Union Budget And Other Economic Policies

Union Budget And Other Economic Policies

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•    During 2009-10, Rs. 42490 crore was allocated for food and Rs. 2866 crore was allocated for kerosene/ LPG under the public distribution system (PDS). It covered 23.3 percent of all households (above poverty line-APL and below poverty line-BPL in 2004-05). Annapurna scheme covered 1.7 percent households with elderly.






•    During 2009-10, Rs. 30100 crore was allocated under Mahatma Gandhi National Rural Employment Guarantee (MGNREG) Scheme. It covered 33 percent of rural households in 2008-09.






•    For the Swarnajayanti Gram Swarozgar Yojana (SGSY), Rs. 2115 crore was allocated during 2001-10. It covered 0.8 percent of rural households in 2004-05. Sampoorna Grameen Rozgar Yojana covered 1 percent rural households in 2004-05.






•    During 2009-1o, Rs. 5109 crore was allocated under India Gandhi National Old Age Pension Scheme (IGNOAPS). It covered 8.3 percent households with elderly in 2004-05. Widows pension scheme covered 6.2 percent of households widows.






•    For the Indira Awas Yojana (IAY), Rs. 7920 crore was allocated during 2009-10. It covered 12.8 percent rural households in 2004-05.






•    For the Midday Meal Scheme (MDMS), Rs. 8000 crore was allocated during 2009-10.






•    For the Rashtriya Swasthya Bima Yojana (RSBY), Rs. 350 crore was allocated during 2009-10.






•    For Social Insurance for Unorganized Workers, Rs. 270 crore was allocated during 2009-10.






According to the Budget Speech 2011-12 delivered by Pranab Mukherjee, http://indiabudget.nic.in/bspeecha.asp:




• The total food inflation declined from 20.2 per cent in February 2010 to less than half at 9.3 per cent in January 2011. At the beginning of the 2011, food inflation was high for some cereals, sugar and pulses.


• The recent spurt in food prices was driven by increase in the prices of items like fruits and vegetables, milk, meat, poultry and fish, which account for more than 70 per cent of the WPI basket for primary food items.

• The Gross Domestic Product (GDP) of India is estimated to have grown at 8.6 per cent in 2010-11 in real terms. In 2010-11 agriculture is estimated to have grown at 5.4 per cent, industry at 8.1 per cent and services at 9.6 per cent.

• Indian economy is expected to grow at 9 per cent with an outside band of +/- 0.25 per cent in 2011-12.

• During the year 2010-11, the Nutrient Based Subsidy (NBS) policy was successfully implemented for all fertilisers except urea.  The policy has been well received by all stakeholders, and the availability of fertilisers has improved. The extension of the NBS regime to cover urea is under active consideration of the Government.

• The Government provides subsidies, notably on fuel and food grains, to enable the common man to have access to these basic necessities at affordable prices. A significant proportion of subsidised fuel does not reach the targeted beneficiaries and there is large scale diversion of subsidised kerosene oil. To ensure greater efficiency, cost effectiveness and better delivery for both kerosene and fertilisers, the Government will move towards direct transfer of cash subsidy to people living below poverty line in a phased manner.

• A task force headed by Shri Nandan Nilekani has been set-up to work out the modalities for the proposed system of direct transfer of subsidy for kerosene, LPG and fertilisers. The interim report of the task force is expected by June 2011. The system will be in place by March 2012.

• As a part of financial strengthening of Regional Rural Banks, an amount of Rs. 350 crore was given to these banks during this year. Rs. 500 crore will be provided to them during 2011-12 to enable them maintain a Tier I Capital to Risk Weighted Asset Ratio (CRAR) of at least 9 per cent as on March 31, 2012.

• There is a proposal to create in the course of the year, "India Microfinance Equity Fund" of `100 crore with SIDBI.

• To empower women and promote their Self Help Groups (SHGs), there is a proposal to create a “Women’s SHG’s Development Fund” with a corpus of `500 crore. The Committee set up by RBI to look into issues relating to micro finance sector in India has submitted its report. The Government is considering putting in place appropriate framework to protect the interests of small borrowers.

• The Rural Infrastructure Development Fund (RIDF) is an important instrument for routing bank funds for financing rural infrastructure. This is popular among State Governments. There is a proposal to raise the corpus of RIDF XVII to Rs. 18,000 crore in 2011-12 from Rs. 16,000 crore in the current year. The additional allocation would be dedicated to creation of warehousing facilities.

• Handloom weavers have been facing economic stress. Consequently, many of them have not been able to repay debts to handloom weaver cooperative societies which have become financially unviable. There is a proposal to provide Rs. 3,000 crore to NABARD, in phases for these cooperative societies. The initiative would benefit 15,000 cooperative societies and about 3 lakh handloom weavers. The details of the scheme would be worked out by the Ministry of Textiles in consultation with Planning Commission.

