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Budget Estimates 2012-13 Union Finance Minister Pranab Mukharjee presented the union budget 2012-13 in the parliament

on 16 March 2012. The minister in his budget speech, projected the economic growth for 2012-13 to be 7.6%. While the total tax receipts for fiscal year 2012-13 is estimated to be 1077612 crore rupees, the total budgetary expenditure is projected to be 1490925 crore rupees. Budgetary allocations for various sectors including education, health, agriculture, defence also received a reasonable hike. The highlights of Budget Estimates 2012-13 are presented below: Gross Tax Receipts estimated at 1077612 crore rupees. Net Tax to Centre estimated at 771071 crore rupees. Non-tax Revenue Receipts estimated at 164614 crore rupees. Non-debt Capital Receipts estimated at 41650 crore rupees. Temporary arrangement to use disinvestment proceeds for capital expenditure in social sector schemes extended for one more year. Total expenditure for 2012-13 budgeted at 1490925 crore rupees. Plan expenditure for 2012-13 at 521025 crore rupees is 18 per cent higher than Budget Estimate of 2011-12. 99 per cent of the total plan outlay met in the Eleventh Plan. Non-plan expenditure estimated at 969900 crore rupees. 365216 crore rupees estimated to be transferred to States. Fiscal deficit at 5.1 per cent of GDP in Budget Estimate 2012-13. Net market borrowing required to finance the deficit to be 4.79 lakh crore rupees in 2012-13. Central Government debt at 45.5 per cent of GDP in 2012-13 as compared to Thirteenth Finance Commission target of 50.5 per cent. Effective Revenue Deficit to be 1.8 per cent of GDP in 2012-13.

Union Budget 2012-13: Sector Based Allocation Union Finance Minister Pranab Mukharjee presented the annual budget for the fiscal year 2012-13 in the parliament on 16 March 2012. The Union Minister of Finance came up with an increased budgetary allocation for various sectors including agriculture, rural development, defence etc. While, the Plan Outlay for Department of Agriculture and Cooperation increased by 18 percent, the target for agricultural credit raised by 100000 crore rupees to 575000 crore rupees. Budgetary allocation for rural drinking water and sanitation received a hike of over 27 per cent. Flagship programmes like Right to Education-Sarva Shiksha Abhiyan received an increase of 21.7 per cent in the budgetary allocation. Some of the major allocations made for different sectors of economy are as follows: Agriculture and Allied Activities Budgetary allocation for agriculture and allied activities 2012-13 increased by 18% 9217 crore rupees allocated for Rashtriya Krishi Vikas Yojana. 1000 crore rupees for Bringing Green Revolution to Eastern India (BGREI) project 300 crore rupees to Vidarbha Intensified Irrigation Development Programme under RKVY. 200 crore rupees allocated for incentivising research with rewards 14242 crore rupees allocated for Accelerated Irrigation Benefit Programme (AIBP) 500 crore rupees provided to broaden scope of production of fish to coastal aquaculture Rural Development 14,000 crore rupees allocated for rural drinking water and sanitation 24000 crore rupees allocated for Pradhan Mantri Grameen Sadak Yojna 12040 crore rupees provided for Backward Regions Grant Fund scheme 20,000 crore rupees allocated for Rural Infrastructure Development Fund

5000 crore rupees earmarked for creating warehousing facilities Education Sarva Siksha Abhiyan-Right to Education- 25555 crore rupees 3124 crore rupees provided for Rashtriya Madhyamik Shiksha Abhiyan (RMSA) Health 20822 crore rupees National Rural Health Mission Employment and skill development 3915 crore rupees provided for National Rural Livelihood Mission 1276 crore rupees allocated for Prime Ministers Employment Generation Programme 1000 crore rupees allocated for National Skill Development Fund Defence and Security 193407 crore rupees aallocated for Defence services including 79579crore rupees for capital expenditure 1185 crore rupees to be allocated for construction of nearly 4000 residential quarters for Central Armed Police Forces 3280 crore rupees proposed to be allocated for construction of office building of CentralArmed Police Forces Infrastructure and Industrial Development 25360 crore rupees allocated for Road Transport and Highways Ministry 3884 crore rupees loan waiver for handloom weavers and their cooperative societies 500 crore rupees pilot scheme announced for promotion and application of Geo-textile in the North Eastern Region 70 crore rupees allocated to set up a powerloom mega cluster in Ichalkaranji in Maharashtra 5000 crore rupees India Opportunities Venture Fund to be set up with SIDBI 15888 crore rupees to be provided for capitalisation of public sector banks and financial institutions Other major allocations 37113 crore rupees allocated for Scheduled Castes Sub Plan 21710 crore rupees earmarked for Tribal Sub Plan

Economic Survey 2011-12: Analysis The Economic Survey was tabled by the Union Finance Minister Pranab Mukherjee on 15 March 2012. Indian economy was estimated to grow by 6.9% in 2011-12 mainly due to weakening industrial growth. The Survey stated that despite dip in the economic growth India remains among the fastest growing economies of the world. Countrys sovereign credit rating was stated to have risen by a substantial 2.98 percent in 200712. The Survey highlighted the slowing down of the global economy as a prime reason for the dip in Indian economic growth. The global economy became adverse in September 2011, owing to the turmoil in the eurozone countries. The slowdown was reflected in sharp ratings downgrades of sovereign debt in most major advanced countries. While a large part of the reason for the slowing of the Indian economy was attributed to

