"The global crisis has affected us. India's gross domestic product (GDP) is expected to grow at 6.9 percent in 2011-12, after having grown at 8.4 percent in each of the two preceding years," the minister said. "But it is also a fact that in any cross-country comparison, India still remains among the front-runners in economic growth," he added.
The minister stated that the Indian economy was at the cusp of a revival, as agriculture and services have continued to grow at a decent pace. It was industrial performance that was acting as a drag. The Finance Minister also exuded confidence that headline inflation would moderate in the next few months and remain stable.
Budget Highlights
GDP to grow by 6.9% in 2011-12
This year’s performance disappointing
India still among front runners in economic growth
Monetary policy was geared towards containing inflation
Need to improve supply side of economy
Exports grew 23 %
Imports grew 29%
Past year was supposed to be year of recovery
To keep subsidies under 2% of GDP over next 3 years
We were facing several challenges; global situation a dampener
Industry pulled down growth in past two years
Industry now showing signs of recovery
Need to improve supply side of economy
Subsidy for food security law to be fully provided
Some subsidies inevitable
Agriculture to services performed well
Weak growth due to industrial slowdown
Economy now turning around
Manufacturing on cusp of revival
Need to improve micro-economic environment
Expect headline inflation to moderate in the next few months and remain stable
Agri growth at 2.5%
External trade growth encouraging
India has successfully achieved diversification of import and export market
Diversification has helped overcome global slowdown
Current account deficit at 3.6%
Fiscal balance has deteriorated due to increase in direct tax seepages and increased subsidy
Expect smaller fiscal deficit in the coming year
Concept of effective revenue deficit is being brought in as a fiscal parameter
Crude oil prices to cross USD 115/barrel
Need to take a close look at revenue expenditure, particularly subsidies
Endeavour to restrict subsidy to under 2% of GDP
Recommendation of task force under Nandan Nilekani has been accepted
Direct transfer of fertilizer subsidy to retailer and then on to farmer to be rolled out
Direct transfer of kerosene subsidy pilot project in Alwar, Rajasthan
Direct subsidy transfer to be implemented in at least 50 more districts soon
DTC to be implemented at the earliest
The structure of GST network has been approved by EGoM
Treasury management for CPACs has been enhanced
Rs 30000 cr to be raised via disinvestment
At least 51% stake will remain with the govt
FDI in multi-band retail held in abeyance
GST to be operational by August 2012
Provision for advance pricing agreement included in DTC bill
Reform in financial sector has been pursued to ensure more market intervention
New scheme - Rajiv Gandhi equity scheme - to be introduced
Simplifying process of IPOs
Mandatory for companies to issue stocks over Rs 10 cr through online system
8 financial amendments bills to be introduced this year
Central Know Your Customer repository would be set up
70,000 habitations have been provided with banking services
Ultra small branches would be set up
Swabhiman campaign to be extended to habitations with population of 1000 people
81 Regional Rural Banks have migrated to core banking
Weak RRBs to be recapitalized for another two years
Viability gap funding under PPP is an important factor
Oil and gas and LNG storage and oil gas pipeline, telecom towers will also be made eligible under viability gap finding
The first infra debt fund with a outlay of Rs 8,000 cr has been launched
Tax free infra bonds to be raised to Rs 60,000 cr
Coal India has been advised to sign power purchase agreements with power plants
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