Madam Speaker, I rise to present the Budget for the year 2013-14.
I recall my last tenure as Finance Minister and acknowledge with gratitude the splendid support that I received from all sections of the House as well as the people of India. Today, more than ever, I seek the same support as we navigate the Indian economy through a crisis that has enveloped the whole world and spared none.
I intend to keep my speech simple, straight forward and reasonably short.
I. THE ECONOMY AND THE CHALLENGES
4. I shall begin by setting the context. Global economic growth slowed from 3.9 percent in 2011 to 3.2 percent in 2012. India is part of the global economy: our exports and imports amount to 43 percent of GDP and two-way external sector transactions have risen to 108 percent of GDP. We are not unaffected by what happens in the rest of the world and our economy too has slowed after 2010-11. In the current year, the CSO has estimated growth at 5 percent while the RBI has estimated growth at 5.5 percent. Whatever may be the final estimate, it will be below India’s potential growth rate of 8 percent. Getting back to that growth rate is the challenge that faces the country.
5. Let me say, however, there is no reason for gloom or pessimism. Even now, of the large countries of the world, only China and Indonesia are growing faster than India in 2012-13. And in 2013-14, if we grow at the rate projected by many forecasters, only China will grow faster than India. Between 2004 and 2008, and again in 2009-10 and 2010-11, the growth rate was over 8 percent and, in fact, crossed 9 percent in four of those six years. The average for the 11th Plan period, entirely under the UPA Government, was 8 percent, the highest ever in any Plan period. Achieving high growth, therefore, is not a novelty or beyond our capacity. We have done it before and we can do it again.
6. I acknowledge that the Indian economy is challenged, but I am absolutely confident that, with your cooperation, we will get out of the trough and get on to the high growth path. I shall now outline our plans and priorities.
7. Our goal is ‘higher growth leading to inclusive and sustainable development’. That is themool mantra.
8. Growth is a necessary condition and we must unhesitatingly embrace growth as the highest goal. It is growth that will lead to inclusive development, without growth there will be neither development nor inclusiveness. However, I may sound a note of caution. Owing to the plurality and diversity of India, and centuries of neglect, discrimination and deprivation, many sections of the people will be left behind if we do not pay special attention to them. As Joseph Stiglitz, Nobel prize-winning economist, said, “There is a compelling moral case for equity; but it is also necessary if there is to be sustained growth. A country’s most important resource is its people.” We have examples of States growing at a fast rate, but leaving behind women, the scheduled castes, the scheduled tribes, the minorities, and some backward classes. The UPA does not accept that model. The UPA Government believes in inclusive development, with emphasis on improving human development indicators. I hope this Budget will be yet another testimony to that commitment.
Fiscal Deficit, Current Account Deficit and Inflation
9. The purpose of a Budget and the job of a Finance Minister is to create the economic space and find the resources to achieve the socio economic objectives. At present, the economic space is constrained because of a high fiscal deficit; reliance on foreign inflows to finance the current account deficit; lower savings and lower investment; a tight monetary policy to contain inflation; and strong external headwinds. During the course of my speech, I shall spell out measures that will address each of these issues.
10. In September, 2012, Government accepted the main recommendations of the Dr. Vijay Kelkar Committee. A new fiscal consolidation path was announced. Red lines were drawn for the fiscal deficit at 5.3 percent of GDP this year and 4.8 percent of GDP in 2013-14. I know there is a lot of scepticism. In a little while, I shall tell you how we have fared.
11. My greater worry is the current account deficit (CAD). The CAD continues to be high mainly because of our excessive dependence on oil imports, the high volume of coal imports, our passion for gold, and the slow down in exports. This year, and perhaps next year too, we have to find over USD 75 billion to finance the CAD. There are only three ways before us: FDI, FII or External Commercial Borrowing (ECB). That is why I have been at pains to state over and over again that India, at the present juncture, does not have the choice between welcoming and spurning foreign investment. If I may be frank, foreign investment is an imperative. What we can do is to encourage foreign investment that is consistent with our economic objectives.
