Union Budget And Other Economic Policies

Union Budget And Other Economic Policies

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According to the Budget Speech 2012-13 delivered by Pranab Mukherjeehttp://indiabudget.nic.in/bspeecha.asp

• India’s Gross Domestic Product (GDP) is estimated to grow by 6.9 per cent in 2011-12, after having grown at the rate of 8.4 per cent in each of the two preceding years.

• The growth is estimated to be 2.5 per cent in agriculture, 3.9 per cent in industry and 9.4 per cent in services during 2011-12.

• Monthly food inflation declined from 20.2 per cent in February 2010, to 9.4 per cent in March 2011 and turned negative in January 2012. The February 2012 inflation figure has gone up marginally.

• The Government has decided that from 2012-13 subsidies related to food and for administering the Food Security Act will be fully provided for. All other subsidies would be funded to the extent that they can be borne by the economy without any adverse implications. It will be the endeavour to restrict the expenditure on Central subsidies to under 2 per cent of GDP in 2012-13. Over the next three years, it would be further brought down to 1.75 per cent of GDP. 

• The recommendations of the task force headed by Nandan Nilekani on IT strategy for direct transfer of subsidy have been accepted. Based on these recommendations, a mobile-based Fertiliser Management System (mFMS) has been designed to provide end-to-end information on the movement of fertilisers and subsidies, from the manufacturer to the retail level. This will be rolled out nation-wide during 2012. Direct transfer of subsidy to the retailer, and eventually to the farmer will be implemented in subsequent phases. This step will benefit 12 crore farmer families, while reducing expenditure on subsidies by curtailing misuse of fertilisers. Pilot projects show that substantial economies in subsidy outgo can be achieved by the use of Aadhaar platform. 

• The enrolments into the Aadhaar system have crossed 20 crore and the Aadhaar numbers generated upto date have crossed 14 crore.  There is plan to allocate adequate funds to complete another 40 crore enrolments starting from April 1, 2012. The Aadhaar platform is now ready to support the payments of MG-NREGA; old age, widow and disability pensions; and scholarships directly to the beneficiary accounts in selected areas.

• The total plan outlay for the Department of Agriculture and Cooperation is being increased by 18 per cent from Rs. 17,123 crore in 2011-12 to Rs. 20,208 crore in 2012-13. 

• The outlay for Rashtriya Krishi Vikas Yojana (RKVY) is being increased from Rs. 7,860 crore in 2011-12 to Rs. 9,217 crore in 2012-13. 

• The initiative of Bringing Green Revolution to Eastern India (BGREI) has resulted in a significant increase in production and productivity of paddy. States in eastern India have reported additional paddy production of seven million tonnes in Kharif 2011. There is a proposal to increase the allocation for this scheme from Rs. 400 crore in 2011-12 to Rs. 1000 crore in 2012-13.

• Under RKVY, Rs. 300 crore has been allocated to Vidarbha Intensified Irrigation Development Programme. This Scheme seeks to bring in more farming areas under protective irrigation. 

• To improve productivity in the dairy sector, a Rs. 2,242 crore project is being launched with World Bank assistance. To broaden the scope of production of fish to coastal aquaculture, apart from fresh water aquaculture, the outlay in 2012-13 is being stepped up to Rs. 500 crore. Suitable allocations are also being made for poultry, piggery and goat rearing. 

• The target for agricultural credit in 2012-13 has been raised to Rs. 5,75,000 crore. This represents an increase of Rs. 1,00,000 crore over the target for the current year.

• The interest subvention scheme for providing short term crop loans to farmers at 7 per cent interest per annum will be continued in 2012-13. An additional subvention of 3 per cent will be available to prompt paying farmers. In addition, the same interest subvention on post harvest loans up to six months against negotiable warehouse receipt will also be available. This will encourage the farmers to keep their produce in warehouses.

• A Short term RRB Credit Refinance Fund is being set-up to enhance the capacity of Regional Rural Banks to disburse short term crop loans to the small and marginal farmers. Rs. 10,000 crore has been allocated to NABARD for refinancing the RRBs through this fund. 

• Kisan Credit Card (KCC) is an effective instrument for making agricultural credit available to the farmers. KCC scheme will be modified to make KCC a smart card, which could be used at ATMs.   

• A sum of Rs. 200 crore would be set aside for incentivising research with rewards, both for institutions and the research team responsible for scientific breakthroughs in agriculture.  