• Outstanding loans to minority communities which stood at 13 per cent of total priority sector lending at the end of last year have increased to 13.6 per cent in the current year. It has been directed to the Public Sector Banks to achieve the target of 15 per cent at the earliest.

• The total allocation of Rashtriya Krishi Vikas Yojana (RKVY) has been increased from Rs. 6,755 crore in 2010-11 to Rs. 7,860 crore in 2011-12.

• In order to make Green Revolution reach the Eastern Region, allocation of Rs. 400 crore has been made. The program would target the improvement in the rice based cropping system of Assam, West Bengal, Orissa, Bihar, Jharkhand, Eastern Uttar Pradesh and Chhattisgarh.

• Government's initiative on pulses has received a positive response from the farmers. As per the second advance estimates, a record production of 165 lakh tonnes of pulses is expected in 2011-12 as against 147 lakh tonnes in 2010-11. There is a proposal to provide an amount of Rs. 300 crore to promote 60,000 pulses villages in rainfed areas for increasing crop productivity and strengthening market linkages.

• The domestic production of edible oil meets only about 50 per cent demand. The gap in supply is met through imports, which are often at high prices due to the quantum of India's requirement. Recent interventions by the Government and good rains are expected to result in a higher oilseeds production of 278 lakh tonnes in 2010-11 as against 249 lakh tonnes in 2009-10. To achieve a major breakthrough, There is a proposal of an amount of Rs. 300 crore to bring 60,000 hectares under oil palm plantation, by integrating the farmers with the markets. The initiative will yield about 3 lakh metric tonnes of palm oil annually in 5 years.

• The growing demand for vegetables has to be met by a robust increase in the productivity and market linkage. An efficient supply chain, to provide quality vegetables at competitive prices will have to be established. There is a proposal to provide an amount of Rs. 300 crore for implementation of vegetable initiative to set in motion a virtuous cycle of higher production and incomes for the farmers. To begin with, this programme will be launched near major urban centres.

• Bajra, jowar, ragi and other millets are highly nutritious and are known to possess several medicinal properties. The availability and consumption of these Nutri-cereals is, however, low and has been steadily declining over recent years.  A provision of Rs. 300 crore is being made to promote higher production of these cereals, upgrade their processing technologies and create awareness regarding their health benefits. This initiative would provide market linked production support to ten lakh millet farmers in the arid and semi-arid regions of the country. The programme would be taken up in 1000 compact blocks covering about 25,000 villages. This will help improve nutritional security and increase feed and fodder supply for livestock.

• The consumption of foods rich in animal protein and other nutrients has risen of late, with demand growing faster than production. The National Mission for Protein Supplements is being launched in 2011-12 with an allocation of Rs. 300 crore. It will take up activities to promote animal based protein production through livestock development, dairy farming, piggery, goat rearing and fisheries in selected blocks.

• There is a proposal to provide Rs. 300 crore for Accelerated Fodder Development Programme which will benefit farmers in 25,000 villages.

• There has been deterioration in soil health due to removal of crop residues and indiscriminate use of chemical fertilizers, aided by distorted prices. To address these issues, the Government proposes to promote organic farming methods, combining modern technology with traditional farming practices like green manuring, biological pest control and weed management.

• For the year 2011-12, there has been a raise in the target of credit flow to the farmers from Rs. 3,75,000 crore this year to Rs. 4,75,000 crore in 2011-12. Banks have been asked to step up direct lending for agriculture and credit to small and marginal farmers.

• The existing interest subvention scheme of providing short term crop loans to farmers at 7 per cent interest will be continued during 2011-12. There is a proposal  to enhance the additional subvention to 3 per cent in 2011-12.  Thus, the effective rate of interest for such farmers will be 4 per cent per annum.

• In view of the enhanced target for flow of agriculture credit, there is a proposal to strengthen NABARD's capital base by infusing Rs. 3000 crore, in a phased manner, as Government equity. This would raise its paid-up capital to Rs. 5,000 crore.

• An estimated 40 per cent of the fruit and vegetable production in India goes waste due to lack of storage, cold chain and transport infrastructure. To address these issues, the Eleventh Plan target for number of Mega Food Parks was set at 30. So far, 15 such parks have been sanctioned. During 2011-12, approval is being given to set up 15 more Mega Food Parks.

• The years 2008 to 2010 saw very high levels of foodgrain procurement. On January 1, 2011, the foodgrain stock in Central pool reached 470 lakh metric tonnes, 2.7 times higher than 174 lakh metric tonnes on January 1, 2007. The storage capacity for such large quantities requires augmentation. Process to create new storage capacity of 150 lakh metric tonnes through private entrepreneurs and warehousing corporations has been fast tracked. Decision to create 20 lakh metric tonnes of storage capacity under Public Entrepreneurs Guarantee (PEG) Scheme through modern silos has been taken. While India will be able to add about 2.6 lakh tonnes of capacity by March 2011, based on existing sanctions, the addition will reach 40 lakh tonnes by March 2012. During 2010-11, another 24 lakh metric tonnes of storage capacity has been created under the Rural Godown Scheme.