12. Finally, the development must be sustainable economically and ecologically. The development model must have democratic legitimacy and approval.
13. Looming large over our efforts to stimulate growth is inflation. Some inflation is imported. Supply demand mismatch, for example in oilseeds and pulses, also pushes up inflation. Aggregate demand is another cause of inflation. The battle against inflation must be fought on all fronts. Our efforts in the past few months have brought down headline WPI inflation to about 7.0 percent and core inflation to about 4.2 percent. It is food inflation that is worrying, and we shall take all possible steps to augment the supply side to meet the growing demand for food items.
14. Government expenditure boosts aggregate demand and it has both good and bad consequences. Wisdom lies in finding the correct level of government expenditure. In the budget for 2012-13, the estimate of Plan Expenditure was too ambitious and the estimate of non-Plan Expenditure was too conservative. Faced with a huge fiscal deficit, I had no choice but to rationalise expenditure. We took a dose of bitter medicine. It seems to be working. We also took some policy decisions that had been deferred for too long, corrected some prices, and undertook a review of certain tax policies. We have retrieved some economic space. As I outline our plans and priorities, Hon’ble Members will find that I have used that economic space to advantage and to advance the UPA Government’s socio-economic objectives.
II. THE PLAN AND BUDGETARY ALLOCATIONS
15. The 12th Five Year Plan began in 2012-13. Anticipating a global and domestic recovery, total expenditure had been fixed at `14,90,925 crore. Due to the slowdown and the austerity measures, the revised estimate is `14,30,825 crore or 96 percent of the budget estimate. The economic space that we have gained has given me the confidence to be more ambitious in 2013-14. I have been able to set the BE of total expenditure at `16,65,297 crore and of plan expenditure at `5,55,322 crore. Hon’ble Members will be happy to know that plan expenditure in 2013-14 will be 29.4 percent more than the revised estimate of the current year. All flagship programmes have been fully and adequately funded. I dare say I have provided sufficient funds to each Ministry or Department consistent with their capacity to spend the funds. Now, it is over to the Ministries and Departments to deliver the outcomes through good governance, prudent cash management, close monitoring and timely implementation.
16. Madam Speaker, on the one side is economic policy. On the other side is economic welfare. We are a developing country. The link between policy and welfare can be expressed in a few words: opportunities, education, skills, jobs and incomes. Every mother understands this. Every young man and woman understands this. My budget for 2013-14 has before it one overarching goal: to create opportunities for our youth to acquire education and skills that will get them decent jobs or self-employment that will bring them adequate incomes that will enable them to live with their families in a safe and secure environment.
SC, ST, Women and Children
17. Let me assure Hon’ble Members that their concerns are my concerns too. I know their concern for the welfare and progress of the scheduled castes and the scheduled tribes for whom the Budget has sub plans. I also know their concern that adequate funds must be provided for programmes that benefit women, children and the minorities. I have tried to meet these concerns as fully as possible. I propose to allocate `41,561 crore to the scheduled caste sub plan and `24,598 crore to the tribal sub plan. The total represents an increase of 12.5 percent over the BE and 31 percent over the RE of the current year. I reiterate the rule that the funds allocated to the sub plans cannot be diverted and must be spent for the purposes of the sub plans.
18. I have made sufficient allocations to programmes relating to women and children. Hon’ble Members will find from the budget documents that the gender budget has `97,134 crore and the child budget has `77,236 crore in 2013-14.
19. Women belonging to the most vulnerable groups, including single women and widows, must be able to live with self-esteem and dignity. Young women face gender discrimination everywhere, especially at the work place. Ministry of Women and Child Development has been asked to design schemes that will address these concerns. I propose to provide an additional sum of `200 crore to that Ministry to begin work in this regard.
Minorities
20. I have allocated `3,511 crore to the Ministry of Minority Affairs. This is an increase of 12 percent over the BE and 60 percent over the RE of 2012-13.