• To maximise the flow of benefits from investments in irrigation projects, structural changes in Accelerated Irrigation Benefit Programme (AIBP) are being made. The allocation for AIBP in 2012-13 is being stepped up by 13 per cent to Rs. 14,242 crore. 

• To mobilise large resources to fund irrigation projects, a Government owned Irrigation and Water Resource Finance Company is being operationalised. The Company would start its operations in 2012-13 by focusing on financing sub-sectors like micro-irrigation, contract farming, waste water management and sanitation. 

• A new centrally sponsored scheme titled “National Mission on Food Processing” would be started, in cooperation with the State Governments in 2012-13.

• The Government has taken steps to create additional foodgrain storage capacity in the country. Creation of 2 million tonnes of storage capacity in the form of modern silos has already been approved. Nearly 15 million tonnes capacity is being created under the Private Entrepreneur’s Guarantee Scheme, of which 3 million tonnes of storage capacity will be added by the end of 2011-12 and 5 million would be added next year.

• To reduce India’s import dependence in urea, Government has taken steps to finalise pricing and investment policies for urea. It is expected that with the implementation of the investment policy, country will become self sufficient in manufacturing urea in the next five years. In case of the potassic-phosphatic (P&K) fertiliser, use of single super phosphate (SSP) will be encouraged through greater extension work. This fertiliser is manufactured entirely in the domestic sector. 

• The Government has taken definite steps to create food security at the household level by making food a legal entitlement for all targeted people, especially for the poor and vulnerable segments of India's population. The National Food Security Bill, 2011 is before the Parliamentary Standing Committee.

• To ensure that the objectives of the National Food Security Bill are effectively realised, a Public Distribution System Network is being created using the Aadhaar platform. A National Information Utility for the computerisation of PDS is being created. It will become operational by December 2012. 

• Following the decision taken in the Prime Minister’s National Council on India’s Nutritional Challenges, a multi-sectoral programme to address maternal and child malnutrition in selected 200 high burden districts is being rolled out during 2012-13. It will harness synergies across nutrition, sanitation, drinking water, primary health care, women education, food security and consumer protection schemes.

• For 2012-13, an allocation of Rs. 15,850 crore has been made as against Rs. 10,000 crore in 2011-12 for the Integrated Child Development Services (ICDS) scheme. This amounts to an increase of over 58 per cent

• In 2012-13, National Programme of Mid Day Meals in Schools has been allocated Rs. 11,937 crore as against Rs. 10,380 crore in 2011-12.

• Rajiv Gandhi Scheme for Empowerment of Adolescent Girls, SABLA, has been introduced in 2011-12 with a view to address the nutritional needs and other educational and skill development initiatives for self development of adolescent girls in the age group of 11 to 18 years. For 2012-13, an allocation of Rs. 750 crore has been proposed for the scheme. 

• Budgetary allocation for rural drinking water and sanitation has been raised from Rs. 11,000 crore in 2011-12 to Rs. 14,000 crore in 2012-13, which is an increase of over 27 percent. 

• A major initiative has been proposed to strengthen Panchayats across the country through the Rajiv Gandhi Panchayat Sashaktikaran Abhiyan (RGPSA). This programme will expand on the existing schemes for Panchayat capacity building. 

• Backward Regions Grant Fund scheme is given an enhanced allocation of Rs. 12,040 crore in 2012-13, an increase of about 22 per cent over BE of 2011-12. This includes the State component which covers projects in backward areas in Bihar, West Bengal and the Kalahandi-Bolangir-Koraput region of Odisha, development projects for drought mitigation in the Bundelkhand region and projects under the Integrated Action Plan (IAP) to accelerate the pace of development in selected tribal and backward districts.

• Allocation under Rural Infrastructure Development Fund (RIDF) is enhanced to Rs. 20,000 crore.  An amount of Rs. 5,000 crore is earmarked from the above allocation exclusively for creating warehousing facilities under RIDF.

• For 2012-13, Rs. 25,555 crore has been provided for Right to Education-Sarva Shiksha Abhiyan. This is an increase of 21.7 per cent over 2011-12.

• In the Twelfth Plan, 6,000 schools have been proposed to be set up at block level as model schools to benchmark excellence. Of these, 2500 will be set up under Public Private Partnership (PPP).

• The Rashtriya Madhyamik Shiksha Abhiyan (RMSA) was launched in March, 2009 to enhance access to quality secondary education. In 2012-13, Rs. 3,124 crore has been allocated for RMSA, which is nearly 29 per cent higher than the allocation in 2011-12.