• Investment in cold storage projects is now gaining momentum.  During this year, 24 cold storage projects with a capacity of 1.4 lakh metric tonnes have been sanctioned under National Horticulture Mission. In addition, 107 cold storage projects with a capacity of over 5 lakh metric tonnes have been approved by the National Horticulture Board.

• To attract investment in this sector, henceforth, capital investment in the creation of modern storage capacity will be eligible for viability gap funding scheme of the Finance Ministry. It is also proposed to recognize cold chains and post-harvest storage as an infrastructure sub-sector.

• The recent episode of inflation in vegetables and fruits has exposed serious flaws in our supply chains. The government regulated mandis sometimes prevent retailers from integrating their enterprises with the farmers. There is need for the State Governments to review and enforce a reformed Agriculture Produce Marketing Act urgently.

• Infrastructure is critical for India's development. For 2011-12, an allocation of over Rs. 2,14,000 crore is being made for this sector, which is 23.3 per cent higher than current year. This amounts to 48.5 per cent of the Gross Budgetary Support to plan expenditure.

• To provide a real wage of Rs. 100 per day, the Government has decided to index the wage rates notified under the MGNREGA to the Consumer Price Index for Agricultural Labour. The enhanced wage rates have been notified by the Ministry of Rural Development on January 14, 2011. It has resulted in significant enhancement of wages for the beneficiaries across the country.

• The Anganwadi workers and Anganwadi helpers are the backbone of Integrated Child Development Services Scheme.  It has been announced to increase the remuneration of Anganwadi workers from Rs. 1,500 per month to Rs. 3,000 per month and for Anganwadi helpers from Rs. 750 per month to Rs. 1,500 per month.  This will be effective from April 1, 2011. Around 22 lakh Anganwadi workers and helpers will benefit from the increase.

• In the Budget for 2011-12, specific allocations are being earmarked towards Scheduled Castes Sub-plan and Tribal Sub-plan. These will be shown in the Budget of the relevant Ministries and Departments under separate minor heads of account. There is a proposal to increase the Budget allocation for primitive tribal groups from Rs. 185 crore in 2010-11 to Rs. 244 crore in 2011-12.

• There is a proposal of an allocation of Rs. 52,057 crore for education, which is an increase of 24 per cent over the current year.

• The existing operational norms of Sarva Shiksha Abhiyan have been revised to implement the right of children to free and compulsory education which has come into force with effect from April 1, 2010. For the year 2011-12, there is a proposal to allocate Rs. 21,000 crore which is 40 per cent higher than Rs. 15,000 crore allocated in the Budget for 2010-11. A revised Centrally Sponsored Scheme “Vocationalisation of Secondary Education” will be implemented from 2011-12 to improve the employability of youth.

• In 2011-12, there is a proposal to introduce a scholarship scheme for needy students belonging to the Scheduled Castes and Scheduled Tribes studying in classes ninth and tenth. It would benefit about 40 lakh Scheduled Caste and Scheduled Tribe students.

• For health, there is a proposal to step up the plan allocations in 2011-12 by 20 per cent to Rs. 26,760 crore. The Rashtriya Swasthya Bima Yojana has emerged as an effective instrument for providing a basic health cover to poor and marginal workers. It is now being extended to MGNREGA beneficiaries, beedi workers and others. In 2011-12, there is proposal to further extend this scheme to cover unorganized sector workers in hazardous mining and associated industries like slate and slate pencil, dolomite, mica and asbestos etc.

• In Budget 2010-11 a co-contributory pension scheme “Swavalamban” was announced. This scheme has been welcomed by the workers in unorganised sector. Over 4 lakh applications have already been received. On the basis of the feedback received, exit norms have been relaxed whereby a subscriber under Swavalamban will be allowed exit at the age of 50 years instead of 60 years, or a minimum tenure of 20 years, whichever is later. There is proposal to extend the benefit of Government contribution from three to five years for all subscribers of Swavalamban who enroll during 2010-11 and 2011-12. An estimated 20 lakh beneficiaries will join the scheme by March 2012.

• Under the on-going Indira Gandhi National Old Age Pension Scheme for BPL beneficiaries, the eligibility for pension is proposed to be reduced from 65 years at present to 60 years. Further, for those who are 80 years and above, the pension amount is being raised from Rs. 200 at present to Rs. 500 per month.

• There is proposal to allocate Rs. 200 crore from the National Clean Energy Fund as Centre's contribution in 2011-12 for launching environmental remediation programmes.

• The UID Mission has taken off and Aadhaar numbers are being generated in large numbers. So far 20 lakh Aadhaar numbers have been given and from 1st October 2011, ten lakh numbers will be generated per day. The stage is now set for realising the potential of Aadhaar for improving service delivery, accountability and transparency in governance of various schemes.

• To provide green and clean transportation for the masses, National Mission for Hybrid and Electric Vehicles will be launched in collaboration with all stakeholders.


Rural Expert

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