Budget 2014-15: Civil Services Mentor Magazine - April + May 2014

BUDGET 2014-2015

India has come a long way since the first Union budget of independent India was presented by R. K. Shanmukham Chetty on November 26, 1949 till the recent interim budget presented by P.Chidambaram. ‘Interim –budget’ refers to the budget of a government that is going through a transition period, which at this point of time would be upcoming lok sabha polls of 2014. These budgets are common in democracies where one political party or a coalition is voted out and another political party or a coalition is voted into office. The two governments often have different fiscal plans, so the old government budget is cut short and a new budget is created.

2013 was one of the dismal years when it comes to performance on the economic front. The growth rate was as low as 4.9. It might not be the worst growth rate in relative terms, but it certainly feels so when compared to 9.4% growth rate of this same economy in 2006-07. Let’s hope that with an abundant monsoon last year and a grip over inflation and current account deficit the growth trajectory in India will be back on it’s track and India will lead the race for fastest growing nation in the world , that has an equal opportunistic impact on the country’s poor as well. But let’s take a glance at different aspects of India economy first:

THE PRESENT ECONOMIC SCENARIO:

  • The world economy is very crucial when it comes affecting the fortune of developing nations around the globe. And a slow growth of the world economy automatically has an adverse impact on the under-developed
    and developing countries around the globe.

  • The world economy has been witnessing a sliding trend in growth, from 3.9 percent in 2011 to 3.1 percent in 2012 and 3 percent in 2013.

  • The economic situation of major trading partners of India, who are also the major source of our foreign capital inflows, continues to be under stress. United States has just recovered from long recession, Euro zone, as a whole, is reporting a growth of 0.2 per cent, and China’s growth has also slowed down.

  • The economic challenges faced by our country are common to all emerging economies.

Deficit and Inflation

  • The fiscal deficit for the year 2013-14 stands at 4.6 percent .
  • The current account deficit projected to be to come down.
  • Foreign exchange reserve is bound to grow. Fiscal stability at the top of the Agenda, so is keeping inflation to a bare minimum.
  • Food inflation is at 6.2 percent from as high as that of 13.8 per cent.

Agriculture

  • The performance of agricultural sector has been very well.
  • Food grain production estimated for the current year is 263 million tonnes compared to 255.36 million tonnes in 2012-13.
  • Agriculture export likely to increase.
  • Agricultural GDP growth for the current year estimated at 4.6 percent compared to 4.0 percent in the last four years.

Saving/Investment

  • Savings rate in 2012-13 is 30.1 percent and investment rate is 34.8 percent .

Foreign Trade

  • Our exports have sharply recovered, despite a decline in growth of global trade.
  • The estimated merchandise export is estimated to reach a growth rate of 6.3 percent.

Manufacturing

  • The manufacturing sector has witnessed a sluggish growth due to deceleration in investment.
  • 8 NIMZ or National Investment and Manufacturing Zones along Delhi Mumbai Industrial Corridor (DMIC) have been announced and 9 Projects had been approved by the DMIC trust.
  • 3 more Industrial Corridors connecting Chennai and Bengaluru, Bengaluru and Mumbai& Amritsar and Kolkata are under different stages of preparatory works.

Infrastructure

  • In 2012-13 and in nine months of the current financial year, 29, 350 MW of power capacity, 3, 928 Kms of National Highways, 39, 144 Kms of Rural Roads, 3,343 Kms of New Railway track and 217.5 million tones of capacity per annum in our ports have been created to give a big boost to infrastructure industries.

  • 19 Oil and Gas blocks were given out for exploration and 7 new Air ports are under construction.

  • Infrastructure debt funds have been promoted to provide finances for infrastructure Projects.

Exchange Rates

  • Rupee came under pressure following indications by US Federal Reserve of reduction in asset purchases in May 2013 and at one point of time it reached as low as Rs. 69 against a dollar.

UPAfs record of Growth

  • Production of food grains went up from 213 million tonnes to 263 million tonnes, installed power capacity up to 2,34,600 MW from 1,12,700 MW, coal production 554 million tonnes from 361 million tonnes, 3,89,578 Kms of Rural Roads under PMGSY from 51,511 Kms, over a period of 10 years.

Economic Initiative

  • Centrally Sponsered Schemes were restructured into 66 Programs for greater Synergy.
  • About 50,000 MW of Thermal and Hydel Power capacity is under construction after receiving all clearances and approvals. 78,000 MW of power capacity have been assured coal supply.
  • Liberalized FDI policy in telecommunication, pharmaceuticals, civil aviation, power trading exchange, and multi brand retail to attract large investment.
  • Approval to establish 2 semi conductor wafer fab units.
  • Approval of IT modernization project of Department of Post.
  • Kudankulam Nuclear Power Plant Unit-I achieved criticality and is generating 180 Million Units of power.
  • Fast breeder Reactor at Kalpakkam and 7 Nuclear Power Reactors under construction.
  • National Solar Mission to add 4 Ultra Mega Solar Power Projects each with the capacity of over 500 MW in 2014-15.
  • Ministry of MSME will create the eIndia Inclusive Innovation Fundf to promote grass root innovations with social returns to support enterprises in the MSME sector with an initial contribution of `100 crore to the corpus of the fund.

Social Sector Initiative

  • A Venture Capital Fund to provide concessional finance to Scheduled Caste will be set up by IFCI with an initial capital of e 200 crore which can be supplemented every year.
  • The restructured ICDS, under implementation in 400 districts, will be rolled out in remaining districts from 1.4.2014.
  • A National Agro-Forestry Policy 2014 has been approved.
  • A new Plan Scheme with an allocation of e100 crore has been approved to promote community radio station.
  • New technologies such as JE vaccine, a diagnostic test for Thalassaemia and Magnivisualizer for detection of Cervical cancer have been delivered to people.

2013-14 Progress Report

  • Decisions of de-controlling sugar, gradual correction of diesel prices, rationalization of railway fares, were welcomed.
  • New bank license applications were invited .
  • DISCOMS, have been restructured with generous central assistance.
  • 12.8 lakhs land titles covering 18.80 lakh hectare were distrib uted under the Scheduled Tribes and Other traditional Forest Dwellers Act.
  • The oppressive colonial law of 1894 was substituted with the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act.
  • National Food Security Act was passed assuring food to 67 percent of the population/households.
  • The new companies Act replaced a law of 1956 vintage.
  • The PFRDA Act was passed to establish a statutory regulator for the New Pension Scheme.

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