• National Rural Health Mission (NRHM) is being implemented through ‘Accredited Social Health Activist’- ‘ASHA’.  The scope of ASHA’s activities is being enlarged to include prevention of Iodine Deficiency Disorders, ensure 100 per cent immunisation and better spacing of children.  At the community level, a more active role is envisaged for ASHA as the convenor of the Village Health and Sanitation Committee, as also to support the initiative on malnutrition. 

• Allocation to NRHM has been increased from Rs. 18,115 crore in 2011-12 to Rs. 20,822 crore in 2012-13.

• National Urban Health Mission is being launched to encompass the primary healthcare needs of people in the urban areas. The Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) aimed at setting up of AIIMS-like institutions and upgradation of existing Government medical colleges is being expanded to cover upgradation of 7 more Government medical colleges. 

• The Swarnjayanti Gram Swarozgar Yojana (SGSY) has been restructured into National Rural Livelihood Mission (NRLM) to provide self-employment opportunities.  A sub-component, Mahila Kisan Sashaktikaran Pariyojana, under NRLM seeks to provide better targeting of women farmers. For NRLM, allocation has been increased by over 34 per cent from Rs. 2,914 crore in 2011-12 to Rs. 3,915 crore in 2012-13. 

• A ‘Women’s SHG’s Development Fund’ has been set up in NABARD. Rs. 200 crore will be provided to enlarge the corpus to Rs. 300 crore. This Fund will support the objectives of Aajeevika i.e. the National Rural Livelihood Mission.  It will empower women SHGs to access bank credit.

• Interest subvention to Women SHGs is provided to avail loans up to Rs. 3 lakh at 7 per cent per annum. Women SHGs that repay loans in time will get additional 3 per cent subvention, reducing the effective rate to 4 per cent. The initiative, in the first phase, would focus on selected 600 Blocks of 150 districts, including the Left Wing Extremism affected districts.

• A credit linked subsidy programme namely Prime Minister’s Employment Generation Programme (PMEGP) is being implemented through KVIC. The allocation for this programme has been increased by 23 per cent from Rs. 1,037 crore in 2011-12 to Rs. 1,276 crore in 2012-13.

• Under the ongoing Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme for BPL beneficiaries, the monthly pension amount per person is being raised from Rs. 200 to Rs. 300.

• Organised retail helps in reducing cost of intermediation due to economies of scale, benefiting both consumers and producers. At present, FDI in single brand and in cash and carry wholesale trade is permitted to the extent of 100 per cent. The decision in respect of allowing FDI in multi-brand retail trade up to 51 per cent, subject to compliance with specified conditions, has been held in abeyance. Efforts are on to arrive at a broad based consensus in consultation with the State Governments. 

• For the year 2012-13, Rs. 15,888 crore is provided for capitalisation of Public Sector Banks, Regional Rural Banks and other financial institutions including NABARD. 

• In 2010-11, “Swabhimaan” campaign was launched to extend banking facilities through Business Correspondents to habitations having population in excess of 2000.  Out of 73,000 identified habitations that were to be covered by March, 2012, about 70,000 habitations have been provided with banking facilities. With this, over 2.55 crore beneficiary accounts would have been operationalised.  The remaining habitations are likely to be covered by March 31, 2012.  As a next step, Ultra Small Branches are being set up at these habitations, where the Business Correspondents would deal with cash transactions. 

• In 2012-13, the “Swabhimaan” campaign will be extended to habitations with population of more than 1000 in North Eastern and hilly States and to other habitations which have crossed population of 2,000 as per Census 2011.

• 82 RRBs in India, 81 have successfully migrated to Core Banking Solutions (CBS) and have also joined the National Electronic Fund Transfer system so as to meet rural credit needs.  

• In 2012-13, the allocation for Scheduled Castes Sub Plan (SCSP) is Rs. 37,113 crore which represents an increase of 18 per cent over 2011-12. The allocation for Tribal Sub Plan (TSP) in 2012-13 is Rs. 21,710 crore representing an increase of 17.6 per cent over 2011-12.

• With the objective of promoting market access of Micro and Small Enterprises, Government has approved a policy which requires Ministries and CPSEs to make a minimum of 20 per cent of their annual purchases from MSEs. Of this, 4 per cent will be earmarked for procurement from MSEs owned by SC/ST entrepreneurs.

Rural Expert

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