21. The Maulana Azad Education Foundation is the main vehicle to implement educational schemes and channelize funds to non-government organisations for the minorities. Its corpus stands at `750 crore. With the objective of raising it to `1,500 crore during the 12th Plan period, I propose to allocate `160 crore to the corpus fund. The Foundation wishes to add medical aid to its objectives. I have accepted that a beginning can be made by providing medical facilities such as an infirmary or a resident doctor in the educational institutions run or funded by the Foundation. I propose to allocate `100 crore to launch this initiative.
Disabled Persons
22. Government is committed to provide support to persons with disabilities. I propose to allocate a sum of `110 crore to the Department of Disability Affairs for the ADIP Scheme in 2013-14, as against the RE of `75 crore in the current year.
Health and Education
23. Health for all and education for all remain our priorities.
24. I propose to allocate `37,330 crore to the Ministry of Health and Family Welfare. Of this, the new National Health Mission that combines the rural mission and the proposed urban mission will get`21,239 crore, an increase of 24.3 percent over the RE.
25. I propose to provide `4,727 crore for medical education, training and research.
26. The National Programme for the Health Care of Elderly is being implemented in 100 selected districts of 21 States. Eight regional geriatric centres are being funded for the development of dedicated geriatric departments. I propose to provide `150 crore for this programme.
27. Ayurveda, Unani, Siddha and Homoeopathy are being mainstreamed through the National Health Mission. I propose to allocate `1,069 crore to the Department of AYUSH.
28. The six AIIMS-like institutions have admitted their first batch of students in the academic session that commenced in September 2012. The hospitals attached to the colleges will be functional in 2013-14. I propose to provide a sum of `1,650 crore for these institutions.
29. Education is the other high priority. I propose to allocate `65,867 crore to the Ministry of Human Resource Development, which is an increase of 17 percent over the RE of the previous year. The Sarva Shiksha Abhiyan (SSA) and the Right to Education Act are firmly in place. I propose to provide`27,258 crore for SSA in 2013-14.
30. Investment in the Rashtriya Madhyamik Shiksha Abhiyan (RMSA) cannot be postponed any longer. Hence, I propose to provide `3,983 crore for RMSA, which is an increase of 25.6 percent over the RE of the current year.
31. Hon’ble Members will be happy to know that thousands of scholarships will be given to students belonging to Scheduled Castes, Scheduled Tribes, Other Backward Classes and Minorities, and girl children, in 2013-14. I propose to allocate `5,284 crore to the various Ministries for the purpose, as compared `4,575 crore in the RE of the current year.
32. The Mid-Day Meal Scheme (MDM) will be provided `13,215 crore.
33. The reconstruction of the Nalanda University has gathered momentum. The Government is committed to the creation of Nalanda University as a centre of educational excellence.
ICDS
34. I commend the ICDS for being able to spend the entire amount of `15,850 crore provided in 2012-13. In recognition of the needs of children, I propose to allocate `17,700 crore in 2013-14, representing an increase of 11.7 percent. The focus will continue to be on early childhood care and education.
35. Maternal and child malnutrition in a country with abundant foodgrains is a shame that we must overcome. A multi-sectoral programme that was announced last year will be implemented in 100 districts during 2013-14 and it will be scaled up to cover 200 districts the year after. I propose to allocate a sum of `300 crore for the programme in 2013-14.
Drinking Water
36. Clean drinking water and sanitation have a number of beneficial externalities. I propose to allocate `15,260 crore to the Ministry of Drinking Water and Sanitation, as against the RE of `13,000 crore in the current year.
37. There are still 2,000 arsenic- and 12,000 fluoride-affected rural habitations in the country. I propose to provide `1,400 crore towards setting up water purification plants.
Rural Development
38. The Ministry of Rural Development steers a number of flagship programmes. We estimate that they will be able to spend `55,000 crore before the end of the current year, and I propose to allocate `80,194 crore in 2013-14, marking an increase of 46 percent. MGNREGS will get `33,000 crore, PMGSY will get `21,700 crore, and IAY will get `15,184 crore.
