subsidies including food, fertiliser and petroleum.
For the coming year, gross tax revenue receipts at theexisting rates of taxation are estimated at Rs 671,293 crore, of which the Centre's net receipts have been projected at Rs 5,00,096 crore.
With revenue expenditure estimated at Rs 848,085 crore, the revenue deficit amounts to 4 per cent of the GDP. Fiscal deficit is estimated at Rs 332,835 crore which is 5.5 per cent of the GDP.
This would be lower than in 2008-09 but higher than would be appropriate under normal circumstances, he said.
"However, conditions in the year ahead are not likely to be normal and therefore the high fiscal deficit is inevitable. We will return to FRBM targets once the economy is restored to the recent trend growth path," he said.
Mukherjee said extraordinary economic circumstances merit extraordinary measures. "Now is the time for such measures. Our government decided to relax the FRBM targets, in order to provide much needed demand boost to counter the situation created by global financial meltdown."
"Indeed, depending on the response of the domestic economy and the revival of the global economy, there may be a need to consider additional fiscal measures when the regular budget is presented by the new government after the elections.
However, the medium term objective should be to revert to the path of fiscal consolidation at the earliest," he said.
Touching on the revised estimates for 2008-09, he said the total expenditure has been revised to Rs 900,953 crore against Rs 750,884 crore, an increase of Rs 150,069 crore.
The plan expenditure for 2008-09 was placed at Rs 243,386 crore in the Budget estimate which has now gone up to Rs 282,957 crore in the revised estimates.
The additional plan spending of Rs 39,571 crore is on account of increase in the central plan by Rs 24,174 crore and an increase of Rs 15,397 crore in central assistance to state and UT plans.
On the non-plan side, the additional Rs 110,498 crore in the revised estimate is accounted for by an increase in expenditure of Rs 48,863 crore on fertiliser subsidy, Rs 10,960 crore on food subsidy, Rs 15,000 crore on agriculture debt waiver, Rs 7,605 crore on pensions and Rs 5,149 crore on police.
An additional amount of Rs 9,000 crore has also been provided for in defence expenditure.
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