Finance Minister Pranab Mukherjee presented his second budget for the current UPA government on February 26 2010. Dispelling all fears of stimulus roll back, rising fiscal deficit, increase in services tax etc., Finance Minster has chosen the path for growth and fiscal discipline.
In the beginning of the speech, Finance Minster recalled the tough conditions prevailing last year where he presented the budget when global economic uncertainties and later, the delay and sub-normal south-west monsoon threatened to compound the crises.
“We have weathered all these crises well and Indian Economy now is in a far better position than it was a year ago” he added. After experiencing a downturn in 2008-09 and signs of economy stabilising in first quarter of 2009-10, a smart recovery in Indian economy is evident which prompted him to be optimistic.
However, he mentioned the three challenges outlined in last budget also which remain relevant even today.
- Targets to quickly revert back to the pre-crisis growth rate of 9% and to aims to explore the means to cross the double digit growth barrier.
- To harness economic growth to consolidate the recent gains in making development more inclusive. To find resources for the trust for development of infrastructure in rural areas, to strengthen food security, improve education opportunities and provide health facilities for household both in rural and urban areas.
- To address the weaknesses in government systems, structures and institutions at different levels of governance. It points out towards the bottleneck of our public delivery mechanism.
THE INDIAN ECONOMY
- The Advance Estimates for Gross Domestic Product (GDP) growth for 2009-10 project GDP at 7.2 per cent. The final GDP figure may well turn out to be higher when the third and fourth quarter GDP estimates for 2009-10 become available.
- These positive figures are expected despite a negative growth in the agriculture sector. A renewed momentum in the manufacturing sector has contributed to encouraging scenario and has become the growth driver of the economy. The growth rate in manufacturing sector in December 2009 was 18.5 percent – the highest in the past two decades.
- A major concern during the second half of 2009-10 has been the emergence of double digit food inflation. Momentum in food prices, erratic monsoons and drought like conditions in large part of the country played a role to this escalating inflation. Government has set in motion steps, in consultation with the State Chief Ministers, which should bring down the inflation in the next few months and ensure that there is better management of food security in the country.
The budget sets out a fiscal target to bring down fiscal deficit to 5.5% in 2010-11. For 2011-12 the aim is to bring it to 4.8% and in 2012-13 to 4.1%. Last Update Wednesday 17th March 2010