global factors, domestic factors also played role. Analysis The slowdown in Indian economy was attributed largely to weakening industrial growth. The industrial sector has performed poorly, retreating to a 27% share of the GDP. The services sector however continued to be a star performer as its share in GDP climbed from 58% in 2010-11 to 59% in 2011-12 with a growth rate of 9.4%. Agriculture and allied sectors were estimated to achieve a growth rate of 2.5% in 2011-12. Agriculture & allied sectors were are estimated to achieve a growth rate of 2.5% in 2011-12 with foodgrains production likely to cross 250.42 million tones as a result of increase in the production of rice in a number of states. Overall growth during April-December 2011 reached 3.6% compared to 8.3% in the corresponding period of the previous year. The fiscal 2011-12 was marked by a sharp depreciation of the Indian rupee. In the current fiscal 2011-12, on month-to-month basis the rupee depreciated by 12.4 per cent from 44.97 per US dollar in March 2011 to 51.34 per US dollar in January 2012. Rupee reached a peak of 43.94 on 27 July 27 2011 and lowest at 54.23 per US dollar on 15 December 2011 indicating a depreciation of 19 per cent. The RBI was required to sell dollars twice in the fiscal to help raise the value of the rupee. Also in 2011-12 Indias external debt stock increased by US $ 20.2 billion (6.6 per cent) to US $ 326.6 billion at end-September 2011 vis--vis US $ 306.4 billion at end-March 2011, primarily due to higher commercial borrowings and short-term debt. Inflation as measured by the wholesale price index (WPI) remained high during greater part of 2011-12 fiscal, though by year end a noticeable slowdown in price rise was registered. Food inflation, in particular came down significantly. RBI adopted stringent monetary policies to control inflation as well as curb inflationary pressures. The high rate of interest established by the central bank lowered growth rate of investment in the economy as the sharp increase in interest rates resulted in higher costs of borrowings and other rising costs affecting profitability. Economic Survey 2011-12 stated that Indias foreign trade performance will remain a key driver of growth in the coming fiscal 2012-13. During the first half of 2011-12, Indias export growth was 40.5%, but it failed to remain high for the entire fiscal. Imports grew rapidly, by 30.4% during 2011-12 (April-December). Indias Balance of Payments widened to $ 32.8 billion in the first half of 2011-12, compared to $29.6 billion during the corresponding period of the earlier fiscal 2010-11. The foreign exchange reserves increased from US $ 279 billion at end March 2010 to US $ 305 billion at end March 2011. Reserves were found to vary from an all-time peak of US$ 322.2 billion at end August 2011 and a low of US $ 292.8 billion at end-January 2012. Wholesale Price Index (WPI) which remained persistently high throughout 2011 due to increasing global commodity prices and high crude prices began to moderate and it is expected to touch 6.5 to 7 percent by March 2012. Economic Survey 2011-12 observed that in 2011-12 the gap between WPI and CPI inflation narrowed due to sharp fall in food inflation. CPI-IW inflation, after remaining in single digit from August 2010 to August 2011, briefly touched double digits at 10.1 percent in September 2011. It however came down to 6.5 percent in December 2011. The banking sector- public and private showed impressive increase in priority sector lending. The Economic Survey 2011-12 underlined the fact that flow of agricultural credit was highly impressive. The Indian banking system disbursed credit of Rs 446779 crore to the agricultural sector as against a target of Rs 375000 crore in-2010-11.

The Labour Bureau conducted twelve quarterly quick employment surveys to assess the impact of the economic slowdown on the employment sector. The surveys indicated an upward trend in employment since July 2009 was maintained. Overall employment in September 2011 over September 2010 increased by 9.11 lakh, with the highest increase recorded in IT/BPO (7.96 lakh) sector. The coverage under the MGNREGA consistently increased from 4.51 crore households during 2008-09 to 5.49 crore households during 2010-11 with averaged employment of 47 persondays per household. Average wage increased from Rs 65 in 2006-07 to Rs. 100 in 2010-11. The Survey stated that to strengthen transparency and accountability in the implementation of the MGNREGA, the Government initiated a service delivery project for Information and Communication Technology (ICT) and biometrics related works of the MGNREGA on PPP basis. The performance of broad sectors and sub sectors in key infrastructure areasin 2011-12 was both good and bad. Whereas there was improvement in growth in power, petroleum refinery, cement, railway freight traffic, passenger handled at domestic terminals and upgradation of NHAI, coal, natural gas, fertilizers, handling of export cargo at airports and number of cell phone connections show negative growth. Steel sector witnessed moderation in growth. Forecasts The real GDP growth is expected to pick up to 7.6% in 2012-13 and 8.6% in 2013-14 as per the survey. Pranab Mukherjee predicted 7.6% GDP growth in 2012-13. As per the survey, given that fiscal consolidation is back on track, savings and capital formation should is likely to start rising. Also the RBI policy rates are expected to be reduced in the back of easing of inflationary pressures. The lowered interest rates will encourage investment activity and have a positive impact on growth. These projections were all made on the basis of assumptions regarding factors like normal monsoons, reasonably stable international prices, particularly oil prices, and global growth. The progressive deregulation of interest rates on savings accounts is expected to raise financial savings and thus improve transmission of monetary policy. Survey Suggestions Sustainable development and climate change were recognized by the survey as central areas of global concern. The Survey suggested need to examine the linkages and trade-offs between policy rate changes and inflation in the Indian context, for better calibration of monetary policy. The Economic Survey 2011-12 stated that it was essential to make lower carbon sustainable growth a central element of our Twelfth Five Year Plan commencing in April 2012. In Conclusion The Economic Survey in conclusion mentioned that India is more closely integrated with the world economy as its share of trade to GDP of goods and services tripled between 1990-2010. The extent of financial integration, measured by flows of capital as a share of GDP also increased leading to an expansion of Indias role in the world economy