39. The objectives of PMGSY have been substantially fulfilled in several States. Naturally, these States wish to do more. Hence, it is proposed to carve out PMGSY-II and allocate a portion of the funds to the new programme that will benefit States such as Andhra Pradesh, Haryana, Karnataka, Maharashtra, Punjab and Rajasthan. Details of PMGSY-II will be announced by the Minister of Rural Development in due course.
JNNURM
40. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is being continued in the 12th Plan. The 14,000 buses sanctioned during 2009 to 2012 have made a big contribution to urban transport. I propose to provide `14,873 crore for JNNURM, as against the RE of `7,383 crore in the current year. Out of this, a significant portion will be used to support the purchase of upto 10,000 buses, especially by the hill States.
III. AGRICULTURE
41. Thanks to our hard working farmers, agriculture continues to perform very well. The average annual growth rate of agriculture and allied sector during the 11th Plan was 3.6 percent as against 2.5 percent and 2.4 percent, respectively, in the 9th and 10th Plans. In 2012-13, total foodgrain production will be over 250 million tonnes. Minimum support price of every agricultural produce under the procurement programme has been increased significantly under the UPA Government. Farmers have responded to the price signals and produced more. Agricultural exports from April to December, 2012 have crossed `138,403 crore.
42. I propose to allocate `27,049 crore to the Ministry of Agriculture, an increase of 22 percent over the RE of the current year. Of this, agricultural research will be provided `3,415 crore.
Agricultural Credit
43. Agricultural credit is the driver of agricultural production. We will exceed the target of`575,000 crore fixed for 2012-13. For 2013-14, I propose to increase the target to `700,000 crore.
44. The interest subvention scheme for short-term crop loans will be continued and a farmer who repays the loan on time will be able to get credit at 4 percent per annum. So far, the scheme has been applied to loans extended by public sector banks, RRBs and cooperative banks. I propose to extend the scheme to crop loans borrowed from private sector scheduled commercial banks in respect of loans given within the service area of the branch concerned.
Green Revolution
45. Bringing the green revolution to eastern India has been a remarkable success. Assam, Bihar, Chhattisgarh and West Bengal have increased their contribution to rice production. I propose to continue to support the eastern Indian States with an allocation of `1000 crore in 2013-14.
46. The original Green Revolution States face the problem of stagnating yields and over-exploitation of water resources. The answer lies in crop diversification. I propose to allocate `500 crore to start a programme of crop diversification that would promote technological innovation and encourage farmers to choose crop alternatives.
47. The Rashtriya Krishi Vikas Yojana is intended to mobilise higher investment in agriculture and the National Food Security Mission is intended to bridge yield gaps. I propose to provide `9,954 crore and `2,250 crore, respectively, for these two programmes.
48. Small and marginal farmers are vulnerable everywhere, and especially so in drought prone and ecologically-stressed regions. Watershed management is crucial to improve productivity of land and water use. I propose to increase the allocation for the integrated watershed programme from `3,050 crore in 2012-13 (BE) to `5,387 crore.
49. Eminent agricultural scientists have suggested that we start a pilot programme on Nutri-Farms for introducing new crop varieties that are rich in micro-nutrients such as iron-rich bajra, protein-rich maize and zinc-rich wheat. I propose to provide a sum of upto `200 crore to start the pilots. Ministry of Agriculture will formulate a scheme and I hope that agri businesses and farmers will come together to start a sufficient number of pilots in the districts most affected by malnutrition.
50. The National Institute of Biotic Stress Management for addressing plant protection issues will be established at Raipur, Chhattisgarh. The Indian Institute of Agricultural Bio-technology will be established at Ranchi, Jharkhand and will serve as a centre of excellence in agricultural bio-technology.
51. A pilot scheme to replant and rejuvenate coconut gardens that was implemented in some districts of Kerala and the Andaman & Nicobar Islands will be extended to the entire State of Kerala, and I propose to provide an additional sum of `75 crore in 2013-14.
Farmer Producer Organizations
